Arrigo was shocked at what she found and how brazenly the Pentagon wrote it up because it feels untouchable, especially since 2001. That notion proved misguided after CIA used the material to blackmail or bribe its officials "into 'working on' the Halliburton-Carlyle team." Top CIA types were involved, and Tenet laid it out for Arrigo: You've "given me the keys to the kingdom. (These) documents will make me rich."

She collected three types. Her report covers one but has plenty of incriminating evidence. Her precise recall of dates and names is incomplete, but events are factually right and damning on how Washington operates. It's always been this way but never to the degree as under George Bush. Arrigo exposes the scheme - the systematic looting of the treasury to enrich contractors and high-level officials at Pentagon, CIA and others well-placed in government. Precise amounts are unknown, but at mimimum are countless multi-billions, even trillions - at taxpayer expense and diverted from essential social and infrastructure needs.


Arrigo discovered high-level Pentagon corruption. It involved bid-rigging and implicated "an Air Force general on the JCS and a Defense Contractor, Boeing." She disclosed it to JCS Chairman Hugh Shelton and DCI George Tenet, and in both instances drew blanks. She also reported it to the Government Accountability Office (GAO), the investigative arm of Congress. It was vetted and confirmed, but left unaddressed the larger issue of whether new generation planes are needed at an enormous cost to taxpayers. Arrigo believed not, and several Air Force generals agreed. Not other JCS members, however, who she learned are on the take.

There's more. They "had the gall to try to force through another unneeded plane contract for Boeing." At an early 2004 JCS meeting, Arrigo complained about the previous undelivered order because it didn't meet Pentagon specifications. Yet one general in particular tried "to force the US military to buy another (unneeded) upgrade." One other JCS member backed her to no avail, and the new order went through. Arrigo rightfully concluded that new plane orders were to enrich Boeing and high-level Pentagon types getting kickbacks for their cooperation.

She also learned how much - an average $22,000 "for each (JCS meeting) vote according to their bank" records. Not US ones. CIA-arranged Swiss accounts specifically for this purpose. Everyone at the meeting cashed in, except Arrigo and one dissenting general. More disturbing is that this is standard Pentagon practice - handouts to contractors; kickbacks to complicit brass; and taxpayers out multi-billions - year after year.

Jeff St. Clair wrote about it in his 2005 book "Grand Theft Pentagon: Tales of Corruption and Profiteering in the War on Terror." It's an explosive account of how contractors like Halliburton, Lockheed Martin, Boeing, Bechtel and the Bush family-connected Carlyle Group scam multi-billions at taxpayer expense and not a whiff of it in the mainstream. It's the reason US annual "defense" spending tops $1.1 trillion (conservatively) with all military, homeland security, veterans, NASA, debt service and other allocations included.


Arrigo refers to the Pentagon's Receiving Department "swing shift" personnel. They alone are on the take so other shifts are shut out and can't report it. As a CIA insider, she checked and found damning evidence - about "the military (not) getting supplies to the troops on time." She also learned that Halliburton has its "Representative to the CIA," and one at the Pentagon as well. Both get federal salaries but neither was "hired by CIA or the military through their personnel departments. Neither had done military training or trained at (CIA's) 'Farm' as a spy." Arrigo was disturbed and with good reason when orders from the top said back off.

It got worse. Arrigo worked at CIA for over 30 years and reported directly to Tenet. But she wasn't prepared for what she found - a new section at the Agency without her knowledge. It employed 40 people, all working for Halliburton "while being paid by the US taxpayer as if they were CIA." It was secret. No files were on them. They were never interviewed, never vetted, and she concluded: "CIA had a back door in its security to let Halliburton put anyone they wanted in (its) hallways. It was an outrageous (breach) of US National Security," and in a post-9/11 "war on terrorism" climate.

She was shocked and told Tenet. His reply: "Yes, I know." Head of CIA building security also knew. Arrigo asked what he'd do about it. His answer: "Keep my mouth shut so I can stay alive and I suggest you do the same." She asked if he, CIA or Halliburton would kill her if she talked. He didn't think so. Would national security firm CACI do it because it's affiliated with Halliburton and also has a CIA back door for its personnel at the Agency.

Arrigo dug deeper. She got inside Halliburton's area and asked questions. Why was the company shipping half the contracted for amounts and shortchanging the troops and taxpayers. It was no different for war zones. Halliburton "set up the same corrupt system of swing shift receivers (for) at least 3 continents. They received the cartons and signed (off) that the goods were all received properly. Then the shortages later were chalked up to thefts or war damage, etc."

Arrigo again informed Tenet. His answer: "This is nothing new," then added: "Have a report about it on my desk before Christmas (2001)." It got worse. Arrigo told Tenet he's responsible for "correct(ing) Halliburton's short-shipping and its invasion of the CIA." He said he couldn't because the White House tied his hands. Call Congress, Arrigo said. DCI "should be a man of courage." Tenet ignored her, so Arrigo faxed documents revealing Halliburton fraud to GAO - omitting national security secrets. One of them crowed about the scheme's profitability, and having high-level officials involved made it foolproof.

It was clever and even more devious than Arrigo imagined. Halliburton uses each shortage complaint as a new order. "In that way (it) never (loses) by having to make good for (what's) missing," and (it gets) paid double for the same merchandise.

Arrigo knew too much, took risks to learn it, and what happened next is shocking. Halliburton's "CIA Representative" confronted her, tore out her phone, ransacked her office, removed every shred of paper, and hauled her off bodily "to a prison cell" inside its basement offices. She was intimidated and threatened. Thought she might be killed. She survived, but the message was clear. She complained to Tenet. Showed him her bruises. He responded dismissively: "There, there, everything will be all right in the morning."

GAO still has Arrigo's files. It began investigating but stopped. She thinks that Congress can resume it and asked Waxman to do it. That's where things now stand.

Case 3: The White House Conspiracy to Cook the Books - Halliburton, Carlyle and CIA

In 2002, Arrigo tried a new tact - ingratiating herself with "Halliburton's Man" and using it to her advantage. She offered cooperation for access to his space and make him think she was on his side. It worked, went on for four and one-half months through late May, and it paid off - with plenty of insider knowledge "about Halliburton and how it works." Enough to fill a book, she says, but her account sticks to highlights.

First off, it's pure myth that Dick Cheney stopped running the company. "He called in orders to the man I worked for almost every day and sometimes two or more times a day. He remained (Halliburton's) functional head in all but name. No one....had the power to override his orders." Second, Cheney never divested himself of Halliburton profits. "He merely hid how (he got them) through a series of shell companies."

One of Arrigo's jobs was to liaison between Halliburton and CIA's "creative accounting departments." In other words, their co-conspiratorial treasury looting efforts, and Arrigo got insider access to it. Her advanced math and computer software training qualified her. In a few months, she became expert in how CIA and Halliburton hid their "financial illegalities."

She explained - "Computers are good ways to fool most people because (they don't) look inside of them." They can be programmed "to print out one set of books for regulators, another for Defense Contractors, another for the Pentagon, another for the taxpayer," and so forth. It's simple. Decide what you want, and machines will create it in any desired form. The trick is doing it expertly, most criminals can't, so they need professionals to do it for them. It means crimes are never secret, and many computer experts know about them. CIA has always been tainted, kept it secret since inception, so far has been untouchable, but remains vulnerable to exposure by people of conscience like Arrigo.

She explained: Halliburton has eight software programmers at CIA. Its home office has many more. She was on conference calls with 60 of them on ways to conceal illegalities and assure none of it leaks out. The company has less expertise than CIA so the Agency took charge to make the two systems compatible. It took several years and over 100 programmers. They came, left for other jobs, and took insider knowledge with them. It risks more leaks about Halliburton, other contractors, CIA, the Pentagon, high-ups in government, and the Basel-based Bank of International Settlements for its part in corruption.

Many investigations are ongoing, but huge pressure is exerted to quash them. It's feared leaks may unravel the whole scheme - a vast corruption web involving countless numbers of contractors, related companies, and many high level government and Pentagon insiders. Cover-up software hides it. Taxpayers fund it. Amounts keep getting greater, and they're up to unimaginable levels.

Arrigo explained the system. Suppose Halliburton sold product A in 100 Lot Sizes, in Quantity X at Price Y to the Pentagon on a given date. Most civilian invoices disclose this. Pentagon ones don't so contractors can cheat and Pentagon brass profit. Missing information conceals whether all merchandise was delivered as nothing indicates quantities shipped. Further, repackaging also hides proper amounts. Omitting the price alone conceals whether a shipment was shorted, but CIA is more clever than that. It experimented with "tested receivers at some of its front companies" to learn how best to deceive them. What works best is "shifting prices around like random noise" - one day this cost, another a different one, and so forth.

One company used a "gross overcharge method" that looked suspicious. It got receivers to discover the real price, and that defeated CIA's scheme. When it works, it cooks the books, and no one's the wiser. Ledger entries are inflated, undercut, omitted, added, or varied in amounts of similar transactions. Like a "professional crime institution," CIA is expert at falsifying books so no one catches on. How? By random price variations to keep auditors off balance and unable to discover corruption patterns.

Another example:

CIA varies its front company prices monthly. Suppose Halliburton made a purchase "when it (used) a cost inflation idea of cheating. Halliburton (has) an incentive to inflate the cost of its purchases (to) justify (its) high (price) to the military." So as standard practice it uses CIA's highest price and claims that amount for its cost.

But comparing two sets of books reveals the scheme. So methodology became more sophisticated to conceal it. Halliburton takes CIA prices and doubles them on its books. It then claims the Agency recorded half the charge "accidently," says its front company promised a 50% discount, but never delivered. CIA looks bad, and it balked. No matter. Halliburton still does it, but CIA has "lots of fronts with lots of customers and worse problems (to hide) than merely jacking up prices. Some fronts (are) fictitious and (make) no products." Others have real customers plus fake ones to launder money. CIA tries to "make (their) crimes 'undetectable.' " Halliburton hopes to "sneak by" until caught, then find a way to weasel out of it with minimal damage or cost.


In early 2002, GAO got damning evidence: that Halliburton overbills and short-ships - deliberate fraudulent acts as standard company practice, confident it can get away with it, and most often it does.

GAO has the goods to expose it from Halliburton and Pentagon invoices. They reveal a problem. They don't match, are grossly inflated, and payments exceed amounts billed - by about 35%. Arrigo met with GAO and compared notes. Halliburton has similar Pentagon and CIA-paid staff, and George Bush approved it in a secret Executive Order Arrigo has for proof. She gave it to GAO plus other documents showing national security is compromised and taxpayers cheated - hugely.

One document lists Halliburton's CIA and Pentagon staff, what little official records discloses about them, their secret office locations, and information on their private security staff. Arrigo discovered that Halliburton's top CIA man served time for felony fraud. Another at Pentagon was convicted as well - for stealing Army vehicles, then profiteering by transshipping them overseas.

Dick Cheney knew, blocked background checks to conceal it, but Arrigo found out and about the Pentagon fraud that followed. She has a handwritten Cheney memo instructing his man "to make sure that the Pentagon pays us all that it owes us and then some." CIA's forgery department verified the writing is Cheney's.

Arrigo also has a letter from Halliburton's Pentagon man to his CIA counterpart, and it's damning. He brags how he's "getting more than we bargained for (from) the Pentagon" and suggested they get together to compare notes. They did and Arrigo taped it. The evidence once more is damning - about how easy it is to scam the system; befriend accounting personnel; install company programmers; check bills supposedly behind in payments; install a special software code for higher amounts; and do all of the above at Pentagon and CIA.

Arrigo informed George Tenet so he'd stop "Halliburton from ripping off the American taxpayer via the CIA and Pentagon." Tenet hardly blinked and responded casually: "Well, you certainly have done a thorough job as usual." He then offered to inform the White House to "correct the problem." Arrigo did herself, GAO as well, and later learned that the Bush administration (likely Dick Cheney) blocked an investigation.

This article covers four of Arrigo's 12 cases. Their evidence is damning and shows systemic contractor, government, CIA and Pentagon fraud involving enormous amounts of money. One or more articles will follow if more material can be obtained. It's not what Pentagon and CIA want outed so getting it is never simple and revealing it not without risks.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Mondays from 11AM to 1PM US Central time for cutting-edge discussions with distinguished guests. All programs are archived for easy listening.