A network television news report accusing Custer Battles of mistreating Iraqi civilains is only the latest issue to surface regarding the company's performance in Iraq.

01:00 AM EST on Thursday, February 17, 2005

BY MICHAEL CORKERY
Journal Staff Writer

A Rhode Island company that was awarded millions of dollars worth of contracts in Iraq is being accused by four former employees of committing violence "the American population wouldn't stand for," according to a network television news report.

The former employees of Custer Battles, a private security firm based in Middletown, told NBC News that they witnessed fellow employees shoot at unarmed Iraqi civilians and possibly crush others with a truck.

Three of the employees told the network that they quit Custer Battles because they were upset by the alleged incidents. The men could not be reached for comment yesterday.

Custer Battles denied the allegations and yesterday released company documents which it said raise questions about the former workers' credibility and motives for their allegations.

The company provided an e-mail from one of the four employees, stating he would "dis-acknowledge" the accusations if he was paid money he thought the company owed him.

Members of Congress have criticized the use of heavily armed private security firms, such as Custer Battles, which operate under less scrutiny than the U.S. military but engage in similar combat activities.

Sen. Jack Reed said the NBC News report underscores the lack of oversight of private security firms and called for the Pentagon to investigate the allegations against Custer Battles.

"The report of indiscriminate violence by private contractors in Iraq is deeply disturbing," Reed said in a statement yesterday.

It's been a tough week for Custer Battles, which was co-founded by a onetime Rhode Island congressional candidate, West Point graduate and former CIA employee, Michael J. Battles.

On Monday, before a Democratic congressional committee, the company found itself at the center of a controversy over how U.S.-occupation forces in post-invasion Iraq disbursed and accounted for hundreds of millions of dollars.

The hearing came just two weeks after a special inspector general's audit of the Coalition Provisional Authority -- the agency that ran Iraq immediately after the fall of Saddam Husein's regime -- found that the agency had failed to provide proper oversight of ministry spending, issued unauthorized contracts and lost track of $9 billion in Iraqi funds.

At Monday's hearing, Franklin Willis, a former official with the CPA, told the Senate Democratic Policy Commmittee that Iraq after the fall of Saddam was "like the Wild West -- awash in $100 bills."

He described how, during one point in the summer of 2003, Custer Battles was paid with $2 million in fresh U.S. bills, stuffed into a gunnysack.

Also on Monday, the committee heard testimony from a lawyer representing two self-described whistle blowers, who are suing the company for fraud. The Pentagon has barred the company from government contracts, pending an investigation. The Justice Department declined to prosecute the company.

Shortly after the 2003 invasion of Iraq, Custer Battles was hired to guard the civilian side of the Baghdad airport and escort supply convoys along hazardous highways, among other duties.

Battles said the suit was brought by an employee who was fired in 2003 and a former subcontractor who was rebuffed in his effort to become an equity partner in Custer Battles.

The NBC News report, which aired Tuesday night, quotes four other former Custer Battles employees: Bill Craun, Jim Errante, Ernest Colling and Will Hough.

"What we saw, I know the American population wouldn't stand for," Craun told NBC News.

The men, who are identified as ex-soldiers and ex-Marines, told NBC News that on Nov. 8 they were working for Custer Battles, escorting a convoy of equipment bound for the Iraqi Army.

The men said that a Kurdish employee, who was working for a Custer Battles sub-contractor, fired into a passenger car to clear a traffic jam.

In another incident that day, Colling said that the rear gunner in his vehicle shot at a teenager passing along on a road. "Unarmed, walking kids," said Colling.

Craun told NBC News that later a Custer Battles pickup truck smashed into and rolled over the back of a sedan full of Iraqis.

According to the news report, Craun said, "I could see children sitting in the back seat of that car with their eyes looking up at the axle as it came down and pulverized the back."

The men told NBC News News they assume that the civilians were hurt in all three incidents, but they were not sure.

Craun and Colling said that they quit the company immediately after these incidents, according to NBC News. Errante said he quit after "witnessing wild, indiscriminate shootings on two other missions," NBC News reported.

Battles said yesterday, "we categorically deny these allegations." He said the company investigated the allegations, with the help of the law firm Edwards & Angell, which interviewed company employees in Iraq.

In a statement, a company official said there's no corroborating evidence to support the allegations, which they said they first learned about in late December when contacted by NBC News.

"NBC and Custer Battles investigations have unearthed no witnesses, no family members, no hospital or police records. The reason for this is that these incidents simply did not occur," the company said.

According to the statement, "these four individuals were disgruntled for various reasons, and have been attempting to damage the company by making false accusations."

"Specifically, Hough was terminated after several incidents of incompetence, negligence and threatening a Custer Battles manager with bodily harm.

"Craun, Colling and Errante voluntarily resigned after only a few days of work, and have been disputing their final pay resolution with the company over having to pay back their cash and travel advances.

"Upon learning that he would have to reimburse the company for cash and travel advances, Craun told other Custer Battles staff that he would call the company 'baby killers' to the press if they did not pay him more."

Custer Battles provided to the Journal a Nov. 29 e-mail from Colling to company co-founder Scott Custer. The e-mail states: "I prefer not to say why I left. I felt that it wasn't right."

The e-mail continues: "I just want to get paid for the time I was there nothing more. . . . If you do that, I will give a statement that will dis-acknowledge what Will Hough and others have to say."

Custer Battles also provided a photograph of a car that company officials say was the one damaged during the Nov. 8 convoy escort mission. From the picture, it's difficult to see the extent of damage to the rear of the car. But the passenger compartment does not appear to be totally damaged.

In a company e-mail, also provided to the Journal, Tim Teets, who was the Custer Battles "team leader" on the Nov. 8 mission, acknowledged that the car "was pushed out of the way."

Teets said an explosive device had gone off behind the convoy as it was traveling on a highway ramp crowded with cars.

All of the cars, except one, were moving out of the way to make room for the convoy. Teets said the lead Custer Battles truck pushed that car to the side. "The speed of the push was no more than 5 miles per hour. At no time did our company vehicle run over this vehicle," Teets wrote.

Battles said the company is still working in Iraq guarding convoys and doing other security work.

"We understand that Iraq is a very dangerous place to operate," Michael Battles said yesterday. "We also know that the U.S. involvement in Iraq has become a very controversial topic and it is used to further groups' agendas.

"We, as good corporate citizens, will continue to work toward the aim of reconstructing Iraq."

Digital Extra: See how the Middletown security firm of Custer Battles describes its services, at:

http://www.custerbattles.com