Federal agents raided business operations at European Stars and Stripes in Germany on Thursday because a complaint filed with the Department of Defense Inspector General alleges the paper unfairly charges rates for color ads that actually run black and white in some editions, publisher Thomas E. Kelsch told employees in a memo Friday.
“Investigative officers have visited Stars and Stripes headquarters in Griesheim, Germany, and Washington, D.C., interviewed personnel and obtained copies of pertinent records,” Kelsch said in the memo.
He added that Stripes “is cooperating with the investigation.”
John Crane, chief spokesman for the DOD IG, did not return repeated calls seeking comment.
On Thursday, a group of agents from the investigative arm of the DOD IG and from Air Force and Army criminal investigation commands swarmed the newspaper office in Griesheim, which is near Darmstadt. They seized at least 42 boxes of documents, as well as computer records. Various managers and employees were sequestered and then interviewed.
The agents did not leave the newspaper until nearly 2 a.m. Friday.
Meanwhile, agents from the IG’s office also visited the Washington office, where they interviewed Kelsch; Max Lederer, Stripes’ chief operating officer and a former European Stripes general manager; and International Advertising Director Fred Benson. Computers records were confiscated there as well.
Kelsch refused to answer questions or comment beyond his memo. Lederer also would not comment.
Benson said he spoke with agents, who asked questions “about general business practices,” including staffing, staff organization and “who answers to whom,” he said.
Color ads are more expensive than black-and-white ads.
“The issue is the fact that the contracting printing services in Rome, Italy, and until recently in the United Kingdom, which print Stars and Stripes, sometimes cannot print the same pages in color that the press in Germany does,” Kelsch wrote in his memo. “As a result, occasionally ads appear in color from our press in Germany but in black and white off the press in Italy.
“Stars and Stripes has been aware of this problem since it first began using contracted print sites in 1999,” he wrote. “At that time, adjustments were made to the rate charged advertisers so that they would be charged only for color produced on our press in Germany. If the press configuration allowed color at the other sites, that was treated as an extra bonus for the advertisers and they were not charged for it.”
However, several advertisers contacted said they discovered that some ads they thought were running in color in all editions were actually in black and white in the papers printed in Italy and the U.K. They formally asked Stripes to rectify the problem.
One employee at a major advertiser who asked not to be identified said he didn’t see this as necessarily an issue for investigation. “Stars and Stripes’ advertising department is currently working to try and resolve the billing issues,” the advertiser said.
Kelsch said that Stripes is notifying customers who buy color ads in European Stripes about the investigation “and confirming the pricing policy for color.”
Additional details of the investigation may not be revealed, because the IG is not required to release details, said Robert Bittman, counsel at the Washington offices of White & Case LLP, an international law firm with 38 offices in 26 countries that specializes in federal law.
“They don’t have to tell you,” Bittman said. “That’s the nature of the investigations. That’s why [the IG was] created.”
Technically part of the Department of Defense — as is Stars and Stripes — the IG was created by Congress as a “watchdog over executive agencies,” looking for waste, fraud, abuse and failure to follow federal guidelines and procedures,” Bittman said. “They tend to be more secret, frankly, than some federal prosecutors.”
What the IG cannot do is bring criminal charges. If it uncovers criminal activity, it turns it over to the appropriate federal prosecutor, Bittman said. The IG typically files reports, findings and recommendations to the secretary of defense or to Congress. But it is not required to make public any details of the investigation, he said.
“I’ve seen many, many IG investigations … and usually, they tell you [the investigation details]. But they don’t have to,” Pittman said.