It's become a familiar theme in the ongoing Hurricane Katrina saga: Businesses with close Bush administration ties get key contracts, only to flub the job they were paid handsomely to do.
Yet another example came to light this week, thanks to the Associated Press: Scrambling to meet President Bush's promise to protect New Orleans before the start of last year's hurricane season, the Army Corps of Engineers installed defective flood-control pumps despite warnings from its own engineer that the equipment would likely fail during a storm. And -- surprise, surprise -- the manufacturer who got the $26.6 million contract to install the problem pumps happened to have close ties to the Bush family.
The contractor in this case is Moving Water Inc., a Deerfield Beach, Fla. firm owned by J. David Eller and sons. Eller was a business partner of former Florida Gov. Jeb Bush in a company called Bush-El that marketed MWI pumps overseas in questionable deals that remain under investigation. In addition, Eller has donated about $128,000 to politicians -- mostly Republicans -- over the past decade, according to information the AP obtained from the Center for Responsive Politics.
The Corps awarded the competitively bid pump contract to MWI in January 2006. A few months later, a Corps expert raised concerns about the equipment's functionality, the AP reports:
Misgivings about the pumps were chronicled in a May 2006 memo provided to the AP by Matt McBride, a mechanical engineer and flooded-out Katrina victim who, like many in New Orleans, has been closely watching the rebuilding of the city's flood defenses.
The memo was written by Maria Garzino, a Corps mechanical engineer overseeing quality assurance at an MWI test site in Florida. The Corps confirmed the authenticity of the 72-page memo, which details many of the mechanical problems and criticizes the testing procedures used.
About a dozen of the 34 pumps on order were already in place in New Orleans when Garzino wrote her report, according to Bedey.
In her memo, Garzino told corps officials that the equipment being installed was defective. She warned that the pumps would break down "should they be tasked to run, under normal use, as would be required in the event of a hurricane."
Louisiana Gov. Kathleen Blanco yesterday blasted the Corps for installing the pumps and demanded a congressional investigation. U.S. Sen. Mary Landrieu has also called for an investigation:
That the Corps would knowingly utilize pumps their own experts deemed defective is gravely troubling. The implication that the political connections of the manufacturer may have played a role in the decision is equally troubling.
In designing pumps that are essential to protecting New Orleans and the region, it seems the Corps made one bad decision after another. I will call for a full investigation into whether the Corps installed pumps that either failed during testing or were never tested at all. We must find out if the Corps used taxpayer dollars to buy a product that they knew didn't work and hold the decision-makers accountable.
In the meantime, MWI has fired back by defending the effectiveness of its products, the Miami Herald reports:
On Wednesday, a Fort Lauderdale lawyer who represents MWI denied that the pumps were or are defective.
"They were tested last week, and they exceeded the design specifications as far as flow and capacity," said William R. Scherer Jr. "That was exactly the situation in 2006 when they were installed."
However, Scherer acknowledged the pumps had had a vibration problem when first installed in a hurry last year to get in front of the hurricane season.
"It's a big task, and it takes time to get the kinks out," Scherer said. "You can't install it perfectly."
Scherer, it should be noted, is a member of the Bush Rangers, a group of the president's biggest campaign fundraisers; he also led the team of attorneys that helped litigate Bush into the White House following the contested 2000 election, according to WhiteHouseForSale.org.
This isn't the first time that MWI has found itself caught up in controversy: In 1999, a whistleblower lawsuit sparked an FBI investigation into shady taxpayer-backed water pump deals in Nigeria, according to the St. Petersburg Times:
MWI ... in 1992 sold Nigeria $74.3-million-worth of giant water pumps and other equipment in a deal made possible by a loan from Export-Import Bank of the United States. Nigeria is about $23 million behind on its payments, and as the Miami Herald reported last year, many of the pumps were unaccounted for or sitting idle.
From 1989 to 1993, Bush and Eller co-owned a company, Bush-El, that marketed MWI pumps, which are used for flood control and irrigation. Bush traveled to Nigeria to help push the pump sales, and as son of the president, received red-carpet treatment.
Former MWI pilot Greg Johnson, who was interviewed by the FBI, said it appeared the investigation focused on how the U.S. loan money was spent.
In an interview, Johnson contended that the pump prices were highly inflated and many of them could never be used because of infrastructure problems in Nigeria. "It was the biggest scam I've ever seen in my life," Johnson said.
"I think the investigation is about misappropriated funds. They (the U.S. government) financed a pig in a poke, and I think they're interested in knowing where the money went and who made the commissions. . . . The only scenario where I could see Jeb Bush involved is if they call him in and ask him where the value of his $648,000 comes from and what did he do for that money."
Bush reported making $648,000 from MWI, about $452,000 selling his stake in the company back to Eller in 1993 and the rest from sales commissions from countries other than Nigeria. He has not provided details about those other sales.
Nigeria has been MWI's key customer since the 1980s, thanks in large part to the Ex-Im bank. Before Bush joined Eller's team in 1989, MWI received nearly $90-million in Ex-Im backing for pump sales to Nigeria.
The country's problems paying back those loans prompted Ex-Im to tighten its loan policies for Nigeria. But by 1990, MWI was working on persuading Ex-Im officials to back more pumps sales to Nigeria. They approved eight separate loans to Nigeria totaling $74.3-million.
In 2002, the U.S. Justice Department amended its suit against Eller, alleging that he twice flew suitcases of cash to offshore tax havens to hide his assets, the St. Petersburg Times reported. The DOJ also claimed that MWI improperly used more than a third of a $74.3-million U.S. loan to pay a Nigerian agent for the company. In turn, that agent and other company officials paid Nigerian government officials involved in buying MWI's pumps, the lawsuit alleges. MWI denies the charges.
According to the paper:
Between 1985 and 1993, the government says, Eller flew on his company plane to the Bahamas and to Grand Cayman, once with a "large suitcase filled with currency" and once with a "large duffel bag or suitcase filled with currency." At both places, a chauffeured limousine whisked him and the money away. Eller told his pilot he was "moving his assets out of the United States," the lawsuit contends, calling it an effort to shield the money from creditors.
Eller's lawyer, William Scherer, said the flights never occurred and neither Eller nor MWI has accounts in either country.
The lawsuit by the George W. Bush Justice Department suggests no wrongdoing by Jeb Bush, who from 1988 to 1994 worked with Eller marketing MWI pumps to foreign countries, including Nigeria.
Indeed, the amended complaint omits allegations of influence-peddling by MWI -- including Eller's bringing Jeb Bush into the pump business -- leveled in the whistle-blower's recently unsealed lawsuit. That lawsuit prompted the federal investigation.
This begs a couple of questions: Why was a company under DOJ investigation for such serious charges given a major federal contract for New Orleans reconstruction in the first place? And why is the DOJ suit against MWI still unresolved after so many years?