Invitation to Steal: War Profiteering in Iraq

[laststeamtrain]

Invitation to Steal: War Profiteering in Iraq

William D. Hartung | May 28, 2008

The heavy reliance on private contractors to do everything from serving meals and doing laundry to protecting oil pipelines and interrogating prisoners has been a major factor in the immense costs of the Iraq war. By one measure, there may be more employees of private firms and their subcontractors on the ground in Iraq than there are U.S. military personnel.

One of the main rationales for using private companies to carry out functions formerly done by uniformed military personnel – a practice that has been on the rise since then Defense Secretary Dick Cheney commissioned a study that led to the contracting out of all Army logistics work to Halliburton in the 1990s – was that it would save money. But in Iraq, the combination of greedy contractors and lax government oversight has resulted in exorbitant costs, many of them for projects that were never completed.

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Large firms like Halliburton were not the only ones to exploit the war for excess – and in some cases illegal – profits. One of the most notorious examples involved Custer Battles, named after its founders Scott Custer and Michael Battles. When the two men went to Iraq in search of contracts, they had no capital, no employees, and no experience in the security business. But they did have a knack for marketing, billing themselves “Green Berets with MBAs.”

Shortly after arriving in Iraq, Custer Battles received a lucrative contract to provide security for the Baghdad airport. As an example of just how loose controls were, one early payment to the company was made in the form of $2 million in shrink wrapped $20 bills, transferred to the firm in exchange for a handwritten receipt. A film of two Custer employees playing football with a brick of the shrink wrapped bills provided one of the most enduring images of greed and corruption generated by the Iraq occupation contracting fiasco.

<snip>

Another circle of beneficiaries may be referred to as the “policy profiteers”: individuals who advocated for the war with Iraq at the same time that they stood to gain from it. Chief among these were Bruce Jackson, R. James Woolsey, and Richard Perle. Jackson, a former vice president at the world’s largest weapons contractor, Lockheed Martin, co-chaired the Committee for the Liberation of Iraq, an advocacy group which closely coordinated its pro-war messages with the Bush administration. He had previously served as chair of the foreign policy subcommittee of the Republican platform committee at the party’s 2000 convention. Both Woolsey and Perle served as advisors to then Secretary of Defense Donald Rumsfeld as part of the Defense Policy Board. Both men used their posts as official advisors to the Pentagon to beat the drums for war, and both simultaneously ran investment funds that were receiving money from major contractors like Boeing that have profited mightily from the Iraq conflict. In addition, Woolsey is an executive at Booz, Allen and Hamilton, a consulting firm that has given seminars on how to get Iraq-related contracts.

Preventing war profiteering on the scale that has prevailed in Iraq will require the implementation of thoroughgoing reforms:

* Increasing the use of competitive bidding, even in cases in which only a few contractors are deemed to be capable of doing the task at hand;
* Better screening of bidders to rule out companies with no experience in the relevant area of work (e.g., see profile of Custer Battles, above);
* More auditors in the field from the outset of a conflict;
* A new “Truman Committee” modeled on the effort led by then Senator Harry Truman during World War II. The committee should have subpoena power, a robust investigative staff, and the ability to forward major abuses to the relevant criminal authorities;

<more>

http://www.fpif.org/fpiftxt/5254

[central scrutinizer]

1. Don't forget Bush's executive order 13303 prior to the war

granting immunity to his cronies for war profiteering before the Iraq war was every launched

http://www.whitehouse.gov/news/releases/2003/05/20030522-15.html

Executive Order
Executive Order Protecting the Development Fund for Iraq and Certain Other Property in Which Iraq Has An Interest

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act, as amended (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.), section 5 of the United Nations Participation Act, as amended (22 U.S.C. 287c) (UNPA), and section 301 of title 3, United States Code,

I, GEORGE W. BUSH, President of the United States of America, find that the threat of attachment or other judicial process against the Development Fund for Iraq, Iraqi petroleum and petroleum products, and interests therein, and proceeds, obligations, or any financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein, obstructs the orderly reconstruction of Iraq, the restoration and maintenance of peace and security in the country, and the development of political, administrative, and economic institutions in Iraq. This situation constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States and I hereby declare a national emergency to deal with that threat.

I hereby order:

Section 1. Unless licensed or otherwise authorized pursuant to this order, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is prohibited, and shall be deemed null and void, with respect to the following:

(a) the Development Fund for Iraq, and

(b) all Iraqi petroleum and petroleum products, and interests therein, and proceeds, obligations, or any financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein, in which any foreign country or a national thereof has any interest, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons.

Sec. 2. (a) As of the effective date of this order, Executive Order 12722 of August 2, 1990, Executive Order 12724 of August 9, 1990, and Executive Order 13290 of March 20, 2003, shall not apply to the property and interests in property described in section 1 of this order.

(b) Nothing in this order is intended to affect the continued effectiveness of any rules, regulations, orders, licenses or other forms of administrative action issued, taken, or continued in effect heretofore or hereafter under Executive Orders 12722, 12724, or 13290, or under the authority of IEEPA or the UNPA, except as hereafter terminated, modified, or suspended by the issuing Federal agency and except as provided in section 2(a) of this order.

Sec. 3. For the purposes of this order:

(a) The term "person" means an individual or entity;

(b) The term "entity" means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization;

(c) The term "United States person" means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any juris-diction within the United States (including foreign branches), or any person in the United States;

(d) The term "Iraqi petroleum and petroleum products" means any petroleum, petroleum products, or natural gas originating in Iraq, including any Iraqi-origin oil inventories, wherever located; and

(e) The term "Development Fund for Iraq" means the fund established on or about May 22, 2003, on the books of the Central Bank of Iraq, by the Administrator of the Coalition Provisional Authority responsible for the temporary governance of Iraq and all accounts held for the fund or for the Central Bank of Iraq in the name of the fund.

Sec. 4. (a) The Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Defense, is hereby authorized to take such actions, including the promulga-tion of rules and regulations, and to employ all powers granted to the President by IEEPA and the UNPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government. All agencies of the United States Government are hereby directed to take all appropriate measures within their statutory authority to carry out the provisions of this order.

(b) Nothing contained in this order shall relieve a person from any requirement to obtain a license or other authorization in compliance with applicable laws and regulations.

Sec. 5. This order is not intended to, and does not, create any right, benefit, or privilege, substantive or procedural, enforceable at law or in equity by a party against the United States, its departments, agencies, entities, officers, employees, or agents, or any other person.

Sec. 6. This order shall be transmitted to the Congress and published in the Federal Register.

GEORGE W. BUSH
THE WHITE HOUSE,
May 22, 2003.