Tuesday, September 20, 2011

The spoils of war; A Baghdad story plays out in Canadian courts

(Richard Galustian and a SkyLink employee Mike Douglas in happier days)


(The following story is from 2009. It was found on the cutting room floor. Note, Ontario court ruled against Galustian who appealed. Galustian won one appeal in US court. He contacted me recently and said he was still fighting the case.)

By Jorge Barrera (2009)
the cutting room floor
A former top U.S. official involved with the reconstruction of Iraq and the subsidiary of a Canadian firm operating in that country were the subject of a probe by the U.S. military’s major corruption fraud unit, according to allegations contained in an Ontario lawsuit launched by a British security contractor.

Richard Galustian, a security contractor who worked for the U.S. government in Iraq, launched the multi-million dollar lawsuit against SkyLink Group of Companies, senior company officers, subsidiaries of the firm, a former employee and retired Col. John Holly, the former director of logistics in Iraq for the U.S. Army Corp of Engineers.

Galustian alleges in an affidavit filed in support of the lawsuit that Holly and agents acting for SkyLink Group were involved in the creation and dissemination of a fake Iraqi warrant for Galustian’s arrest.

The affidavit alleges that the warrant was used to force him into dropping a demand for a 10 per cent stake in SkyLink Arabia Galustian claims he was promised. The warrant put Galustian’s life in danger in Iraq, wrecked his business reputation and drove him out of the country, the affidavit alleges.

SkyLink Arabia was a subsidiary of Toronto-based SkyLink Aviation, which was part of SkyLink Group of Companies, according to court documents filed as part of the lawsuit.

SkyLink Aviation and SkyLink Arabia provide transportation services with operational expertise in high risk regions.

SkyLink Aviation landed a $36 million contract last year to provide six Mi8 helicopters for use by the Canadian military in Afghanistan.

Galustian has also launched a defamation lawsuit in the U.S. against Lawrence Peter, the director of the Private Security Company Association of Iraq (PSCAI), over the distribution of the arrest warrant to the association’s members, military officials and diplomats in Iraq.

The meeting with the FBI

Galustian, owner of ISI International, said in an interview he discussed the relationship between Holly and SkyLink Arabia for “several hours” with investigators from the F.B.I. and the military during an August 2008 encounter in London. He would not reveal details on the record, but said the investigators were interested in dealings between Holly and SkyLink Arabia.

“They asked about Holly and SkyLink,” said Galustian in an interview with the cutting room floor.

The investigators also discussed the 16-page affidavit which was filed last July with the Ontario Superior Court as part of the ongoing, multi-million dollar lawsuit seeking damages for slander, libel, breach of fiduciary duty and conspiracy among other claims, Galustian said. The affidavit said the allegations made by Galustian in his U.S. court fight drew the attention of federal and military investigators.

Galustian was contacted last summer by Scott R. Wilk, special agent in charge of the Middle East Major Fraud Field Office, who asked him to meet and discuss Holly and firms involved in the reconstruction of Iraq, the affidavit said. Wilk was “investigating the PSCAI, certain PSCAI members and (John) Holly,” Galustian states in the affidavit.

Galustian filed a paper copy of a July 6, 2008, email from Wilk with the court.

“I understand you have a ongoing lawsuit concerning PSCAI and John Holley. I’m the Special Agent in Charge of the Major Corruption Fraud Unit for the Middle East and I would like to see if I could meet you in Dubai to set up a meeting to discuss information regarding PSCAI and members of that organization as well as Holley (sic),” wrote Wilk at 1:20 p.m. from email address scott.wilk@iraq.centcom.mil. The subject line of the email read “RE: Meeting.”

Galustian said he never met with Wilk, but the London meeting stemmed from Wilk’s initial invitation.

Wilk did not respond to a request for comment.

The F.B.I. agent involved in the discussion with Galustian did not respond to requests for comment.

None of the allegations have been proven in court.

Holly resigned from his post on Sept. 3, 2008, said U.S. Army Corp of Engineers spokesperson Suzanne Fournier.

No statement of defence has been filed by the defendants in response to the affidavit.

“No one has admitted anything in the public record,” said Arthur Hamilton, a lawyer with Toronto firm Cassels Brock and Blackwell who is representing SkyLink Group. “There is no concession to anything that has been said so far.”

A lawyer who has acted for Holly, Phil Tunley from Toronto firm Stockwoods LLP Barristers, refused to comment.

A statement of defence filed by SkyLink Group in response to Galustian’s original 2006 lawsuit claims no deal was ever made to hand Galustian 10 per cent of SkyLink Arabia.

SkyLink Group, which said it was the “parent company” of SkyLink Arabia, also claimed it had no “assets, conducts no operational activities” and “is not involved in any business activities in the Middle East,” according to the 2006 statement of defence.


Galustian’s claims were called “fantastical... far-fetched” and “a complete fabrication,” in a memorandum filed last year by Peter as part of his defence against the U.S. lawsuit filed by Galustian with the U.S. District Court, Eastern Virginia District.

That lawsuit is currently on appeal after the federal judge ruled Iraq would be a more appropriate venue for the case.

The arrest warrant

What began as a Canadian lawsuit over an alleged broken promise for 10 per cent of SkyLink Arabia in 2006 ballooned into a two country legal battle after an Iraqi warrant for Galustian’s arrest surfaced in 2007.

Galustian claims his lawyer, George Karayannides, a Toronto partner with Heenan Blaikie, received a copy of the warrant on Jan. 30, 2007, from a SkyLink Group lawyer. While the Jan. 25 dated warrant — a copy of the original and a translation were filed in court — made no mention of a charge, Galustian alleges that the SkyLink Group lawyer informed Karayannides that Galustian was wanted on “allegations of terrorism.”

“I was incensed by this outrageous and obviously false warrant,” said Galustian, in the affidavit.

The British Foreign Office investigated the warrant and interviewed the judge whose name was affixed to the document. The judge said the signature was not his, that he was not working that day, and that “he suspected that the police were involved” in its creation because the court stamp used on the document was genuine.

Galustian alleges in the affidavit that a “sworn translator” in Baghdad by the name of Riadh Al-Hasan said that he received the original stamped warrant for translation from a SkyLink Arabia employee.

A Baghdad consultant for SkyLink Group, acting on a request from a firm employee, bribed “or coerced” an Iraqi police officer into forging the warrant, Galustian alleges in his affidavit. The warrant was then handed to Holly who passed it on to Peter on Feb. 6, 2007, for distribution, the affidavit alleges.

Holly was “aware that the warrant was a forgery,” but acted because he had been promised Galustian’s 10 per cent interest in SkyLink Arabia as part of a side deal with parent company SkyLink Group, the affidavit alleges.

In an affidavit sworn by Holly and filed with the federal court in Virginia, the former Marine said he never had “any business or ownership interest in SkyLink Arabia or any private security company.” Holly also claims he played no role in the awarding of contracts in Iraq.

Holly does admit he passed the warrant to Peter after it was reviewed by a U.S. Army Corp of Engineers lawyer “because it potentially affected the operations of private security companies in Iraq.”

When contacted by the cutting room floor, an employee with SkyLink Arabia said his firm was part of SkyLink Aviation, before denying it a short while later once he learned he was speaking with a journalist.

U.S. private equity firm Apollo Investment is currently finishing off a deal to purchase majority shares in SkyLink Aviation from SkyLink Group.

Apollo would not comment on the lawsuit or its deal for SkyLink Aviation. The deal, however, was confirmed by a spokesperson for SkyLink Group and the Department of Defence, which received a letter last November advising the department of the deal.

The impact of the Apollo deal on the lawsuit remains unclear.

The New York Times reported in February that U.S. federal authorities were investigating senior American military officers as part of a probe into graft around the $124 billion reconstruction of Iraq. The Times reported that investigators were examining the activities of two senior military officials — who were named — and reviewing information offered by an American arms dealer and contractor who was killed in Iraq in 2004.

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