War profiteering

The unsavory prospects of war profiteering in the U.S.-led occupation of Iraq, and its alleged "reconstruction", were proclaimed in a January 21, 2004 press release by the Institute for Southern Studies: a "New Investigation Reveals 'Reconstruction Racket' in Iraq." The latest issue of the Institute's publication "Southern Exposure" provides an "in-depth report by Pratap Chatterjee and Herbert Docena ... one of the first on-the-ground accounts of how U.S. taxpayer money given to Bechtel, Halliburton and other companies is being spent."

An "investigative team spent three weeks in Iraq visiting project sites, analyzing contracts, and interviewing dozens of administrators, contract workers, and U.S. officials. Among the findings:

• Despite over eight months of work and billions of dollars spent, key pieces of Iraq's infrastructure - power plants, telephone exchanges, and sewage and sanitation systems - have either not been repaired, or have been fixed so poorly that they don't function.
• San Francisco-based Bechtel has been given tens of millions to repair Iraq's schools. Yet many haven't been touched, and several schools that Bechtel claims to have repaired are in shambles. One 'repaired' school was overflowing with unflushed sewage; a teacher at the school also reported that 'the American contractors took away our Japanese fans and replaced them with Syrian fans that don't work' - billing the U.S. government for the work.
• Inflated overhead costs and a byzantine maze of sub-contracts have left little money for the everyday workers carrying out projects. In one contract for police operations, Iraqi guards received only 10% of the money allotted for their salaries; Indian cooks for Halliburton subsidiary Kellogg Brown and Root reported making just three dollars a day.

"The [Southern Exposure] report also reveals further details of Halliburton's contracts: for example, that of Halliburton's $2.2 billion in contracts, only about 10% has gone to meeting community needs - the rest being spent on servicing U.S. troops and rebuilding oil pipelines. Halliburton has also spent over $40 million in the unsuccessful search for weapons of mass destruction.

"'A handful of well-connected corporations are making a killing off the devastation in Iraq' observes Chris Kromm, publisher of 'Southern Exposure'. 'The politics and process behind these deals have always been questionable. Now we have first-hand evidence that they're not even doing their jobs.'"

See related external links under "The War / Rebuilding of Iraq" section in Halliburton Company article.

Fraud

Knight Ridders' Seth Bornstein reports on May 21, 2004, that "Empty flatbed trucks crisscrossed Iraq more than 100 times as their drivers and the soldiers who guarded them dodged bullets, bricks and homemade bombs.

"Twelve current and former truckers who regularly made the 300-mile re-supply run from Camp Cedar in southern Iraq to Camp Anaconda near Baghdad told Knight Ridder that they risked their lives driving empty trucks while their employer, a subsidiary of Halliburton Inc., billed the government for hauling what they derisively called 'sailboat fuel.'

"Defense Department records show that Kellogg Brown and Root, a Halliburton subsidiary, has been paid $327 million for 'theater transportation' of war materiel and supplies for U.S. forces in Iraq and is earmarked to be paid $230 million more. The convoys are a lifeline for U.S. troops in Iraq hauling tires for Humvees, Army boots, filing cabinets, tools, engine parts and even an unmanned Predator reconnaissance plane.

"KBR's contract with the Defense Department allows the company to pass on the cost of the transportation and add 1 percent to 3 percent for profit, but neither KBR nor the U.S. Army Field Support Command in Rock Island, Ill., which oversees the contract, was able to provide cost estimates for the empty trucks. Trucking experts estimate that each round trip costs taxpayers thousands of dollars."

War Advocates Benefit

Reported in the Los Angeles Times July 14, 2004, Advocates of War Now Profit From Iraq's Reconstruction by Walter F. Roche Jr. and Ken Silverstein

• Former CIA Director R. James Woolsey is a prominent example of the phenomenon, mixing his business interests with what he contends are the country's strategic interests.

• Neil Livingstone, a former Senate aide who has served as a Pentagon and State Department advisor and issued repeated public calls for Hussein's overthrow. He heads a Washington-based firm, GlobalOptions, Inc. that provides contacts and consulting services to companies doing business in Iraq.

• Randy Scheunemann, a former Rumsfeld advisor who helped draft the Iraq Liberation Act of 1998 authorizing $98 million in U.S. aid to Iraqi exile groups. He was the founding president of the Committee for the Liberation of Iraq. Now he's helping former Soviet Bloc states win business there.

• Margaret Bartel, who managed federal money channeled to Chalabi's exile group, the Iraqi National Congress, including funds for its prewar intelligence program on Hussein's alleged weapons of mass destruction. She now heads a Washington-area consulting firm helping would-be investors find Iraqi partners.

• K. Riva Levinson, a Washington lobbyist and public relations specialist who received federal funds to drum up prewar support for the Iraqi National Congress. She has close ties to Bartel and now helps companies open doors in Iraq, in part through her contacts with the Iraqi National Congress.

• Joe M. Allbaugh, who managed President Bush's 2000 campaign for the White House and later headed the Federal Emergency Management Agency, and Edward Rogers Jr., an aide to the first President Bush, recently helped set up New Bridge Strategies and Diligence, LLC to promote business in postwar Iraq. Rogers was retained in July 2004 as the chief lobbyist for the Kurdish Democratic Party.

10 Worst Profiteers of 2004

• The following list was released by the Center for Corporate Policy:

1. Aegis Defence Services
2. BearingPoint, Inc.
3. Bechtel
4. BKSH and Associates
5. CACI International and Titan Corporation
6. Custer Battles
7. Halliburton
8. Lockheed Martin
9. Loral Satellite
10. QUALCOMM

SourceWatch Resources

Profiteering

• Bush administration cronyism and incompetence
• Bush Dynasty
• Carlyle Group
• Loose Cannon Pentagon
• Military-industrial complex
• Private Military Corporations
• Socialization of costs and privatization of profits

Iraq

• Ahmed Chalabi
• civil war in Iraq
• Coalition Provisional Authority
• Globalization of Iraq
• Iraq Infrastructure Reconstruction Office (IIRO)
• Iraq Reconstruction Task Force
• Kith & Kin Inc.
• New Iraq
• Office of Reconstruction and Humanitarian Assistance
• Oil and War in Iraq
• Operation Iraqi Freedom: Beginnings of a Quagmire
• Post-war Iraq
• Reconstruction of Iraq contractors
• Reconstruction of Iraq funding
• Privatization of Iraq
• Vision for Post-Conflict Iraq
• Windrush Communications Ltd.

General

• defense contractors
• federal contractors
• globalization

External links

• War Profiteers DOT com, from CorpWatch.
• Herbert Docena, Iraq reconstruction's bottom-line, Asia Times, December 25, 2003.
• Chris Kromm, Making a Killing: The New War Profiteers, Southern Exposure, Winter 2003/2004.
• Pratap Chatterjee and Herbert Docena, Occupation, Inc., Southern Exposure, Winter 2003/2004: "War profiteers in Iraq pursue quick fixes and high profits by overcharging for shoddy work, while Iraqis protest that they could do the work better and cheaper. Welcome to the reconstruction racket."
• William D. Hartung, Making Money on Terrorism, The Nation, February 23, 2004 (Issue): "We all know that Halliburton Company is raking in billions from the Bush Administration's occupation and rebuilding of Iraq. But in the long run, the biggest beneficiaries of the Administration's 'war on terror' may be the 'destroyers,' not the rebuilders. The nation's 'Big Three' weapons makers--Lockheed Martin, Boeing Company and Northrop Grumman--are cashing in on the Bush policies of regime change abroad and surveillance at home."
• How Much Are You Making on the War, Daddy?: A Quick and Dirty Guide to War Profiteering in the Bush Administration (2004, Nation Books/Avalon) review:

  "The main characters in Hartung's book are Vice President Dick Cheney, Deputy Defense Secretary Paul Wolfowitz, Rumsfeld, Perle and Frank Gaffney of the right-wing think tank Center for Security Policy, neoconservatives all. Hartung visits their younger selves in the Nixon, Ford and Reagan administrations and traces their careers in the defense industry and at think tanks like CSP and the American Enterprise Institute during the Clinton years. He also chronicles numerous examples of unsavory activity since they reentered the halls of power and the Iraq war began."

• Richard Muhammad, For-Profit Patriotism, AlterNet, March 4, 2004.
• Karen Lowe, "Spoils of War" 4-Part Series from Marketplace/Public Radio.org, April 20-23, 2004.
• Evelyn Pringle, Mom & Pop War Profiteering Team: The Woolseys, Yubanet.com, January 21, 2005.
• "Iraq's Disappearing Billions," antiwar.com, September 12, 2005.
• Tom Turnipseed, "Dick Cheney: War Profiteer," Common Dreams, November 17, 2005.
• David Sirota, "The Growing Problem of Defense Industry Profiteering", Common Dreams, November 30, 2005.
• Dave Whyte, "The corporate plunder of Iraq", Socialist Worker, February 11, 2006.
• Julian Borger and David Pallister, "Corruption: the 'second insurgency' costing $4bn a year. One third of rebuilding contracts under criminal investigation," Guardian Unlimited (UK), December 2, 2006.
• Renae Merle, "Census Counts 100,000 Contractors in Iraq. Civilian Number, Duties Are Issues," Washington Post, December 5, 2006.
• Ann Scott Tyson, "U.S. Army Battling To Save Equipment. Gear Piles Up at Depots, Awaiting Repair," Washington Post, December 5, 2006.
• Private Security Transnational Enterprises in Colombia José Alvear Restrepo Lawyers' Collective, February 2008.