Iraq’s failing F-16 program highlights corruption at Balad Airbase

Iraq’s vaunted F-16 fighter jet program has fallen into such disarray that pilots can no longer fly combat missions against the self-proclaimed Islamic State (IS) group – a collapse in military capacity that highlights a broader degradation of the country's security relationship with the U.S. and the effects of pervasive corruption.

In over a dozen interviews with Iraq Oil Report, Iraqi officials and U.S. contractors detailed several criminal schemes and failures of oversight at the Balad Airbase, north of Baghdad, where the jets are housed. Their allegations raise serious questions about the working practices of both the Iraqi Air Force and Sallyport Global Services, the U.S. contractor responsible for providing the base with food, sleeping quarters, security, and fuel supplies.

“Right now the Iraqi Air Force has zero capability for combat,” said one Iraqi military officer. A second Iraqi military officer predicted the planes will not even be capable of training flights within two months because of inadequate maintenance.

While the counter-insurgency campaign against IS militants has not depended on the Iraqi F-16s — they conducted fewer than 10 airstrikes in the first half of this year, according to a U.S. official — the deterioration of the program is a symptom of the kind of corruption and dysfunction that hollowed out the Iraqi military and left it incapable of preventing IS from conquering one-third of the country in 2014. The grounded jets also serve as a prime example of expensive U.S. military assistance that has failed to create meaningful Iraqi military capacity.

The multi-billion-dollar purchase of 36 jets from the U.S. in 2011 appeared to signal a new era of Iraq-U.S. security cooperation under former Iraqi Prime Minister Nouri al-Maliki. But that relationship has been on rocky ground for years, and nearly fell apart entirely after the U.S. assassination of Iranian Gen. Qassim Soleimani and Iraqi paramilitary commander Abu Mahdi al-Mohandis in Baghdad this January.

The effect on the F-16 program has been acute. Engineers from U.S. company Lockheed Martin were contracted to maintain the fleet of fighter jets as part of the F-16 purchase agreement – a deal worth about $300 million per year – but withdrew when U.S. personnel and contractors in Iraq came under increasing attacks from Iran-backed militia groups following the double assassination.

Without Lockheed's expertise on site, the fleet cannot receive proper maintenance, according to two Iraqi military officers: only five jets are currently able to fly.

The lack of U.S. maintenance isn't the only reason so many F-16s are grounded. Balad Airbase has become a major center of corruption, according to Iraqi military personnel, current and former Sallyport officials, outside observers, leaked documents, and open-source information, which all combine to paint a picture of poor accountability, lack of oversight, and cronyism, creating a dangerous and dysfunctional working environment.

"Balad Airbase is like a big, gigantic cake and everyone in Iraq is standing around with a fork," said one contractor associated with the base.

In a series of interviews with Iraq Oil Report, three people with knowledge of the inner workings of the base and the F-16 program independently alleged Iraqi companies had paid bribes to Sallyport officials in order to win sub-contracts. Two Iraqi military officers also alleged that military leaders are fabricating records of training flights that don't actually happen, in order to cover up their embezzling of unused jet fuel; and, they alleged that Iraqi engineers are forging waivers to continue using jet engine parts that are overdue to be repaired or replaced, despite serious risks to the life of the pilots.

Most of the people bringing forward allegations of misconduct said they were speaking to Iraq Oil Report because the problems at Balad have put them or their colleagues in danger. They requested anonymity because they feared reprisal from corrupt or compromised superiors who have profit motives to tolerate or perpetuate the dysfunction.

Iraq Oil Report contacted the Ministry of Defense, an Iraqi Air Force spokesperson, and the Iraqi general in charge of Balad, but all declined to comment for this article.

In response to a list of allegations detailed in this article, Sallyport Chief Operating Officer C. D. Moore provided a statement citing the company's "long and successful history of supporting the Iraqi Air Force and its contributions to the security of the Iraqi people."

"We are proud of the excellent and important work our employees on Balad perform under difficult circumstances, and we hold our employees and business partners to the highest standards," Moore said. "Our culture of always doing the right thing starts at the top, and it is underpinned by significant investments in robust compliance and procurement teams, tools, and disciplined processes. Our commitment to integrity is clear and clearly communicated: anyone unable to abide by our standards is not welcome in our company.”

Iraq's Ministry of Defense has issued recent statements denying major problems with the F-16 program.

"The F-16 jets continue to fly for training and combat missions even after the withdrawal of the American companies," the ministry said in a statement posted on Facebook on July 10, claiming it was "relying on Iraqi expertise that has the proven ability to maintain these modern jets, having completed technical workshops at different levels. The Hawks of the Sky, the 9th Fleet, confirm that they trust the Iraqi expertise in terms of preparing their jets.”

Crippled fleet

Balad Air Base, about 80 kilometers north of Baghdad, is home to thousands staff working for the Iraqi Air Force, Sallyport, and other contractors, in support of the F-16 program. The base has been under Iraqi control since 2011, and Sallyport provides basic living services, construction, security and airfield management in a deal worth around $375 million to $400 million per year.

One warning sign of the problems at Balad came on July 1, when maintenance crews mistakenly left a tool inside an F-16 engine before a training flight.

"A pilot was flying and he heard a bang," said an Iraqi military officer, who said the tool had been sucked into the engine chamber. "He managed to get back [to base], but the engine was destroyed and he almost crashed."

The incident was confirmed by a second Iraqi military officer. Iraq Oil Report has also seen a number of photographs showing the damaged engine, which both officers said would cost millions of dollars to fix.

The two officers said the July 1 accident reflected a broader culture of negligence at Balad, which has increasingly afflicted the maintenance of the F-16s since the departure of Lockheed Martin in early January.

"The mechanics aren't safe," said one of the military officers. "They're working on the engines despite not having the expertise, and they're breaking them."

One part of the problem, according to both officers, is that Iraqi mechanics don't have access to spare parts. Instead, they are coming under pressure from superiors to sign waivers enabling them to keep using parts that ought to be replaced.

"You can't just sign waivers for parts that expire," one officer said. "The pilots are scared and don't want to fly."

Several officials said the base has recently averaged just two F-16 training flights per day, down from 12 to 18 per day when Lockheed Martin was present.

The fleet "is not doing combat anymore,” said one Iraqi military officer – a claim that was confirmed by other Iraqi officers and by a U.S. official, who said the most recent F-16 combat mission was in June.

The U.S. official also confirmed that the number of operational F-16s is "down in the 20 percent range," and said that Lockheed contractors are now scheduled to return to Iraq in September.

Many people familiar with the maintenance problems said they were being covered up because corruption schemes at Balad created incentives for military leaders and contractors to maintain an illusion that the F-16 program is functioning reasonably well.

Stealing fuel

The two Iraqi military officers described a scheme in which Air Force officials are fabricating log books to inflate the number of training flights, in order to justify the ongoing supply of jet fuel. Only a fraction of the fuel is used, however, and the rest is being smuggled.

"They are stealing the fuel," one of the officers said, estimating the ringleaders of the scheme are taking between $250,000 and $500,000 worth of fuel per month.

Both officers said it was common to see fuel trucks arrive at Balad and then leave so quickly that they could not have possibly pumped their cargo into storage tanks. And the theft is becoming more brazen.

"Everyone is talking about it on the base," one of the Iraqi military officers said. "[Staff] see the trucks leave regularly, earlier than usual now. They take the fuel before it even gets on base."

The two Iraqi military officers said they do not have hard evidence to prove who is masterminding the scheme, but they said the fuel smuggling was so obvious it could not possibly happen without the knowledge of the head of Balad Airbase, Gen. Sahi Sarhan al-Amri; the commander of the Air Force, Gen. Shabab Jahed; and Sallyport, which manages the fuel purchases.

"Right now it's a mafia," said the second Iraqi military officer. "You can't get on the base unless you pay your dues. This is the biggest money hole in Iraq."

A contractor associated with the base said "the new government is seriously looking at potentially replacing the [base] commander because he is constantly trying to improperly pressure subcontractors."

The allegations of large-scale fuel theft were corroborated by a former Sallyport employee at Balad, who said the company had a years-long history of mismanaging fuel purchases, including failing to reconcile discrepancies between the volumes of fuel purchased and actually delivered.

A current Sallyport employee said the company does not follow procedures for checking the correct quantity and quality of fuel delivered because "Sallyport management is paid off to close their eyes.”

When presented with this specific claim of employees accepting bribes, Sallyport did not confirm or deny it. But Moore, the company's COO, did say the company takes such allegations seriously.

"Sallyport will not participate in any improper scheme, and we refuse to turn a blind eye to misconduct by any party," Moore said in a written statement. "If we were to discover that any individual or entity with whom we had an association failed to meet this same standard, we would cease doing business with them."

The two military officers and the former Sallyport official said they had no evidence to prove definitively that Sallyport was an active conspirator in stealing jet fuel, but they all said the company was, at a minimum, guilty of neglecting to provide a rudimentary level of oversight that would prevent such theft.

“Everything was possible because they [Sallyport] weren't following standard operating procedures," the former employee said. "If they are not corrupt, then they are incompetent and not following procedures. And there is a profit motive. These are the factors at play."

Pervasive corruption

Balad Airbase appears to be enmeshed in so much corruption that it's difficult for companies to work there without bending the rules, relaxing compliance standards, and looking the other way in response to likely crimes.

For example, one of Sallyport's fuel suppliers is an Iraqi company called Medina al-Qabab, according to the current and former Sallyport officials, the two Iraqi military officers, and internal Sallyport documents obtained by Iraq Oil Report. Medina al-Qabab is allegedly affiliated with paramilitary units that control the road between Baghdad and Balad Airbase.

"If you don't give them the contract, they block the road," one Iraqi military officer said.

According to the officer, the company makes an outsize profit on the contract because, rather than buy fuel from government refineries — as it is supposed to do — the company allegedly buys fuel "on the black market," including from paramilitary groups involved in smuggling.

"They buy it from anywhere, this cheap stuff," the officer said. "They market it as good stuff, and then they get the full value.”

Medina al-Qabab did not initially respond to requests for comment in the two weeks before this story was published. After this story was published, Ali al-Bandar, the executive manager of the company, gave an interview to Iraq Oil Report in which he denied Medina al-Qabab engaged in any wrongdoing, specifically rejecting the allegations of trading in black-market fuel.

The true origin of Medina al-Qabab's fuel is impossible to prove, according to current and former Sallyport employees, because Sallyport has neglected to follow procedures designed to ensure the fuel meets quality standards and to prevent the unwitting purchase of smuggled fuel.

“[Sallyport] didn’t check the refinery source origin certificates or the [fuel truck] seals," the former Sallyport employee said, adding that a company like Medina al-Qabab could make a profit of 40 to 50 cents per liter by sourcing fuel from the black market.

The former Sallyport employee recalled procurement staff members sending multiple emails to superiors insisting on refinery source origin certificates, but management told the staff to stay out of it.

"I think most people are really ethical," the former employee said. "But you only need to have a couple of people in key positions in a company that just doesn’t care."

Bandar, of Medina al-Qabab, said his company had source origin certificates for all of its fuel deliveries to Balad. But the current and former Sallyport employees said that such paperwork was rendered virtually meaningless because their company also did not check the seals that are put on tanker trucks when they load at government refineries: an unbroken seal can help prove to the recipient that the driver has not swapped out high-quality fuel for black-market product.

"It comes down to the seals," the former Sallyport employee said. "If you’re not doing the seals at the time [of unloading the fuel] then everything — all possibilities now exist."

As it turned a blind eye to the origins of the fuel it was receiving, Sallyport also appears to have failed to ensure it was receiving the proper quantities.

Under standard procedures, staff at Balad should have double-checked the volume of each fuel delivery by putting a measuring stick into each tanker truck. But according to an internal Sallyport audit of fuel deliveries covering the period of October to December 2018, which was obtained by Iraq Oil Report, the company recorded a suspiciously high number of identical meter readings when taking delivery of fuel from an Iraqi company called Nesmet al-Shimal.

“That tells you they were not using the meter. And that is a guarantee,” the former Sallyport employee said. “You can’t statistically hit those numbers. You can’t say, 'Wow, it just randomly hits the same number over and over and over and over again.' That is a dead giveaway that they are not using the meter."

During the period of the audit, almost 43,000 liters of fuel unaccounted for between the amount reportedly sent by the refinery and the amount purportedly received by Sallyport.

"It is likely Nesmet drivers realized they were not being asked to verify delivery quantities or sign delivery notes," the internal Sallyport audit said. "Furthermore, they most likely realized Sallyport did not have flow meters so accurate measurements would be impossible. They started siphoning within the gauge stick method’s margin of error. When they were not discovered they progressed to higher amounts ultimately siphoning a thousand or more per truck."

Three months later, in March 2019, Sallyport management strong-armed staff into signing off on an order of 400,000 liters of jet fuel from Nesmet al-Shimal, even though there was no purchase order, the base already had enough jet fuel, and the required U.S. government due diligence system checks had not taken place, according to the former Sallyport employee. Iraq Oil Report obtained internal Sallyport documents that corroborate this claim.

"There was no urgency for that fuel," said the former Sallyport employee, but one manager "kept saying he didn’t care about the procurement process — he needed the fuel."

In a statement to Iraq Oil Report, Sallyport defended its subcontracting practices.

"Vendors are selected for compliance, reliability, and best value, in accordance with U.S. government processes," the Sallyport statement said. "We further note that, as a contractor to the United States government, all of Sallyport’s activities under this FMS‐funded program are subject to constant and rigorous oversight and audit by the U.S. Air Force."

One of the Iraqi military officers said it was especially clear that Sallyport was not following proper procedures because of how differently everyone behaved when there was an inspection.

"They only [follow proper procedures] when the inspection is going on, and when someone is watching them," the officer said. "Then the vendor brings good fuel onto the base. This is a system they have set up."

Mission impossible

The degradation of the F-16 fleet raises questions as to whether the program ever had a chance of achieving the strategic goals of either Iraq or the U.S.

In the negotiation phase of the F-16 sale, the U.S Defense Department's Defense Security Cooperation Agency (DSCA) argued that "the proposed sale will contribute to the foreign policy and national security objectives of the United States by enhancing the capability of Iraq's Air Force. The proposed aircraft and accompanying weapon systems will greatly enhance Iraq’s interoperability with the U.S. and other NATO nations, making it a more valuable partner in an important area of the world, as well as supporting Iraq’s legitimate need for its own self-defense," according to a 2011 arms sale notification.

But the DSCA appears to have emphasized the potential benefits of the program without contemplating any serious obstacles in implementing it.

"The country will have no difficulty absorbing these aircraft into its armed forces," the DSCA wrote.

Iraq Oil Report contacted the U.S. Defense Department’s Office of Security Cooperation - Iraq, which manages Foreign Military Sales (FMS) such as the F-16 purchase program and the related Lockheed Martin contract, and all queries were referred to the U.S. Embassy in Baghdad, which houses the OSC-I. The embassy declined to comment.

In retrospect, one obvious problem is that F-16 maintenance remains dependent on the physical presence of a contractor, Lockheed Martin, that evidently has limited tolerance for security risks – meaning the Iraqi Air Force is likely to lose its most advanced weapons in the volatile times when they are most needed.

"Unfortunately, the ISF [Iraqi security forces] never developed a culture of maintenance responsibility or the maintenance personnel required to keep their equipment in working order," said one U.S. official, adding that the F-16s are not the only weapons system with such problems. "They have relied heavily on U.S. contractors and U.S. military maintainers to keep their equipment going."

Another major problem appears to be the sheer expense of the F-16 maintenance. In an environment rife with corruption, any program requiring hundreds of millions of dollars' worth of subcontracting and procurement each year is likely to create opportunities for graft and misconduct.

Sallyport, for example, has run into trouble in Iraq before.

In 2018, the parent company of Sallyport, Caliburn International, filed a disclosure to the U.S. Securities and Exchange Commission (SEC) that acknowledged it had alerted the Justice Department of possible violations of the Foreign Corrupt Practices Act (FCPA) associated with Sallyport's partnership with an Iraqi company, Afaq, "relating to alleged promises made by Afaq to pay Iraqi government officials in exchange for those officials naming Sallyport as a provider of services at the Balad Air Base."

According to Zack Kopplin of the Government Accountability Project, who has investigated Sallyport's activities in Iraq extensively, Afaq is closely connected to former Prime Minister Maliki.

"Sallyport has engaged outside counsel and has cooperated, and continues to cooperate, with the [Justice Department's] investigation, which also considers whether Sallyport’s former management knew, or should have known, of the alleged promise of payments by Afaq to Iraqi government officials," the Caliburn disclosure said.

The current Sallyport employee said that, even if the company does investigate some egregious misconduct, it still has overwhelming incentives to turn a blind eye to corruption.

"Keep in mind, it is an Iraqi foreign military sales contract, so if the Iraqis aren't happy with Sallyport, then Sallyport runs the risk of losing the entire contract," the employee said.

The lack of accountability appears to be the root of many other problems. One contractor at Balad said the network of corruption was not the result of an elaborate conspiracy, but rather the natural product of powerful actors realizing nobody has any incentive to stop them from stealing.

"They're not working with each other," the contractor said. "They're just not working to expose each other, because they all know they are on the take. They are all cheating. So when one person sees someone cheating, they think, 'Well, why don't I get mine? Because what are you going to do — turn me in?'"

UPDATE: This story has been updated to reflect comments by the executive manager of Medina al-Qabab, which were provided after the story was first published.