Update: The contracting company that built the Iraqi prison detailed in this blog has issued a statement in response to the Inspector General's audit. Scroll to the bottom of the post to see the response.

By Aram Roston, NBC News Producer

Even for troubled reconstruction efforts in Iraq, this case stands out. Sprawled out in the Iraqi desert in Diyala Province is an abandoned and incomplete prison compound built of reinforced concrete, ringed by a fence and unmanned watchtowers. It cost the U.S. government $40 million to build over three years, before the entire complex was left unattended in 2007, to the wind and sand.

 "This was the worst project we've seen!" said Stuart Bowen, the Special Inspector General for Iraq Reconstruction, whose office released a report on the site, known as the Khan Bani Sa'ad Correctional Facility. Much of the anticipated reconstruction in Iraq following the 2003 U.S. invasion has been hampered by the violence of war, as well as by mismanagement and corruption, as Bowen's office and other investigations have documented in the past.

 The report lays out a withering critique of what happened. It was meant to be the first phase of a 3,600-bed prison - with space for 1,800 prisoners as a first step. And it was conceived during the days of the "Coalition Provisional Authority," about a year after the U.S. invasion, when Ambassador Paul Bremer presided over the U.S. occupation.

By Jim Popkin, NBC News Senior Investigative Producer

Conservative provocateurs have been hunting for it. Investigative journalists have been on the prowl, too. Even a former professor has been searching through old boxes for his copy of it. But today Barack Obama made it official: He doesn’t have and can’t release any copies of the thesis-length paper he wrote 25 years ago while a senior at Columbia University.

“We do not have a copy of the course paper you requested and neither does Columbia University,” Obama spokesman Ben LaBolt told NBC News.
 
The hunt begins
The hunt for Obama’s senior “thesis” began with a throwaway line in a newspaper article last October. The New York Times story, on Obama’s early New York years, mentioned in passing that the presidential contender had majored in political science at Columbia and had spent his time “writing his thesis on Soviet nuclear disarmament.”

By Tim Sandler, NBC News producer

Louisiana could have saved millions of dollars in the aftermath of Hurricane Katrina if it hadn’t hired high-profile consultant James Lee Witt, according to a new report released by state auditors. Witt’s firm billed the state double what it paid subcontractors to manage storm debris removal, the audit said.
 
The Louisiana Legislative Auditor’s Office examined work performed by James Lee Witt Associates [JLW], a company that has made tens of million of dollars as a top contractor for the state’s Governor’s Office of Homeland Security and Emergency Preparedness.

Witt was director of the Federal Emergency Management Agency (FEMA) during the Clinton administration and received an open-ended no-bid contract from the state of Louisiana shortly after the Katrina disaster.

The audit was conducted after NBC News reported last July that Witt Associates made 100 percent markups on invoices submitted to the state for debris monitoring and grant management. Sources told NBC News that the markups were submitted even though Witt Associates did little more than clerical work on the contracts, which was farmed out to three small companies.

By Carol Grisanti and Robert Windrem, NBC News

In a rare move, one of al-Qaida's highest-ranking leaders has conducted an on-camera interview with a journalist and, in the process, called for the destruction of Pakistan's government.

It was the first time since 2002 that any top al-Qaida official has taken the security risk of sitting down for an interview with a bonafide journalist.

Abu Mustafa al-Yazid, an Egyptian whom U.S. intelligence officials have identified as the al-Qaeda's third highest-ranking official, sat for an interview with Najeeb Ahmad, a reporter for Geo TV. Geo TV is a private Pakistani television channel. 

In the interview, Yazid, also known as Sheikh Saeed, called for the destruction of Pakistan's government which he said had "betrayed" the jihadis. Yazid swore that al-Qaida would recapture Afghanistan. And he reiterated al-Qaida's position that "all Americans, not just the American government" are the enemies of Islam.

The interview took place in Khost in eastern Afghanistan. Ahmad, the Geo reporter, is the president of the Karachi Press Club and said he used a Palestinian intermediary to arrange the interview.  It took three months to arrange and took place a few days ago, Geo said. Ahmad traveled to Peshawar, near the Afghan border, where he was given dark glasses and driven to the interview site, according to Geo who called the interview "a worldwide exclusive".

By Jim Popkin, NBC News

We've had the Bubba Gap. The Women Gap. And now comes the "Gift Gap." At political gift stores across America, Barack Obama schlock is outselling John McCain schlock at least five to one, according to interviews NBC News conducted with gift-shop retailers and t-shirt manufacturers.

That would mean that five times as many Obama t-shirts are on the streets…five times as many Obama bumper stickers are junking up cars…and five times as many Obama bobble heads are wiggling on desks across America.

At the Capital Noveltees manufacturing plant in Washington, DC, for example, demand for Obama gift items is through the roof. The firm, a major supplier to retailers nationwide, has sold 54,028 pro-Obama t-shirts since March. During that same period, the company has sold only 5,979 pro-McCain t-shirts, said company owner Susan Benovitz.

"It's not that we're favoring one candidate over another," Benovitz said. "I just know how fast the re-orders come in for Obama."

By Pete Williams, NBC News Justice Correspondent

Israel's security service says it has arrested six men suspected of forming a terror cell sympathetic to al-Qaida. And it says one of the men talked about trying to shoot down a helicopter carrying President Bush on a visit to the region.

U.S. officials say the arrests in Israel are the result of an Israeli investigation and that officials there kept the U.S. government informed. They say the U.S. was notified when Israeli investigators realized that one of the members of the suspected cell used a cell phone to make videos of helicopters taking off and landing, and commented on an internet site about attacking President Bush's helicopter. But the Bush aspect is only part of the broader Israeli investigation.

By Jim Miklaszewski, NBC News Chief Pentagon Correspondent

U.S. military commanders in Afghanistan have now ordered a formal investigation into last weekend's attack on a remote combat outpost that killed nine American soldiers and wounded 15 more. The commanders not only want to determine how scores of heavily-armed insurgents took the Americans by complete surprise, but exactly who were those enemy forces and how were they able to pull off such a well-coordinated and complex attack.

The outpost in Kunar province had been established only a couple of days before when some 200 insurgents staged the pre-dawn attack with machine-guns, rocket propelled grenades and mortars. Eight of the nine dead were killed in a surveillance tower. A handful of the enemy fighters actually breached the wall to the small compound but were quickly driven back or killed. But two days after the assault, U.S. commanders determined the outpost could not be adequately defended and withdrew all American forces. Reports claim that within hours the post was overrun by Taliban fighters.

By Jim Popkin, NBC News Senior Investigative Producer

White-supremacist groups have recruited 203 people who served in the U.S. military or who claim to have U.S. military backgrounds, according to a new report by the FBI. The unclassified FBI Intelligence Assessment, issued last week and obtained by NBC News, cautions that white-power extremists are trying hard to recruit active-duty soldiers and recent veterans of the wars in Iraq and Afghanistan.

“White supremacist extremists hope to revitalize the white supremacist movement by exploiting antigovernment sentiment among opponents of the overseas conflicts in Iraq and Afghanistan,” the FBI report states. It adds, however, that the effort is not going particularly well. “Although some veterans of these conflicts have joined the extremist movement, they have not done so in numbers sufficient to stem declines among major national extremist organizations, nor has their participation resulted in a more violent extremist movement,” the FBI writes.

By Jim Popkin, NBC News Senior Investigative Producer

NBC News has obtained an FBI "Intelligence Bulletin" that warns of potential dangers from al-Qaida and Taliban prisoners who have escaped over the years from prisons around the world. The unclassified bulletin, issued on June 24 to law-enforcement officials in the U.S., says that the escapees "possibly pose a threat to U.S. interests at home and abroad," and that they "may be plotting future attacks." But it adds: "The FBI has no current, credible and reliable threat information [about them] plotting a specific attack against the U.S. Homeland."

By Ali Kermalli and Robert Windrem, NBC News

Despite rising tensions with Iran, the U.S. State Department today announced that it has invited Iranian athletes to compete in the United States as part of a "people-to-people exchange" program. Nicholas Burns, Under Secretary of State for Political Affairs, today confirmed a report on MSNBC.COM's "Deep Background" blog.

"With the generous support of Congress, we're in the second year of successful people-to-people exchange programs. Partnering with the U.S. Olympic Committee, we invited 15 members of the Iranian national table-tennis team to the United States last week. This group included the first female Iranian athletes who've ever been to the U.S. on this program. In cooperation with the National Basketball Association, we'll bring the Iranian Olympic basketball team here next week for the NBA summer league," Burns told Congress today.

"We're committed to using educational, cultural, and sports exchanges to help rebuild bridges between our two societies after 30 years of estrangement," he added.

By NBC News

A spokesman for one of Iraq’s most prominent insurgent groups declares in a rare interview that he favors the Democrats in the upcoming presidential election. “We believe that the Democrats are more aware of the severity of the American situation in Iraq, and, therefore, they can give more attention to safeguarding American interests in this region,” the spokesman said.

The comments are part of an exclusive interview that NBC News terrorism analyst Evan Kohlmann recently conducted with Dr. Ali al-Naimi, spokesman for the Islamic Army in Iraq. Kohlmann, who also serves as Senior Investigator for the NEFA Foundation, has now conducted several interviews with the leading insurgent groups in Iraq. The on-the-record conversations have revealed the rifts that have arisen amongst the Iraqi insurgent groups and al-Qaida. In the recent interview, al-Naimi denounces al-Qaida and its foreign fighters. “The errors of al-Qaida in regards to spilling the blood of the innocent are more numerous than can possibly be covered in a single response, statement, or interview,” al-Naimi said.