Rezko’s $50 mil. Iraq deal

IRAQ CON­TRACT Gov’s staff of­fered to let firm train 150 power-plant guards in west­ern Illi­nois, but now plan’s in limbo

Chicago Sun-Times - - METRO - BY TIM NO­VAK AND CHRIS FUSCO

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 (DIll.) 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.”

Com­pan­ion chief ex­ec­u­tive Daniel T. Fraw­ley (left) sought help from Gov. Blago­je­vich.

NAM Y. HUH~AP

For­mer top fund-raiser Tony Rezko leaves the Dirk­sen Fed­eral Build­ing af­ter his ar­raign­ment in Oc­to­ber 2006. Sources say he was an owner of Com­pan­ion Se­cu­rity.

HINS­DALE PO­LICE, AP

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