The Top Ten War Profiteers of
The Center for Corporate Policy
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.
Another client is Cummins Engine,
which has managed to sell its power generators thanks to the country's
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'
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.
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
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
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
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
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
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.