by Matt Pearce and Brooke Williams | inewsource

WASHINGTON — An Orange County defense contractor, who has contributed generously to both sides of the political aisle here, lost his high-level security clearance while fulfilling a Navy contract a local congressman sponsored.

Sabtech Industries, a small Yorba Linda firm that makes specialized Navy computer parts, has secured about $40 million in mostly no-bid government contracts during the past decade and enjoyed millions in exclusive earmarks from Congress. But last summer, according to the Department of Defense, a federal investigation led the department to suspend company president Rahim Sabadia’s “secret”-level security clearance.

Rep. Gary Miller, center left, and Rahim Sabadia, center right, at a Council of Pakistan American Affairs fundraiser for Miller last year in Newport Beach. The fundraiser was co-sponsored by Sabadia, president of Sabtech Industries. This picture is posted on the council’s website.

Sabtech abruptly stopped work on a classified contract worth up to $7.7 million.

Federal agencies involved would not provide the reason for the investigation or suspension. The Defense Security Service (DSS), a Pentagon agency that handles contractor security, cited privacy and national security when it redacted records documenting the suspension, but in an internal email supplied by the Navy an unidentified employee says Sabadia “told me” DSS had questions about some of his “charitable contributions.”

Sabadia is active in the Islamic community. He was born in South Africa and immigrated to the United States in 1974, according to his biography. He founded Sabtech in 1984.

He would not discuss his contributions to charities or suspension of his personal security clearance. In email exchanges, Sabadia did not address suspension; he said only that his clearance had not been denied or revoked. He also suggested Sabtech no longer needed security clearance and voluntarily dropped it.

However, Navy records show the company still needed clearance to finish the contract — funded through an earmark from Congressman Gary Miller, a Republican who represents parts of Orange, Los Angeles and San Bernardino counties.

A Navy spokeswoman said two other contractors stepped in to finish Sabtech’s work.

Since 2008, Miller has set aside $9.6 million in defense contract earmarks exclusively for Sabtech, according to data from Taxpayers for Common Sense, a federal spending watchdog group. Public records show Congress has earmarked money for Sabtech since 2002 but don’t include amounts given to the company or names of lawmakers who requested the money.

Sabtech executives and employees are collectively among the top ten campaign contributors to Miller’s congressional career, giving $41,850 since 2000.

Miller repeatedly refused to cooperate with reporters from inewsource but last month he called the Orange County Register to say that he has followed all the rules in his dealings with Sabtech and Sabadia. Miller said that in the past he has submitted earmarks for perhaps a dozen companies from his district.

“If a business from my district comes to me, says there is a demand for their product, and the military confirms that, we put in an earmark,” Miller said.

Miller noted that House leaders have halted all earmarks for the last two years.

He said he was not aware of donations Sabadia has made that might have led to the loss of the company’s security clearance, but said, “If Sabtech was taken off that list, shame on them.”

Sabadia donates to charities through his family foundation, whose mission is detailed on its website: “to provide for the needy, including children, the aging or infirm, widows, orphans, combating malnutrition, and promoting education and enlightenment through charity.”

Support for Islamic charities

inewsource, an investigative reporting nonprofit based at San Diego State University, examined the foundation’s tax documents in an attempt to understand how “charitable contributions” might have played a role in the security clearance investigation.

The foundation usually gives between $500,000 and $1 million a year to charities, including many Islamic education, relief and humanitarian organizations, as well as groups such as Rockefeller Philanthropy Advisors and Doctors Without Borders. Its website says recipients of its money since October 2004 have had to sign a declaration swearing not to support, directly or indirectly, “violence of any kind, in any part of the world, for any reason whatsoever.”

One of the foundation’s large beneficiaries—receiving at least $1.2 million since 2002—is the Council on American Islamic Relations (CAIR), a prominent, national group that federal prosecutors accused of having ties to Hamas, a U.S.-designated terrorist organization that became the ruling Palestinian political party in the Gaza Strip in 2007. Hamas is responsible for many deadly suicide bombings and rocket attacks against Israel during the past decade.

Sabtech’s former executive vice president, Omar Zaki, is on CAIR’s national board of directors and used to handle government relations for the organization. Zaki, who didn’t return phone calls and an email, contributed to Miller’s campaign in 2006.

Hussam Ayloush, executive director of CAIR’s office in Greater Los Angeles, said the organization has tens of thousands of donors, including other individuals who hold government security clearance.

Asked about Sabadia’s clearance suspension, Ayloush said, “It would be very unusual if it has anything to do with CAIR….You’re talking about the Muslim community’s NAACP.”

“We would hear about something like this,” he said, “considering many of our members happen to be engineers, business people” and “end up working for the defense industry and the State Department.”

Ayloush said CAIR “absolutely” does not have ties to Hamas.

“I truly have no doubt that the whole situation we’re dealing with is part of an attempt to smear the American Muslim community by targeting its organizations and business leaders,” he said.

He said the Sabadia Family Foundation specifically supports educational and civic engagement programs that “promote dialogue and understanding.”

Miller says millions in earmarks justified

inewsource discovered Sabadia’s clearance suspension while examining earmarks that Miller secured for Sabtech Industries.

Earmarks allowed legislators to steer federal money toward specific companies and projects before House Republicans led a charge to enact a ban for this session of Congress. They had drawn fire during high-profile controversies, such as the resignation and imprisonment of Rep. Randy “Duke” Cunningham, from San Diego County, for taking bribes from a defense contractor in exchange for millions in federal contracts.

Opponents paint the technique as a symbol of waste and corruption; proponents say earmarks are essential to funding overlooked projects.

Miller has not had written contact with the Navy since at least 2008, according to Navy documents. He does not sit on any committees in charge of national defense or military budget appropriations, and no other representatives signed on to support the recent earmarks for Sabtech.

Miller told the Register that Sabtech had been a Navy contractor for years “before they ever came to me.” He said the Navy verified it needed Sabtech’s products.

A 2005 Department of Defense news release called Sabtech’s services contract “essential,” and the government’s original offer for the work said that Sabtech was the “singular responsible source capable” of doing the job. But when asked May 10 about the contract’s cancellation, a Navy spokeswoman said other contractors were finishing Sabtech’s work.

Sabtech execs big backers of Miller

Sabadia and his wife — Nafees El Batool, another Sabtech executive —each have given the congressman nearly the maximum the law allows since at least 2003, including a 2006, when he ran for re-election unopposed.

According to federal campaign data, they each often gave to Miller the same amount on the same day. In all, they donated $40,100 to Miller’s campaigns, plus $10,000 in 2010 to America First, a Political Action Committee connected to Miller. The couple also has given $110,700 to the Democratic Senatorial Campaign Committee and smaller amounts contributed to other candidates including democrats such as Loretta Sanchez of Santa Ana.

One donation to Miller, in 2009, came five days before the congressman requested $5 million for Sabtech, which has no registered lobbyists or Political Action Committees.

Reached at home, El Batool hung up after a reporter identified himself. In a phone conversation on March 27, Sabadia said the campaign contributions are not linked to earmarks.

“We don’t practice that sort of thing; it’s illegal to do that,” Sabadia said. “When the congressman decides to support a Navy requirement, it has nothing to do with any support he gets from his constituents.”

Miller said he’s confident the donations he got from Sabadia followed all the rules.

“This man’s a political donor I can’t help that,” he said. “I’m a real small player when you look at what the man gives.”

Newspaper and community reports have linked Sabadia and Miller on other political issues.

A story in Southern California InFocus, a monthly Muslim newspaper based in California, says Miller drafted an amendment in the Transportation Security Act in 2004 to allow people to remove their names from the no-fly list after Sabadia’s family was stopped and searched by Homeland Security guards, missing a flight.

“A few months earlier, Sabadia had spent a few hours with Republican Congressman Gary Miller who happened to be sitting next to him on a flight,” the article said. “So Sabadia called Miller’s office and apprised him of his ordeal.”

Neither Sabadia nor Miller’s office would comment on the story, or on a story on the website of the Council of Pakistan American Affairs featuring a picture of Miller and Sabadia at a fundraiser the site says Sabadia co-hosted for the congressman. The article on the site credits Sabadia with getting Miller “on board” with the Congressional Pakistan Caucus.

Security suspension stirs confusion

Miller’s latest funding for Sabtech called for upgrades to the “Aegis” system, a widely used radar-based weapons tracking system on Navy ships that is often touted as a tool in helping to establish an international anti-missile shield.

When the Department of Defense suspended Sabadia’s “secret”-level security clearance in July 2010, it led to surprise and confusion among some involved with Sabtech’s work, according to emails the Navy provided to the Watchdog Institute.

“I’m concerned as to how this affects the Engineering Services Contract,” wrote one sender, whose name the Navy redacted; some of Sabtech’s work required “access to classified data and spaces.”

“What Rahim [Sabadia] told me was DSS has questions about some of his ‘charitable contributions,’ but that is all I know at this point,” another email stated.

Pentagon rules meant Sabtech employees would not be able to do their classified work until another top company executive got a security clearance, said Leslie Blake, record keeper for Defense Security Service.

Meanwhile, Sabadia filed a request to voluntarily withdraw Sabtech’s clearance, noting in an email the company had two years to regain its clearance.

“As soon as we are able to restructure Sabtech’s Senior Management Team in a way, (comma sic) to accommodate having a qualified citizen to hold a Clearance, we will revisit the issue,” he wrote the Navy in email.

Navy documents show that Sabtech’s clearance was formally removed Aug. 23, and the next morning Michael Schrantz, a Navy contracting officer, ordered Sabtech to halt its work at the Dahlgren naval base in Virginia and to turn in employees’ ID badges and parking passes.

On March 3, three Sabtech employees created Primary Tech Systems, in Virginia, according to records from the Secretary of the Commonwealth. It has the same address as Sabtech’s Virginia office.

Sabadia would not discuss the purpose of the new company and said he has no financial stake in it.

One Sabtech employee, Dave Emerson, said he was surprised to hear that he was listed on official documents as a director for Primary Tech Systems.

“I did not know that,” he said. “Somebody must have forged my name.”

No available records show that Primary Tech Systems has any contracts or security clearance with the Department of Defense, and Blake said it’s possible that Sabtech employees who still had their individual security clearances could do the same work for a different firm.

As long as Sabadia did not have access to classified information, Blake said, “I don’t think there’s anything in the rules that would prevent anyone from starting a new company while they’re employed by Sabtech.”

Orange County Register Staff Writer Chris Knap and Register Researcher Michael Doss contributed to this report.

inewsource, a nonprofit based at SDSU, produces in-depth reports and partners with media organizations across Southern California, including the Orange County Register.

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