Afghanistan jet fuel deals generate thick fog of mystery

BISHKEK, Kyrgyzstan -- When U.S. troops moved into Afghanistan in 2001, Douglas Edelman already had a foothold in Central Asia. He had opened a bar and hamburger joint in this capital of Kyrgyzstan, the crumbling, outer rim of the former Soviet empire.

Today, his fortunes turbo-charged by war, the 58-year-old Californian, along with a young Kyrgyz partner, controls a multinational jet fuel business that has received Pentagon contracts worth nearly $3 billion, according to current and former employees.

The contracts have kept U.S. warplanes flying over Afghanistan and helped the Pentagon skirt increasingly hazardous supply routes through Pakistan. But nurtured by retired U.S. military and intelligence officers, the jet fuel deals have generated a thick fog of mystery that has flummoxed competitors and the White House.

Congressional investigators have spent six months digging into single-source Pentagon contracts, the possibly illegal diversion of Russian fuel and Kyrgyz claims of back-room deals, which have soured ties with a crucial U.S. ally.

The below-the-radar rise of Mina Corp. and Red Star Enterprises -- whose ownership, operations and even office locations are shrouded in secrecy -- shows how nearly a decade of war has not only boosted the bottom line of corporate behemoths but also enriched unknown upstarts.

In just eight years, Mina and Red Star -- both registered in Gibraltar and run by the same people -- have come from nowhere to become a key link in the U.S. military's supply chain. They have beaten out established rivals to supply nearly a billion gallons of jet fuel to a U.S. Air Force base in Kyrgyzstan, a vital staging post for the Afghan conflict, and also to American warplanes at Bagram air base in Afghanistan.

Without their supplies, the U.S. war effort would quickly grind to a halt. All American troops enter and leave Afghanistan on U.S. transport planes fueled by Mina in Kyrgyzstan. The firm also provides jet fuel for a fleet of C-135 aero-tankers that perform more than a third of all in-flight refueling operations over Afghanistan. Vast underground storage tanks built by Red Star at Bagram hold five Olympic-size swimming pools worth of jet fuel, the biggest such facility by far in the war zone.

The companies themselves, however, are largely invisible. In dealings with the Pentagon, they have used addresses in Toronto, London and Gibraltar, each apparently little more than a mail drop. Mr. Edelman, the former bar owner, who now lives in London, is so elusive that even congressional investigators probing the jet fuel deals have not managed to talk to him. He did not comply with a July subpoena from the House Subcommittee on National Security and Foreign Affairs, according to people close to the probe.

Keeping a low profile, said Mr. Edelman's 35-year-old Kyrgyz partner, Erkin Bekbolotov, in his first media interview, is "the key to success in countries where there is hostility to the U.S." Mina and Red Star, said Mr. Bekbolotov, who did meet with the subcommittee, "have done a fantastic job."

He declined to comment on ownership or earnings, saying only that the companies make "a reasonable profit." Mr. Edelman, he added, is merely a "part-time adviser."

Yet people familiar with the business say Mr. Edelman, originally from Stockton, Calif., has a controlling interest in at least half of Mina and Red Star. Mr. Bekbolotov owns the rest. The companies said Mr. Edelman was not available for an interview.

Bewildered -- and also jealous -- competitors whisper that the companies are perhaps the Afghan conflict's version of Air America, a nominally private airline run covertly by the Central Intelligence Agency during the Vietnam War.

"Everyone thinks I'm CIA," said Mr. Bekbolotov, noting that "this image has been very helpful" as it curbs "harassment by Kyrgyz officials or people close to them." But Mr. Bekbolotov insists it is not true.

After poring over 250,000 pages of e-mails, contracts and other documents relating to the jet fuel deals, congressional investigators have not uncovered credible evidence of CIA skullduggery or corruption. But they have found serious flaws in a Pentagon contracting system.

"The Pentagon and State Department ignored widespread Kyrgyz public perceptions of contract corruption engendered by a fundamental lack of transparency," said Rep. John Tierney, D-Mass., chairman of the subcommittee that conducted the probe. "Supplying vast quantities of fuel is an extremely sensitive endeavor with significant political, diplomatic and geopolitical ramifications. It is not merely a logistics matter."

The White House, alarmed by the unintended consequences of the fuel deals, is pushing for greater transparency, said a senior administration official. "There has been a giant fight with [U.S. Central Command] over this," said the official, who asked not to be named because of the sensitivity of the matter.

When Kyrgyzstan's authoritarian president, Murmanbek Bakiyev, was overthrown in April, U.S. officials who rushed to Bishkek to show support for his successor received a tongue-lashing from the new Kyrgyz government, which claimed that opaque jet fuel deals had enriched the deposed regime. Kyrgyzstan has oscillated over whether to kick the Americans off its base, and officials there say the behavior of Red Star and Mina has done nothing to help the U.S. cause.

Speaking in an interview shortly before a September meeting with President Barack Obama, new Kyrgyz President Roza Otunbayeva demanded that the Pentagon stop using private contractors and work through a state-run Kyrgyz venture instead.

Accusations of wrongdoing, said Chuck Squires, a retired U.S. military intelligence officer and director of operations for the business, "are all garbage. This is a legitimate company. Always has been."

At the center of Mina and Red Star's dealings with the Pentagon is Mr. Squires, a genial Russian-speaking retired lieutenant colonel who spent 27 years in the U.S. Army, mostly in intelligence. He ended his career as a Central Asia adviser to Central Command, which now runs U.S. military operations in Afghanistan and also Kyrgyzstan.

First published on November 1, 2010 at 12:00 am