Tony Rezko’s $50 million Iraq deal
BY TIM NOVAK AND CHRIS FUSCO Staff Reporters July 11, 2011 2:38AM
Updated: July 11, 2011 2:48AM
The following article was originally published on Aug. 7, 2007:
Two years ago, Iraq’s Ministry of Electricity gave a $50 million contract to a start-up security company owned by now-indicted businessman Tony Rezko and a onetime Chicago cop with a checkered financial past. Within a month, an Iraqi leadership change left the deal in limbo.
Now the company, Companion Security, is working to revive its contract to train Iraqi power-plant guards in the United States.
Companion found support last summer from Gov. Blagojevich, whose staff offered to let the company lease a military facility in western Illinois. Since then, Companion has been lobbying officials from Washington to Baghdad about its Iraqi deal, according to documents obtained by the Chicago Sun-Times.
Blagojevich’s offer to assist Companion came as a federal investigation into Rezko’s state-government dealings was heating up. A former top fund-raiser for the governor and other politicians, Rezko was indicted on corruption charges in October -- four months after Blagojevich’s homeland security chief wrote a letter inviting Companion to train the guards at the Savanna Army Depot.
The governor’s spokeswoman said state officials didn’t know Rezko had ties to Companion until the Sun-Times began asking questions. Blagojevich and his staff also didn’t know that Companion’s chief executive, former cop Daniel T. Frawley, had a history of financial problems, she said.
It’s unclear if Frawley and Rezko remain partners. They declined to comment.
After the state found a proposed training site, Frawley went to Sen. Barack Obama (D-Ill.) last August.
Obama’s staff declined to help.
“The Senate staff had two meetings, one conference call, and sporadically e-mailed with representatives of Companion Security about their request for Sen. Obama to write a letter introducing the company to senior officials in the Iraqi government,” Obama spokesman Ben LaBolt said. “That is not the kind of action Sen. Obama usually takes for individual companies, and our staff concluded on that basis to decline the requested assistance.”
LaBolt said Obama’s staff was unaware Companion had any ties to Rezko, who has raised campaign donations for Obama.
Companion beefed up its lobbying efforts in March, hiring a Washington attorney who has contacted the U.S. State and Commerce departments. Frawley wants U.S. officials to persuade the Iraqi government to honor the contract he signed on April 18, 2005, when Aiham Alsammarae, another friend of Rezko’s, ran Iraq’s electricity agency.
Iraq’s current electricity minister has balked, saying Frawley’s contract is too expensive, according to a U.S. Embassy official in Baghdad.
As Frawley has sought to revive the deal, he’s been facing lawsuits:
A Missouri bank says Frawley has failed to pay a $4.5 million loan.
A chemical company is suing Frawley because his company didn’t pay a $750,000 court judgment.
A man and his nephew are trying to find Frawley to make him pay a $28,444 judgment they won in a civil case in which they claimed Frawley physically attacked them.
Frawley, 56, was a Chicago cop for seven months in 1977. He has owned businesses that sell resins to make plastic bags. He is a friend of Rezko’s former business partner Daniel Mahru, an attorney for Companion when it got the Iraqi contract.
Frawley and Rezko owned Companion, according to two sources.
“Frawley originally had two other partners; one of them was a guy named Tony Rezko,” said security consultant Patrick Goodale. Under the contract Frawley signed, Goodale is to coordinate training of the Iraqi power-plant guards.
Rezko, 52, is fighting federal charges that he solicited kickbacks from companies seeking state business under Blagojevich. Sources in December told the Sun-Times the feds are investigating Rezko’s dealings in Iraq, where Rezko once had a contract from Alsammarae’s agency to build a power plant.
Alsammarae, who lives in the Chicago area and was a college classmate of Rezko, is a dual U.S.-Iraqi citizen. He left his post as Iraq’s electricity minister in May 2005, about a month after Companion got the contract. Alsammarae was accused of financial corruption by Iraqi authorities and jailed in Iraq last year before escaping and returning here.
Companion’s contract called for it to fly 150 Iraqis to the United States for police-type training. Among the subjects: how to shoot AK-47 rifles.
As Frawley sought to revive the contract in spring 2006, Blagojevich’s chief of staff, John Harris, directed the state’s homeland security adviser, Jill Morgenthaler, to find “a military site for the training of Iraqi police forces,” Morgenthaler wrote in an April 26, 2006, e-mail. She wrote the letter in June 2006 offering the Savanna site.
Two months later, Frawley sought help from Obama, a member of the Senate Foreign Relations Committee who is now running for president. Frawley met with Seamus Ahern, who runs Obama’s Moline office. Frawley and Ahern discussed the proposal over a period of about six months.
Obama and Blagojevich viewed Frawley’s efforts as a chance to create jobs in the Quad Cities area.
Blagojevich’s spokeswoman, Abby Ottenhoff, said state officials assume Frawley’s contract has “gone away” because they haven’t heard from Companion since last year.
“We never got far enough along in the process to determine whether their plan was a good one,” she said. “We only had preliminary discussions with them.”