The 10 Most Brazen War Profiteers
By Charlie Cray, AlterNet. Posted September 5, 2006.
Halliburton has become synonymous with war profiteering, but there are lots of other greedy fingers in the pie. We name names on 10 of these!
The history of American war profiteering is rife with egregious examples of incompetence, fraud, tax evasion, embezzlement, bribery and misconduct. As war historian Stuart Brandes has suggested, each new war is infected with new forms of war profiteering. Iraq is no exception. From criminal mismanagement of Iraq's oil revenues to armed private security contractors operating with virtual impunity, this war has created opportunities for an appalling amount of corruption. What follows is a list of some of the worst Iraq war profiteers who have bilked American taxpayers and undermined the military's mission.
No. 1 and No. 2: CACI and Titan
In early 2005 CIA officials told the Washington Post that at least 50 percent of its estimated $40 billion budget for that year would go to private contractors, an astonishing figure that suggests that concerns raised about outsourcing intelligence have barely registered at the policymaking levels.
In 2004 the Orlando Sentinel reported on a case that illustrates what can go wrong: Titan employee Ahmed Fathy Mehalba, an Egyptian translator, was arrested for possessing classified information from the Guantanamo Bay prison camp.
Critics say that the abuses at Abu Ghraib are another example of how the lines can get blurred when contractors are involved in intelligence work. CACI provided a total of 36 interrogators in Iraq, including up to 10 at Abu Ghraib at any one time, according to the company. Although neither CACI, Titan or their employees have yet been charged with a crime, a leaked Army investigation implicated CACI employee Stephen Stefanowicz in the abuse of prisoners.
CACI and Titan's role at Abu Ghraib led the Center for Constitutional Rights to pursue companies and their employees in U.S. courts.
"We believe that CACI and Titan engaged in a conspiracy to torture and abuse detainees, and did so to make more money," says Susan Burke, an attorney hired by the Center for Constitutional Rights (CCR), whose lawsuit against the companies is proceeding into discovery before the Federal Court for the District of Columbia.
The private suits seem to have already had some effect: In September 2005 CACI announced that it would no longer do interrogation work in Iraq.
Titan, on the other hand, has so far escaped any serious consequences for its problems (in early 2005, it pleaded guilty to three felony international bribery charges and agreed to pay a record $28.5 million Foreign Corrupt Practices Act penalty). The company's contract with the Army has been extended numerous times and is currently worth over $1 billion. Last year L-3 Communications bought Titan as part of its emergence as the largest corporate intelligence conglomerate in the world.
No. 3: Bechtel: precast profits
The San Francisco-based construction and engineering giant received one of the largest no-bid contracts -- worth $2.4 billion -- to help coordinate and rebuild a large part of Iraq's infrastructure. But the company's reconstruction failures range from shoddy school repairs to failing to finish a large hospital in Basra on time and within budget.
Recall that USAID chief Andrew Natsios originally touted the reconstruction as a Middle Eastern "Marshall Plan." Natsios should have known that all would not go smoothly with Bechtel in the lead: Prior to joining the Bush administration, he was chief executive of the Massachusetts Turnpike Authority, where he oversaw the Big Dig -- whose costs exploded from $2.6 billion to $14.6 billion under Bechtel's lead.
In July, the company's reputation for getting things done unexpectedly plummeted like a 12-ton slab of concrete when Stuart Bowen, the special inspector general for Iraq Reconstruction (SIGIR), released an audit of the Basra Children's Hospital Project, which was $70 million to $90 million over budget, and a year and half behind schedule. Bechtel's contract to coordinate the project was immediately cancelled.
Now that the money is running out, American officials are beginning to blame Iraqis for mismanaging their own infrastructure. But as Bowen warns, contractors like Bechtel, the CPA and other contracting agencies will only have themselves to blame for failing to train Iraqi engineers to operate these facilities (esp. water, sewage and electricity) when they leave.
No. 4: Aegis Defense Services
The General Accounting Office (GAO) estimates 48,000 private security and military contractors (PMCs) are stationed in Iraq. The Pentagon's insistence on keeping a lid on military force requirements (thereby avoiding the need for a draft) is one reason for that astronomical growth, which has boosted the fortunes of the "corporate warriors" so much that observers project the industry will be a $200 billion per year business by 2010.
Yet the introduction of PMCs has put "both the military and security providers at a greater risk for injury," the General Accounting Office says, because PMCs fall outside the chain of command and do not operate under the Code of Military Justice.
George Washington University professor Deborah Avant, author of Market for Force and an expert on the industry, says that while established PMCs may act professionally, the government's willingness to contract with a few cowboy companies like Aegis -- a U.K.-based firm whose infamous founder and CEO Tim Spicer was implicated for breaking an arms embargo in Sierra Leone -- only reinforces the fear that U.S. foreign policy is being outsourced to corporate "mercenaries."
An industry insider told Avant that the $293 million contract was given despite the fact that American competitors had submitted lower bids, suggesting the government wanted to hire the foreign company to shield both sides of the transaction from accountability for any "dirty tricks."
Industry critics, including Rep. Jan Schakowsky, D-Ill., say that, at a minimum, Spicer's contract suggests that government agencies have failed to conduct adequate background checks. While it's hard to say how often PMCs have committed human rights violations in Iraq, the Charlotte News-Observer reported in March that security contractors regularly shoot into civilian cars. The problem was largely ignored until a "trophy video" of security guards firing with automatic rifles at civilian cars was posted on a web site traced back to Aegis.
Although the Army's Criminal Investigation Division says no charges will be filed against Aegis or its employees, critics say that only proves how unaccountable contractors are under current laws. Since the war on terror began, just one civilian, CIA contract interrogator David A. Passaro, has been convicted for felony assault associated with interrogation tactics.
Even The International Peace Operations Association, a fledgling industry trade association that insists the industry abides by stringent codes of conduct has rejected Aegis' bid to join its ranks.
No. 5: Custer Battles
In March, Custer Battles became the first Iraq occupation contractor to be found guilty of fraud. A jury ordered the company to pay more than $10 million in damages for 37 counts of fraud, including false billing. In August, however, the judge in the case dismissed most of the charges on a technicality, ruling that since the Coalition Provisional Authority was not strictly part of the U.S. government, there is no basis for the claim under U.S. law. Custer Battles' attorney Robert Rhoad says the company's owners were "ecstatic" about the decision, adding that "there simply was no evidence of fraud or an intent to defraud."
In fact the judge's ruling stated that the company had submitted "false and fraudulently inflated invoices." He also allowed the jury's verdict to stand against the company for retaliating against the whistleblowers that originally brought the case under the False Claims Act, the law that allows citizens to initiate a private right of action to recover money on taxpayers' behalf. During the trial, retired Brig. Gen. Hugh Tant III testified that the fraud "was probably the worst I've ever seen in my 30 years in the Army."
When Tant confronted Mike Battles, one of the company's owners, with the fact that 34 of 36 trucks supplied by the firm didn't work, he responded: "You asked for trucks and we complied with our contract and it is immaterial whether the trucks were operational."