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Mercenary Boom in Iraq Creates Tension at Home and Abroad

by Aaron GlantzSpecial to CorpWatch
March 23rd, 2004

Cartoonist: Khalil Bendib

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."

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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.

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.

Favoritism Towards Kurds?

Four o'clock in the evening in Kirkuk and two dozen American soldiers are doing their part to secure the city. The US military is performing a regular search of the local offices of the Kurdistan Community Party. A dozen American soldiers with machine guns and body armor are searching the building, while another dozen station themselves outside -- some allowing Iraqi children to play with their automatic weapons. The commanding officer Lt. John Frazee says his troops found five Kalashnikovs -- the self-defense limit set by American authorities.

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.

He says he generally finds Kurdish groups comply with instructions from American soldiers. "This area is better than Baghdad because it is Kurdish," he says. "Kurds are less likely to make trouble. They're less likely to be terrorists."

Across town, in a primarily Shi'ite slum, a group of unemployed middle-aged men while away the afternoon drinking tea. Most were soldiers under Saddam Hussein.

"I went to the Coalition (the occupation authorities) to apply for a job in security," says 43-year-old Ibrahim al-Jaboori. "I've been a soldier my whole life and I'm 100% against these terrorists. But they said there are no jobs. Then I see everyone providing security is Kurdish."

Two doors down is Ali Adnan Adwan's fruit stand. The 25-year-old Shi'ite graduated law school a few months before the March 2003 invasion, but with limited telephone service and intermittent electricity, he found it hard to run a law practice. So he started a fruit stand.

"The people who don't have jobs will go to anyone with money and explode themselves." He cites a story a taxi driver told him that there are people willing to pay $250,000 to potential suicide bombers. "So their family and their grandchildren will be able to live well in the future."

Adwan says that he has heard that George Bush got $87 billion extra from American taxpayers to spend in Iraq but as far as he can tell, most of this money has gone to foreigners and Kurds. He suggests if some of that went to people like him there would be fewer bombings.

Magnet for Mercenaries

The top wage for rank and file Kurdish guards who guard the oil fields is $120 a month, hardly a living wage but better than nothing in a country which has an estimated 75% rate of unemployment. By comparison their supervisors, many of whom are South African, are estimated to earn an average salary of $5,000 a month.

"They said they had to teach us how to fight," says one guard speaking on condition of anonymity, "They taught us hand-to-hand fighting and how to use more advanced weapons than just the Kalashnikov." Like most peshmerga on duty, this one doesn't approve of the methods taught by Erinys. "We already knew how to fight," he says. "Saddam's regime taught us how to fight in his army and the peshmerga taught us how to fight Saddam Hussein. Then KBR taught us how to fight for the Americans." Kesnazani calls the South Africans' methods "a bit strange."

The South African trainers came under scrutiny on January 28, when Erinys trainer Francois Strydom was killed and his colleague Deon Gouws seriously injured as a bomb exploded in their hotel in Baghdad. The two men, in addition to being Erinys, trainers turned out to be members of South Africa's secret police in the 1980s under the Apartheid regime.

Strydom was a member of Koevoet, a notoriously brutal counterinsurgency arm of the South African military that operated in Namibia during the neighboring state's fight for independence in the 1980s.

Gouws is a former officer of the Vlakplaas, a secret police unit in South Africa. According to South Africa's Sunday Times, Gouws received amnesty application from the Truth And Reconciliation Commission after admitting to between 40 and 60 petrol bombings of political activists' houses in Mamelodi, Atteridgeville, Soshanguve, Oukasie, Pietersburg, Tembisa and Ekangala in 1986, a car bombing in 1986 that claimed the life of KwaNdebele homeland Cabinet minister and ANC activist Piet Ntuli and an arson attack on the home of Mamelodi doctor Fabian Ribiero in March 1986.

Top Dollar Abroad, Crisis at Home

Like the South Africans, thousands of ex-military men from around the world are flocking to Iraq to find jobs that they cannot get in their home countries. Derek William Adgey, a Royal Marine from Belfast, who was jailed for four years for helping the Ulster Freedom Fighters, was hired by Armor Group, a British company, to guard Bechtel employees. (He was subsequently suspended when the Belfast Telegraph published details of his past.)

Former members of the British military get top dollar in Iraq - as much as a $250,000 a year - from the terrified American businessmen working in Iraq, about three times more than they can earn in Britain.

John Davidson, who runs Rubicon International, a British security company whose interests in Iraq include contracts with BP and Motorola, told the Scotsman newspaper that they preferred to hire former members of Britain's special forces, like the Special Air Service (SAS).

"The SAS are extremely well-trained, low-profile, not waving flags. They go about things in a quiet manner, they are the crme de la crme," he says.

The boom in Iraq has caused a small crisis back at home for the British and South African security forces. The Scotsman estimates that one in six SAS and SBS (Special Boat Service) men have asked for permission to quit their jobs to go to Iraq. The British government is alarmed by the trend because it costs them as much as $3 million to train each of these men.

Meanwhile the South African Police Services' elite task force, a division of 100 men who accompany senior politicians like President Thabo Mbeki, are facing an even more severe crisis with as many as half of their employees asking for early retirement in order to go to Iraq. The $5,000 monthly salary for these men is equivalent to about six months pay at home.

"What is alarming is that members of specialized units are resigning. It will have a negative effect to lose that experience -- it takes at least a year to train them," Henrie Boshoff, an Institute for Security Studies military analyst, told The Sunday Independent newspaper in South Africa.

Aaron Glantz is a correspondent for Free Speech Radio News.