"MOYOCK, North Carolina (AP) -- The four civilians who were killed and dragged through the streets of an Iraqi town Wednesday worked for a North Carolina subcontractor that is providing security in a hostile area of Iraq.
"Blackwater Security Consulting provides security training and guard services to customers around the world. It is one of five subsidiaries of Blackwater USA, based in northeastern North Carolina about a half-hour's drive from the world's largest naval base in Norfolk, Virginia.
"The company referred calls to a spokesman in suburban Washington who declined comment beyond a prepared statement that said Blackwater was a government subcontractor providing security for the delivery of food in the Fallujah area.
"The United States has denounced the slayings as "horrific." Jubilant Iraqi residents dragged two of the charred corpses through the streets and hanged them from a bridge.
"The names of the victims were not immediately released because family members had yet to be notified.
"Privately owned Blackwater USA's range of services include providing firearms and small-groups training for Navy SEALs, police department SWAT teams and former special operations personnel.
"Blackwater President Gary Jackson and two other company leaders are former Navy SEAL commandos.
""We're very proud of the work that we do. We feel that we support a just cause," assistant training director Chris Epperson said during a visit last month.
"On a typical day, a Navy SEALs team practiced shooting in odd positions through doors and windows and cadets from the U.S. Coast Guard Academy learned how to storm through doorways during a room-by-room search. Plainclothes operatives practiced how to escape from a disabled sport-utility vehicle while under fire from attackers.
"The company's security-consulting business connects former special forces troops with jobs that may involve protecting people or places, or training foreign militaries.
"Epperson said the company's contractors provide protection to Paul Bremer, the U.S. administrator in Iraq.
"Other Blackwater USA subsidiaries train dogs and handlers for security work, and train pilots to land airplanes and helicopters on dirt landing strips.
"Faye and Howard Forbes of Moyock said the deaths brought the war home to the community best known for being on the route to North Carolina's Outer Banks beaches.
""With what's been going on in Iraq I'm not surprised at anything," 72-year-old Howard Forbes said while eating at a diner in Moyock. "But I was surprised at what they did to the bodies."..." [more]
"WASHINGTON, March 31 (Reuters) - Soaring security and insurance costs are driving up the price of contracts to rebuild Iraq and more funds may be needed, said a report on Wednesday by the U.S.-led authority's chief inspector in Iraq.
"Stuart Bowen, inspector general for the Coalition Provisional Authority, said security costs and the oversight of spending and control of cash would be among his main concerns in the months ahead as his team looks at U.S.-funded contracts.
"In a quarterly report made public on Wednesday online at www.cpa-ig.org, Bowen said security ate up 10-15 percent or more of the total costs of Iraqi contracts, and he predicted more funding would be needed to cover this.
"Contractors have become a greater target in Iraq. Four U.S. contractors were killed on Wednesday in a brutal attack in Falluja, their burned and mutilated bodies dragged by cheering Iraqis.
""With continued and significant threats to human life being experienced in the Green Zone (in Baghdad) and throughout Iraq, the inability to predict the costs of security (including insurance), raises questions about the need for more funding -- Iraqi, donor, or U.S., to accomplish the reconstruction mission," said the report delivered to Congress on Tuesday.
"Bowen, a former White House lawyer, said his office would work closely with other U.S. agencies to see whether the government should provide insurance or find other ways to control security-related costs without compromising safety.
"The report did not provide estimates on how much more should be budgeted for security but contractors have complained that the price of keeping their staff safe in such a hostile environment has cut deeply into profit margins...." [more]
"BAGHDAD, Iraq - Four civilian contractors who worked for Blackwater USA of Moyock, N.C., and five U.S. troops were killed today in one of the bloodiest and most horrifying days since the end of the U.S.-led war in Iraq, MSNBC News has reported.
"U.S. officials, who spoke to MSNBC anonymously, did not confirm reports from the scene that a woman was among the dead.
"After an embush on two vehicles carrying the civilians in Falluhaj, jubilant Iraqis burned and mutilated the dead, then dragged two corpses through the streets and hung them from a bridge spanning the Euphrates River.
"The brutal treatment of the bodies occurred after the contractors were killed in a rebel attack on their two SUVs in the city about 35 miles west of Baghdad, scene of some of the worst violence on both sides of the conflict since the beginning of the American occupation a year ago.
"According to MSNBC, Brig. Gen. Mark Kimmitt said at a briefing in Baghdad that it was not known what the coalition contractors were doing in Fallujah — apparently without a military escort — when the attack occurred.
"U.S. officials, who spoke with NBC News on condition of anonymity, said that all four contractors were Americans who worked for Blackwater USA of Moyock, N.C. The officials did not confirm reports from the scene that a woman was among the dead.
"Blackwater USA supplies security guards to the Coalition Provisional Authority and has provided protection for Iraq administrator L. Paul Bremer, among other coalition officials.
"In a statement, the company said, "Early evidence indicates that Blackwater personnel may have been the targets of the attack." It said it was seeking additional information...." [more]
"BAGHDAD (Reuters) - International companies hoping to win a slice of Iraqi reconstruction will take part next week in an exhibition its backers say will be Iraq's largest postwar business gathering despite security concerns.
"The April 5-8 Baghdad Expo is due to open weeks after the fairground to hold the event was rocketed, and days after four contractors working on U.S.-funded projects were killed in central Iraq and their bodies dragged through the streets.
"Organizers say the exposition will take place under heavy security and include U.S. companies that won most of the contracts Washington has awarded to rebuild Iraq so far, such as Bechtel, Halliburton and Fluor.
"It will also include companies that want to sell consumer goods, such as DaimlerChrysler.
""Due to the sensitive nature of security issues in Baghdad, the Iraqi American Chamber of Commerce and Industry has invested considerable energy and resources into ensuring that Destination Baghdad Expo will be safe and incident-free," the organizers said in a statement.
"The fairground, next to the former intelligence directorate, was bombed by U.S. planes during last year's invasion of Iraq. During Saddam Hussein's rule, the fairgound was used for the Baghdad Trade Fair during years of crippling economic embargo on the country.
"An expo official said around five firms out of 200 foreign companies due to take part have pulled out because of concerns about security and transport.
"Baghdad's airport has been closed to regular commercial flights since the U.S.-led invasion a year ago. Major highways leading to Baghdad have seen frequent attacks by armed bandits...." [more]
"WASHINGTON -- Halliburton Co. has reaped as much as $6 billion in contracts from the U.S. invasion of Iraq, but improprieties in those military contracts have also given Vice President Dick Cheney’s former company high-profile headaches.
"Pentagon auditors have criticized Halliburton’s estimating, spending and subcontracting, and the Army could begin withholding up to $300 million in payments May 1. The Justice Department is investigating allegations of overcharges, bribes and kickbacks. Democrats have accused the company of war profiteering.
"Even some Wall Street analysts are asking whether Halliburton would be better off jettisoning its Iraq contracts.
""From the shareholders’ point of view, don’t you have to consider whether it’s worth it?" Jim Wicklund of Banc of America Securities asked Halliburton executives during a March 11 conference call with investment analysts.
"Halliburton is fighting back, strongly denying wrongdoing and claiming to be the victim of a political smear campaign. The company set aside nearly $200 million to repay the Pentagon for any overcharges. Executives reassured analysts that Halliburton has enough cash on hand -- about $2 billion -- to weather any more repayments or penalties.
"Having a clean contracting system in Iraq is essential because it’s the first experience Iraqis will have with the American model of business-government partnerships, said Peter Singer, a former Defense Department official who wrote a book on military contracting.
"The company’s defenders say Halliburton had to perform a lot of costly and dangerous work very quickly, with minimal government oversight at the beginning.
"Halliburton’s detractors are undeterred.
""The entire Halliburton affair represents the worst in government contracts with private companies: influence peddling, kickbacks, overcharging and no-bid deals," Sen. Frank Lautenberg, D-N.J., said this week...." [more]
"SAN FRANCISCO, March 30 (Reuters) - California's Parsons Corp., one of the most active U.S. companies in Iraq, said on Tuesday it won a contract worth up to $900 million from the U.S. military for security and justice work in Iraq.
"The privately-owned engineering and construction company said the latest deal includes the restoration and construction of bases for the Iraqi security forces, police stations, border control stations, fire stations, courthouses and prisons.
"The project for two years with three one-year options has a potential value of $900 million and is the second contract the Pentagon has awarded Parsons in a batch of $5 billion worth of heavy construction contracts funded by $18.6 billion appropriated by Congress to rebuild Iraq's infrastructure.
"Last week the Pentagon awarded a $500 million contract to Parsons for the construction and renovation of public buildings in the war-torn country.
"The security and justice contract is the last prime construction deal to be announced in the $5 billion batch...." [more]
By Alan Bjerga, The Wichita Eagle, Kan. Knight Ridder/Tribune Business News
"Mar. 30--WASHINGTON - A former Air Force employee who's now facing indictment played a key role in creating the legislation that handed a controversial tanker-aircraft program to Boeing Co., according to internal Boeing documents obtained by Senate investigators.
"Darleen Druyun, then an Air Force tanker negotiator, worked closely with Boeing and congressional supporters to pass the 2001 law that set up the $23.5 billion leasing program, the documents show.
"One e-mail indicates that Druyun kept Boeing officials informed of her efforts on behalf of the legislation while she was working for the Air Force.
""The primary (tanker lobbying) effort has focused on a briefing Darleen expects to take to Sen. Stevens," said one Boeing e-mail, dated Sept. 30, 2001. Sen. Ted Stevens, R- Alaska, inserted a provision in a December 2001 appropriations bill that called on the Air Force to lease 100 767's from Boeing to be used as tankers.
"The same e-mail, from Boeing's lead tanker negotiator, John Sams, to several Boeing officials, noted that "throughout the uniformed AF (Air Force), the realization exist (sic) that leasing is considerably more costly to the AF and the taxpayer."
"Air Force acquisitions chief Marvin Sambur told Knight Ridder last week that the Air Force worked closely with Boeing on the program, to the exclusion of rival tanker manufacturer Airbus, because legislation required it to.
"The e-mails and other documents show that the Air Force helped make sure that the legislation was written in such a way that Boeing would be favored, and collaborated with Boeing on the company's behalf.
"Druyun later left the Air Force and took a job with Boeing. Boeing fired her in late 2003, along with Chief Financial Officer Mike Sears, for improperly discussing a job at Boeing while still at the Air Force. She's under investigation for her role in the tanker negotiations.
"The documents indicate that Druyun's involvement in shepherding the legislation through Congress began as early as Sept. 25, 2001, when she met with Boeing officials to discuss the viability of leasing tankers rather than buying them.
"In the Sept. 30 e-mail, Boeing officials said one of the goals of Druyun's briefing to Stevens would be to overcome the "legal impediments" to the more costly tanker-lease plan. The "legal impediments" included White House Office of Management and Budget policies against leasing.
"Later documents show close collaboration among Boeing, the Air Force and lawmakers to pass legislation to give Boeing the tanker contract...." [more]
"Halliburton, the Houston-based oilfield services company, has served as an inviting target for critics of the frustrating effort to rebuild postwar Iraq.
"That seems logical given that Halliburton boasts $18bn in Iraq contracts - the biggest haul of any company - and a former chief executive, Dick Cheney, who now sits in the White House as vice-president.
"But the obsession with Halliburton might be obscuring a larger problem with the US-led rebuilding effort: lack of government oversight.
"As Congress and Pentagon investigators delve into the often opaque contracting process, they are revealing a scarcity of auditors supervising the private companies retained to carry out vast projects such as restoring Iraq's oil sector or rehabilitating its schools.
"The latest indication comes in a report last week from the Pentagon's inspector-general, which found there was "little or no government surveillance" on 13 of 24 rebuilding contracts awarded at the outset of the war and that contacting officers failed to support price estimates on nearly all those assignments.
"The inspector-general's report followed a draft of a General Accounting Office review, which reached similar conclusions.
"It noted, for example, that a single Halliburton contract extension worth $587m was renewed in 10 minutes - with just six pages of documentation.
"Both of these buttress the testimony of Henry Bunting, a former Halliburton procurement officer, who told a Democratic party committee in February that he did not encounter a single auditor in four months working for the company in Kuwait.
"During that time, according to Mr Bunting, Halliburton employees spent recklessly on items from car rentals to gym towels - all of which was ultimately paid for by the US government.
"Halliburton is not the only company in Iraq that has fallen foul of the Pentagon. Dov Zakheim, the Pentagon comptroller, told Congress on March 11 that Fluor Federal Systems, Perini Corporation and the Washington International Group also had cost issues.
""This is clearly pervasive in Iraq," said Steve Schooner, a federal contracting expert at the George Washington University school of law. "Everybody over there has got the same problems."..." [more]
"Boeing Co. earlier this month received a $35 million contract to provide telecommunications services to the Coalition Provisional Authority in Iraq.
"Boeing Satellite Systems will provide mobile satellite communications and support services to Coalition Provisional Authority officials in Baghdad's 18 governing ministries, U.S. forces in the country and personnel with other U.S. contractors there, said a March 10 Boeing statement.
"The company unit, part of Boeing's Integrated Defense Systems division located in St. Louis, will use its Thuraya satellite communications system. It will also provide handsets and communications hardware to Iraqi and U.S. employees and offer system installation, training, customer service and logistics services, the statement said.
"Kellogg, Brown & Root Inc. awarded the contract to Boeing, which will subcontract some of the work to DTC, an Iraqi company. KBR, located in Houston, is part of Halliburton, an oil field services firm also based in Houston."
"BAGHDAD, March 29 (Reuters) - The first batch of overdue U.S. projects worth $18.4 billion to rebuild Iraq will be implemented in the next few months to help stabilise the occupied country, U.S. and Iraqi officials said on Monday.
""Assuring complete transparency and conformity with the applicable laws and regulations has taken longer than anyone would have liked, but we are accelerating now," said Admiral David Nash, head of the Programme Management Office which manages the contracts.
""By this time next month we should have our prime contractors on the ground. Physical reconstruction will start not long thereafter," he told a news conference.
"The United States has spent an estimated $4 to $5 billion to rebuild Iraqi after decades of wars, a crippling economic embargo and widespread looting after last year's U.S.-led invasion.
"An additional $18.4 billion was allocated last year, of which around $5 billion worth of contracts were awarded this month, including for electricity and water infrastructure projects.
"U.S. companies such as Bechtel and Halliburton (nyse: HAL - news - people) have been awarded most of the work to rebuild Iraq so far...." [more]
"A group of American construction executives was traveling in a convoy down a palm-lined highway 30 miles north of Baghdad one January day when gunfire and rocket-propelled grenades suddenly exploded everywhere.
"Private security agents riding with the convoy fought off the attackers in a hail of gunfire. Two of the agents died, as did an unknown number of guerrillas.
"The bloodshed was not publicly reported at the time, and the agents' employer, the Steele Foundation of San Francisco, drew a cloak of discreet silence over the incident to protect its clients' identity.
"The shootout was just one more example of the behind-the-scenes role played in Iraq by an estimated 15,000 private security agents from the United States, Britain and countries as varied as Nepal, Chile, Ukraine, Israel, South Africa and Fiji. They are employed by about 25 different firms that are playing their part in Iraq's highly dangerous postwar environment by performing tasks ranging from training the country's new police and army to protecting government leaders to providing logistics for the U.S. military.
""The rate of growth in the security industry is phenomenal," said Deborah Avant, a professor of political science and international affairs at George Washington University in Washington, D.C. "If you had asked a year ago whether there would be 15,000 private security in Iraq, everyone would have said you're nuts. It has moved very quickly over the past decade, but Iraq has escalated it dramatically."
"The boom in Iraq is just the tip of the iceberg for the $100 billion-a- year industry, which experts say has been the fastest-growing sector of the global economy during the past decade. From oil companies in the African hinterland to heads of state in Haiti and Afghanistan to international aid agencies in hotspots around the world, the difference between life and death is decided by private guns for hire.
"In Saudi Arabia and the Persian Gulf states, national armed forces are almost completely operated and overseen by private firms such as MPRI, an Alexandria, Va., subsidiary of giant L-3 Communications, and Vinnell Corp., a subsidiary of defense contractor Northrop Grumman.
"The trend is highly controversial. Some critics point out that security firms are largely unaccountable to governments, the courts or the public, and say that sets a dangerous precedent for covert foreign policy.
"But other experts, including a growing number of humanitarian agency officials, are becoming reluctant allies of the private security industry, saying it offers the only way to provide safety in places such as central Africa, where leading nations like the United States are unwilling to send their own troops as peacekeepers.
"Events in the past month alone show how the issue has come to the fore:
"-- The U.S.-led occupation authority in Iraq said it plans to spend as much as $100 million over the next 14 months to hire private security forces to protect the Green Zone, the 4-square-mile headquarters area in Baghdad, which is currently guarded primarily by U.S. troops. The move appears part of the Bush administration's plans to make its military presence less visible when nominal sovereignty is transferred to a new Iraqi government after June 30.
"-- A bizarre plot attempt has unfolded in Equatorial Guinea after 67 foreign mercenaries were arrested in transit in Zimbabwe prior to what may have been an attempt to overthrow the dictator of the oil-rich nation on the Atlantic Coast of central Africa.
"-- The Steele Foundation, which provided the security detail for former Haitian President Jean-Bertrand Aristide, was briefly embroiled in controversy when Aristide accused it of withdrawing its agents under orders of the U.S. government when he was overthrown in February. Kenneth Kurtz, the CEO of the Steele Foundation, declined to comment to The Chronicle about the allegations...." [more]
"A group of American construction executives was traveling in a convoy down a palm-lined highway 30 miles north of Baghdad one January day when gunfire and rocket-propelled grenades suddenly exploded everywhere.
"Private security agents riding with the convoy fought off the attackers in a hail of gunfire. Two of the agents died, as did an unknown number of guerrillas.
"The bloodshed was not publicly reported at the time, and the agents' employer, the Steele Foundation of San Francisco, drew a cloak of discreet silence over the incident to protect its clients' identity.
"The shootout was just one more example of the behind-the-scenes role played in Iraq by an estimated 15,000 private security agents from the United States, Britain and countries as varied as Nepal, Chile, Ukraine, Israel, South Africa and Fiji. They are employed by about 25 different firms that are playing their part in Iraq's highly dangerous postwar environment by performing tasks ranging from training the country's new police and army to protecting government leaders to providing logistics for the U.S. military.
""The rate of growth in the security industry is phenomenal," said Deborah Avant, a professor of political science and international affairs at George Washington University in Washington, D.C. "If you had asked a year ago whether there would be 15,000 private security in Iraq, everyone would have said you're nuts. It has moved very quickly over the past decade, but Iraq has escalated it dramatically."
"The boom in Iraq is just the tip of the iceberg for the $100 billion-a- year industry, which experts say has been the fastest-growing sector of the global economy during the past decade. From oil companies in the African hinterland to heads of state in Haiti and Afghanistan to international aid agencies in hotspots around the world, the difference between life and death is decided by private guns for hire.
"In Saudi Arabia and the Persian Gulf states, national armed forces are almost completely operated and overseen by private firms such as MPRI, an Alexandria, Va., subsidiary of giant L-3 Communications, and Vinnell Corp., a subsidiary of defense contractor Northrop Grumman.
"The trend is highly controversial. Some critics point out that security firms are largely unaccountable to governments, the courts or the public, and say that sets a dangerous precedent for covert foreign policy.
"But other experts, including a growing number of humanitarian agency officials, are becoming reluctant allies of the private security industry, saying it offers the only way to provide safety in places such as central Africa, where leading nations like the United States are unwilling to send their own troops as peacekeepers.
"Events in the past month alone show how the issue has come to the fore:
"-- The U.S.-led occupation authority in Iraq said it plans to spend as much as $100 million over the next 14 months to hire private security forces to protect the Green Zone, the 4-square-mile headquarters area in Baghdad, which is currently guarded primarily by U.S. troops. The move appears part of the Bush administration's plans to make its military presence less visible when nominal sovereignty is transferred to a new Iraqi government after June 30.
"-- A bizarre plot attempt has unfolded in Equatorial Guinea after 67 foreign mercenaries were arrested in transit in Zimbabwe prior to what may have been an attempt to overthrow the dictator of the oil-rich nation on the Atlantic Coast of central Africa.
"-- The Steele Foundation, which provided the security detail for former Haitian President Jean-Bertrand Aristide, was briefly embroiled in controversy when Aristide accused it of withdrawing its agents under orders of the U.S. government when he was overthrown in February. Kenneth Kurtz, the CEO of the Steele Foundation, declined to comment to The Chronicle about the allegations...." [more]
AIR FORCE LET BOEING WRITE ITS OWN DEAL Documents and e-mails show that Boeing was allowed to eliminate 19 of 26 capabilities the Air Force originally wanted for its tankers.
BY JOSEPH L. GALLOWAY
Knight Ridder Newspapers
"WASHINGTON - The Air Force gave the Boeing Co. five months to rewrite the official specifications for 100 aerial refueling tankers so that the company's 767 aircraft would win a $23.5 billion deal, according to e-mails and documents obtained by Knight Ridder.
"In the process, Boeing eliminated 19 of the 26 capabilities the Air Force originally wanted, and the Air Force acquiesced to keep the price down.
"The Air Force then gave Boeing competitor Airbus 12 days to bid on the project and awarded the contract to Boeing even though Airbus met more than 20 of the original 26 specifications and offered a price that was $10 billion less than Boeing's.
"The Boeing tanker deal has been under investigation since it became public two and a half years ago and has been suspended pending the outcome of the probes.
"But the e-mails and other documents show just how intent the Air Force was on steering the deal to Boeing, even though Airbus' tankers were more capable and cost less.
"In one document, Bob Gower, Boeing's vice president for tankers, noted that one objective in rewriting the specifications was to "prevent an AoA from being conducted." "AoA" stands for "analysis of alternatives" or, in essence, a look at serious competitors...." [more]
By Robert Fisk in Baghdad and Severin Carrell in London
"An army of thousands of mercenaries has appeared in Iraq's major cities, many of them former British and American soldiers hired by the occupying Anglo-American authorities and by dozens of companies who fear for the lives of their employees.
"Many of the armed Britons are former SAS soldiers and heavily armed South Africans are also working for the occupation. "My people know how to use weapons and they're all SAS," said the British leader of one security team in southern Baghdad. "But there are people running around with guns now who are just cowboys. We always conceal our weapons, but these guys think they're in a Hollywood film."
"There are serious doubts even within the occupying power about America's choice to send Chilean mercenaries, many trained during General Pinochet's vicious dictatorship, to guard Baghdad airport. Many South Africans are in Iraq illegally - they are breaking new laws, passed by the government in Pretoria, to control South Africa's booming export of mercenaries. Many have been arrested on their return home because they are do not have the licence now required by private soldiers.
"Casualties among the mercenaries are not included in the regular body count put out by the occupation authorities, which may account for the persistent suspicion among Iraqis that the US is underestimating its figures of military dead and wounded. Some British experts claim that private policing is now the UK's biggest export to Iraq - a growth fueled by the surge in bomb attacks on coalition forces, aid agencies and UN buildings since the official end of the war in May last year.
"Many companies operate from villas in middle-class areas of Baghdad with no name on the door. Some security men claim they can earn more than £80,000 a year; but short-term, high-risk mercenary work can bring much higher rewards. Security personnel working a seven-day contract in cities like Fallujah, can make $1,000 a day.
"Although they wear no uniform, some security men carry personal identification on their flak jackets, along with their rifles and pistols. Others refuse to identify themselves even in hotels, drinking beer by the pool, their weapons at their feet. In several hotels, guests and staff have complained that security men have held drunken parties and one manager was forced to instruct mercenaries in his hotel that they must carry their guns in a bag when they leave the premises. His demand was ignored.
"One British company director, David Claridge of the security firm Janusian, has estimated that British firms have earned up to £800m from their contracts in Iraq - barely a year after the invasion of Iraq. One British-run firm, Erinys, employs 14,000 Iraqis as watchmen and security guards to protect the country's oil fields and pipelines.
"The use of private security firms has led to some resentment amongst the Department for International Development's aid workers - who fear it undermines the trust of Iraqi civilians. "DFID staff would prefer not to have this," said one source. "It's much easier for them to do their job without any visible security, but the security risks are great down there."
"One South African-owned firm, Meteoric Tactical Solutions, has a £270,000 contract with DFID which, it is understood, involves providing bodyguards and drivers for its most senior official in Iraq and his small personal staff.
"Another British-owned company, ArmorGroup has an £876,000 contract to supply 20 security guards for the Foreign Office. That figure will rise by 50 per cent in July. The firm also employs about 500 Gurkhas to guard executives with the US firms Bechtel and Kellogg Brown & Root.
"Opposition MPs were shocked by the scale of the Government's use of private firms to guard British civil servants, and claimed it was further evidence that the British army was too small to cope. Menzies Campbell, the Liberal Democrat's foreign affairs spokesman, said: "This suggests that British forces are unable to provide adequate protection and raises the vexed question of overstretch - particularly in light of the remarks by the Chief of the Defence Staff, last week that Britain couldn't stage another operation on the scale of Iraq for another five years."..." [more]
"WASHINGTON - Uncle Sam's ``cost detectives'' are following the billions of taxpayers' dollars the Bush administration is spending to rebuild Iraq, and that makes some people nervous.
"Federal auditors are on the trail of wasteful spending and padded bills. They work in the offices of the politically connected defense contractors they're investigating. What they've dug up so far is big news. Who they are remains mostly a secret.
"They have found that Halliburton, Vice President Dick Cheney's old firm, has charged $67.3 million for soldiers' meals that were never served, billed the federal government $2.64 per gallon for gas in oil-rich Iraq, and had cost estimates that were inflated by $700 million at one point. They faulted contractor Science Applications International for billing the government for flying a Hummer and a pickup into Iraq on a chartered jet.
"And the Defense Contract Audit Agency is just getting started.
"``You just gotta understand auditors. Once we get a taste of something, we start digging,'' said Rich Buhre, a recently retired regional agency director. ``It's very difficult to try to hide that stuff.''
"What makes a good auditor is ``the junkyard dog mentality,'' Buhre said. ``It's like, you ever get an itch and something just doesn't feel right?''
"The agency's job is to be a consultant to the Pentagon and more than two dozen other federal agencies on the arcane language of contracts, to see whether taxpayers are getting their money's worth.
"It's the most un-Washington of the federal agencies. It shuns attention, gets bipartisan praise in Congress and adheres to strict ethics rules that rotate auditors every five years so they don't get close to the companies they investigate.
"What really separates it from the rest of the feds is that it saves taxpayers money instead of just spending it.
"Last year, it spent $406 million, but helped the government save $2.2 billion. In the past three years, it found that contractors had inflated the prices they charged the government by more than $88 million.
"``They're the last line of defense for taxpayers,'' said Keith Ashdown, the vice president of the liberal fiscal watchdog group Taxpayers for Common Sense.
"The key to the agency is that it's independent from the rest of the Defense Department bureaucracy and from political and business pressure, said former acting agency director Fred Newton. He added: ``You got to be independent about pursuing it and not having a contractor make you back off.''
"That's what the agency is doing with Iraqi spending. Its work triggered a Pentagon inspector general's report March 18 that found serious problems with 24 early contracts in Iraq. The agency has issued 187 reports on Iraqi contracts in all.
"``DCAA's been the one that's really out front on this,'' said David Cooper, at the U.S. General Accounting Office.
"In the past three weeks, the Pentagon has handed out $5 billion in construction contracts to rebuild Iraq, with the last awarded Friday to Pasadena's Parsons Corp.
"Bechtel Corp. -- the San Francisco firm already repairing Iraqi power stations, railways and sewage plants -- landed none of the new contracts. Bechtel didn't apply, the company said.
"Instead, the company chose to concentrate on the work it already has, a company spokeswoman said Friday. The U.S. Agency for International Development has given Bechtel contracts worth nearly $3 billion in Iraq.
""We just wanted to keep our total focus on our current contracts and our USAID customer," Bechtel spokeswoman Valerie Kazanjian said. She did not rule out pursuing other reconstruction jobs as they arise.
"Bechtel and Houston's Halliburton dominated the first round of reconstruction jobs last year, with their employees heading into Iraq on the heels of U.S. troops. Halliburton's many jobs in Iraq -- from patching oil pipelines to cutting soldiers' hair -- are worth between $12.6 billion and $16.8 billion, the most of any reconstruction firm.
"But Halliburton, once run by Vice President Dick Cheney, received none of the new contracts from the Pentagon in the last three weeks. A company spokeswoman reached late Friday said she did not know if her firm applied for any of the work. The company has come under fierce criticism and scrutiny in Congress for its performance in Iraq.
"The latest contracts have instead gone to such firms as Parsons and Orange County's Fluor Corp...." [more]
By Maud S. Beelman, Globe Correspondent, 3/27/2004
"WASHINGTON -- Halliburton, the oil and construction conglomerate formerly headed by Vice President Dick Cheney, dramatically reduced what it spent on lobbying Congress and the federal government after the Bush-Cheney administration took office in January 2001.
"During the last two years of the Clinton administration, Halliburton reported spending $1.2 million lobbying the Senate, House of Representatives, and various executive branch departments, according to records reviewed by the Globe. In comparison, during the first two years of the Bush administration, Halliburton reported spending just $600,000.
"Despite the dropoff in lobbying, the value of Halliburton's work began to increase in the run-up to the Iraq War, and eventually came to be worth more than $8 billion for overseeing aspects of the Iraqi reconstruction. Its federal contracts never exceeded $1 billion per year under the Clinton administration.
"A Halliburton spokeswoman said the cuts in lobbying funds reflected a decision to rely more on industrywide lobbyists than individuals representing the company's particular interests.
"But James Thurber, an American University professor who studies interest groups and lobbying, was skeptical of that explanation.
""They're already in; they don't need to lobby any more," Thurber said of Halliburton.
"The flood of business to Halliburton for the Iraq reconstruction, coupled with allegations that it overcharged the government on some aspects of its contracts, has led some Democrats to contend the company may be benefiting from its association with the Bush administration...." [more]
"The US Department of Defense planned inadequately for the initial stages of postwar Iraq reconstruction and "cut corners" in awarding and monitoring contracts using taxpayers' money, according to a Pentagon report.
"The Pentagon last year awarded 24 contracts to companies to provide consulting and media support to the US occupying authorities in Baghdad. But the department's inspector-general was asked to review the $122m of contracts after military auditors found "irregularities".
""The Department of Defense did not plan for the acquisition support that the Office of Reconstruction and Humanitarian Assistance required to perform its mission," the report said. "As a result, supplies and service were quickly acquired and contracting rules were either circumvented or liberally interpreted."
"The Bush administration has been plagued by criticism of its handling of post-war Iraq reconstruction with allegations of cronyism and incompetence in the awarding of contracts. The inspector-general has separately launched a criminal investigation into charges that Halliburton, the oil services company formerly run by Vice-president Dick Cheney, overcharged the US government for fuel imports.
"The White House has defended the reconstruction process, saying contractors and the military are working under very hard conditions. But while the inspector-general acknowledged the difficult circumstances and need for urgency to rebuild Iraq, the report concluded that "urgency does not permit the contracting officers to abandon the rules".
"The report focuses on $108m in deals awarded to Science Applications International Corporation, a San Diego-based defence company, including the "Iraqi Free Media" contract to provide media development and technical support.
"According to the report, military auditors questioned the amount of payments made to SAIC and it recommends that the company repay $635,000 in unwarranted handling fees.
"The inspector-general found evidence that the SAIC contract was not properly monitored. In one instance, the US authorities used the contract with SAIC to hire a consultant who was put in charge of disposing of rubbish in Iraq, which was outside the contract's scope.
"The report also found that that when one contracting authority refused to charter a cargo plane to transport a Humvee vehicle and Ford truck for the personal use of a SAIC employee, the company successfully found another contracting officer to approve the invoice...." [more]
"Parsons Corp. of Pasadena won a $500-million U.S. military contract Thursday to renovate buildings in Iraq.
"The Pentagon said the latest deal was to provide design and building services and to renovate existing public buildings, hospitals, medical clinics and housing throughout Iraq.
"Privately owned Parsons is one of the most active U.S. companies in Iraq.....
"Parsons is in a joint venture with Worley Group Ltd. of Australia performing up to $800 million worth of work to restore northern Iraq's oil infrastructure.
"The company is also involved in a $1.8-billion infrastructure deal awarded in January by the U.S. Agency for International Development to San Francisco-based engineering company Bechtel Group Inc.
"Other lucrative Iraq business includes a $1.5-billion contract Parsons obtained with the U.S. military for construction and engineering work.
"The latest contract is funded by $18.6 billion appropriated by Congress for the reconstruction of Iraq and is part of a round of heavy-construction deals announced in recent weeks...." [more]
"Kirkuk, Iraq -- Mamand Kesnazani reclines in his high-backed leather chair and puts his feet on top of his desk inside the main security gate of Iraq's northern oil field. The former fighter for Jalal Talabani's Patriotic Union of Kurdistan (PUK), Kesnazani came to Kirkuk the same day as the American Army last April. He's been guarding the oil field ever since.
""I've had a lot of bosses this year," Kesnazani says as he orders a round of dark Iraqi tea. "First it was the PUK, then the US Army came with Kellogg, Brown and Root. That's Dick Cheney's company," he says smiling. "Now the company has changed again to a British company called Erinys."
"Kesnazani is a peshmerga -- which means "ready to die" -- a name that has become the accepted name for the Kurdish fighters in northern Iraq who battled Saddam Hussein's army for decades. Security jobs like those at Northern Oil are technically open to all Iraqis, but those staffing this checkpoint estimate 95% are peshmerga.
"Kesnazani has not even bothered to change his uniform. He still wears the checkered black and white headscarf and sharwal (baggy pants) typical of peshmerga fighters, but most of his cohorts are clad in the smart blue and gold uniform of Erinys Iraq. They look every bit the part of private security guards.
Who's Behind Erinys?
"Erinys $80-million contract, awarded by the occupation authorities last summer to provide security for Iraq's vital oil infrastructure, has become a controversial lightning rod within the Iraqi Provisional Government and the security industry, according to Pulitzer-prize winning journalist Knut Royce of New York Newsday.
"Soon after this security contract was issued, the company started recruiting many of its guards from the ranks of Ahmed Chalabi's former militia, the Free Iraqi Forces, raising allegations from other Iraqi officials that he was creating a private army.
"Chalabi, 59, scion of one of Iraq's most politically powerful and wealthy families until the monarchy was toppled in 1958, had been living in exile in London when the U.S. invaded Iraq. The chief architect of the umbrella organization for the resistance, the Iraqi National Congress (INC), Chalabi is viewed by many Iraqis as America's hand-picked choice to rule Iraq.
"The security contract technically was awarded to Erinys Iraq, a security company also newly formed after the invasion, but bankrolled at its inception by Nour USA, which was incorporated in the United States last May, according to David Braus, the company's managing director. Nour's founder was a Chalabi friend and business associate, Abul Huda Farouki. Within days of the award last August, Nour became a joint venture partner with Erinys and the contract was amended to include Nour.
"An industry source familiar with some of the internal affairs of both companies said Chalabi received a $2-million fee for helping arrange the contract. Chalabi, in a brief interview with Newsday, denied that claim, as did a top company official. Chalabi also denied that he has had anything to do with the security firm.
"Yet the INC is deeply connected to Erinys. For example founding partner and director of Erinys Iraq is Faisal Daghistani, the son of Tamara Daghistani, for years one of Chalabi's most trusted confidants. She was a key player in the creation of the INC which received millions of dollars in U.S. funds to help destabilize the Saddam Hussein regime before the U.S. invasion last year.
"And Farouki's businesses received at least $12 million in the 1980s from a Chalabi-controlled bank in Washington, D.C. The Jordanian government says that bank was part of a massive embezzlement scheme perpetrated by Chalabi on the Petra bank he owned in Amman. When the bank collapsed in 1989, it cost the Jordanian government $200 million to reimburse depositors and avert a collapse of the country's entire banking system.
"Jordanian authorities have complained that much of the funds they claim were siphoned off the Amman bank ended up at Petra International. By May 1989, three months before Jordan seized Petra Bank, the bankrupt Farouki companies owed Petra International more than $12 million, court records show.
"A separate contract for $327 million with Nour was cancelled for the appearance of conflict of interest.
"These men are on the frontline of the burgeoning security business in Iraq, easily the fastest growing business sector in the country because of the growing sophistication and effectiveness of the insurgency. The majority of the jobs go to Kurds because of their unswerving hatred of Saddam over the years, or to mercenaries from other countries like Britain to South Africa, who are neutral players in what some see as a growing civil war. This boom may be heightening ethnic tensions in Iraq while causing a recruitment strain on security forces in other countries...." [more]
By Anne Barnard and Stephen J. Glain, Globe Staff, 3/24/2004
"BAGHDAD -- Colonel David Teeples, commander of the Third Armored Cavalry Regiment in Iraq, can't figure it out. If he can recruit and train members of Iraq's new security force, why can't the Coalition Provisional Authority -- the US-led administration that is running postwar Iraq -- provide them with the uniforms, radios, weapons, and vehicles they need to do their job?
"This frustration is common in postwar Iraq -- among Iraqis as much as US forces. More than a year after the US government secretly divvied up the first contracts for postwar reconstruction, much of the subcontracting process remains confusing, overcentralized, and fertile ground for corruption, say watchdog agencies and Iraqi contractors. The equipment so important to Teeples and his recruits, for example, was supposed to be provided under a $327 million contract that was issued in January but was canceled two weeks ago over what the Army said was errors made by contracting officers.
"The list of reconstruction contracts and licenses either delayed or under investigation is growing due to what watchdog agencies say is an ad hoc and underregulated selection process. And analysts say it is likely to become more prone to abuse if the United States transfers control over Iraq to an interim government without a strong oversight agency.
""They're still far from an open bidding process," said William Hartung, who recently testified to Congress about postwar reconstruction as a director at the World Policy Institute, a New York-based research center. "The contracting has been chaotic and there are still a relatively small number of companies in a position to benefit."
"Pentagon officials acknowledge confusion over the way some subcontracts have been awarded, but say they are working to make the process transparent. "We're putting all the information out there," said Steven Susens, spokesman for the CPA, adding that all applicants meet US standards, with sealed bids. The United States says it will by June 30 transfer sovereignty over Iraq to a local government. With the deadline approaching, charges of cronyism are proliferating as links emerge between winning bidders and Iraqi officials. While allegations of overcharging related to work done by US oil-giant Halliburton Co. have drawn media attention, other less publicized deals and alleged conflicts of interest are raising eyebrows in the United States and Iraq.If coalition efforts to win Iraqi hearts and minds hinge on the integrity of the rebuilding process, the Americans have already lost ground, say Iraqi contractors. Frustration over the country's high unemployment and the slow pace of reconstruction has intensified, they say, because of the perception that foreign companies and a cabal of Iraqi exiles are snatching the best deals. So exasperated are many Iraqis with the contract awards process that many compare it unfavorably with the abusive business practices that flourished under Saddam Hussein's regime. At least back then, Iraqis say, it was clear whom to bribe.
""In the Saddam regime, there was one family, the Tikritis, and you could deal with them," said Kadhim Mohammed al Janabi, who runs a contracting and oil transport company. "Now there are more than 120 parties, plus the people who came from abroad."..." [more]
"With the casualty toll ticking ever upward and troops stretched thin on the ground, the Bush administration is looking to mercenaries to help control Iraq. These soldiers-for-hire are veterans of some of the most repressive military forces in the world, including that of the former Chilean dictator Augusto Pinochet and South Africa's apartheid regime.
"In February, Blackwater USA, a North Carolina-based Pentagon contractor, began hiring former combat personnel in Chile, offering them up to $4,000 a month to guard oil wells in Iraq. The company flew the first batch of 60 former commandos to a training camp in North Carolina. These recruits will eventually wind up in Iraq where they will spend six months to a year.
""We scour the ends of the earth to find professionals – the Chilean commandos are very, very professional and they fit within the Blackwater system," Gary Jackson, the president of Blackwater USA, told the Guardian.
"While Blackwater USA is not nearly as well known as Halliburton or Bechtel – two mega-corporations making a killing off the reconstruction of Iraq – it nevertheless is doing quite well financially thanks to the White House's war on terror. The company specializes in firearm, tactics and security training and in October 2003, according to Mother Jones magazine, the company won a $35.7 million contract to train more than 10,000 sailors from Virginia, Texas, and California each year in 'force protection.'
"Business has been booming for Blackwater, which now owns, as its press release boasts, "the largest privately-owned firearms training facility in the nation." Jackson told the Guardian, "We have grown 300 percent over each of the past three years and we are small compared to the big ones. We have a very small niche market, we work towards putting out the cream of the crop, the best."
"The practice of using mercenaries to fight wars is hardly new, but it is becoming increasingly popular in recent years. During the first Gulf War, one out of every 50 soldiers on the battlefield was a mercenary. The number had climbed up to one in ten during the Bosnian conflict. Currently there are thousands of Bosnian, Filipino and American soldiers under contract with private companies serving in Iraq. Their duties range from airport security to protecting Paul Bremer, the head of the Coalition Provisional Authority.
"Apart from Chile, the other popular source for military recruits is South Africa. The United Nations recently reported that South Africa "is already among the top three suppliers of personnel for private military companies, along with the UK and the US." There are more than 1,500 South Africans in Iraq today, most of whom are former members of the South African Defense Force and South African Police...." [more]
"Baghdad, Iraq - Col. Tom O'Donnell keeps his most precious prizes in a potato-chip canister, which is fitting because he can't dole out just one.
"The garrulous West Pointer revels in handing out heavy brass coins from that canister. One side is in English and the other is in Arabic, both saying, "Presented by the Commander/Task Force Shield," and both feature a royal blue chevron with an outline of Iraq with an oil derrick embossed on it.
"But the key is the motto: "Guardians of the Nation's Treasure."
"As commander of the Coalition Provisional Authority's Task Force Shield, O'Donnell makes sure that the 14,500 Iraqis he has hired through the British security firm Erinys International fulfill that promise.
"A year after the American-led invasion of Iraq, the 47-year-old native of Portsmouth, Ohio, believes that the more than 150 billion barrels of oil that lie beneath the country's dust are its only chance of climbing out of the abyss carved by Saddam Hussein.
"That was part of his message to the deputy of national security adviser Condoleezza Rice and British officials in early February. He was in Washington and London for separate briefings relating to the coalition's plan to hand over control of the country to Iraqis on July 1.
"O'Donnell is the coalition's link to the establishment of the Oil Security Force. In that role, he regularly tours Iraq, a country the size of California, stopping at oil refineries, pumping stations and other key sites along the 4,000 miles of pipeline that sustain it like arteries flowing with ebony blood.
"Every day that oil flows through the pipes that lead south through Kuwait and into the Persian Gulf and north into Turkey is $7 million in Iraqi coffers. The $39.2 million contract to hire, train and arm the Oil Security Force has already paid for itself, O'Donnell said, because crude has been flowing into Turkey since mid-February.
"That's why the pipeline is a frequent target of insurgents.
"From August to October of 2003, saboteurs used everything from 155mm howitzer shells to pipe bombs and mortars to strike the poorly guarded pipeline almost 50 times. Since then, the ranks of trained, uniformed and armed guards protecting the pipeline have more than quadrupled, and acts of sabotage have been cut to about four per month. Repair time has been cut from three to five weeks down to three to five days, primarily because on-site guards are lessening the amount of damage done by each attack.
"Despite the improvement, O'Donnell knows that this legendary home of the Garden of Eden still must travel a rocky and dangerous road. The devout Catholic is as much a student of the Bible as he is of Austrian military mastermind Clausewitz, and his faith plays a large role in his passion to save a country that his fellow soldiers nearly demolished.
"So the only rounds he fires now are in Iraq's defense, and come in those cardboard canisters...." [more]
"PORT-AU-PRINCE—Hundreds of U.S. and Canadian soldiers already patrol the rubble-strewn streets of Port-au-Prince, and the United Nations and other countries have pledged thousands more will soon descend on Haiti.
"While the troops may be well-armed and protected by state-of-the-art Huey military helicopters, sustaining a peacekeeping force of thousands requires more than security. There's also the matter of housing and feeding the soldiers, not to mention more mundane chores like laundry, acquiring flush toilets and showers and delivering mail.
"Nation-rebuilding projects in countries such as Iraq, the Congo and Haiti have spawned a growing industry as private-sector companies compete to win contracts to aid in the rebuilding efforts. Some analysts say the business now generates as much as $200 billion (U.S.) a year.
""When you roll up all the companies involved here, there's no question it's in the billions," said Len Supko, a former U.S. Army colonel who's now a program manager with Cubic Corp., a San Diego, Calif., company that uses computer simulations to help train U.S. troops before their deployment abroad.
"Supporting U.S. military efforts in Haiti alone might produce $100 million a year, said Doug Brooks, president of the International Peace Operations Association, a Washington-based trade group representing companies that covet military support contracts.
""There's going to be a lot of activity and bidding here," Brooks said.
""It may not be a big deal compared to Iraq, but it's right around the corner, so there aren't the costs of getting your people around the world."..." [more]
"The Russian oil company Lukoil will become the largest fuel supplier in Iraq. Lukoil will replace the disgraced Halliburton oil and gas company that recently came under investigation by the U.S. Ministry of Defense, Newsru.com has reported.
"Lukoil’s subsidiary, Lukoil International Trading and Supply Company (LITASCO) signed a contract with the U.S. Refinery Associates of Texas, which won a large tender for fuel supply to Iraq. The Russian company will take responsibility for all the activities connected with logistics, and commercial and financial coverage of the fuel deliveries. Over three months beginning from April 1, LITASCO will have to deliver 180,000 tons of gasoline and 130,000 tons of diesel fuel to Iraq. After this the contract may be renewed.
"Halliburton’s replacement was chosen by a tender, the results of which the Pentagon announced on March 8. The winners were six Turkish companies and the U.S. Refinery Associates which won the right to the largest contract worth $108.5 million. However, the U.S. companies generally do not deliver directly to Iraq, instead hiring subcontractors. Refinery Associates of Texas chose LITASCO as its subcontractor.
"According to calculations by the Russian business daily Vedomosti, LITASCO will be responsible for up to 45 percent of the total fuel supplies to Iraq paid by the U.S. government. The company’s management hopes that after three months the contract will be renewed. Such a short contract is due to the fact that the U.S. Congress approves the financing of Iraqi programs on a quarterly basis.
"Aton Capital Group analyst Dmitry Lukashov notes that the fuel deliveries to Iraq together with other Lukoil programs (such as an education program for Iraqi oil specialists) work together to strengthen the Russian company’s presence in Iraq. The main strategic goal of Lukoil remains the securing of rights for exploration and extraction at the huge West Qurna-2 oil field. The previous contract between Lukoil and Saddam Hussein was signed back in 1997. However, the new government of Iraq has not yet confirmed whether that contract will be honored."
"It is 5.30pm and the lobby of the Diafa Hotel in central Basra is buzzing as a team from UK consulting engineer Halcrow hold their daily meeting with local contractors working on an $8 million programme to renovate Basra's hospitals, universities and libraries.
"Outside there is intermittent gunfire. The deaths of three people in last week's suicide car bomb outside a hotel used for briefings by British forces has thrown security issues into sharp relief, but outside the Diafa makeshift barriers offer only limited protection.
"Dick Trimble, Halcrow's contract manager in Iraq, says his team of 14 people had originally been based at the Coalition Provisional Authority's secure compound, but he moved them into the Diafa to give access to the contractors. 'It is important that they can see us easily for practical reasons, but also to build up trust,' he says.
"Trust is the most vital resource in Iraq now - fundamental to retaining the consent of Iraqis for the reconstruction effort. The disbandment of the CPA on 30 June and the handover of power to the new Iraqi Provisional Government is a key part of the trust-building process.
"But it is unclear whether political sovereignty will be accompanied by the ability to direct economic policy. Sceptics say it's unlikely. Economic regeneration will be massively dependent on the $18.6 billion the US is supplying for Iraqi reconstruction. The US Project Management Office, based in Baghdad, with an office in Basra, is awarding contracts under the programme. The money is coming to Iraq in a presidential election year, with the US Congress and media scrutinising how every dollar is spent.
"No one is sure how much say the Iraqis will have. The UK's International Development Secretary Hilary Benn argues that Iraqis will be integral to implementing the projects from which they will benefit. 'The Americans are going to be funding bilaterally. We are putting a significant amount of money [£500m] into the World Bank and UN Trust Fund, which will be supporting projects for Iraqis themselves.'
"One senior CPA official said dispersal of the US money 'will have to be agreed between the Coalition and the interim government'. But ultimately, he said: 'The Americans will control their own money.'
"To mitigate this perception, strenuous efforts are being made to engage local people. Iraqi directors general head the local government offices overseeing basic services and have been drawn into planning local reconstruction. But day to day, the glue binding the western authorities and prime contractors with the Iraqis who will do most of the actual work is the contracts they negotiate, and the process by which they do so.
"Iraqis are only too aware that companies close to the Bush administration, such as Bechtel and Halliburton, have won billions of dollars of work. But this is of less concern to them than what happens to the money once it hits Basra.
"According to some reports, Bechtel, for example, is supported locally. CPA water and sanitation adviser Wally Weeks says the work it is doing on water plans around the city is first class. But Trimble says contractors in Basra are unhappy: 'There is no transparency in the way Bechtel hands out its work.'" [more]
"The war in Iraq is a year old, and the military-industrial complex is making out like a bandit.
"That at least was what protesters were telling me the other day outside the Bechtel headquarters in downtown San Francisco, where people were chanting, the names of slain soldiers were read aloud and signs said "Shut Down the War Profiteers."
""We're lining Bechtel's pockets at the expense of a number of people's lives," said Paul LaFarge, a New York artist who was in town for the demonstration.
"But why Bechtel? The engineering giant, with about $3 billion in Iraq- reconstruction contracts, has been accused of no wrongdoing (unlike, say, Halliburton, which the Pentagon says received millions of dollars in kickbacks from Mideast subcontractors and overcharged for services provided to U.S. troops).
""They're all part and parcel of the same thing," explained Amy Trachtenberg, a San Francisco artist, as she paused from reciting the names of the dead just feet from where somber-faced Bechtel workers were slipping past a police barricade and into their office building.
"Yet Bechtel wasn't the only object of protesters' ire. Michael Daloisio, a San Francisco teacher, lamented that U.S. schools are struggling for cash while a variety of companies are "making billions off this illegal war."
"Aside from Bechtel, he cited Halliburton, Lockheed-Martin, ChevronTexaco and the Carlyle Group.
"Well now.
"Since the subject has come up, here's a little something about Carlyle that most people don't know. I can say that with confidence because even a Carlyle representative said he didn't know until I pointed it out to him.
"The Washington investment firm, run by a who's who of Republican heavyweights, including former Secretary of State James Baker and former Defense Secretary Frank Carlucci, has put money into about 300 different companies and properties.
"Those investments include United Defense Industries, a maker of combat vehicles, naval guns and missile launchers; and Sippican, a maker of submarine systems and countermeasures to protect warships.
"They also include a New Jersey pharmaceutical firm called MedPointe, which just so happens to be one of only three companies licensed by the U.S. Food and Drug Administration to manufacture over-the-counter potassium iodide pills.
"That's significant because potassium iodide can help protect against thyroid cancer in the event of exposure to large amounts of radiation -- from a small, easily transported nuclear weapon, say, or a terrorist attack on a nuclear power plant.
"And that's significant because, in June 2002, President Bush signed into law the Public Health Security and Bioterrorism Preparedness and Response Act. It requires state and local officials to "provide adequate protection" by distributing potassium iodide to all public facilities within a few miles of a nuclear power plant.
"And that, in turn, is significant because if you're one of just a handful of authorized makers of potassium iodide, you're in a position to profit handsomely if the worst-case scenario should actually come to pass.
"The Carlyle Group and another investment firm, the Cypress Group, spent more than $400 million to acquire a controlling stake in MedPointe in May 2001. Carlyle alone owns about 42 percent of the firm.
"Chris Ullman, a Carlyle spokesman, said he had no idea that MedPointe produces a potassium iodide pill called Thyro-Block. But when I explained what Thyro-Block can be used for, he said this was something to feel good about.
""Carlyle is proud to own companies that make products that keep America safe," Ullman said, adding that MedPointe allows Carlyle "to participate in the specialty pharmaceutical space."
"The other two FDA-approved makers of potassium iodide are a small Florida outfit called Anbex that, prior to the Sept. 11 attacks, sold its pill, Iosat, primarily to doomsday-fearing survivalists; and a Swedish outfit called Recip that brought its lower-dosage pill, ThyroSafe, to the U.S. market in 2002.
"John Hawkins, a MedPointe spokesman, said the company has no current contracts to supply Thyro-Block to any federal agency. He also said that sales of the drug totaled less than $500,000 in 2003 (MedPointe expects sales of all products, led by its allergy and respiratory medicines, to reach $400 million this year).
"But Hawkins acknowledged that MedPointe has bid for government contracts in the past. He also declined to elaborate on the company's intentions for Thyro-Block.
""Our plans for all of our commercial products are confidential," he said...." [more]
"To cope with the possibility that terrorists might someday detonate a nuclear bomb on American soil, the federal government is reviving a scientific art that was lost after the cold war: fallout analysis.
"The goal, officials and weapons experts both inside and outside the government say, is to figure out quickly who exploded such a bomb and where the nuclear material came from. That would clarify the options for striking back. Officials also hope that if terrorists know a bomb can be traced, they will be less likely to try to use one.
"In a secretive effort that began five years ago but whose outlines are just now becoming known, the government's network of weapons laboratories is hiring new experts, calling in old-timers, dusting off data and holding drills to sharpen its ability to do what is euphemistically known as nuclear attribution or post-event forensics.
"It is also building robots that would go into an affected area and take radioactive samples, as well as field stations that would dilute dangerous material for safe shipment to national laboratories.
""Certainly, there's a frightening aspect in all of this," said Charles B. Richardson, the project leader for nuclear identification research at the Sandia National Laboratories in Albuquerque. "But we're putting all these things together with the hope that they'll never have to be used."
"Most experts say the risk of a terrorist nuclear attack is low but no longer unthinkable, given the spread of material and know-how around the globe.
"Dr. Jay C. Davis, a nuclear scientist who in 1999 helped found the Pentagon's part of the governmentwide effort, said the precautions would "pay huge dividends after the event, both in terms of the ability to identify the bad actor and in terms of establishing public trust."
"In a nuclear crisis, Dr. Davis added, the identification effort would be vital in "dealing with the desire for instant gratification through vengeance."
"Vice President Dick Cheney was briefed on the program last fall, Dr. Davis said...." [more]
"The case Cheney vs. U.S. District Court is scheduled to be heard before the Supreme Court next month and could end up revealing more about the Bush administration's motives for the 2003 Iraq war than any conceivable investigation of U.S. intelligence concerning Iraq's purported weapons of mass destruction.
"The plaintiffs, the Sierra Club and Judicial Watch, the conservative legal group based in Washington, argue that Vice President Cheney and his staff violated the open-government Federal Advisory Committee Act by meeting behind closed doors with energy industry executives, analysts and lobbyists.
"The plaintiffs allege these discussions occurred during the formulation of the Bush administration's May 2001 "National Energy Policy."
"For close to three years, Cheney and the administration have resisted demands that they reveal with whom they met and what they discussed.
"Last year, a lower court ruled against Cheney and instructed him to turn over documents providing these details.
"On Dec. 15, the Supreme Court announced it would hear Cheney's appeal. Three weeks later, Cheney and Supreme Court Justice Antonin Scalia spent a weekend together duck hunting at a private resort in southern Louisiana, giving rise to calls for Scalia to recuse himself. So far, he has refused.
"Why has the administration gone to such lengths to avoid disclosing how it developed its new energy policy?
"Significant evidence points to the possibility that much more could be revealed than mere corporate cronyism: The national energy policy proceedings could open a window onto the Bush administration's decision-making process and motives for going to war on Iraq.
"In July 2003, after two years of legal action through the Freedom of Information Act (and after the end of the war), Judicial Watch was finally able to obtain some documents from the Cheney-led National Energy Policy Development Group.
"They included maps of Middle East and Iraqi oilfields, pipelines, refineries and terminals, two charts detailing various Iraqi oil and gas projects, and a March 2001 list of "Foreign Suitors for Iraqi Oilfield Contracts," detailing the status of their efforts. The documents are available at www.judicialwatch.org.
"These documents are significant because during the 1990s, U.S. policy- makers were alarmed about oil deals potentially worth billions of dollars being signed between the Iraqi government and foreign competitors of the United States including France's Total and Russia's LukOil.
"The New York Times reported the LukOil contracts alone could amount to more than 70 billion barrels of oil, more than half of Iraq's reserves. One oil executive said the volume of these deals was huge -- a "colossal amount."
"As early as April 17, 1995, the Wall Street Journal reported that U.S. petroleum giants realized that "Iraq is the biggie" in terms of future oil production, that the U.S. oil companies were "worried about being left out" of Iraq's oil dealings due to the antagonism between Washington and Baghdad, and that they feared that "the companies that win the rights to develop Iraqi fields could be on the road to becoming the most powerful multinationals of the next century."..." [more]
"The invasion of Iraq one year ago provided a multibillion-dollar boost to the United States' largest construction and engineering firms.
"Although San Francisco's Bechtel Corp. and Halliburton, of Houston, have received the most public scrutiny, the billions of tax dollars pouring into Iraq's reconstruction also flow through such competitors as Pasadena's Parsons Corp., Orange County's Fluor Corp. and Washington Group International in Idaho.
"Profit margins are low. But the money and contracts keep coming, even as critics cry favoritism over the political connections many of the firms enjoy. The companies, several of whom have lost workers to the violence, say they're committed to the country long-term and hope the next Iraqi government hands them extra work.
"For sheer size of contracts, none of the reconstruction firms can rival Halliburton, whose employees in Iraq do everything from repairing oil pipelines to washing soldiers' clothes. The company, once run by Vice President Dick Cheney, holds contracts potentially worth between $12.6 billion and $16.8 billion.
"But in the small world of U.S. firms capable of rebuilding a nation, most have landed jobs worth $1 billion or more.
"-- San Francisco's Bechtel won $2.83 billion in contracts for repairing electrical plants, water systems, airports and railways.
"-- Washington Group International holds contracts worth a total of $2.1 billion for electrical work and water system repairs. The total could rise to $3.1 billion if one of the contracts is extended.
"-- Fluor Corp. has landed $1.1 billion in reconstruction jobs, for electrical repairs and building renovation.
"More money is on the way. The Pentagon is handing out $5 billion for work that will continue long after the planned transfer of political power in Iraq this summer. Several reconstruction companies also hold long-term contracts to support the military throughout the Middle East.
"Although the government and the firms it hires have kept exact figures under wraps, most industry analysts expect the firms to score single-digit profits as a percentage of each contract's value.
"And those margins can come at a high personal price. Halliburton alone has seen 30 employees and subcontractors killed, as reconstruction workers become targets for Iraqi insurgents.
"Washington Group employs twice as many security guards as it does other subcontractors. Bechtel has not acknowledged any lost workers and has stopped answering questions about whether any of its employees have died in Iraq.
""In this country, no one is safe, and I haven't seen any improvement," said Robert Band, chief executive officer of Perini Corp., which has about $1 billion in reconstruction work. Seven of its Iraqi subcontractors have been killed.
"And yet, a year after they followed U.S. troops into the country, reconstruction firms hold out hope that their presence in Iraq will lead to more jobs under the next Iraqi government.
""There's not only the immediate reward here, but you're building relationships with Iraqi officials," Fluor spokesman Jerry Holloway said.
"Eventually, he said, the Iraqis will start hiring construction companies on their own. "You're most likely going to be in a position to compete for that work." Many critics of the war want reconstruction cash to go to Iraqi firms. They see the past year's worth of contracts as government patronage for well-connected businesses.
""The United States should be putting up billions of dollars for a country we invaded," said Antonia Juhasz, a project director at the International Forum on Globalization think tank. "The questions are, how is that money to be spent, and in whose interest?"
"Complaints of favoritism in the contract awards have persisted.
"Perini, based in Massachusetts, is partly owned by the investment firm of Sen. Dianne Feinstein's husband, Richard Blum. Bechtel's links to the Republican Party include former Secretary of State George Shultz, who sits on the company's board. Parsons Brinkerhoff, part of a joint venture that just won $43 million to oversee electrical repairs, recently employed retired Navy Rear Admiral David Nash, who now runs project management for the coalition governing Iraq.
""You're an acquisition official, and you see the name of your boss' former company. Do you treat it differently?" asked Keith Ashdown, vice president of policy at Taxpayers for Common Sense, a government-spending watchdog group...." [more]
By DARRIN SCHLEGEL
Copyright 2004 Houston Chronicle
"Halliburton Co. said Friday it will be paid in full for food and logistics services it provides U.S. troops in Iraq until at least the end of next month.
"The Pentagon said earlier this week it would withhold 15 percent from invoices received after April 1 until the Houston-based contractor and military auditors could complete talks to determine fair prices for assigned work.
"But the Army Materiel Command agreed to delay implementing that schedule because of mandates this week that it reduce its overall budget, meaning the audit must wait.
"Halliburton subsidiary KBR has until April 30, and possibly June 1 if needed, to recalculate its costs.
"The Pentagon began probing the company's billing practices last month.
"Auditors had raised questions about the company's billing for meals after finding discrepancies between the number of meals charged for and the number served.
"The company then credited the Army Materiel Command $36 million and agreed to withhold billing on $141 million more until the billing issues are resolved.
"Halliburton said again Friday that it does not believe the 15 percent withholding should apply to its food and logistics contract.
"Should 15 percent of future billings be withheld, subcontractors of the company may be subject to the same amount...." [more]
"JOHANNESBURG -- Under the former apartheid government, Carl Alberts, a combat helicopter pilot, was awarded South Africa's highest military honor for his service battling guerrillas in Angola. Last month, the 49-year-old retired pilot was arrested by South Africa for fighting rebels in Ivory Coast, this time as a mercenary for Ivory Coast's government.
"A decade after the end of apartheid and cessation of South Africa's numerous border wars, the country has some of the best-trained soldiers in the world. The problem is many of them are working for the highest bidder, in conflict zones from Iraq to Sierra Leone.
""We don't like the idea that South Africa has become a cesspool of mercenaries," Nkosozana Dlamini-Zuma, South Africa's foreign affairs minister, said last week after more than 20 alleged South African mercenaries were arrested in Zimbabwe and Equatorial Guinea as part of an apparent coup plot against Equatorial Guinea.
"Despite legislation to curb mercenaries, South Africa remains one of the biggest providers of paid fighters on the international market, particularly for conflicts in Africa.
""For anyone looking for talent, this is the place to come," said John Stremlau, head of international relations at the University of the Witwatersrand in Johannesburg. "There are a lot of thugs around but not many pros. South Africa is one-stop shopping--capable, well-trained bodies with management skills and satellite phones."...
"...former South African soldiers--and some on leave from active duty--have served in conflicts from Papua New Guinea to Congo. At least 1,000 are working in Iraq, some guarding oil facilities near Basra. One South African, working for Erinys Iraq, which identifies itself as a security firm, was killed in a January car bombing in Baghdad, and five others were injured.
"Increasingly, multinational corporations, as well as troubled governments, hire mercenaries. Fighters are sometimes paid in oil and diamond concessions as well as in cash, analysts say. The men arrested in Equatorial Guinea, a tiny nation with vast oil reserves, had reportedly been offered such concessions for their work in ousting the government of President Teodoro Obiang Ngeuma Mbasogo.
""There's a whole movement away from this romanticized image of the snake-eating loner who heads into the continent to destabilize things," said Chris Maroleng, a researcher at the Institute for Security Studies in Pretoria. "Now these guys are seen as front parties for multinational businesses" interested in security or protecting mineral rights...." [Emphasis added.] [more]
"WASHINGTON, March 17 ? The Pentagon said Wednesday that it would withhold about $300 million from payments to a Halliburton subsidiary on a contract to feed soldiers in Iraq until auditors were certain that the government had not been overcharged.
"The money represents about 15 percent of an open-ended contract with the subsidiary, Kellogg Brown & Root. A Pentagon spokeswoman said the decision to withhold the money came from the Defense Department's auditing agency, which found "the possibility of substantial overcharges."
""This shows the system is working," said Dov. S. Zakheim, the department's comptroller.
"Both Halliburton and the military have come under recent criticism over other Iraq contracts in which Halliburton was found to have overcharged the government. Department auditors have previously reported deficiencies in Halliburton's cost estimates for work in Iraq. In some cases, the company has reimbursed the government; other cases are under review.
"Halliburton said Wednesday that the Army had already notified it that its contracts would be renegotiated as part of a cost-cutting drive and said that for that reason no payments should be withheld until the renegotiation was completed.
"The company said that if the payments were withheld, the company in turn would withhold the same percentage from its subcontractors...." [more]
By DAVID IVANOVICH
Copyright 2004 Houston Chronicle Washington Bureau
"WASHINGTON — Altanmia Commercial Marketing Co. is the fuel supplier the Pentagon just can't seem to live without.
"Last week, a top official with the U.S. Army Corps of Engineers told lawmakers the corps planned to terminate the Kuwaiti firm's contract to truck fuel into Iraq, effective Saturday.
"On Monday, the Defense Energy Support Center awarded Altanmia a new $39.9 million contract to do the same kind of work, Pentagon officials announced late Tuesday.
"Altanmia, however, will be transporting that fuel at a far cheaper rate than before.
"Pentagon officials were at a loss Tuesday to explain why one arm of the military would want to hire a company another branch just dumped...." [more]
"WASHINGTON, March 16 (Reuters) - The U.S. military on Tuesday said it awarded three new contracts for fuel deliveries to Iraq, as it continued to replace controversial work done by Vice President Dick Cheney's old firm Halliburton (nyse: HAL - news - people) .
"The military's fuel unit, the Defense Energy Support Center (DESC), said Kuwait Petroleum Corp., based in Safat, won a $79.9 million deal to ship gasoline and diesel fuel to Iraq, which is rich in oil, but has a shortage of refined products.
"Shaheen Business and Investment Group of Amman, Jordan, won a $71.8 million contract for gasoline and diesel fuel, while Altanmia Commercial Marketing Co., of Sharq, Kuwait, won a $40 million deal to truck in gasoline, kerosene and diesel fuel to southern Iraq.
"Last week, the DESC awarded seven new contracts for fuel deliveries to northern Iraq via Turkey.
"In December, the DESC was assigned to find new, cheaper, contractors to bring in fuel to Iraq after Texas-based Halliburton's Kellogg Brown and Root unit came under criminal investigation by the Pentagon's Inspector General's office over allegedly overcharging for fuel brought into Iraq under a no-bid deal it had with the U.S. Army Corps of Engineers...." [more]
"WASHINGTON — The Pentagon's inspector general found "no compelling reason" to scrap a U.S. Air Force deal to lease and buy 100 refueling tankers from Boeing.
"However, Pentagon Inspector General Joseph Schmitz said in a March 5 draft report the deal's terms may need renegotiating because of "unsound acquisition and procurement practices."
"Schmitz was asked to review whether the deal should be killed because Boeing's former chief financial officer offered a job to the official negotiating for the Air Force. To that question, Schmitz said no.
""There's no smoking gun," said Howard Rubel, an analyst at Schwab Soundview Capital Markets. "The draft doesn't show any impropriety and it does show there's still a need for the tanker."
""It looks to me like the deal will go through," said Paul Nisbet, an analyst for JSA Research in Newport, R.I.
"Boeing is dependent on defense contracts for more than half its revenue as commercial-aircraft sales have slumped, and CEO Harry Stonecipher is attempting to quickly rebuild the company's government relations.
"The Inspector General's Office is the first of four Pentagon agencies reviewing the $17 billion tanker deal. In addition, the U.S. Securities and Exchange Commission is investigating the company's disclosures to investors of the potential conflict-of-interest.
"Boeing fired Chief Financial Officer Michael Sears and former Air Force official Darleen Druyun in November after discovering the job offer was made during contract talks...." [more]
