Developing the hot-button issues that appear in Killing Something Beautiful, the Washington, DC-based political thriller I wrote about two big firm lawyers who try to stop a terrorist whose plot is aided by a corrupt lobbyist.

Wednesday, July 9, 2008

“We cannot operate without private security firms in Iraq”

Strange but true. Patrick F. Kennedy, the Under Secretary of State for Management, provided that telling quote to Congress as part of his explanation for why Blackwater Worldwide recently had its contract to provide security for American diplomats in Iraq renewed for a least another year. According to Kennedy, “If the contractors were removed, we would have to leave Iraq.”

So how did Blackwater – the company with significantly more shootings per convoy mission than DynCorp and Triple Canopy (the other US private military companies operating in Iraq) get back to business as usual in Iraq, even after their involvement in a shooting in September that left 17 Iraqis dead, demands from the Iraqi government for Blackwater’s ouster from Iraq, a criminal investigation by the FBI, a series of internal investigations by the State Department and the Pentagon, and high-profile Congressional hearings? According to the New York Times, it was an “intense public and private lobbying campaign” that righted the Blackwater ship.

So, the lobbyists did it? Well, let’s take a look at what Blackwater’s lobbying campaign consisted of. The Center for Responsive Politics provides a look at the dollar figures involved. (Note: Blackwater USA changed the name of some of its operations to Blackwater Worldwide in October 2007, no doubt for the same reason that front companies for illegal arms traffickers change their names: bad publicity. However, Blackwater Worldwide’s website is www.blackwaterusa.com. Ergo, the change was only cosmetic.)

Blackwater USA spent nothing on Congressional lobbying activites until 2006, when they spent $160,000. They almost doubled their lobbying expenditures in 2007, when they spent $302,000. For the first quarter of 2008, they’ve already spent $90,000, which puts them on a pace to drop $360,000 for the year. Meanwhile, their alter ego, Blackwater Worldwide, spent nothing in 2006 (they hadn’t been created yet), dropped $90,000 in 2007, and spent $70,000 in the first quarter of 2008, which puts them on a pace to hit $280,000 for the year. Given that the two companies (USA and Worldwide) are, in reality, two halves of the same whole, we can combine their lobbying expenditures for the following totals: $160,000 for 2006; $392,000 for 2007; and $160,000 for the first quarter of 2008, which makes a projected 2008 total of $640,000.

There you have it. That’s the “intense public and private lobbying campaign” that keeps Blackwater operating in Iraq. From $160,000 (2006) to $392,000 (2007) to $640,000 (2008 projected). Money doesn’t talk in DC – it screams.

Tuesday, July 1, 2008

The strange, corrupt saga of AEY

In January 2007, AEY, Inc. was awarded a $298 million contract by the US Army that made it the primary supplier of ammunition for Afghan security forces in their fight against Al Qaeda and the Taliban. What was so unusual about this contract award was that it was made to a company that had a 21-year-old president and a 25-year-old vice-president, and had at least six earlier contracts with the State Department and the Defense Department either canceled or delayed for poor quality or late deliveries. In addition, four Eastern European countries (Bulgaria, Bosnia, Hungary, and Albania) had already offered to donate the Soviet-style rifle and machine-gun cartridges that the Afghan army and police forces use. Further, an Army contracting team raised concerns about AEY’s inexperience and concluded that there was “substantial doubt” that the company could fulfill its contract (they were overruled by a contracting officer with the Army Sustainment Command). Finally, even though AEY was on the State Department’s “watch list” for individuals and companies suspected of illegal arms transactions (now numbering around 80,000), the Pentagon never bothered to consult that list before awarding the contract.

Not surprisingly, things didn’t work out well for Army and AEY. The company has been shut down and its top executives have been charged with defrauding the government after it was discovered that the ammunition AEY supplied to Afghan forces was not from Albania (as they claimed), but was, in fact, manufactured in China (which was illegal, and a violation of their government contract.) Making matters worse, the ammunition was in terrible condition, having been stored in cardboard boxes since the 1960s.

Besides this being a case study in military contracting gone terribly wrong, what makes this story so particularly juicy is that, within the past few weeks, allegations have surfaced from a military attaché that the American ambassador to Albania, John L. Withers II, helped cover up the illegal Chinese origins of the ammunition supplied by AEY. According to the attaché, who was present at the November 2007 meeting where the cover-up was engineered, the Albanian defense minister, Fatmir Mediu, expressed concern about a pending visit by a New York Times reporter to the site where AEY’s ammunition was being repackaged to conceal its true origins. He was worried that the reporter would reveal that he had been accused of profiting from selling arms and told the American ambassador that because he had gone out of his way to help the United States, “the U.S. owed him something.” After Mediu ordered the commanding general of Albania’s armed forces to remove all boxes of Chinese ammunition from the site the reporter was going to visit, the US ambassador agreed that this action would alleviate the suspicion of wrongdoing.

Embassy officials in Tirana, Albania then tried to cover up the existence of the meeting once Congress began an investigation into AEY. While the attaché urged embassy officials to inform the congressional committee of the meeting between the ambassador and the defense minister, the embassy instead omitted any reference to the meeting in its official response to congressional inquiries. The State Department’s Inspector General (who reports directly to Congress and not to the Secretary of State) has been asked to investigate this entire debacle and the House Committee on Oversight and Reform has held the first of what could be many hearings.

So, the Army sought bids on a contract it didn’t need to award, to a company that had no business being trusted – and while that company was actively lying to and defrauding the government, the US ambassador decides to help out local overseas officials with a cover-up (or, at best, purposefully looked the other way, which is a form of help).

This has all the makings of a controversy that will only get more interesting as congressional investigators and journalists dig up more names, places, and interesting business relationships. Can’t wait to see who told who in the Pentagon to make sure AEY gets helped out.