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Were ArmorGroup Allegations Quashed?

CBS News first reported this month on the hazing and humiliating of local employees and other serious breaches of ethics and policy by civilian security guards during wild parties at the U.S. Embassy in Kabul, Afghanistan.

Turns out, the State Department was warned that things weren't right at the embassy, but nothing was done. Now there are troubling questions for the man once in charge of investigating those problems, reports CBS News correspondent Sharyl Attkisson.

As inspector general for the State Department, Howard Krongard was supposed to be an independent watchdog.

It was his job to investigate the very type of misconduct alleged at the U.S. embassy in Kabul: forced sexual hazing of guards, contract fraud and waste of tax dollars.

CBS News has learned that serious allegations about the embassy reached Krongard's office two years ago - where they apparently vanished into thin air.

How that could've happened is even harder to explain when you consider who made the complaint: Sen. Joe Lieberman, head of the Homeland Security Committee. His staffers say they notified Krongard's office about security and fraud allegations made by high-level whistleblowers from inside ArmorGroup, the company that provides embassy security.

Asked if he remembers that, Krongard said, "No. I Have no knowledge of that whatsoever."

Watch: Excerpt of Attkisson's Interview with Krongard

But CBS News has learned Krongard had a special and controversial link to the company he should have been policing. His brother Buzzy, former executive director of the CIA, was on ArmorGroup's board of directors.

Official: Kabul Embassy Hazing Covered Up
Kabul Embassy Security Co. Admits Error
Images of alleged hazing (Graphic Content)
Shocking Hazing at U.S. Embassy in Kabul
Graphic Content: Additional video of Kabul hazing
Alcohol Banned at U.S. Embassy in Kabul
Letter to Sec. Clinton describing abuses (.pdf)

ArmorGroup's Kabul embassy contract is worth $187 million tax dollars.

Attkisson asked Krongard about the conflict of interest:

Attkisson: Did you know your own brother was on ArmorGroup's board of directors?

Krongard: No , I did not.

Attkisson: Why didn't you know?

Krongard: Dunno. I guess No. 1 I'm not sure why I should've known, but No. 2 he never told me.

Attkisson: You should have known, in the opinion of a lot of people, because it would've been a perceived conflict of interest.

Krongard: He was a senior official in the Central Intelligence Agency; he did not discuss his matters with me.

Attkisson: Would you like to have known in retrospect?

Krongard: If you're asking me do I think that either ArmorGroup or he should have told me, yes. It wouldn't have made any difference, as I say, I never had anything to do with ArmorGroup.

Krongard insists there was no conflict because he and his brother "lead separate lives."

But if the scenario sounds familiar - it is.

About the same time the ArmorGroup complaint disappeared in Krongard's office, lawmakers accused him of dragging his feet on probes into another war contractor: Blackwater.

On Nov. 14, 2007, Krongard was asked under oath if brother Buzzy was involved in Blackwater. He said no, but faced with evidence to the contrary, he phoned his brother during a break and then reversed course.

"I had not been aware of that, and I want to state on the record right now that I hereby recuse myself from any matters having to do with Blackwater."

Krongard resigned under fire a short time later.

We showed our documentary evidence of Buzzy Krongard's ArmorGroup ties to Danielle Brian. She heads the watchdog group - the Project on Government Oversight - that exposed the embassy guard scandal.

"To find that the I.G.'s brother was also on the board of ArmorGroup is - is breathtaking," Brian said.

There's no way to know what would have happened without the possible conflict of interest. But watchdogs say that had the ArmorGroup allegations been aggressively investigated then, it might have prevented two years' worth of fraud, waste and security risks being alleged today.

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