Afghanistan Contractor Still on Hot Seat

The plot has thickened in the ongoing battle between USA Today and Leonie Industries over the Pentagon’s handling of tax obligations of a major propaganda contractor in the Afghanistan war zone.

A story by reporter Tom Vanden Brook published Monday said Defense Department criminal investigators were looking into the company’s late-paid taxes and treatment of Afghan workers. That’s according to an exchange of letters between the Defense inspector general’s office and Rep. John Tierney, D-Mass.

The company has been under informal investigation since March, and although the probe has since been stepped up, the newspaper found the delinquent taxes approaching $4 million were settled that same month. Leonie was also reprimanded by the Pentagon for conducting a “smear campaign” on the Web against USA Today’s reporters.

In a statement to Government Executive, Leonie Director of Marketing and Communications Gar Smith said, “The USA Today article simply reports on an ongoing investigation, there are no new developments that we are aware of. Leonie has been and will continue to work with government officials to address any questions regarding the company’s operations.”

Smith added that “at no time has Leonie Industries, an LLC, been delinquent in its federal and state corporate tax obligations. The outstanding tax obligations related solely to the owners’ personal tax obligations and have no bearing on the company.”