Concealed Weapons: Washington’s Corporate War Lobby

In June of 2003, Joe Allbaugh—a Texas native son, longtime George W. Bush lieutenant, and, until his March resignation, the charitably under-qualified Director of the Federal Emergency Management Agency—set up shop in a H suite of offices adjacent to those of his lobbyist wife, M. Diane Allbaugh of MDA Capitol Associates. There Allbaugh christened himself president of his own influence boutique, The Allbaugh Company. As is often the case with White House friends and connections, it wasn’t long before Allbaugh had clients at his door, including corporate heavy hitters like Union Pacific and the National Mining Association.

In a town where cashing in on one’s connections rarely prompts the bat of an eye, this was hardly an act of innovation. But in July Allbaugh entered into a far more intriguing arrangement, one that put him at the heart of a new nexus between lobbying, political vision, and policymaking—in a Washington where the Roman architecture increasingly reflects the trappings of empire.

Indeed, Allbaugh’s venture may stand as a quintessential case study in business incestuousness and the rise of right-wing Southern political clout on the Potomac. First, Allbaugh became chairman of New Bridge Strategies, a “unique company created specifically [to] take advantage of business opportunities in the Middle East following the conclusion of the US-led war in Iraq,” as its website advertises. Allbaugh’s partners in this new endeavor include Lanny Griffith and Ed Rogers of the lobby shop Barbour, Griffith, and Rogers, one of D.C.’s most Republican and most formidable firms—the Barbour being Haley Barbour, former chair of the Republican National Committee and newly-minted Governor of Mississippi. (M. Diane Allbaugh also sometimes toils in the BG&R vineyards, and is listed as being “of counsel” to the firm).

Also involved in New Bridge is Syrian-American Jamal Daniel. A longtime Houstonite, Daniel is a friend of the Bush family; in an act of pragmatic charity that likely cuts several ways, Daniel’s Crest Investment Corporation pays W’s brother Neil $60,000 a year for 3-4 hours of “consulting” work each week, according to Texas court documents.

But perhaps the most interesting—and lucrative—aspect of the New Bridge deal is the company’s commingling with an entity called Diligence LLC. Founded in 2000 by Nick Day, a former British Special Boat Service and MI5 officer, and Mike Baker, a retired CIA officer, Diligence is a private intelligence and security company staffed, according to its promotional materials, by professionals drawn from the ranks of law enforcement, intelligence agencies, and Special Forces. Diligence can also boast of its D.C. connections: the company’s chair is Robert Burt, a former defense official in the Reagan and first Bush administrations, a director of Barbour, Griffith, and Rogers, and an advisor to New Bridge. Both Ed Rogers and super lobbyist Tommy Boggs sit on its board, and Haley Barbour himself owns a piece of the company.

So far, New Bridge hasn’t had much success landing contracts for construction and telecom clients trying to cash in on Iraq. But Diligence has been doing great business courtesy of the Baghdad office it opened in July. Diligence was originally launched to provide security services for companies trying to hustle a piece of the post-Saddam action. But according to the company, business has grown to “encompass payroll protection and delivery, personnel and facilities security, due diligence on potential Iraqi business partners and companies, screening of potential hires, vetting, training, and management of security personnel, and provision of daily intelligence briefs,” for both private and Coalition interests.

Indeed, Diligence’s business is going so well that the company has decided to turn the Baghdad office into a dedicated subsidiary, Diligence Middle East (DME), cochaired by . . . Richard Burt and Joe Allbaugh. And who can blame them for the move? After all, thanks to the ministrations of the Coalition Provisional Authority (which considers unfettered free enterprise a key ingredient of the new Iraq, and has rewritten the country’s investments laws accordingly), anyone wanting to incorporate in Iraq doesn’t have to share ownership with any indigenous public or private partnership—an almost unheard of arrangement for U.S. companies looking to do business in the Middle East.

 

In the months after 9/11, conventional wisdom in Washington held that “homeland security” would be a goldmine for enterprising lawyers, lobbyists, consultants, and contractors for years to come. And there certainly is a burgeoning homeland security industry—which, as it turns out, Joe Allbaugh is in on as well, through a consortium called Civitas, started by the prominent Republican lobbyist Charlie Black, of BKSH & Associates. (BKSH itself an affiliate of the global public relations giant Burson Marstellar.) But thanks to the Iraq war and the unfolding “post-war” debacle, the real money continues to flow from the headwaters of defense and foreign appropriations.

Any number of Washington lobby shops had both good political and fiscal motives to push for war with Iraq. While some on the right are leery of the Bush Administration’s embrace of “pre-emptive” and “unilateral” action, others see this aggressive posture as a natural development of America’s role as global hegemon and as a necessary instrument of market expansion, so America can do what it does best: business.

War is, of course, always good for those in the business of supplying the military with weapons and technology. In some respects, of course, the defense industry doesn’t require much in the way of lobbying. If you’re Raytheon, for example, so long as places and people are successfully dispatched by your Tomahawk, Patriot, Javelin, Maverick, and TOW missiles, you can be relatively certain Uncle Sam will be placing more orders to replace the expended stocks. The same goes for Lockheed Martin’s Hellfire missiles, as well as the popular and versatile F-16 fighter. For new weapons systems and a myriad of other related matters, however, lobbying is required.

The big arms merchants employ a panoply of inhouse lobbyists whose job is to ensure that Congress is perpetually preparing, and paying, for war. Meanwhile, smaller or less traditional defense-interested companies often rely on well-connected former national security officials to look after their interests. Sometimes, though, it’s hard to say just how former “former” is, particularly if someone who’s lobbying the Defense Department is consulting for them as well—in particular on a project designed to facilitate a war.

Such was the case with Christopher M. Lehman, a former Reagan National Security Council official who now heads the Virginia-based Commonwealth Consulting Corporation. Commonwealth lobbies for about a dozen defense-related concerns. In 2002 and 2003, Lehman, according to former Pentagon officials, was also a consultant to the Defense Department’s secretive Office of Special Plans, the unit of specially-hired neoconservatives tasked with producing intelligence analysis proving the need for war with Iraq based on Saddam Hussein’s possession of weapons of mass destruction and ties to al Qaeda.

While war can be good for business, one longtime K Street hired gun opined to me in March that even better prospects—for both business and influence peddlers—would be found in the reconstruction. “A bunch of the Pentagon people think they’ll be welcomed with open arms and then out of there fast; others think it’s going to a disaster, and troops will be there forever,” the lobbyist said. “Either way, it’s a win-win for us.

“In the first scenario,” he continued, “lots of reconstruction and retraining contracts will be doled out in an orderly way. In the other case, you’ll need those contracts, and, because Rumsfeld wants to outsource so many military functions, you’ll have money there, too. Whoever wants that money will need to know the people who know the right people. And I can tell you right now there are a bunch of people around town who, if they don’t know the right Iraqis or the right neoconservatives, are scrambling to make new friends or make new alliances.”

In this respect, Charlie Black’s shop, BKSH & Associates, was already sitting pretty. A longtime Republican strategist and Bush family friend, Black was a key player in the Bush/Cheney 2000 campaign. Since the dawn of the second Bush Administration, BKSH has been retained by the Iraqi National Congress of Ahmed Chalabi, a figure beloved by Pentagon neocons but scorned by most of the intelligence and foreign policy community. Chalabi’s status as an at-large felon convicted of fraud and embezzlement in Jordan—and the INC’s dodgy reputation as purveyor of dubious intelligence—inclined many to keep the man and the organization at arm’s length. But when the Pentagon’s favorite Iraqi exile took a position on the interim Iraqi Governing Council, Chalabi and the INC were quickly seen as useful gateways for business.

By summer’s end AT&T, GM, Cummins Engine, and the engineering firm Fluor International had retained BKSH’s services with an eye towards doing business in Iraq. So far, Fluor has landed two Iraq contracts—one for logistical services, another for the rebuilding of Iraq’s electrical grid. Cummins has also done a brisk business in selling generators thanks to its Iraq contract, so much so that its generator sales rose by 15 percent in one quarter.

Elsewhere, it probably didn’t hurt Lucent Technologies in winning its $25 million Iraq contract that the company retains Barbour, Griffith, and Rogers. Louisiana scion and Washington fixture Tommy Boggs’s firm Patton Boggs is raking in money directly through its new dedicated Iraq practice—and indirectly via its 15 percent ownership of Qorvis Communications, which is working the Iraqi and American leadership on behalf of Jordan’s Shaheen Business and Investment Group.

Another Louisianian, former Republican Speaker-Elect Bob Livingston, has proven that in Washington, there is lucrative life after humiliating sex scandal: having already scored Britain’s De La Rue International a pricey currency and passport printing contract for the new Iraqi government, The Livingston Group is working hard on behalf of a variety of British and Chinese interests hoping for Mesopotamian tenders.

Liberty Mobile, a consortium hoping to land one of the three wireless phone concessions for Iraq, seemed to have lost out when the Coalition Provisional Authority announced that tenders were being awarded to three other groups. But according to sources, through the persistent efforts of Liberty’s lobbyists, an investigation into both the contract awards process and the contractors themselves was launched that may yet see Liberty landing some reconstruction business.

Carrying Liberty’s water: both a team from the DC powerhouse Akin, Gump, Strauss, Hauer, and Feld that includes former Bush/Cheney 2000 California state director Stacy Carlson and top Republican lobbyist Barney J. Skladany, and the newly-created Millennium Capital Consultants, an apparent operation of one. But the one carries a lot of weight: according to papers filed with the U.S. Congress, Millennium is super-low profile trade lawyer William N. Walker— a former protégé of Donald Rumsfeld in both Illinois politics and the Ford White House, where Rumsfeld made Walker the president’s patronage chief and later deputy trade representative.

According to Walker, this history had nothing to do with his tasking by Liberty Mobile. “This is not the type of thing one would go talk to [Rumsfeld] about,” Walker told Southern Exposure. He downplayed his history with Rumsfeld, and described Liberty Mobile as “dead.” But even if Liberty Mobile never makes a dime from Iraqi reconstruction, Walker himself has already made a pretty penny lobbying on their behalf.

 

Not everyone in Iraq had to hire lobbyists. Take Science Applications International Corporation (SAIC), one of the larger and more venerable components of the military-industrial complex. Though well-known and highly regarded for science and technology contract work to defense and intelligence agencies, SAIC is not known for more conceptual projects like political and media reform. Yet the corporation has managed to land precisely such work in Iraq—to the tune of an estimated $38 million disbursed by the Pentagon.

SAIC was given the for-hire portfolio that includes advising Iraqi dissidents on how to set up a democratic, representative Iraq and how to help create an independent Iraqi media. It’s only speculation, of course, but some Washington observers can’t help but wonder if the presence of Wayne Downing and William Owens on SAIC’s board might have had something to do with this. A former US Special Forces commander and White House aide, Downing has long been a booster of Ahmed Chalabi and the INC, and was part of the Committee for the Liberation of Iraq, a sort of American national auxiliary of the INC. In addition to sitting on SAIC’s board, Owens also has a place at the table of the Pentagon’s Defense Policy Board, a body almost completely stacked by the Bush Administration with hawks hungry for regime change all over the Middle East.

Despite SAIC’s connections, the company’s desultory performance in Iraq might jeopardize its contracts. So far, neither endeavor seems to have gone particularly well; as a “project consultant” told the Washington Post in a neglected story, the CPA’s inability to decide if the SAIC-run Iraqi Media Network is “a mouthpiece for the authority or independent media” has rendered the project less than credible, and Senator Richard Lugar (R-Ind.) has made no secret of his desire to see the contract authority taken away from the Pentagon and moved to the State Department.

 

State, however, isn’t necessarily any more discerning when it comes to doling out business to contractors. Take, for example, its history with Virginia-based DynCorp, a leader in the rapidly-expanding private military company (PMC) industry. DynCorp has spent tens of millions of lobbying dollars in recent years to make sure that military tasks from weapons systems maintenance to base security are outsourced.

A $3 billion company whose business is drawn almost exclusively from federal government contracts, DynCorp is in many respects a virtual army for hire. Its cadre of former military, intelligence, and law enforcement personnel do pretty much what they did in the public sector, but now for more money, courtesy of government tenders. DynCorp employees fly virtual combat missions over Colombia’s coca fields, augment the US Border Patrol on the Mexican border, provide diplomatic security at US embassies abroad, and have taken over certain US Special Forces missions in Afghanistan. Unfortunately, DynCorp’s private warriors have also been investigated overseas for one-the-side entrepreneurial endeavors ranging from drug smuggling to arms and sex-slave-trafficking (see “Gun for Hire,” Southern Exposure, Spring/Summer 2002).

DynCorp was, reportedly, one of five companies vying for another gig: the lucrative $48 million contract to train a new Iraqi army. The Vinnell Corporation won that battle. And what so qualifies Vinnell to train a nation’s army? Like DynCorp, it may as well be a private army in and of itself, one that’s grown from battalion to corps size in its history. Vinnell was one of the first private companies to start hiring just-out-of-the-service former soldiers and paying them, courtesy of government contracts, to do things not unlike what they were getting paid vastly less to do while working directly for Uncle Sam.

Given the company’s experience in everything from running US military training programs to training the Saudi armed forces, it’s hardly surprising that Vinnell got the Iraq gig—though it didn’t hurt, say Pentagon sources, that it had help from dozens of lobbyists deployed by the defense behemoth Northrop Grumman. That’s right: in addition to having planes, ships, missiles, and other pieces of defense hardware for sale, Northrop, which cannily bought Vinnell last year, also has its own ground force for hire as well.

 

In Iraq, contractors aren’t just there as trainer and supplements to nascent Iraqi police and military forces; they’re ubiquitous as US military support personnel. Dozens of firms now do everything from carpentry, laundry, cooking, and mail service to weapons systems manning and maintenance for the military. And if Secretary of Defense Donald Rumsfeld has his way, the tens of thousands of tasks once performed by military personnel and now “outsourced” will grow to hundreds of thousands over time, in the ostensible name of both taxpayer savings and creating a military where the majority of men and women in uniform are devoted to fighting.

In some ways, this might not sound like a bad idea. But there are problems with outsourcing, not the least of which are the hidden costs that often emerge, even when a contractor comes in with a low bid. Authorities need to monitor contractors closely, as the venerable tradition of jacking up costs and gouging the government is alive and well. A 2003 study by the nonpartisan Project on Government Oversight found that between 1990 and 2003, the top ten federal government contractors logged at least 280 instances of real and alleged misconduct. By the time a contract has run its course, the amount charged to the government can be far, far greater than the original low bid.

 

Even if a company is virtuous, it still will likely have to deal with costly insurance issues that don’t arise for the military. When a contractor tells its insurance company that it’s going to send employees into harm’s way in places like Iraq or Afghanistan, insurance premiums generally skyrocket in the neighborhood of 400 percent. This creates new expenses for the contractor that can either result in those expenses being passed on to the taxpayer—or the contractor not showing up at all, which has happened in Iraq, complicating situations for both soldiers and civilians.

While Halliburton and its Kellogg, Brown, and Root subsidiary garnered much attention for overcharging the U.S. government for fuel (which resulted in the Defense Energy Support Center, a government agency, taking over), there has been a host of other less-publicized contractor-related horror stories that underscore the need for serious debate on military outsourcing as public policy.

A few examples: Newhouse News Service’s award-winning military correspondent David Wood has reported on soldiers’ mothers organizing a fundraising drive to buy and ship their sons air-conditioning units after contractors failed to supply them. A Pentagon audit found that Halliburton’s stewardship of military mess halls would have sent any county health inspector into a fit of apoplexy. Electricity production remains inadequate due to lack of personnel and hardware support from contractors. Vinnell and its subcontractors on the Iraqi army tender—SAIC, Military Professional Resource, Eagle Group International, Omega Training Group, and Worldwide Language Resources—have done such a good job that over half the trainees in the first unit of the new Iraqi army have quit.

And if the experience of one active-duty Army officer I spoke with late in 2003 is any indicator, the contractors don’t care. The soon-to-retire officer told me that he had recently been approached by a contractor offering him a post-Army job in the office that writes contract bids. “He showed me some of their internal memos, and next to each job they were hiring for were two columns,” he said. “In one was what they’re going to pay the person to do the same thing they did in the military, basically at twice the salary. The other is what they’re actually going to charge the government, which is about twice what’s in the first column. I asked how he could do such a thing. He just shrugged and said, ‘There’s lots of money out there right now.’”

In early January 2004, however, the Pentagon announced that its aggressive Army-outsourcing program has been back-burnered. But the fundamental scenario remains: as more and more military jobs are privatized, the Pentagon shifts its resources from paying people to paying for weapons systems, and an increasing share of the defense budget goes into profits for defense contractors and other industries. The result has been a hemorrhaging of military personnel in recent years (particularly in the Army’s officer corps), as many of those interested in continuing their soldiering careers have gone to work for private military companies.

While those companies pay ex-soldiers better than the military, the real money goes to top executives and investors. Meanwhile, the companies themselves, citing “proprietary” concerns about “trade secrets,” can shield their operational details (including egregious cost overruns) from public scrutiny more effectively that the military itself can in some cases. But matters of defense and security—and the lives of soldiers and civilians—can hardly be expected to stand in the way of profit in the new business of war.