Monday, June 09, 2008

A Mistress Scorned: Inside the Foggo CIA Contracting Scandal

May 22, 2008

A federal grand jury issued a new indictment on Tuesday against the former Executive Director of the CIA, Kyle "Dusty" Foggo. The source of this new indictment is reliably rumored to be Stephanie Danes-Smith, Foggo's (alleged) former mistress before he dumped her and took up with the woman referred to as "ER" in the indictment.

Payback's a bitch.

According to informed sources, Foggo and Danes-Smith had been going hot and heavy since they met while assigned to the in Agency's Directorate of Science and Technology in the mid -1990s. This intimate relationship continued when Dusty was assigned to head up the Frankfurt support base and Stephanie was head of Printing and Photography Group (P&PG) in 2003/2004. Despite being a GS-15/SIS level administration group chief, Danes-Smith was constantly traveling on temporary duty assignments to Frankfurt, supposedly at Foggo's personal request, to "help out" when Afghanistan and Iraq were ramping up.

Danes-Smith's travels to Europe magically corresponded with visits by Foggo's wife to Vienna to visit relatives. (Foggo's wife was an Austrian Foreign Service National that he had met when assigned to Vienna.) The frequency of Danes-Smith's travel on to a place that had no relationship to her official duties became so obvious that she was finally called in by her boss, then Director of Global Support Jeanette Moore, and told that future trips to Frankfurt would have to be confined to authorized vacations. Foggo was also reprimanded by Moore by cable in mid-2004.

When Foggo was named ExDir by Porter Goss, he told Moore that her days were numbered and she retired. Not one to waste talent and connections, Raytheon picked up Moore shortly thereafter as a business development executive.

With Foggo back at Headquarters, Foggo and Danes-Smith became well known around Agency headquarters for requisitioning chauffeured limos from the Agency motor pool and cruising around Washington, DC. Rumors of these alleged trysts were rampant at Langley and Dusty's colleagues warned him to give up this high profile habit. But Dusty was a guy who "made Bill Clinton seem like a choirboy," according to a source familiar with this taste in hookers and strip joints.

Foggo's response to their warnings was to take up with "ER" and try to force Agency subordinates to hire her at Headquarters.

It appears that Foggo offered Danes-Smith a consolation prize when he dumped her for "ER" in Feb 2005 by appointing Danes-Smith as the Director of the newly re-established Directorate of Support (formerly known as the Directorate of Administration, or DA). A bit of history: The DA was dissolved in mid-2001 by Foggo's predecessor as Executive Director, A.B. "Buzzy" Krongard, principally to spite a bitter enemy of his, former DDA Dick Calder, creator of the "working capital fund" concept (and current president of Abraxis). Buzzy, an investment banker, thought "working capital fund" was totally dysfunctional, and even stated this in no uncertain terms at a annual gathering of CIA finance officers in 1999. Foggo and Calder were quite close, Foggo having served as Calder's "hit man" in firing career CIA DA employees rendered excess by the working capital fund and it was Buzzy who exiled Dusty to the Agency's Frankfurt support base (where Danes-Smith gave a hand with the "ramp up").

Back to the Langley soap opera: Among other issues, "ER" (the new mistress named in the indictment) apparently had security clearance problems, over which Foggo tried to exert the influence of "a personal interest in this case."

He officially designated "ER" as "ExDir Interest" to push the security clearance through. Sexual escapades and questionable contracting might prompt turned heads and hallway gossip at Headquarters, but comprising security crosses the line. Dimes started dropping in virtually every phone in the greater McLean area, prompting the Agency's Office of Inspector General (OIG) to begin an inquiry.

Courtesy of "Duke" Cunningham and lifelong friend Brent Wilkes, the FBI soon joined in.

And that takes us to this week's indictment which significantly ups the ante for Foggo. Instead being liable for receiving $90,000 in in kind benefits, he is now liable for almost $2 million in monies that he controlled and directed to other parties. In addition to the sexier aspects of the indictment, new allegations in the indictment include:

Foggo muscling a major contractor to hire his co-conspirator Brent Wilke's companies as subcontractors;

Foggo pressuring a major contractor to hire various cronies as either employees or consultants; and

Foggo passing classified information to Wilkes (Wilkes didn't have a clearance) so that he would have the inside track on contracts.

Ironically, Foggo served two years as a CIA ethics officer.