Keith clarifying prior Keith rages

Caught at the trough: a sign of things to come

Feds arrest former DHB chief

BY ROBERT E. KESSLER | robert.kessler@newsday.com

The former head of the Long Island company that provided most of the body armor for U.S. soldiers in Iraq and Afghanistan was arrested at dawn Thursday in his Manhattan apartment by FBI and IRS agents on charges of fraudulently looting the company and investors to pay for a lavish lifestyle.

That lifestyle included supporting a stable of trotting horses; a face-lift for his wife; a diamond, ruby and sapphire-encrusted belt buckle in the shape of an U.S. flag; and an $8 million bat mitzvah for his daughter, which featured music stars including 50 Cent and Kenny G, according to Benton Campbell, the U.S. attorney for the eastern district.

David Brooks, 53, the founder and former head of DHB Industries, which had been located in Westbury, was the highest-paid head of a public company on Long Island in 2004, making $2.7 million in salary and bonuses, plus tens of millions of dollars in stock options.

Related links

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How David Brooks lives in Old Westbury
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List of riches: some of what feds say Brooks took
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All about Brooks and that $8M bat mitzvah
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Point Blank Solutions is trying to recover
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Document: United States vs. David H. Brooks indictment

Federal prosecutors charged Brooks in a 71-page indictment with securities fraud, insider trading, obstruction of justice and tax evasion for allegedly obtaining almost all of his income by two illegal methods. One was by having the company secretly underwrite $6 million of his personal expenses; the other was by artificially inflating the value of DHB company stock, which he then sold in a type of pump-and-dump scheme, prosecutors say.

In the latter, Brooks allegedly made $186 million in 2004 by selling shares in the company shortly after he said he had no intention of selling the stock and shortly before the stock plunged because of reports about the quality of its body armor, the indictment said.

Brooks, who has a mansion in Old Westbury and a home in Florida as well as a Manhtattan apartment, also used tens of millions of dollars he acquired illegally to set up a number of supposed charitable trusts, according to remarks in court by Assistant U.S. Attorney John Martin, a prosecutor in Campbell's office.

Brooks took tax exemptions for the trusts' operations, but instead of contributing their money to needy causes, he used the funds to pay for many of the entertainers at his daughter Elizabeth's bat mitzvah, Martin said at the court hearing. Those entertainers also included Tom Petty, Aerosmith and the Eagles, Martin said. The November 2005 bat mitzvah had been widely reported as costing as much as $10 million.

In addition to the bat mitzvah, horses and face-lift for his wife, Terry, the indictment also alleges that Brooks illegally got the company to pay for luxury cars, vacations, jewelry, cosmetic surgery and country club bills for himself and his family. DHB moved its headquarters to Pompano Beach, Fla., in July 2006, after Brooks was forced out, and the company changed its name earlier this month to Point Blank Solutions. Although the company has set aside $60 million to settle a lawsuit alleging it manufactured defective vests, the vests in question were not among those supplied to U.S. troops.

Brooks pleaded not guilty at arraignment in U.S. District Court in Central Islip, and was held without bail by U.S. District Court Judge Joanna Seybert, pending a hearing Monday.

Seybert acted after prosecutor Martin said that in the past year Brooks had purchased a single diamond worth $10 million, unspecified millions in gold and had surreptitiously moved $22 million to banks in Switzerland and Senegal. The United States does not have an extradition treaty with Senegal, Martin said.

"David Brooks grew up in Brooklyn and that means he doesn't run away from a fight. It's a lot easier \[for the government\] to make allegations than to prove them," Paul Shechtman of Manhattan, Brooks' attorney, said after the hearing.

Shechtman, one of New York's leading defense lawyers, who was the Director of Criminal Justice for the State of New York under Governor George E. Pataki, said some sort of bail arrangement could be arranged permitting his client to be monitored by guards in home detention. Such an arrangement had been worked out recently in the case of a Muttontown couple accused of enslaving two Indonesian housekeepers, said Shechtman.

A spokesman for Point Blank, Glenn Wiener said yesterday, "As Mr. Brooks is no longer employed by the Company, we cannot provide additional commentary."

Also charged in the indictment with Brooks was Sandra Hatfield, 54, of Pompano Beach, the former chief executive officer of DHB.

Hatfield was accused of making $5 million by selling her company stock before it dropped. In 2004 she was the highest paid woman executive on Long Island, earning almost $1 million in salary and bonuses.

Brooks and Hatfield allegedly used a number of schemes to artificially inflate the stock of DHB.

To make the company look more profitable, for example, in one scheme, the two allegedly exaggerated the amount earned by the sales of armored vests to the U.S. military by $6 million in 2003 and $13 million 2004, according to Martin.

Hatfield's attorney Roland Riopelle, of Manhattan, said his client was not guilty and "we believe she will be speedily acquitted at a trial." She is scheduled to be arraigned Tuesday.

Brooks and Hatfield theoretically face up to 140 years in prison if convicted on all charges, but would probably be sentenced to considerably less. They also face forfeiture of a total of $191 million, and additional multimillions of dollars in fines.

Original article posted here.

Now even the mainstream media (and weazl's law school classmate, silly little Dan Abrams) start taking about news that should have been five years old

Fiscal responsiblility? No end to the profligacy and cronyism of the Bush clan and its minions

US-Iraqi contract 'in disarray'

Training police and army is a key part of the US strategy in Iraq

A $1.2bn (£590m) contract for training Iraqi police was so badly managed that auditors do not know how the money was spent, the US state department says.

The programme was run by a private US company, DynCorp. It insists there has been no intentional fraud.

Auditors have stopped trying to audit the programme because all the documents are in disarray and the government is trying to retrieve some of the money.

Training Iraqis to take over security is a key part of US strategy.

Correspondents say this case is the latest to highlight problems linked to private companies being awarded lucrative government contracts in Iraq.

Olympic pool and VIP trailers

The US government audit, due to be released in Washington, says the state department cannot say "specifically what it received" for most of the money paid to DynCorp, the largest single contractor to the department.

DynCorp had won a contract to provide housing, food, weapons and specialist training for Iraq's police force in February 2004.

But some of its spending included the acquisition of a $1.8m X-ray scanner that was never used, and the $4m purchase of 20 VIP trailers and an Olympic-size swimming pool with money intended to fund an Iraqi police compound.

Stuart Bowen Jr, the Special Inspector General for Iraq Reconstruction (SIGIR), blamed the problems on long-standing contract administration problems within the state department office that awarded the contract.

He said "lack of controls" and "serious contract management issues" within the Bureau for International Narcotics and Law Enforcement Affairs (INL) made it "vulnerable to waste and fraud".

Senator Joe Lieberman, chairman of the Senate Committee on Homeland Security and Governmental Affairs, said it could take the state department up to five years to review invoices and demand repayment from DynCorp for unjustified expenses.

"This scenario is far too frequent across the federal government," he said.

DynCorp had been asked to improve its management of government-owned equipment in Iraq twice before.

Original article posted here.

Why weazl hates to be right: Iraqi government folds on Blackwater ban

Joint inquiry could resolve Blackwater standoff

Ewen MacAskill in Washington
Thursday September 20, 2007
The Guardian

The US and Iraqi governments were yesterday planning to announce a joint investigation into Sunday's shooting of eight civilians in Baghdad that led to the suspension of the private American security firm Blackwater.

The inquiry offers a face-saving way out of an awkward standoff between the two governments. The US, which heavily relies on Blackwater for protection of its diplomatic staff and other western workers, was forced for a second day in a row to order all state department employees not to venture outside the relative safety of Baghdad's fortified green zone other than by helicopter.

The Iraqi prime minister, Nuri al-Maliki, yesterday urged the US to stop using Blackwater and transfer the work to other firms. "We will not allow Iraqis to be killed in cold blood ... what happened was a crime," he told a news conference in Baghdad.

He disputed the Blackwater version of the shooting.

"It is in our interests to freeze the work of this company and the embassy can travel with other companies," Mr Maliki said.

Blackwater is the biggest of three private security firms employed by the state department. Private security staff involved in controversial incidents are often hastily withdrawn but a US embassy spokeswoman, Mirembe Natongo, said those involved were still in Iraq.

The proposed US-Iraqi inquiry comes amid conflicting accounts about what happened on Sunday. Blackwater said its employees had acted "lawfully and appropriately" after coming under attack. But the Iraqi government insisted Blackwater had opened fire on innocent civilians.

The deputy press secretary at the US state department, Tom Casey, said: "We're in conversations with the Iraqis on how we can find some mechanisms for looking at this issue in a joint way. There have been a number of questions that have been raised and we want to make sure that both we and the Iraqis have a common set of facts that we're working from and also that we can hopefully come to some common conclusions on how to proceed."

The US secretary of state, Condoleezza Rice, who is on a trip to the Middle East, told journalists that she wanted to "work with the Iraqi government to make certain that this sort of thing doesn't happen".

Original article posted here.

Further reason why weazl thinks that mercenaries will not be leaving Iraq anytime soon

And this clip from April 2006should put the lie to the facade that the Moron didn't know about this or that it was an "oversight" .

The Mafia of US mercenaries and the cash and carry government that feeds them

The corporate takeover of U.S. intelligence

by Tim Shorrock

The U.S. government now outsources a vast portion of its spying operations to private firms -- with zero public accountability.

More than five years into the global "war on terror," spying has become one of the fastest-growing private industries in the United States. The federal government relies more than ever on outsourcing for some of its most sensitive work, though it has kept details about its use of private contractors a closely guarded secret. Intelligence experts, and even the government itself, have warned of a critical lack of oversight for the booming intelligence business.

On May 14, at an industry conference in Colorado sponsored by the Defense Intelligence Agency, the U.S. government revealed for the first time how much of its classified intelligence budget is spent on private contracts: a whopping 70 percent. Based on this year’s estimated budget of at least $48 billion, that would come to at least $34 billion in contracts. The figure was disclosed by Terri Everett, a senior procurement executive in the Office of the Director of National Intelligence, the agency established by Congress in 2004 to oversee the 16 agencies that make up the U.S. intelligence infrastructure. A copy of Everett's unclassified PowerPoint slide presentation, titled "Procuring the Future" and dated May 25, was obtained by Salon. (It has since become available on the DIA's Web site.) "We can't spy ... If we can't buy!" one of the slides proclaims, underscoring the enormous dependence of U.S. intelligence agencies on private sector contracts.

The DNI figures show that the aggregate number of private contracts awarded by intelligence agencies rose by about 38 percent from the mid-1990s to 2005. But the surge in outsourcing has been far more dramatic measured in dollars: Over the same period of time, the total value of intelligence contracts more than doubled, from about $18 billion in 1995 to about $42 billion in 2005.

"Those numbers are startling," said Steven Aftergood, the director of the Project on Government Secrecy at the Federation of American Scientists and an expert on the U.S. intelligence budget. "They represent a transformation of the Cold War intelligence bureaucracy into something new and different that is literally dominated by contractor interests."

Because of the cloak of secrecy thrown over the intelligence budgets, there is no way for the American public, or even much of Congress, to know how those contractors are getting the money, what they are doing with it, or how effectively they are using it. The explosion in outsourcing has taken place against a backdrop of intelligence failures for which the Bush administration has been hammered by critics, from Saddam Hussein's fictional weapons of mass destruction to abusive interrogations that have involved employees of private contractors operating in Iraq, Afghanistan and Guantánamo Bay, Cuba. Aftergood and other experts also warn that the lack of transparency creates conditions ripe for corruption.

Trey Brown, a DNI press officer, told Salon that the 70 percent figure disclosed by Everett refers to everything that U.S. intelligence agencies buy, from pencils to buildings to "whatever devices we use to collect intelligence." Asked how much of the money doled out goes toward big-ticket items like military spy satellites, he replied, "We can't really talk about those kinds of things."

The media has reported on some contracting figures for individual agencies, but never before for the entire U.S. intelligence enterprise. In 2006, the Washington Post reported that a "significant majority" of the employees at two key agencies, the National Counterterrrorism Center and the Pentagon's Counter-Intelligence Field Activity office, were contractors (at CIFA, the number was more than 70 percent). More recently, former officers with the Central Intelligence Agency have said the CIA's workforce is about 60 percent contractors.

But the statistics alone don't even show the degree to which outsourcing has penetrated U.S. intelligence -- many tasks and services once reserved exclusively for government employees are being handled by civilians. For example, private contractors analyze much of the intelligence collected by satellites and low-flying unmanned aerial vehicles, and they write reports that are passed up to the line to high-ranking government officials. They supply and maintain software programs that can manipulate and depict data used to track terrorist suspects, both at home and abroad, and determine what targets to hit in hot spots in Iraq and Afghanistan. Such data is also at the heart of the National Security Agency's massive eavesdropping programs and may be one reason the DNI is pushing Congress to grant immunity to corporations that may have cooperated with the NSA over the past five years. Contractors also provide collaboration tools to help individual agencies communicate with each other, and they supply security tools to protect intelligence networks from outside tampering.

Outsourcing has also spread into the realm of human intelligence. At the CIA, contractors help staff overseas stations and provide disguises used by agents working under cover. According to Robert Baer, the former CIA officer who was the inspiration for the character played by George Clooney in the film "Syriana," a contractor stationed in Iraq even supervises where CIA agents go in Baghdad and whom they meet. "It's a completely different culture from the way the CIA used to be run, when a case officer determined where and when agents would go," he told me in a recent interview. "Everyone I know in the CIA is leaving and going into contracting whether they're retired or not."

The DNI itself has voiced doubts about the efficiency and effectiveness of outsourcing. In a public report released last fall, the agency said the intelligence community increasingly "finds itself in competition with its contractors for our own employees." Faced with arbitrary staffing limits and uncertain funding, the report said, intelligence agencies are forced "to use contractors for work that may be borderline 'inherently governmental'" -- meaning the agencies have no clear idea about what work should remain exclusively inside the government versus work that can be done by civilians working for private firms. The DNI also found that "those same contractors recruit our own employees, already cleared and trained at government expense, and then 'lease' them back to us at considerably greater expense."

A Senate Intelligence Committee report released on Thursday spells out the costs to taxpayers. It estimates that the average annual cost for a government intelligence officer is $126,500, compared to the average $250,000 (including overhead) paid by the government for an intelligence contractor. "Given this cost disparity," the report concluded, "the Committee believes that the Intelligence Community should strive in the long-term to reduce its dependence upon contractors."

The DNI began an intensive study of contracting last year, but when its "IC Core Contractor Inventory" report was sent to Congress in April, DNI officials refused to release its findings to the public, citing risks to national security. The next month, a report from the House Permanent Select Committee on Intelligence rebuked the DNI in unusually strong language, concluding that U.S. officials "do not have an adequate understanding of the size and composition of the contractor work force, a consistent and well-articulated method for assessing contractor performance, or strategies for managing a combined staff-contractor workforce."

U.S. intelligence budgets are classified, and all discussions about them in Congress are held in secret. Much of the information, however, is available to intelligence contractors, who are at liberty to lobby members of Congress about the budgets, potentially skewing policy in favor of the contractors. For example, Science Applications International Corp., one of the nation's largest intelligence contractors, spent $1,330,000 in their congressional lobbying efforts in 2006, which included a focus on the intelligence and defense budgets, according to records filed with the Senate's Office of Public Records.

The public, of course, is completely excluded from these discussions. "It's not like a debate when someone loses," said Aftergood. "There is no debate. And the more work that migrates to the private sector, the less effective congressional oversight is going to be." From that secretive process, he added, "there's only a short distance to the Duke Cunninghams of the world and the corruption of the process in the interest of private corporations." In March 2006, Randy "Duke" Cunningham, R-Calif., who had resigned from Congress several months earlier, was sentenced to eight years in prison after being convicted of accepting more than $2 million in bribes from executives with MZM, a prominent San Diego defense contractor. In return for the bribes, Cunningham used his position on the House appropriations and intelligence committees to win tens of millions of dollars' worth of contracts for MZM at the CIA and the Pentagon's CIFA office, which has been criticized by Congress for spying on American citizens. The MZM case deepened earlier this month when Kyle "Dusty" Foggo, the former deputy director of the CIA, was indicted for conspiring with former MZM CEO Brent Wilkes to steer contracts toward the company.

U.S. intelligence agencies have always relied on private companies for technology and hardware. Lockheed built the famous U-2 spy plane under specifications from the CIA, and dozens of companies, from TRW to Polaroid to Raytheon, helped develop the high-resolution cameras and satellites that beamed information back to Washington about the Soviet Union and its military and missile installations. The National Security Agency, which was founded in the early 1950s to monitor foreign communications and telephone calls, hired IBM, Cray and other companies to make the supercomputers that helped the agency break encryption codes and transform millions of bits of data into meaningful intelligence.

By the 1990s, however, commercial developments in encryption, information technology, imagery and satellites had outpaced the government's ability to keep up, and intelligence agencies began to turn to the private sector for technologies they once made in-house. Agencies also turned to outsourcing after Congress, as part of the "peace dividend" that followed the end of the Cold War, cut defense and intelligence budgets by about 30 percent.

When the National Geospatial-Intelligence Agency was created in 1995 as the primary collection agency for imagery and mapping, for example, it immediately began buying its software and much of its satellite imagery from commercial vendors; today, half of its 14,000 workers are full-time equivalent contractors who work inside NGA facilities but collect their paychecks from companies like Booz Allen Hamilton and Lockheed Martin. In the late 1990s, the NSA began outsourcing its internal telecommunications and even some of its signals analysis to private companies, such as Computer Services Corp. and SAIC.

Outsourcing increased dramatically after 9/11. The Bush administration and Congress, determined to prevent further terrorist attacks, ordered a major increase in intelligence spending and organized new institutions to fight the war on terror, such as the National Counterterrorism Center. To beef up these organizations, the CIA and other agencies were authorized to hire thousands of analysts and human intelligence specialists. Partly because of the big cuts of the 1990s, however, many of the people with the skills and security clearances to do that work were working in the private sector. As a result, contracting grew quickly as intelligence agencies rushed to fill the gap.

That increase can be seen in the DNI documents showing contract award dollars: Contract spending, based on the DNI data and estimates from this period, remained fairly steady from 1995 to 2001, at about $20 billion a year. In 2002, the first year after the attacks on New York and Washington, contracts jumped to about $32 billion. In 2003 they jumped again, reaching about $42 billion. They have remained steady since then through 2006 (the DNI data is current as of last August).

Because nearly 90 percent of intelligence contracts are classified and the budgets kept secret, it's difficult to draw up a list of top contractors and their revenues derived from intelligence work. Based on publicly available information, including filings from publicly traded companies with the Securities and Exchange Commission and company press releases and Web sites, the current top five intelligence contractors appear to be Lockheed Martin, Northrop Grumman, SAIC, General Dynamics and L-3 Communications. Other major contractors include Booz Allen Hamilton, CACI International, DRS Technologies and Mantech International. The industry's growth and dependence on government budgets has made intelligence contracting an attractive market for former high-ranking national security officials, like former CIA director George Tenet, who now earns millions of dollars working as a director and advisor to four companies that hold contracts with U.S. intelligence agencies and do big business in Iraq and elsewhere.

Congress, meanwhile, is beginning to ask serious questions about intelligence outsourcing and how lawmakers influence the intelligence budget process. Some of that interest has been generated by the Cunningham scandal. In another recent case, Rep. Rick Renzi, a Republican from Arizona, resigned from the House Intelligence Committee in April because he is under federal investigation for introducing legislation that may have benefited Mantech International, a major intelligence contractor where Renzi's father works in a senior executive position.

In the Cunningham case, many of MZM's illegal contracts were funded by "earmarks" that he inserted in intelligence bills. Earmarks, typically budget items placed by lawmakers to benefit projects or companies in their district, are often difficult to find amid the dense verbiage of legislation -- and in the "black" intelligence budgets, they are even harder to find. In its recent budget report, the House Intelligence Committee listed 26 separate earmarks for intelligence contracts, along with the sponsor's name and the dollar amount of the contract. The names of the contractors, however, were not included in the list.

Both the House and Senate are now considering intelligence spending bills that require the DNI, starting next year, to provide extensive information on contractors. The House version requires an annual report on contractors that might be committing waste and fraud, as well as reviews on its "accountability mechanisms" for contractors and the effect of contractors on the intelligence workforce. The amendment was drafted by Rep. David Price, D-N.C., who introduced a similar bill last year that passed the House but was quashed by the Senate. In a statement on the House floor on May 10, Price explained that he was seeking answers to several simple questions: "Should (contractors) be involved in intelligence collection? Should they be involved in analysis? What about interrogations or covert operations? Are there some activities that are so sensitive they should only be performed by highly trained Intelligence Community professionals?"

If either of the House or Senate intelligence bills pass in their present form, the overall U.S. intelligence budget will be made public. Such transparency is critical as contracting continues to expand, said Paul Cox, Price's press secretary. "As a nation," he said, "we really need to take a look and decide what's appropriate to contract and what's inherently governmental."

Original article posted here.

Hired Guns, Off the Books

Blackwater: Bush’s Shadow Army

On September 10, 2001, before most Americans had heard of Al Qaeda or imagined the possibility of a “war on terror,” Donald Rumsfeld stepped to the podium at the Pentagon to deliver one of his first major addresses as Defense Secretary under President George W. Bush. Standing before the former corporate executives he had tapped as his top deputies overseeing the high-stakes business of military contracting–many of them from firms like Enron, General Dynamics and Aerospace Corporation–Rumsfeld issued a declaration of war.

“The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America,” Rumsfeld thundered. “It disrupts the defense of the United States and places the lives of men and women in uniform at risk.” He told his new staff, “You may think I’m describing one of the last decrepit dictators of the world…. [But] the adversary’s closer to home,” he said. “It’s the Pentagon bureaucracy.” Rumsfeld called for a wholesale shift in the running of the Pentagon, supplanting the old DoD bureaucracy with a new model, one based on the private sector. Announcing this major overhaul, Rumsfeld told his audience, “I have no desire to attack the Pentagon; I want to liberate it. We need to save it from itself.”

The next morning, the Pentagon would be attacked, literally, as a Boeing 757–American Airlines Flight 77–smashed into its western wall. Rumsfeld would famously assist rescue workers in pulling bodies from the rubble. But it didn’t take long for Rumsfeld to seize the almost unthinkable opportunity presented by 9/11 to put his personal war–laid out just a day before–on the fast track. The new Pentagon policy would emphasize covert actions, sophisticated weapons systems and greater reliance on private contractors. It became known as the Rumsfeld Doctrine. “We must promote a more entrepreneurial approach: one that encourages people to be proactive, not reactive, and to behave less like bureaucrats and more like venture capitalists,” Rumsfeld wrote in the summer of 2002 in an article for Foreign Affairs titled “Transforming the Military.”

Although Rumsfeld was later thrown overboard by the Administration in an attempt to placate critics of the Iraq War, his military revolution was here to stay. Bidding farewell to Rumsfeld in November 2006, Bush credited him with overseeing the “most sweeping transformation of America’s global force posture since the end of World War II.” Indeed, Rumsfeld’s trademark “small footprint” approach ushered in one of the most significant developments in modern warfare–the widespread use of private contractors in every aspect of war, including in combat.

The often overlooked subplot of the wars of the post-9/11 period is their unprecedented scale of outsourcing and privatization. From the moment the US troop buildup began in advance of the invasion of Iraq, the Pentagon made private contractors an integral part of the operations. Even as the government gave the public appearance of attempting diplomacy, Halliburton was prepping for a massive operation. When US tanks rolled into Baghdad in March 2003, they brought with them the largest army of private contractors ever deployed in modern war. By the end of Rumsfeld’s tenure in late 2006, there were an estimated 100,000 private contractors on the ground in Iraq–an almost one-to-one ratio with active-duty American soldiers.

To the great satisfaction of the war industry, before Rumsfeld resigned he took the extraordinary step of classifying private contractors as an official part of the US war machine. In the Pentagon’s 2006 Quadrennial Review, Rumsfeld outlined what he called a “road map for change” at the DoD, which he said had begun to be implemented in 2001. It defined the “Department’s Total Force” as “its active and reserve military components, its civil servants, and its contractors–constitut[ing] its warfighting capability and capacity. Members of the Total Force serve in thousands of locations around the world, performing a vast array of duties to accomplish critical missions.” This formal designation represented a major triumph for war contractors–conferring on them a legitimacy they had never before enjoyed.

Contractors have provided the Bush Administration with political cover, allowing the government to deploy private forces in a war zone free of public scrutiny, with the deaths, injuries and crimes of those forces shrouded in secrecy. The Administration and the GOP-controlled Congress in turn have shielded the contractors from accountability, oversight and legal constraints. Despite the presence of more than 100,000 private contractors on the ground in Iraq, only one has been indicted for crimes or violations. “We have over 200,000 troops in Iraq and half of them aren’t being counted, and the danger is that there’s zero accountability,” says Democrat Dennis Kucinich, one of the leading Congressional critics of war contracting.

While the past years of Republican monopoly on government have marked a golden era for the industry, those days appear to be ending. Just a month into the new Congressional term, leading Democrats were announcing investigations of runaway war contractors. Representative John Murtha, chair of the Appropriations Committee’s Subcommittee on Defense, after returning from a trip to Iraq in late January, said, “We’re going to have extensive hearings to find out exactly what’s going on with contractors. They don’t have a clear mission and they’re falling all over each other.” Two days later, during confirmation hearings for Gen. George Casey as Army chief of staff, Senator Jim Webb declared, “This is a rent-an-army out there.” Webb asked Casey, “Wouldn’t it be better for this country if those tasks, particularly the quasi-military gunfighting tasks, were being performed by active-duty military soldiers in terms of cost and accountability?” Casey defended the contracting system but said armed contractors “are the ones that we have to watch very carefully.” Senator Joe Biden, chair of the Foreign Relations Committee, has also indicated he will hold hearings on contractors. Parallel to the ongoing investigations, there are several bills gaining steam in Congress aimed at contractor oversight.

Occupying the hot seat through these deliberations is the shadowy mercenary company Blackwater USA. Unbeknownst to many Americans and largely off the Congressional radar, Blackwater has secured a position of remarkable power and protection within the US war apparatus. This company’s success represents the realization of the life’s work of the conservative officials who formed the core of the Bush Administration’s war team, for whom radical privatization has long been a cherished ideological mission. Blackwater has repeatedly cited Rumsfeld’s statement that contractors are part of the “Total Force” as evidence that it is a legitimate part of the nation’s “warfighting capability and capacity.” Invoking Rumsfeld’s designation, the company has in effect declared its forces above the law–entitled to the immunity from civilian lawsuits enjoyed by the military, but also not bound by the military’s court martial system. While the initial inquiries into Blackwater have focused on the complex labyrinth of secretive subcontracts under which it operates in Iraq, a thorough investigation into the company reveals a frightening picture of a politically connected private army that has become the Bush Administration’s Praetorian Guard.

Blackwater Rising

Blackwater was founded in 1996 by conservative Christian multimillionaire and ex-Navy SEAL Erik Prince–the scion of a wealthy Michigan family whose generous political donations helped fuel the rise of the religious right and the Republican revolution of 1994. At its founding, the company largely consisted of Prince’s private fortune and a vast 5,000-acre plot of land located near the Great Dismal Swamp in Moyock, North Carolina. Its vision was “to fulfill the anticipated demand for government outsourcing of firearms and related security training.” In the following years, Prince, his family and his political allies poured money into Republican campaign coffers, supporting the party’s takeover of Congress and the ascension of George W. Bush to the presidency.

While Blackwater won government contracts during the Clinton era, which was friendly to privatization, it was not until the “war on terror” that the company’s glory moment arrived. Almost overnight, following September 11, the company would become a central player in a global war. “I’ve been operating in the training business now for four years and was starting to get a little cynical on how seriously people took security,” Prince told Fox News host Bill O’Reilly shortly after 9/11. “The phone is ringing off the hook now.”

Among those calls was one from the CIA, which contracted Blackwater to work in Afghanistan in the early stages of US operations there. In the ensuing years the company has become one of the greatest beneficiaries of the “war on terror,” winning nearly $1 billion in noncovert government contracts, many of them no-bid arrangements. In just a decade Prince has expanded the Moyock headquarters to 7,000 acres, making it the world’s largest private military base. Blackwater currently has 2,300 personnel deployed in nine countries, with 20,000 other contractors at the ready. It has a fleet of more than twenty aircraft, including helicopter gunships and a private intelligence division, and it is manufacturing surveillance blimps and target systems.

In 2005 after Hurricane Katrina its forces deployed in New Orleans, where it billed the federal government $950 per man, per day–at one point raking in more than $240,000 a day. At its peak the company had about 600 contractors deployed from Texas to Mississippi. Since Katrina, it has aggressively pursued domestic contracting, opening a new domestic operations division. Blackwater is marketing its products and services to the Department of Homeland Security, and its representatives have met with California Governor Arnold Schwarzenegger. The company has applied for operating licenses in all US coastal states. Blackwater is also expanding its physical presence inside US borders, opening facilities in Illinois and California.

Its largest obtainable government contract is with the State Department, for providing security to US diplomats and facilities in Iraq. That contract began in 2003 with the company’s $21 million no-bid deal to protect Iraq proconsul Paul Bremer. Blackwater has guarded the two subsequent US ambassadors, John Negroponte and Zalmay Khalilzad, as well as other diplomats and occupation offices. Its forces have protected more than ninety Congressional delegations in Iraq, including that of House Speaker Nancy Pelosi. According to the latest government contract records, since June 2004 Blackwater has been awarded $750 million in State Department contracts alone. It is currently engaged in an intensive lobbying campaign to be sent into Darfur as a privatized peacekeeping force. Last October President Bush lifted some sanctions on Christian southern Sudan, paving the way for a potential Blackwater training mission there. In January the Washington, DC, representative for southern Sudan’s regional government said he expected Blackwater to begin training the south’s security forces soon.

Since 9/11 Blackwater has hired some well-connected officials close to the Bush Administration as senior executives. Among them are J. Cofer Black, former head of counterterrorism at the CIA and the man who led the hunt for Osama bin Laden after 9/11, and Joseph Schmitz, former Pentagon Inspector General, who was responsible for policing contractors like Blackwater during much of the “war on terror”–something he stood accused of not doing effectively. By the end of Schmitz’s tenure, powerful Republican Senator Charles Grassley launched a Congressional probe into whether Schmitz had “quashed or redirected two ongoing criminal investigations” of senior Bush Administration officials. Under bipartisan fire, Schmitz resigned and signed up with Blackwater.

Despite its central role, Blackwater had largely operated in the shadows until March 31, 2004, when four of its private soldiers in Iraq were ambushed and killed in Falluja. A mob then burned the bodies and dragged them through the streets, stringing up two from a bridge over the Euphrates. In many ways it was the moment the Iraq War turned. US forces laid siege to Falluja days later, killing hundreds of people and displacing thousands, inflaming the fierce Iraqi resistance that haunts occupation forces to this day. For most Americans, it was the first they had heard of private soldiers. “People began to figure out this is quite a phenomenon,” says Representative David Price, a North Carolina Democrat, who said he began monitoring the use of private contractors after Falluja. “I’m probably like most Congress members in kind of coming to this awareness and developing an interest in it” after the incident.

What is not so well-known is that in Washington after Falluja, Blackwater executives kicked into high gear, capitalizing on the company’s newfound recognition. The day after the ambush, it hired the Alexander Strategy Group, a K Street lobbying firm run by former senior staffers of then-majority leader Tom DeLay before the firm’s meltdown in the wake of the Jack Abramoff scandal. A week to the day after the ambush, Erik Prince was sitting down with at least four senior members of the Senate Armed Services Committee, including its chair, John Warner. Senator Rick Santorum arranged the meeting, which included Warner and two other key Republican senators–Appropriations Committee chair Ted Stevens of Alaska and George Allen of Virginia. This meeting followed an earlier series of face-to-faces Prince had had with powerful House Republicans who oversaw military contracts. Among them: DeLay; Porter Goss, chair of the House Intelligence Committee (and future CIA director); Duncan Hunter, chair of the House Armed Services Committee; and Representative Bill Young, chair of the House Appropriations Committee. What was discussed at these meetings remains a secret. But Blackwater was clearly positioning itself to make the most of its new fame. Indeed, two months later, Blackwater was handed one of the government’s most valuable international security contracts, worth more than $300 million.

The firm was also eager to stake out a role in crafting the rules that would govern mercenaries under US contract. “Because of the public events of March 31, [Blackwater’s] visibility and need to communicate a consistent message has elevated here in Washington,” said Blackwater’s new lobbyist Chris Bertelli. “There are now several federal regulations that apply to their activities, but they are generally broad in nature. One thing that’s lacking is an industry standard. That’s something we definitely want to be engaged in.” By May Blackwater was leading a lobbying effort by the private military industry to try to block Congressional or Pentagon efforts to place their forces under the military court martial system.

But while Blackwater enjoyed its new status as a hero in the “war on terror” within the Administration and the GOP-controlled Congress, the families of the four men killed at Falluja say they were being stonewalled by Blackwater as they attempted to understand the circumstances of how their loved ones were killed. After what they allege was months of effort to get straight answers from the company, the families filed a ground-breaking wrongful death lawsuit against Blackwater in January 2005, accusing the company of not providing the men with what they say were contractually guaranteed safeguards. Among the allegations: The company sent them on the Falluja mission that day short two men, with less powerful weapons than they should have had and in Pajero jeeps instead of armored vehicles. This case could have far-reaching reverberations and is being monitored closely by the war-contractor industry–former Halliburton subsidiary KBR has even filed an amicus brief supporting Blackwater. If the lawsuit is successful, it could pave the way for a tobacco litigation-type scenario, where war contractors find themselves besieged by legal claims of workers killed or injured in war zones.

As the case has made its way through the court system, Blackwater has enlisted powerhouse Republican lawyers to defend it, among them Fred Fielding, who was recently named by Bush as White House counsel, replacing Harriet Miers; and Kenneth Starr, former Whitewater prosecutor investigating President Clinton, and the company’s current counsel of record. Blackwater has not formally debated the specific allegations in the suit, but what has emerged in its court filings is a series of legal arguments intended to bolster Blackwater’s contention that it is essentially above the law. Blackwater claims that if US courts allow the company to be sued for wrongful death, that could threaten the nation’s war-fighting capacity: “Nothing could be more destructive of the all-volunteer, Total Force concept underlying U.S. military manpower doctrine than to expose the private components to the tort liability systems of fifty states, transported overseas to foreign battlefields,” the company argued in legal papers. In February Blackwater suffered a major defeat when the Supreme Court declined its appeal to hear the Falluja case, paving the way for the state trial–where there would be no cap on damages a jury could award–to proceed.

Congress is beginning to take an interest in this potentially groundbreaking case. On February 7 Representative Henry Waxman chaired hearings of the Oversight and Government Reform Committee. While the hearings were billed as looking at US reliance on military contractors, they largely focused on Blackwater and the Falluja incident. For the first time, Blackwater was forced to share a venue with the families of the men killed at Falluja. “Private contractors like Blackwater work outside the scope of the military’s chain of command and can literally do whatever they please without any liability or accountability from the US government,” Katy Helvenston, whose son Scott was one of the Blackwater contractors killed, told the committee. “Therefore, Blackwater can continue accepting hundreds of millions of dollars in taxpayer money from the government without having to answer a single question about its security operators.”

Citing the pending litigation, Blackwater’s general counsel, Andrew Howell, declined to respond to many of the charges levied against his company by the families and asked several times for the committee to go into closed session. “The men who went on the mission on March 31, each had their weapons and they had sufficient ammunition,” Howell told the committee, adding that the men were in “appropriate” vehicles. That was sharply disputed by the men’s families, who allege that in order to save $1.5 million Blackwater did not provide the four with armored vehicles. “Once the men signed on with Blackwater and were flown to the Middle East, Blackwater treated them as fungible commodities,” Helvenston told lawmakers in her emotional testimony, delivered on behalf of all four families.

The issue that put this case on Waxman’s radar was the labyrinth of subcontracts underpinning the Falluja mission. Since November 2004 Waxman has been trying to pin down who the Blackwater men were ultimately working for the day of the ambush. “For over eighteen months, the Defense Department wouldn’t even respond to my inquiry,” says Waxman. “When it finally replied last July, it didn’t even supply the breakdown I requested. In fact, it denied that private security contractors did any work at all under the [Pentagon’s contracting program]. We now know that isn’t true.” Waxman’s struggle to follow the money on this one contract involving powerful war contractors like KBR provides a graphic illustration of the secretive nature of the whole war contracting industry.

What is not in dispute regarding the Falluja incident is that Blackwater was working with a Kuwaiti business called Regency under a contract with the world’s largest food services company, Eurest Support Services. ESS is a subcontractor for KBR and another giant war contractor, Fluor, in Iraq under the Pentagon’s LOGCAP contracting program. One contract covering Blackwater’s Falluja mission indicated the mission was ultimately a subcontract with KBR. Last summer KBR denied this. Then ESS wrote Waxman to say the mission was conducted under Fluor’s contract with ESS. Fluor denied that, and the Pentagon told Waxman it didn’t know which company the mission was ultimately linked to. Waxman alleged that Blackwater and the other subcontractors were “adding significant markups” to their subcontracts for the same security services that Waxman believes were then charged to US taxpayers. “It’s remarkable that the world of contractors and subcontractors is so murky that we can’t even get to the bottom of this, let alone calculate how many millions of dollars taxpayers lose in each step of the subcontracting process,” says Waxman.

While it appeared for much of the February 7 hearing that the contract’s provenance would remain obscure, that changed when, at the end of the hearing, the Pentagon revealed that the original contractor was, in fact, KBR. In violation of military policy against LOGCAP contractors’ using private forces for security instead of US troops, KBR had entered into a subcontract with ESS that was protected by Blackwater; those costs were allegedly passed on to US taxpayers to the tune of $19.6 million. Blackwater said it billed ESS $2.3 million for its services, meaning a markup of more than $17 million was ultimately passed on to the government. Three weeks after the hearing, KBR told shareholders it may be forced to repay up to $400 million to the government as a result of an ongoing Army investigation.

It took more than two years for Waxman to get an answer to a simple question: Whom were US taxpayers paying for services? But, as the Falluja lawsuit shows, it is not just money at issue. It is human life.

A Killing on Christmas Eve

While much of the publicity Blackwater has received stems from Falluja, another, more recent incident is attracting new scrutiny. On Christmas Eve inside Baghdad’s heavily fortified Green Zone, an American Blackwater contractor allegedly shot and killed an Iraqi bodyguard protecting a senior Iraqi official. For weeks after the shooting, unconfirmed reports circulated around the Internet that alcohol may have been involved and that the Iraqi was shot ten times in the chest. The story then went that the contractor was spirited out of Iraq before he could be prosecuted. Media inquiries got nowhere–the US Embassy refused to confirm that it was a Blackwater contractor, and the company refused to comment.

Then the incident came up at the February 7 Congressional hearing. As the session was drawing to a close, Representative Kucinich raced back into the room with what he said was a final question. He entered a news report on the incident into the record and asked Blackwater counsel Howell if Blackwater had flown the contractor out of Iraq after the alleged shooting. “That gentleman, on the day the incident occurred, he was off duty,” Howell said, in what was the first official confirmation of the incident from Blackwater. “Blackwater did bring him back to the United States.”

“Is he going to be extradited back to Iraq for murder, and if not, why not?” Kucinich asked.

“Sir, I am not law enforcement. All I can say is that there’s currently an investigation,” Howell replied. “We are fully cooperating and supporting that investigation.”

Kucinich then said, “I just want to point out that there’s a question that could actually make [Blackwater’s] corporate officers accessories here in helping to create a flight from justice for someone who’s committed a murder.”

The War on the Hill

Several bills are now making their way through Congress aimed at oversight and transparency of the private forces that have emerged as major players in the wars of the post-9/11 period. In mid-February Senators Byron Dorgan, Patrick Leahy and John Kerry introduced legislation aimed at cracking down on no-bid contracts and cronyism, providing for penalties of up to twenty years in prison and fines of up to $1 million for what they called “war profiteering.” It is part of what Democrats describe as a multi-pronged approach. “I think there’s a critical mass of us now who are working on it,” says Congressman Price, who represents Blackwater’s home state. In January Price introduced legislation that would expand the Military Extraterritorial Jurisdiction Act of 2000 (MEJA) to include all contractors in a war zone, not just those working for or alongside the armed forces. Most of Blackwater’s work in Iraq, for instance, is contracted by the State Department. Price indicated that the alleged Christmas Eve shooting could be a test case of sorts under his legislation. “I will be following this and I’ll be calling for a full investigation,” he said.

But there’s at least one reason to be wary of this approach: Price’s office consulted with the private military lobby as it crafted the legislation, which has the industry’s strong endorsement. Perhaps that’s because MEJA has been for the most part unenforced. “Even in situations when US civilian law could potentially have been applied to contractor crimes, it wasn’t,” observed P.W. Singer, a leading scholar on contractors. American prosecutors are already strapped for resources in their home districts–how could they be expected to conduct complex investigations in Iraq? Who will protect the investigators and prosecutors? How will they interview Iraqi victims? How could they effectively oversee 100,000 individuals spread across a dangerous war zone? “It’s a good question,” concedes Price. “I’m not saying that it would be a simple matter.” He argues his legislation is an attempt to “put the whole contracting enterprise on a new accountable footing.”

This past fall, taking a different tack–much to the dismay of the industry–Republican Senator Lindsey Graham, an Air Force reserve lawyer and former reserve judge, quietly inserted language into the 2007 Defense Authorization, which Bush signed into law, that places contractors under the Uniform Code of Military Justice (UCMJ), commonly known as the court martial system. Graham implemented the change with no public debate and with almost no awareness among the broader Congress, but war contractors immediately questioned its constitutionality. Indeed, this could be a rare moment when mercenaries and civil libertarians are on the same side. Many contractors are not armed combatants; they work in food, laundry and other support services. While the argument could be made that armed contractors like those working for Blackwater should be placed under the UCMJ, Graham’s change could result in a dishwasher from Nepal working for KBR being prosecuted like a US soldier. On top of all this, the military has enough trouble policing its own massive force and could scarcely be expected to monitor an additional 100,000 private personnel. Besides, many contractors in Iraq are there under the auspices of the State Department and other civilian agencies, not the military.

In an attempt to clarify these matters, Senator Barack Obama introduced comprehensive new legislation in February. It requires clear rules of engagement for armed contractors, expands MEJA and provides for the DoD to “arrest and detain” contractors suspected of crimes and then turn them over to civilian authorities for prosecution. It also requires the Justice Department to submit a comprehensive report on current investigations of contractor abuses, the number of complaints received about contractors and criminal cases opened. In a statement to The Nation, Obama said contractors are “operating with unclear lines of authority, out-of-control costs and virtually no oversight by Congress. This black hole of accountability increases the danger to our troops and American civilians serving as contractors.” He said his legislation would “re-establish control over these companies,” while “bringing contractors under the rule of law.”

Democratic Representative Jan Schakowsky, a member of the House intelligence committee, has been a leading critic of the war contracting system. Her Iraq and Afghanistan Contractor Sunshine Act, introduced in February, which bolsters Obama’s, boils down to what Schakowsky sees as a long overdue fact-finding mission through the secretive contracting bureaucracy. Among other provisions, it requires the government to determine and make public the number of contractors and subcontractors (at any tier) that are employed in Iraq and Afghanistan; any host country’s, international or US laws that have been broken by contractors; disciplinary actions taken against contractors; and the total number of dead and wounded contractors. Schakowsky says she has tried repeatedly over the past several years to get this information and has been stonewalled or ignored. “We’re talking about billions and billions of dollars–some have estimated forty cents of every dollar [spent on the occupation] goes to these contractors, and we couldn’t get any information on casualties, on deaths,” says Schakowsky. “It has been virtually impossible to shine the light on this aspect of the war and so when we discuss the war, its scope, its costs, its risks, they have not been part of this whatsoever. This whole shadow force that’s been operating in Iraq, we know almost nothing about. I think it keeps at arm’s length from the American people what this war is all about.”

While not by any means a comprehensive total of the number of contractor casualties, 770 contractor deaths and 7,761 injured in Iraq as of December 31, 2006, were confirmed by the Labor Department. But that only counts those contractors whose families applied for benefits under the government’s Defense Base Act insurance. Independent analysts say the number is likely much higher. Blackwater alone has lost at least twenty-seven men in Iraq. And then there’s the financial cost: Almost $4 billion in taxpayer funds have been paid for private security forces in Iraq, according to Waxman. Yet even with all these additional forces, the military is struggling to meet the demands of a White House bent on military adventurism.

A week after Donald Rumsfeld’s rule at the Pentagon ended, US forces had been stretched so thin by the “war on terror” that former Secretary of State Colin Powell declared “the active Army is about broken.” Rather than rethinking its foreign policies, the Administration forged ahead with plans for a troop “surge” in Iraq, and Bush floated a plan to supplement the military with a Civilian Reserve Corps in his January State of the Union address. “Such a corps would function much like our military Reserve. It would ease the burden on the armed forces by allowing us to hire civilians with critical skills to serve on missions abroad when America needs them,” Bush said. The President, it seemed, was just giving a fancy new title to something the Administration has already done with its “revolution” in military affairs and unprecedented reliance on contractors. Yet while Bush’s proposed surge has sparked a fierce debate in Congress and among the public, the Administration’s increasing reliance on private military contractors has gone largely undebated and underreported.

“The increasing use of contractors, private forces or as some would say ‘mercenaries’ makes wars easier to begin and to fight–it just takes money and not the citizenry,” says Michael Ratner, president of the Center for Constitutional Rights, which has sued contractors for alleged abuses in Iraq. “To the extent a population is called upon to go to war, there is resistance, a necessary resistance to prevent wars of self-aggrandizement, foolish wars and in the case of the United States, hegemonic imperialist wars. Private forces are almost a necessity for a United States bent on retaining its declining empire.”

With talk of a Civilian Reserve Corps and Blackwater promoting the idea of a privatized “contractor brigade” to work with the military, war critics in Congress are homing in on what they see as a sustained, undeclared escalation through the use of private forces. “‘Surge’ implies a bump that has a beginning and an end,” says Schakowsky. “Having a third or a quarter of [the forces] present on the ground not even part of the debate is a very dangerous thing in our democracy, because war is the most critical thing that we do.”

Indeed, contractor deaths are not counted in the total US death count, and their crimes and violations go undocumented and unpunished, further masking the true costs of the war. “When you’re bringing in contractors whom the law doesn’t apply to, the Geneva Conventions, common notions of morality, everything’s thrown out the window,” says Kucinich. “And what it means is that these private contractors are really an arm of the Administration and its policies.”

Kucinich says he plans to investigate the potential involvement of private forces in so-called “black bag,” “false flag” or covert operations in Iraq. “What’s the difference between covert activities and so-called overt activities which you have no information about? There’s no difference,” he says. Kucinich also says the problems with contractors are not simply limited to oversight and transparency. “It’s the privatization of war,” he says. The Administration is “linking private war contractor profits with warmaking. So we’re giving incentives for the contractors to lobby the Administration and the Congress to create more opportunities for profits, and those opportunities are more war. And that’s why the role of private contractors should be sharply limited by Congress.”

Jeremy Scahill reports on the Bush Administration’s growing dependence on private security forces such as Blackwater USA and efforts in Congress to rein them in. This article is adapted from his new book, Blackwater: The Rise of the World’s Most Powerful Mercenary Army (Nation Books).

Original article posted here.