Spies for Hire: Carlyle Group
to Become Owner of "One of America's Largest Private Intelligence
www.democracynow.org/, May 19,
The secretive investment fund
the Carlyle Group is in the process of buying part of Booz Allen
Hamiliton, the major military and intelligence contractor. We
speak with investigative journalist Tim Shorrock, author of the
new book Spies for Hire: The Secret World of Intelligence Outsourcing.
Tim Shorrock, investigative journalist
and author of the new book Spies for Hire: The Secret World of
AMY GOODMAN: The Carlyle Group is one
of the world's largest and most secretive investment funds. Nicknamed
the Ex-President's Club, Carlyle's employees have included both
President Bush, H.W. and George W. Bush, former British Prime
Minister John Major, former Secretary of State James Baker, and
former Defense Secretary Frank Carlucci. Amidst growing public
scrutiny over its dealings, the company has recently scaled back
its holdings in military contractors and its links to controversial
But that appears to be changing. On Friday,
the intelligence firm Booz Allen Hamilton said it would sell its
government-oriented unit to Carlyle Group for $2.5 billion. Booz
Allen has been a major figure in the privatization of government
intelligence. Current National Intelligence Director Mike McConnell
was Booz Allen's director of defense programs before his appointment
last year. Booz Allen has been deeply involved in some of the
Bush administration's most controversial counterterror programs,
including the infamous Total Information Awareness data-mining
scheme. The Carlyle-Booz Allen deal awaits shareholder and regulator
Tim Shorrock is the author of Spies for
Hire: The Secret World of Intelligence Outsourcing. In a new article
for CorpWatch, Shorrock says Carlyle's purchase of Booz Allen
would lead to its "re-[emergence] as the owner of one of
America's largest private intelligence armies." Tim Shorrock
joins us now from Washington, D.C. Welcome to Democracy Now!,
TIM SHORROCK: Thank you, Amy.
AMY GOODMAN: It's good to have you with
us. Well, start off by talking about the significance of Carlyle
buying, if it's approved, Booz Allen's government unit.
TIM SHORROCK: Well, as you said before,
as you said earlier, Carlyle has kind of scaled down its defense
investments in recent years, but this is a major plunge back into
it. Booz Allen Hamilton is one of the largest intelligence contractors
in America and also plays a very strategic role, I would say,
in US intelligence as an adviser to agencies such as the National
Security Agency. And it also advises all the key combat commands
of the United States military and other key agencies such as the
Central Intelligence Agency and the National Geospatial-Intelligence
Agency. And they don't just provide technology. They provide,
you know, all kinds of expertise and all kinds of management,
consulting to these agencies, you know, help them decide how to
spend their money down the road. And they have many, many people
on staff who have played very senior roles in intelligence.
AMY GOODMAN: Can you talk about Michael
McConnell and his journey from Booz Allen to National Intelligence?
TIM SHORROCK: Well, McConnell began as
an intelligence officer in the US Navy. He became well known to
Americans when he was the intelligence adviser to Colin Powell
during the first Gulf War. And then after that, he was appointed
to be director of the National Security Agency at the very tail
end of the first Bush administration. He ran the National Security
Agency, which of course does eavesdropping and surveillance on
telephone calls and emails all over the world, including in the
United States. He ran the NSA for a few years, and then he went
directly to Booz Allen, where he became the director-he was a
vice president of Booz Allen, he was a director of their military
The important thing for readers-for listeners
to know about the military intelligence is that the Pentagon controls
about 85 percent of the entire intelligence budget. And so, when
we're talking about military intelligence, we're talking about
a huge swathe of intelligence. And so, in that position, he advised
the NSA, he advised many of the other agencies. And so, he played
a very important role in intelligence. And I would say that people
like McConnell, when they're in the private sector playing this
kind of consulting role to the agencies, they might as well be
called an intelligence official with a proviso that they are working
for the private sector. So then, as you also mentioned, during
his time at Booz Allen, they played an important advisory role
in many important Bush's administration programs, such as Admiral
Poindexter's program, which was designed to, you know, collect
all kinds of information on American citizens to root out-to allegedly
root out terrorism here.
AMY GOODMAN: Tim Shorrock, can you lay
out what you call the intelligence-industrial complex?
TIM SHORROCK: Well, in my book Spies for
Hire, I describe this intelligence-industrial complex as a $50
billion industry, and I base that on what our intelligence budget
is now and figures I've gotten on the percentage of money that's
actually spent on contracts. It's about 70 percent of our entire
intelligence budget goes to private contracts.
So this complex is about-I would say about
a hundred companies. There's many more, but, you know, a hundred
companies that really play important roles have major contracts.
And they range in size from Lockheed Martin and companies like
Northrop Grumman, big defense contractors that we usually associate
with, you know, building planes or big ships are very involved
in intelligence at all levels, to small companies like Spectel,
which is a little company in Virginia that employs about 200 or
300 people with high-level security clearances who go and work
for the CIA and other agencies and missions in places like Iraq
You also have companies like Booz Allen,
which are more like consulting companies that have millions of
dollars, hundreds of millions of dollars in contracts with the
agencies. Booz Allen, I might add, also not only has contracts
with the various agencies, but as well as with the Office of the
Director of National Intelligence. So they're advising our intelligence
leaders on, you know, what kind of technology to buy, all aspects
AMY GOODMAN: As you say, Mike McConnell,
the Director of National Intelligence, is the first contractor
in US history to take the leading role in the US intelligence
TIM SHORROCK: That's right. And that's
a pretty important fact for people to know. I mean, in the past,
leaders of the intelligence-there's only been, you know, two directors
of National Intelligence under the intelligence, so-called, reform
bill that passed in 2004. The first one was an ambassador, Negroponte,
and then McConnell took over. But never in the past has there
been someone gone straight from the private sector to running
US intelligence. They always come out of the-in the past, it was
always the Director of Central Intelligence was the director of
all intelligence, was the President's primary adviser on intelligence.
So here, you have somebody who spent, you know, over a decade
as a very high-level private consultant running intelligence operations
for profit being the President's primary adviser on intelligence.
AMY GOODMAN: Tim Shorrock, start naming
names. Talk about the US corporations, the multinational companies
that are involved in the intelligence-industrial complex.
TIM SHORROCK: Well, like I said, there's
a lot of companies that people recognize, because they're big
defense contractors, and they've grown-like Lockheed Martin, Northrop
Grumman, Raytheon, BEA Systems of Britain, for example-they've
grown in intelligence by-often by buying smaller companies and
putting together intelligence units of their own.
There's also companies like-at sort of
the middle level, I call them, companies like CACI International
(CACI), which as listeners know is-was one of the contractors
involved in the prisoner abuse scandal at Abu Ghraib. They're
a very, very important intelligence contractor, and they operate
at all levels of all the agencies, from the CIA to the NSA to
many military intelligence agencies.
There's other companies here in Washington.
There's one called Mantec International, for example, that does
a lot of work for the National Security Agency, particularly in
places like Iraq and Afghanistan, where they're out actually on
the frontlines, you know, tracking enemy weapons systems and listening
in on conversations between insurgent groups and helping the US
military track people down.
So, it covers a very wide range of companies.
And probably most of these companies, very few people know about
We talked at the top of the hour about
Carlyle buying Booz Allen. Carlyle, in 2003, bought a company
called QinetiQ, which is spelled with a Q. It's a British company.
And QinetiQ used to be the defense intelligence research group
or research unit of the British military, and it was privatized
in the early part of the Bush administration. The Carlysle Group
bought it, pumped hundreds of millions of dollars of investment
capital into it, and it was-already had contracts-QinetiQ already
had contracts with the Pentagon, various defense agencies here.
But with Carlyle's money, they really advanced into the intelligence
market. And with that capital, QinetiQ bought five or six medium-
sized intelligence companies and really expanded into the intelligence-industrial
And that's sort of typical of the way
companies expand. They buy companies primarily for the contracts
they hold with intelligence agencies. So Carlyle did it with QinetiQ.
Then they sold their holdings, made about a half-a-billion-dollar
profit off of it. And then, they've obviously been looking around
and decided Booz Allen would make a very profitable investment.
And I'm sure over the next few years we will see a fair amount
of expansion from Booz Allen, as Carlyle pumps in more capital
and they buy other companies and grow even larger.
AMY GOODMAN: We continue our conversation
with Tim Shorrock. Spies for Hire is his book, The Secret World
of Intelligence Outsourcing. Tim, finishing up on Carlyle taking
over Booz Allen, if approved, of course Carlyle gained great notoriety
after the September 11th attacks. They were having their big meeting
in Washington at the Hay-Adams, and their big investors-some of
their big investors-were the bin Laden family, not Osama bin Laden,
but bin Laden-other bin Laden brothers. And in the end, you know,
there were the Bushes, there were James Baker, and there were
the bin Ladens. They were forced to sell out, is that right?
TIM SHORROCK: Yeah, they-after that news
appeared-I think it was first reported in the Wall Street Journal-they
quickly asked the bin Laden family to withdraw their investment,
which they did. But they have a lot of investment from-I mean,
you know, Carlyle is a private equity fund, and what they do is
they get investments from very large investment funds, many of
them overseas. Many American pension funds controlled by US unions,
such as the Service Employees International Union, have very large
investments in Carlyle. The California Public Employees' Retirement
System, for example, actually owns five percent of the Carlyle
Group. So they're well connected to various facets of American
capital. And, yes, the bin Ladens pulled out. Lately, they've
had investment from a large government investment fund in Abu
Dhabi. But a lot of these people, as you mentioned earlier, like
George Bush, Sr. and James Baker, have withdrawn, but they still
employ many, many people who have come from high-level positions
within government and clearly have analyzed what the markets are
and what potential profit there is in a company like Booz Allen.
AMY GOODMAN: So, can you talk about-what
does it mean when private companies are working with the CIA,
in terms of the top-secret information that they have? You begin
your prologue with a man named John Humphrey, a former CIA officer.
Talk about what he said.
TIM SHORROCK: Well, I was at an intelligence
conference, and this man from-he was from CACI International-was
speaking about sort of the general experience of contractors,
and he was saying how difficult it was to be in a position like
in Abu Ghraib, when you're a contractor and you have the government
asking you to do things and the rules are unclear. And he was
expressing some real discomfort about a contractor being in that
And I was rather stunned, because I had
never heard anyone from CACI express any remorse or any second
thoughts about what had happened at Abu Ghraib. Their CEO-his
name is Jack London-went on a huge media offensive, which they're
still on. They just published a little pamphlet about their-you
know, how badly they were treated during the Abu Ghraib scandal.
But the fact is, you know, you have contractors like this that
create a profit center out of interrogating enemy prisoners. They
create a profit center out of interrogating prisoners in Guantanamo.
When did this begin to be part of American
capitalism, when you have very sensitive operations like this-in
some cases, operations we shouldn't even be doing-become profit
centers? I think this is an extremely dangerous trend. And lately,
there's been some attempts in Congress-right now, there's an attempt
in Congress to have some legislation that would keep contractors
out of this area of interrogation, keep them out of the area of
renditions, where they're flying people, capturing people in places
like Syria or, you know, in Italy and flying them to places where
they can be tortured by other governments. There's been private
corporations involved in that, as well.
AMY GOODMAN: And you point out chain of
command issues, where you will have one of these private contractors
telling soldiers what to do.
TIM SHORROCK: Well, that's exactly, apparently,
what happened in Abu Ghraib. And the problem is, you know-there's
been a lot of testimony, and there's been a really good film,
was made about-that included shots from Abu Ghraib and interviews
with prisoners, and there's now a lawsuit that's been filed by
the Center for Constitutional Rights against CACI International
for its role there.
But from what we do know from testimony
at some of the trials of the lower-level people that were at Abu
Ghraib that were eventually convicted for their role in the abuse
is that, in fact, some of the worst practices there were endorsed
and pushed by some of these contractors, they claim in the trials
and some of the other testimony, from people from CACI International.
For example, introducing the use of attack dogs to frighten and
terrorize prisoners there, that was actually in part introduced
by individuals from this company.
And, you know, we know the people at the
top, Donald Rumsfeld, Stephen Cambone and others who wanted to
step up the practices there at Abu Ghraib, they've never-they've
always escaped responsibility, and so did the companies. And this
problem of like, where is the legal responsibility when they break
the law, is still yet to be clarified.
AMY GOODMAN: Tim Shorrock, you write about
a report that was suppressed last year, official information about
the scope of intelligence outsourcing. Can you talk about what
TIM SHORROCK: Well, when I started writing
this book and researching this book, I was sort of drawing on
figures I had done. I did an article for Mother Jones a few years
ago where I had estimated, based on interviews with quite a few
people here in Washington, that the total outsourcing in intelligence
was about 50 percent; about half the budget at that time, I thought,
I estimated, was being spent on contracts. And by 2006 or so,
I was looking for some firm figures, 2007.
And finally, the Office of Director of
National Intelligence actually commissioned an internal study.
They ordered all the agencies, all the sixteen agencies of the
intelligence community, to provide them with figures about how
much contracting went on in their specific agencies, what the
major companies were, the percentage, the breakdown of the work
force between contractors and government employees. And they put
this report together. There was a lot of press reports in the
New York Times, LA Times, other places that were following this,
where people were expecting, and it seemed like they were going
to actually release sort of the basic-you know, the top figures
of this, so the American people and Congress would get a good
idea of the extent of contacting.
But when the time came to release this
report, Admiral McConnell, who of course had come from one of
the major contractors and had knowledge of and contacts with all
the companies that were involved, they decided not to put it out.
And so, I think the report was released to certain members of
Congress who have access to highly classified material, but it
was not released in general in Congress and certainly not to the
But the figure that I got about a year
ago-I got a leaked document that was an unclassified document
that was a pie chart that showed 70 percent-that's seven-o percent-of
our intelligence budget money going into the hands of private
contractors. So the fact is that, you know, the American people
aren't told this by the American government, and many people in
Congress have no idea of the extent of contracting, and it's supposed
to be their job to provide oversight to our intelligence community.
And when you have-they don't even have knowledge of what's going
on with 70 percent of the budget. That makes oversight a little
bit of a joke.
AMY GOODMAN: The Office of the Director
of National Intelligence, ordering a study of contracting with
the sixteen agencies that make up the community, when it came
time to release, the office said no? They refused to make it public?
TIM SHORROCK: That's right. They said
this information would help America's enemies. It would-you know,
it would basically-would help-you know, I guess they were talking
about al-Qaeda. If al-Qaeda or somebody like that knew that, you
know, 50 percent of the CIA was outsourced, that would help them
in some way. But that's all-you know, you can figure a lot of
this stuff out from public information. I talked to a lot of people
and got some pretty firm estimates.
Some of the agencies, to their credit,
do provide a breakdown. For example, the Defense Intelligence
Agency, which provides intelligence for the Joint Chiefs of Staff
and the Secretary of Defense, told me that 35 percent of their
workforce is private-sector contractors. The National Geospatial-Intelligence
Agency, which provides imagery, satellite-secret satellite imagery
and mapping to military units and also to national intelligence
agencies, their workforce is 50 percent contractors. The National
Reconnaissance Office, which is one of our most secret agencies
and controls all military spy satellites, their contracted workforce
is 95 percent, so it's a huge proportion of their workforce.
AMY GOODMAN: And you have some other astounding
figures. At least half to 75 percent of people at NSA headquarters-the
NSA, National Security Agency, many times larger than the CIA-are
contractors, 50 to 75 percent contractors working in the private
TIM SHORROCK: Right. The NSA was one of
the agencies that basically refused to talk on any level to me
about this, but that's what I've been able to gather from talking
to people who actually work for-people employed by companies that
are contracted to the NSA.
But what your listeners need to understand
is that a lot of these contractors actually work in these buildings.
So the National Security Agency is up-just up the road from here
in Fort Meade, Maryland. They have a huge black building where
they all work. And so, many of the people actually working inside
that building are contractors working for Booz Allen Hamilton
or Lockheed Martin or General Dynamics Information Systems. All
the companies we've talked about, they're actually sitting there
doing this classified work.
And the NSA has been a real sort of pioneer
in the use of outsourced intelligence. They went into it really
heavily in the late 1990s and started expanding their contractor
base from a few hundred companies, now where it's, you know, literally
in the thousands. And so, that means that, you know, we know the
NSA tracks and listens to our conversations, listens to literally
millions and millions of conversations, cell phones, email communications
overseas, as well. And so, that analysis, a lot of that analysis,
is being carried out by private-sector companies with people with
high-level security clearances.
AMY GOODMAN: Before we end, Tim, I wanted
to go to a piece you've just broken in Salon.com called "Blacklisted
by the Bush Government." Explain.
TIM SHORROCK: Well, this is a story about
how NSA surveillance can have a domestic impact. I write about
an Islamic charity that was based in Saudi Arabia that was under
investigation, that has been under investigation by the US government
for ties to terrorism. They had a fairly large chapter that they
invested in in Oregon, in Ashland, Oregon. This was in the late
1990s, where they became affiliated. And so, my story is about
the effects of this investigation on this Oregon chapter, which,
based on the reporting I did, there are no-there are no-there's
no evidence of connections to terrorism. Yet, by declaring them
specially designated global terrorists, they were able to shut
the organization down and basically drive it out of business with
no evidentiary hearing, no ability by these people to challenge
the evidence, which is all classified. All the important evidence
is classified. I find it a severe distortion of our justice system
and very alarming.
AMY GOODMAN: Can you talk about the players
involved? Talk about the Saudi sports star.
TIM SHORROCK: Oh, Soliman Al-Buthe is
one of the key figures in this story, and he was-the charity was
called the Al-Haramain Islamic Foundation. And the man I talk-I
went to Saudi Arabia to interview him, he was an adviser to them,
and he helped set up Al-Haramain in Oregon. He's now an environmental
figure. He's a government official in the city of Riyadh, where
basically his job is inspecting all restaurants, you know, for
health problems. And so, he's called a specially designated global
terrorist, as well, and he's called that by the UN because the
US designated him as such. He also has not been able to see any
classified evidence. The US says he's a terrorist. But I think-you
know, last year, the US embassy in Riyadh invited him to a function,
and which they rescinded after it was reported in the Portland
But a lot of people like that that I met
in Saudi Arabia, they're called-they've been accused of being
terrorist supporters in some way by the United States, but they
operate there freely and they seem to have a lot of love for the
United States. So when I met this man Soliman, he loves to watch
the Lakers. He has his TV all the time to Chris Matthews of MSNBC.
And it was kind of humorous to think of him as a terrorist. But
I think the problem is, the organization itself in some of the
countries that it operated in, according to US intelligence, did
provide money and supplies to some Jihad groups overseas. But
the issue is, the actual evidence can never be seen, and so we
have to trust-we're supposed to trust the US government's judgment
on this. And I think in the-
AMY GOODMAN: And you begin your piece
with this conversation that he, in Saudi Arabia, is having with
his lawyers in the United States, and he's trying to figure out
how to pay them. And, well, then you tell the story of what happens
and who's listening.
TIM SHORROCK: Right. Well, the significance
of the Al-Haramain case is that this man, Soliman Al-Buthe, that
I interviewed was on the phone with two of his lawyers here in
the United States in March 2004, at a period when the NSA surveillance
program was being questioned by the Justice Department. His conversation
was monitored by the National Security Agency without a warrant.
The only reason the Al-Haramain lawyers found out about it was
they were given a document by accident by the Treasury Department,
which does these investigations of global terrorists and puts
the financial screws on them. They accidentally gave them an NSA
document, highly classified document, that showed they were under
On the basis of that document, they have
sued the National Security Agency for warrantless-for violating
FISA, violating the 1978 law that regulates foreign intelligence
by the NSA. And that lawsuit is the only lawsuit still in play
in which the NSA warrantless program of the Bush administration
might be found illegal by a federal judge in a federal court.
AMY GOODMAN: Tim Shorrock, I want to thank
you very much for being with us, investigative journalist, author
of the new book Spies for Hire: The Secret World of Intelligence
The Carlyle Group