Top Ten War Profiteers

[Moses]

    The Top Ten War Profiteers of 2004
    The Center for Corporate Policy

    Friday 31 December 2004

    1. AEGIS: In June, the Pentagon's Program Management Office in Iraq awarded a $293 million contract to coordinate security operations among thousands of private contractors to Aegis, a UK firm whose founder was once investigated for illegal arms smuggling. An inquiry by the British parliament into Sandline, Aegis head Tim Spicer's former firm, determined that the company had shipped guns to Sierra Leone in 1998 in violation of a UN arms embargo. Sandline's position was that it had approval from the British government, although British ministers were cleared by the inquiry. Spicer resigned from Sandline in 2000 and incorporated Aegis in 2002.

    2. BEARING POINT: Critics find it ironic that Bearing Point, the former consulting division of KPMG, received a $240 million contract in 2003 to help develop Iraq's "competitive private sector," since it had a hand in the development of the contract itself. According to a March 22 report by AID's assistant inspector general Bruce Crandlemire, "Bearing Point's extensive involvement in the development of the Iraq economic reform program creates the appearance of unfair competitive advantage in the contract award process."

    Bearing Point spent five months helping USAID write the job specifications and even sent some employees to Iraq to begin work before the contract was awarded, while its competitors had only a week to read the specifications and submit their own bids after final revisions were made. "No company who writes the specs for a contract should get the contract," says Keith Ashdown, the vice president of Washington, DC-based Taxpayers for Common Sense.

    3. BECHTEL: Schools, hospitals, bridges, airports, water treatment plants, power plants, railroad, irrigation, electricity, etc. Bechtel was literally tasked with repairing much of Iraq's infrastructure, a job that was critical to winning hearts and minds after the war. To accomplish this, the company hired over 90 Iraqi subcontractors for at least 100 jobs. Most of these subcontracts involved rote maintenance and repair work, however, and for sophisticated work requiring considerable hands-on knowledge of the country's infrastructure, the company bypassed Iraqi engineers and managers.

    Although Bechtel is not entirely to blame, the company has yet to meet virtually any of the major deadlines in its original contract. According to a June GAO report, "electrical service in the country as a while has not shown a marked improvement over the immediate postwar levels of May 2003 and has worsened in some governorates."

    4. BKSH & ASSOCIATES: Chairman Charlie Black, is an old Bush family friend and prominent Republican lobbyist whose firm is affiliated with Burson Marsteller, the global public relations giant. Black was a key player in the Bush/Cheney 2000 campaign and together with his wife raised $100,000 for this year's reelection campaign.

    BKSH clients with contracts in Iraq include Fluor International (whose ex-chair Phillip Carroll was tapped to head Iraq's oil ministry after the war, and whose board includes the wife of James Woolsey, the ex-CIA chief who was sent by Paul Wolfowitz before the war to convince European leaders of Saddam Hussein's ties to al Qaeda). Fluor has won joint contracts worth up to $1.6 billion[b/].

    Another client is Cummins Engine, which has managed to sell its power generators thanks to the country's broken infrastructure.

    Most prominent among BKSH's clients, however, is the Iraqi National Congress, whose leader Ahmed Chalabi was called the "George Washington of Iraq" by certain Pentagon neoconservatives before his fall from grace. BKSH's K. Riva Levinson was hired to handle the INC's U.S. public relations strategy in 1999. Hired by U.S. taxpayers, that is: Until July 2003, the company was paid $25,000 per month by the U.S. State Department to support the INC.

    5. CACI AND TITAN: Although members of the military police face certain prosecution for the horrific treatment of prisoners at the Abu Ghraib prison, so far the corporate contractors have avoided any charges. Maj. Gen. Antonio Taguba reported in an internal Army report that two CACI employees "were either directly or indirectly responsible" for abuses at the prison, including the use of dogs to threaten detainees and forced sexual abuse and other threats of violence. Another internal Army report suggested that Steven Stefanowicz, one of 27 CACI interrogators working for the Army in Iraq, "clearly knew [that] his instructions" to soldiers interrogating Iraqi prisoners "equated to physical abuse."

    "Titan's role in Iraq is to serve as translators and interpreters for the U.S. Army," company CEO Gene Ray said, implying that news reports had inaccurately implied the employees' involvement in torture. "The company's contract is for linguists, not interrogators." But according to Joseph a. Neurauter, a GSA suspension and debarment official, CACI's role in designing its own Abu Ghraib contract "continues to be an open issue and a potential conflict of interest."

    Nevertheless, the GSA and other agencies conducting their own investigations have yet to find a reason to suspend the company from any new contracts. As a result, in August the Army gave CACI another $15 million no-bid contract to continue providing interrogation services for intelligence gathering in Iraq; In September, the Army awarded Titan a contract worth up to $400 million for additional translators.

    6. CUSTER BATTLES: At the end of September, the Defense Department suspended Custer Battles (the name comes from the company's two principle founders - Michael Battles and Scott Custer) and 13 associated individuals and affiliated corporations from all federal contracts for fraudulent billing practices involving the use of sham corporations set up in Lebanon and the Cayman Islands. The CPA caught the company after it left a spreadsheet behind at a meeting with CPA employees. The spreadsheet revealed that the company had marked up certain expenses associated with a currency exchange contract by 162 percent.

    7. HALLIBURTON: In December Congressman Waxman (D-CA), announced that "a growing list of concern's about Halliburton's performance" on contracts that total $10.8 billion have led to multiple criminal investigations into overcharging and kickbacks. In nine different reports, government auditors have found "widespread, systemic problems with almost every aspect of Halliburton's work in Iraq, from cost estimation and billing systems to cost control and subcontract management." Six former employees have come forward, corroborating the auditors' concerns.

    Another "H-bomb" dropped just before the election, when a top contracting official responsible for ensuring that the Army Corps of Engineers follows competitive contracting rules accused top Pentagon officials of improperly favoring Halliburton in an early-contract before the occupation. Bunnatine Greenhouse says that when the Pentagon awarded the company a 5-year oil-related contract worth up to $7 billion, it pressured her to withdraw her objections, actions that she said were unprecedented in her experience.

(next- Mrs. Cheney's company)

[Moses]

8. LOCKHEED MARTIN: Lockheed Martin remains the king among war profiteers, raking in $21.9 billion in Pentagon contracts in 2003 alone. With satellites and planes, missiles and IT systems, the company has profited from just about every phase of the war except for the reconstruction. The company's stock has tripled since 2000 to just over $60.

    Lockheed is helping Donald Rumsfeld's global warfare system (called the Global Information Grid), a new integrated tech-heavy system that the company promises will change transform the nature of war. In fact, the large defense conglomerate's sophistication in areas as diverse as space systems, aeronautics and information and technology will allow it to play a leading role in the development of new weapons systems for decades to come, including a planned highly-secure military Internet, a spaced-based missile defense system and next-generation warplanes such as the F-22 (currently in production) and the Joint Strike Fighter F-35.

    E.C. Aldridge Jr., the former undersecretary of defense for acquisitions and procurement, gave final approval to begin building the F-35 in 2001, a decision worth $200 billion to the company. Although he soon left the Pentagon to join Lockheed's board, Aldridge continues to straddle the public-private divide, Donald Rumsfeld appointed him to a blue-ribbon panel studying weapons systems.

    Former Lockheed lobbyists and employees include the current secretary of the Navy, Gordon England, secretary of transportation Norm Mineta (a former Lockheed vice president) and Stephen J. Hadley, Bush's proposed successor to Condoleeza Rice as his next national security advisor.

    Not only are Lockheed executives commonly represented on the Pentagon various advisory boards, but the company is also tied into various security think tanks, including neoconservative networks. For example, Lockheed VP Bruce Jackson (who helped draft the Republican foreign policy platform in 2000) is a key player at the neo-conservative planning bastion known as the Project for a New American Century.

    9. LORAL SATELLITE: In the buildup to the war the Pentagon bought up access to numerous commercial satellites to bolster its own orbiting space fleet. U.S. armed forces needed the extra spaced-based capacity to be able to guide its many missiles and transmit huge amounts of data to planes (including unmanned Predator drones flown remotely by pilots who may be halfway around the world), guide missiles and troops on the ground.

    Industry experts say the war on terror literally saved some satellite operators from bankruptcy. The Pentagon "is hovering up all the available capacity" to supplement its three orbiting satellite fleets, Richard DalBello, president of the Satellite Industry Association explained to the Washington Post. The industry's other customers - broadcast networks competing for satellite time - were left to scramble for the remaining bandwidth.

    Loral Space & Communications Chairman Bernard L. Schwartz is very tight with the neoconservative hawks in the Bush administration's foreign policy ranks, and is the principal funder of Blueprint, the newsletter of the Democratic Leadership Council.

    In the end, the profits from the war in Iraq didn't end up being as huge for the industry as expected, and certainly weren't enough to compensate for a sharp downturn in the commercial market. But more help may be on its way. The Pentagon announced in November that it would create a new global Intranet for the military that would take two decades and hundreds of billions of dollars to build. Satellites, of course, will play a key part in that integrated global weapons system.

    10. QUALCOMM: Two CPA officials resigned this year after claiming they were pressured by John Shaw, the deputy undersecretary of defense for technology security to change an Iraqi police radio contract to favor Qualcomm's patented cellular technology, a move that critics say was intended to lock the technology in as the standard for the entire country. Iraq's cellular market is potentially worth hundreds of millions of dollars in annual revenues for the company, and potentially much more should it establish a standard for the region. Shaw's efforts to override contracting officials delayed an emergency radio contract, depriving Iraqi police officers, firefighters, ambulance drivers and border guards of a joint communications system for months.

    Shaw says he was urged to push Qualcomm's technology by Rep. Darrell E. Issa, a Republican whose San Diego County district includes Qualcomm's headquarters. Issa, who received $5,000 in campaign contributions from Qualcomm employees from 2003 to 2004, sits on the House Small Business Committee, and previously tried to help the company by sponsoring a bill that would have required the military to use its CDMA technology.

    "Hundreds of thousands of American jobs depend on the success of U.S.-developed wireless technologies like CDMA," Issa claimed in a letter to Donald Rumsfeld. But the Pentagon doesn't seem to be buying the argument. The DoD's inspector general has asked the FBI to investigate Shaw's activities.

[Lani]

Moses, thanks very much for posting this.
As a result of reading this and finding QUALCOMM's name on it, I am no longer using their email client Eudora. Even though I've been using the free version, on principle, I want nothing to do with them or their products from now on.

Fortunately I had recently downloaded and installed the free download of Mozilla Firefox as my new browser (after being a loyal Netscape user since 1995) and remembered they had something called Thunderbird as a free download e-mail client which after downloading and installing, it imported all my Eudora settings and mailboxes and address book entries, quickly and easily.

So I am now running both these programs and liking them, a lot!

Take a look and decide for yourselves if either or both of these free programs are of interest to you.

www.mozilla.org/

[Moses]

My efforts to download firefox have failed -- not sure why. I was thinking of installing it by way of CD.

[Moses]

U.S. Suspends Cooperation With Israel on Fighter Jet
By MARC PERELMAN[/size]
May 6, 2005

In a clear sign that the Bush administration's anger over Israeli-Chinese military ties is nearing a boiling point, the Pentagon is suspending information-sharing with Jerusalem on a key fighter-jet program.

The seriousness of the rift had been downplayed for months by both American and Israeli officials. Last week, however, the Pentagon announced that it was suspending information-sharing with Israel on the American-led, multinational effort to produce an all-purpose attack aircraft, the F-35 Joint Strike Fighter.

Washington still intends to sell the jet to Israel along with other American allies after its expected rollout in 2012, officials said. Still, several military observers said the Pentagon's decision to block Israeli intelligence access should be understood as a serious step. The spat is playing out against the backdrop of a flurry of news reports citing increasing American concerns about China's military buildup and the threat it poses to Taiwan, a key American ally in the region.

Israel is China's second-largest arms supplier after Russia.

"It is very symbolic to tell the Israelis that our level of concern is such that 'given the stakes, we'll cut you off despite our normally very warm relations,'" said Derek Mitchell, who headed China affairs at the Pentagon in the second Clinton administration and is now a senior fellow at the Center for Security and Strategic Studies in Washington. "If Israel persists, this could get ugly. We are talking about real military capabilities that could put the U.S. at risk in the Taiwan Strait, a major flashpoint."

In an e-mail message to the Forward, Pentagon spokesman Major Paul Swiergosz stated that America continues "to discuss our concerns about technology transfer issues with our allies, friends and partners and to look for them to take a responsible approach with regards to China."

"Israel is a security cooperation partner in the Joint Strike Fighter program," Swiergosz wrote. "But there are some types of technology and information that we are not comfortable sharing until we resolve the technology and security issues."

Israeli officials are downplaying the rift over the F-35.

"We are in an ongoing dialogue to resolve the discrepancies," Defense Ministry spokeswoman Rachel Niedak-Ashkenazi was quoted as saying by the Jerusalem Post. "We believe that the misunderstandings will be resolved in the coming months."

The Pentagon's decision to suspend information-sharing with Israel comes amid an ongoing dispute between Washington and Jerusalem over an unmanned attack drone, the Harpy, that Israel sold to China. After Beijing sent the unmanned planes back to Israel for upgrades, American officials demanded that Israel not return them to China. Israel says that it is merely repairing the drones as part of the original sales contract.

American officials say that the Israeli decision to work on the drones violated a joint-monitoring mechanism that was put in place in 2003, after an earlier American-Israeli crisis. That dispute concerned an Israeli sale to China of a plane equipped with its own airborne radar system, known as Phalcon. Following American protests, Israel canceled the contract. Jerusalem eventually agreed to pay China $350 million in compensation, but raw feelings lingered, prompting some Israelis to complain about American pressure.

Mitchell, the former Pentagon official, said the "theoretical concerns" first raised during the Phalcon dispute have now evolved into "a real sense of urgency." As a result, he said, pressure on Israel has been ratcheted up and reached senior echelons of the administration.

An upcoming Pentagon report, described last month in the Boston Globe, is expected to claim that China will soon have the capacity to block American forces from defending Taiwan, partly thanks to its military cooperation with Israel, among other countries. The Pentagon document is expected to assert that China is on the verge of launching a new fighter jet built with Israeli technology and modeled on Israel's Lavi warplane, according to the Globe.

The Lavi was a joint Israeli-American design, based upon the F-16, that was to be manufactured in Israel, financed mostly with American aid. The project was canceled in 1987 under furious pressure from the Reagan administration, following years of cost overruns and intense pressure in Washington for Israel to rely instead on the F-16.

The cancellation caused an uproar in the Israeli defense industry, reportedly resulting in pressure on the government to remarket the technology elsewhere. According to Pentagon officials quoted in the Boston Globe, much of the Lavi's design appears to have found its way into the new Chinese fighter. In American eyes, that could amount to a violation of American exports regulations requiring American approval for such sales.

Concerns over China's military prowess led to an intense, ultimately successful campaign by the Bush administration for preservation by the European Union of its 15-year-old arms embargo against China. In the current atmosphere, Israeli military sales to China appear particularly sensitive.

At the same time, Israel views China as an important ally, both for its diplomatic clout and its huge arms purchasing needs. Prime Minister Sharon is scheduled to visit China later this year.

Israel's forays into the booming Chinese arms market reportedly have prompted Secretary of Defense Donald Rumsfeld and outgoing Undersecretary of Defense Douglas Feith to complain to their respective Israeli counterparts, according to American and Israeli press reports.

During a March trip to Washington, Israeli Defense Minister Shaul Mofaz told reporters that the dispute over China was the primary reason for his visit. He added, however, that the "attempt to find a rift or a crisis [between Israel and America regarding Israel's military relations with China] is wrong-headed."

Upon his return to Israel, Mofaz told Israeli defense contractors that as part of his promise of full transparency to the Bush administration, they would be required to get clearance before any attempts to sell military or even civilian products to China.

In mid-December, Israel's Channel 2 reported that Feith, one of Israel's strongest supporters in the Bush administration, had demanded the resignation of the director general of the Israeli Defense Ministry, Amos Yaron. Feith reportedly complained that Yaron had concealed the ramifications of the Harpy deal from him.

Mofaz backed Yaron and said he had no intention of replacing him. However, Mofaz did not bring Yaron to Washington in March. He named a former air force commander, Major General Herzl Bodinger, to represent Israel in talks to settle the Harpy dispute.

While Jerusalem's decision to bow to American pressure and cancel the Phalcon sale hurt the burgeoning Israeli-Chinese partnership for several years, the two countries have renewed their cooperation.

"China has always considered that the development of normal commercial and military cooperation between China and Israel is a matter for these two countries, in which others do not have the right to interfere," said Quan Jing, a Chinese diplomat who is a visiting fellow at the Brookings Institution. "China's economic and security ties with Israel will continue to exist and progress."

China has doubled its military spending since the late 1990s. It recently enacted an anti-secession law, formalizing its decades-long assertion that Taiwan is a Chinese province that should be reunited with the mainland. The new Chinese policy reportedly reserves the right to respond militarily to any move towards Taiwanese independence.

The United States, which favors a peaceful reunification of the two Chinas, has provided Taiwan with billions of dollars of military equipment. Protecting Taiwan and stiffening America's stance toward Beijing are traditionally high on the Republican political agenda.

The Bush administration initially seemed to embrace this position, rejecting the Clinton administration's view of mainland China as a "strategic partner." Early on, the Bush administration strengthened military ties to Taiwan. It also found itself embroiled in a nasty dispute in 2001 over a collision in Chinese air space between an American spy plane and a Chinese jet fighter.

The two have since mended fences. Beijing is now seen in Washington as an ally in the war on terrorism and a partner in pressuring North Korea to drop its nuclear arms program. But China's new assertiveness has prompted new concerns in American military circles.

"There is a stronger concern in the U.S. that China poses a threat to American security," Jing told the Forward, "particularly against the background of political and military confrontations across the Taiwan Strait."