Iraq ordered to pay murdered U.S. contractor's firm $88 million

A judge said Iraq failed to pay for reconstruction work by Wye Oak Technology, whose president was assassinated near Baghdad in 2004.

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By Alex Johnson and Ken Dilanian

A federal judge on Tuesday ordered the government of Iraq to pay more than $89 million to a Pennsylvania military contractor whose president was assassinated near Baghdad in 2004.

U.S. District Judge Royce Lamberth said in a 107-page ruling that Iraq's Defense Ministry breached its contract with Wye Oak Technology Inc. of Pennsylvania by failing to pay the company in late 2004.

In 2004, Wye Oak's president, Dale Stoffel of Monongahela, Pennsylvania, complained to the U.S. Defense Department that Iraq had failed to pay almost $21 million it owed the company for refurbishing old military equipment as part of U.S. reconstruction efforts in Iraq. He alleged that the Defense Ministry was siphoning off the money it owed to Wye Oak as part of a kickback scheme.

In December 2004, Stoffel, who was 43, was shot to death along with a colleague, Joseph Wemple, 49, near an Iraqi military base north of Baghdad.

At the time, Iraq blamed anti-government insurgents for the attack, while the FBI opened an investigation into whether Iraq orchestrated it in retaliation for Stoffel's allegations. The murders officially remain unsolved, however.

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At a bench trial last year, Lamberth found Iraq to be in breach of contract, and on Tuesday he ordered the country to pay the unpaid $21 million and more than $68 million in lost profits to Wye Oak Technology, along with unspecified attorneys fees and 5 percent annual interest back to 2009, when the company sued.

Lamberth noted that the Federal Sovereign Immunities Act limited the ability to sue a foreign government in U.S. courts, but he pointed to an exception in the 1976 law that allows litigation if the case involves commercial activity "that causes a direct effect in the United States."

In a statement, attorneys for Wye Oak said the contractor was "very gratified" and felt "vindicated" by the judge's decision.

In court documents, Lamberth specifically noted the high marks that Army Lt. Gen. David Petraeus, then the head of the multinational security transition project in Iraq, had given Wye Oak for its work.

"The performance of Wye Oak was quite good and appeared quite competent," Petraeus testified last year.

"I mean, the problem was that the Iraqis hadn't paid him. And that was a fairly big deal, as you might imagine, and something that I took up repeatedly with the Ministry of Defense," he said.

Lamberth also quoted extensively from a letter Petraeus sent to Stoffel's widow a week after Stoffel was killed, in which Petraeus called him "an irreplaceable member of our team."

"Only months ago the Iraqi Armed Forces had no mechanized force; now, there are already many operational tanks and armored vehicles, and Iraq is on track to have a battalion's worth of soldiers trained and equipped prior to January's elections," Petraeus wrote.

"None of this would have been possible without your husband's visionary leadership, relentless drive, and complete dedication," he wrote.