Crossing Jordan: Iraq fuel deal sparks lawsuit

Aram Roston Investigative producer

Editor's note: NBC News has learned that this story has sparked a congressional investigation. Click here to read more.

A little-noticed civil lawsuit in Florida is shining a light on an unusual but hugely profitable Pentagon contract to ship millions of gallons of aviation fuel to U.S. bases in Iraq through the kingdom of Jordan.

The deal involves a cast of influential characters, including the king of Jordan’s brother-in-law, who is suing Harry Sargeant III, a top Florida-based fundraiser for Sen. John McCain's presidential bid.

Sargeant is a Florida businessman and former Marine Corps pilot hailed by the McCain campaign as a "Trailblazer" for raising $100,000 or more in political donations. Through a company called International Oil Trading Co., or IOTC, Sargeant and a partner have a lucrative contract worth hundreds of millions of dollars per year to supply American military forces in Iraq with fuel, especially aviation fuel. The firm ships the fuel to Jordan and then trucks it across the border, where U.S. forces escort the convoys to air bases.

Sargeant’s IOTC has experienced phenomenal growth since the Iraq war started, transforming itself from an unknown business in 2004 to a major Pentagon contractor in only a few years.

The way the American military structured the deal, only a company with the blessing of the Jordanian government could win the contract.  A bidder was required to have a Jordanian government "Letter of Authorization," and only IOTC received such a letter.

The lawsuit against Sargeant was filed April 10 in Florida state court by Mohammad Al-Saleh, who is married to the half sister of King Abdullah of Jordan. Al-Saleh’s suit says he essentially brokered Sargeant's contract by arranging the approval and cooperation of the Jordanian government, using his "connections and influence." The lawsuit alleges that Al-Saleh arranged for the Jordanian government “to issue a letter of authorization to IOTC.” Al-Saleh’s lawyer, Jonathan Frank, said, “Were it not for my client, they would not have been able to get that letter.”

‘Whoever got the letter got the contract’
"Without the letter, you can't bid," Al-Saleh said in an interview with NBC News. "Whoever got the letter got the contract."

Al-Saleh says he also arranged a deal with a company owned by the Jordanian Army which ensured that oil could be offloaded at a Jordanian port "without interference, bureaucratic or otherwise." So in essence a Jordanian Army-owned company was operating as a subcontractor in the IOTC deal.

A representative of IOTC, speaking on condition of anonymity because the company has not yet responded to the lawsuit in court, denied Al-Saleh’s contentions. “He did not arrange that deal with the Jordanian military,” the representative said. The IOTC representative also said Al-Saleh was not the key figure in obtaining the letters of authorization which were so crucial. The IOTC representative acknowledged that Al-Saleh played a role in obtaining one of the letters of authorization.

Jordan is a close U.S. ally in the Middle East. Although Jordan is not an oil-producing country, unlike other neighbors of Iraq such as Saudi Arabia or Kuwait, the Pentagon had insisted that fuel be brought in through Jordan.

IOTC has won three successive contracts to perform the work. The company — a partnership between Sargeant, Al-Saleh and a third man — first won the Pentagon Iraq fuel contract in 2004 with another company. When the Pentagon put the contract up for competition in 2005, IOTC, now incorporated in Florida, won with a bid of $213 million, even though other companies offered lower bids. The Defense Energy Support Center, or DESC, which awarded the contract, said in a statement to NBC News that none of those lower bidders met contract requirements.

Then, in 2007, when the Defense Department put the contract up for bid again, IOTC won again.

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