While the Pentagon preps for a new administration, a scandal from an earlier era is rearing its head.

A Defense Department project, supposedly designed to support U.S. troops, was used instead to channel millions of dollars to personal friends and allies of its chief. The "America Supports You,"

or ASY, program was led in a "questionable and unregulated manner," according to a Department of Defense Inspector General report, obtained by Danger Room. At least $9.2 million was "inappropriately transferred" by the project's managers. Much of that money served only to further promote ASY, instead of assisting servicemembers.

In 2004, the office of then-Secretary of Defense Donald Rumsfeld set up ASY as a six-month effort to showcase the U.S. public's backing for the troops and their families. "If you're serving overseas, and you watch the mainstream media coverage, sometimes you can't tell if America knows you're there," one official overseeing the program says. America Supports You was seen as a way to counteract that sense.

In time, however, the program grew. Pro-troop rallies were organized. Special wristband and dog tags were made. Special-edition comic books were printed up. Processions were held on the National Mall, on the 9/11 anniversary. Sesame Street characters were enlisted to make DVDs that encouraged families with young children to talk about overseas deployments. America Supports You became a kind of umbrella group for all sorts of charity-related work for service members and military families.

Meanwhile, ASY began to spend millions — not to help the troops, the Inspector General says, but to help itself. "Instead of focusing on its primary mission of showcasing and communicating support to the troops and their families, the ASY program focus [turned to] building or soliciting support from the public," the Inspector General's report notes. In 2006 and 2007, for instance, more than $600,000 was spent ginning up support for America Supports You among schoolchildren. Another $165,000 went to a pro-ASY concert aboard the USS Intrepid, docked on Manhattan's west side. And $15,000 went to actor and musician Gary Sinise's "Lt. Dan Band" to play a separate show. The report calls all of these "questionable and unregulated actions."

By mid-2007, allegations began to surface that the Pentagon official in charge of the program, Armed Forces Information Service chief Alison Barber (pictured, left), was improperly redirecting millions of dollars in public funds.

From fiscal years 2004 to 2007, the Inspector General's report notes, Barber funneled $8.8 million in contracts to the public relations firm Susan Davis International — to set up the myriad events, and to promote the ASY "brand." The work was incredibly lucrative; Davis' executives made as much as $312,821 to $662,691 per year. "Paying a public relations contractor annual salaries approaching three-quarters of a million dollars does not appear to be a cost-effective means to support the ASY program and the war fighter," the report observes.

But what made it even harder to stomach was that Davis was a friend of Barber's, and a well-known Republican operative, according to former Defense Department lawyer Diane Beaver. Another half-million went to media consultant Mitch Semel, for web work.

Worse still, in the eyes of many, was that Barber used the Stars & Stripes newspaper as a kind of money-laundering service, to pay Davis and Semel. The paper is partially financed by the Pentagon, and was part of Barber's American Forces Information Service. But* Stripes *has a decades-long tradition of fierce independence. Editors were galled to discover that Barber's office was pouring money into the paper's coffers — and then paying Davis and Semel out of accounts with less congressional oversight and fewer spending restrictions than typical

Defense Department funds.

"Readers need to know that the newspaper they trust to provide them independent, accurate, credible news is not in any way operating in a compromised position," managing editor Doug Clawson said. "If, in fact, Stripes was helping handle public relations work on behalf of a political appointee it doesn’t look good, and could taint the editorial department, and thereby the readers’ perceptions of this newspaper’s mission."

The Department of Defense's Inspector General had already launched investigations into financial wrongdoing and organizational mismanagement at America Supports You, the Armed Forces Information Service, and the

Defense' Secretary's public affairs office. In October 2007, the

Inspector General widened its review to include Stars & Stripes.

Barber is no longer at the Pentagon. Two months ago, she abruptly resigned as the heads of both American Supports You and of Defense Media Activity, the new organization that oversees* Stars & Stripes*.

America Supports You has been moved under the Defense Department's community relations office. "A lot of the big issues have been addressed — how we do contracting, how we use appropriated funds," one member of that office tells Danger Room. "We're back in the comfort zone, running a program in the way that the government is used to running it."

Photo: DoD