How a Bar Owner in Kyrgyzstan Ended up with $7 Billion in U.S. Defense Contracts

Seems like every day we hear about another corrupt civil servant. Corrupt banker, businessman, athlete. Seems that behind every success story of the last ten years, a scandal is exploding. We’re facing a rising sea of corruption and we wonder, who will be the next to be drowned? Who will be saved?

—Jack McCoy

Every now and then, we check in with the latest from the International Consortium of Investigative Journalists (ICIJ), the dogged investigators into the world’s oligarchs and the many ways they hide their money. On Wednesday, we learned about this jamoke, who was recently convicted of massive financial crimes, and his case is a doozy.

For nearly two decades, the California-born businessman sat atop a near-invisible corporate empire that received more than $7 billion in defense contracts to supply fuel and services to the U.S. military. [Douglas] Edelman used his newfound wealth to fund investments across the globe—from Hollywood movies to an Iraqi newspaper to an MTV franchise in eastern Europe. He also maintained a veil of secrecy over his personal stake in two defense contracting firms and in his subsequent investments, saying at one point in a recorded conversation that he spent “all of my time trying to make sure my name isn’t [on] anything,” according to court documents.

In court on Wednesday, Edelman, 73, pleaded guilty to creating a fake paper trail and making false statements that his 50% stake in the defense firms instead belonged to his French wife, Delphine le Dain. Because le Dain is not a U.S. citizen and does not live in the U.S., she was not liable to pay U.S. taxes on what the indictment stated was over $350 million in income from the business. Edelman pleaded guilty to 10 counts of the 30-count indictment, and could still face prosecution on charges related to tax evasion from 2013 to 2020. The court will determine later this year the amount of income on which Edelman evaded taxes, which will play a key role in determining his prison sentence.

Tell me again that the Pentagon doesn’t need to be audited up to its eyeballs.

Described by a friend as a “happy bohemian”—someone who liked jazz, parties, and the occasional puff of marijuana—Edelman went from a small-time fuel trader and bar owner in Kyrgyzstan’s capital of Bishkek to a fabulously wealthy defense contractor, profiting off the windfall that accompanied the U.S. military response to the Sept. 11, 2001, attacks. After the U.S. Air Force transformed Bishkek’s international airport into a critical hub for that year’s invasion of Afghanistan, Edelman and his Kyrgyz partner found themselves delivering 500,000 gallons per day of jet fuel to the U.S. military.

This guy goes from dope-smoking bar owner in Kazakhstan to $350 million in undeclared Pentagon income and nobody notices? It’s the American dream, or at least the Kazakh one. This guy makes Fat Leonard look like a crooked commissioner in Middlesex County.

Leaked documents show that the prominent Panamanian law firm Alemán, Cordero, Galindo & Lee, known as Alcogal, sent letters to other law firms in 2010, just as a congressional investigation into Edelman’s business was heating up, identifying le Dain and her children as the ultimate beneficiaries of a trust that held his investments. The firm stressed in its letters that the information was “strictly personal and confidential” and should be kept separate from the company’s corporate records.

A few months after congressional investigators released their report in December 2010, which was prominently covered in The Washington Post and elsewhere, Alcogal dropped Edelman’s offshore network as a client. In response, another of Edelman’s representatives angrily wrote to the law firm that he was surprised “that you believe to [sic] what is written on the Internet” and that the entire episode was caused by “a journalist who did not have any evidence.”

Hey, I resemble that remark.

U.S. prosecutors drew on roughly two million documents about Edelman’s corporate empire, seized from jurisdictions around the world. In 2020, British police raided Edelman’s $43 million mansion in London’s Kensington neighborhood. In 2023, according to leaked documents, the Cypriot police demanded documents relating to Edelman’s businesses—including a company previously owned with a godson of King Charles—from a Nicosia-based law firm.The Pentagon did not know who owned Edelman’s firms, Mina Corp. and Red Star Enterprises, until it was revealed by the congressional investigation. If it had been required to gather this information, Warren said, U.S. tax authorities would have been able to identify his tax evasion much sooner.

Congress adopted a provision in 2021 requiring the collection of this information. In the months following the passage of the law, the U.S. government bodies in charge of establishing federal acquisitions rules ordered two reports on how to implement the 2021 law. However, both reports have been languishing unfinished for more than four years.

Languishing. Could that actually mean ignored? And of course there’s a tie-in with the layabouts in Buckingham Palace.

Turns out Edelman chose the right central Asian location from which to run his scams.

Edelman had arrived from Russia, where he exploited the chaos caused by the collapse of the Soviet Union to establish himself as an intermediary for Russian refineries. The relationships that he developed in Moscow would prove crucial: Mina and Red Star transported massive amounts of fuel from Russia to Kyrgyzstan, despite a perceived Russian ban on the export of fuel for military use. The congressional investigation quoted from internal documents in which Red Star said it had “cracked the code” on exporting Russian fuel, in part by developing relationships with Russian fuel producers, railway authorities and government officials “to make sure there is no intervention” that would interrupt the supply of fuel.

In 1998, Edelman also opened one of the first Western-style bars in downtown Bishkek: The American Pub. It served German beer, American burgers and—in a concession to Kyrgyz culinary tastes — caviar.

No cheese tots? Loaded potato skins? What kind of American joint was this?

The pub quickly became a popular destination for the city’s small community of expats. And Edelman would draw on its clientele, including former U.S. military officers, to help navigate the Pentagon’s complex military contracting process. Most notably, Chuck Squires, a former U.S. Army lieutenant colonel who served as defense attaché at the U.S. embassy in Bishkek, and rose to become CEO of one of the defense contractors in 2015 ... Squires, the former U.S. military officer, set up a Seychelles company where he parked his income from Mina and Red Star, using an email address whose handle was “intconman.” The website of a restaurant run by his family members also included cryptic references to his work: “Chuck is doing dangerous things in Zagreb.” In a letter to ICIJ, Squires wrote that Edelman never discussed his income or taxes with him, and that he didn’t believe Edelman counseled his friends on how to evade taxes.

Of course not. Read the whole thing, and tell me again that the Pentagon doesn’t need to be audited into freaking rubble.