Who Slipped Koppel a Mickey?
Posted by Brooke Shelby Biggs on May 22nd, 2006
OK, I have to start just assuming that ted Koppel, once the lovably goofy nerd who dared ask the really boring but important questions of the day on national television (although at a time almost no one was still awake), is simply goading us on. He cannot possibly believe that his modest proposal in today's New York Times op-ed is actually in any way a good idea. He of all people should recognize that he left out all the really important questions, and they aren't even the boring ones!
Koppel argues that perhaps the answer to our over-extended military force trying to fight multiple wars and assist in multiple humanitarian efforts is to call upon private security contractors to do the heavy lifting.
Koppel caught the wonk virus: he sees the whole issue in terms of political expedience and/or fallout. Never mind the causes of the problems he seeks to address with mercenaries; never mind the morality (indeed, patriotism) of paying others to fight and die for your causes.
The draft is unpopular! The military is overextended! Answer: Blackwater!
Holy bejeezus. Hang on there, pilgrim.
First of all, perhaps if we had not declared war on an unidentifiable and undefeatable enemy ("terrorism"), we might not be quite so over-extended. Perhaps if we had provided enough troops in the first place to secure the peace after the fall of Saddam Hussein, we would not now be so over-extended. Ah, but that is another argument for another day.
Koppel's list of "factors" that make a rent-a-military a good idea includes some real chokers:
"• The unwillingness or inability of the United Nations or other multinational organizations to dispatch adequate forces to deal quickly with hideaous, large-scale atrocities"
Ted, what about the United States' unwillingness and inability to do the very same? We lecture the UN and NATO about not doing enough, and yet we commit not one soldier to the effort. We've got no room to throw shame around on that one. But again, another argument, another day.
"• The expansion of American corporations into more remote, fractious, and potentially hostile settings."
Ahem. Since when has it been the American soldiers job to die for corporations? Since when do we go to war expressly for the purpose of defending corporate interests abroad? We do, of course, but even George W. Bush has the decency to tell us it's for "freedom."
Koppel goes on to argue that perhaps our future is one of thousands of bands of roving, hired mercenaries, each defending the interests of its benefactor - be it a corporation or a nation.
Of course, Koppel must know that this already happens every day. Shell "allowed" the Nigerian military to execute the activists who were making it difficult to keep drilling for and pumping out oil from Ogoni native lands. Freeport McMoRan was just exposed for having made illegal payments to the Indonesian military (which has murdered thousands of civilians) to protect its interests in the region. Multinational companies operating all over the world hire private contractors to "protect their interests," which, according to reliable sources, sometimes amounts to killing whoever gets in the way of maximum profit.
And let us remember, before we embrace private contractors to fight our national battles, that it was a private security contractor - Jack Idema - who set up a private jail in Kabul and tortured hundreds of innocent civilians because he thought they looked like terrorists. Let us not forget that Halliburton, Custer Battles, and other private contractors hired to "support" our military efforts have in fact overcharged or outright defrauded the very government they supposedly serve. Blackwater last year was embarrassed by the revelation of an internal memo which described shooting people as "fun."
Can you imagine, though, the Koppelian future Ted has proposed? A
stateless world where private contractors maintain private armies for
multinational corporations, not countries. Spooky.Thousands of angry little bands of mercenaries crawling the globe, each answering to a different wealthy benefactor, each with a different objective, none subject to the Geneva Convention, bound only to shareholders? There are simply no enforceable standards of accountability in this privatized future. There is certainly no room for morality.
Tell me you're floating a little trial balloon here, Ted, to watch our heads explode. Tell us you're playing devil's advocate. But most of all, please tell us you're not serious.
U.S. Military Clothing Contractor Raided
Posted by Brooke Shelby Biggs on May 17th, 2006
How cynical is this? In order to take advantage of quotas that require a certain nmumber of federal contracts be awarded to minority-owned and operated businesses, the cuddly sounding "National Center for the Employment of the Disabled" used the word "disabled" to win a contract to manufacture miltary uniforms, and then failed to actually employ disabled people to do the work.
Well, the FBI agents who raided the company's factory last week found out that a whopping 7 percent of the laborers at the plant were moderately to severely disabled. The contract was awarded based on assurances that the labor force would be at least 75 percent disabled.
Some Jokes Are Too True To Be Funny
Posted by Brooke Shelby Biggs on May 17th, 2006
Secretary of Housing and Urban Development Alphonso Jackson may think he's Steven Colbert, but his blunt brand of "humor" is a little too, er, observational for a laugh.
The secretary was at a forum in Dallas earlier this month and told this hilarious story of an advertising contractor who had just been selected to receive a contract from HUD:
"He had made every effort to get a contract with HUD for 10 years. He made a heck of a
proposal and was on the (General Services Administration) list, so we
selected him. He came to see me and thank me for selecting him. Then he
said something ... he said, 'I have a problem with your president.'
"I said, 'What do you mean?' He said, 'I don't like President
Bush.' I thought to myself, 'Brother, you have a disconnect -- the
president is elected, I was selected. You wouldn't be getting the
contract unless I was sitting here. If you have a problem with the
president, don't tell the secretary.'
"He didn't get the contract. Why should I
reward someone who doesn't like the president, so they can use funds to
try to campaign against the president? Logic says they don't get the
contract. That's the way I believe."
Jackson later said the conversation had never happened, that it was a joke, and that political leanings do not figure into the contract award system. Qualifications and competitiveness of bids are the only criteria, he insists.
He needs to work on his delivery.
Damn the Hurricane - Full Lobbying Ahead!
Posted by Brooke Shelby Biggs on May 10th, 2006
More emails to and from former FEMA heavy Michael "Brownie" brown have emerged from the week of Hurricane Katrina's landfall, illustrating just how much non-Katrina business was going down as Brown fluffed his hair and the devil bore down on New Orleans. We checked out The Center for Public Integrity's analysis ...
Among the missives was one -- hours after the hurricane made landfall -- from former Arkansas Senator Tim Hutchinson, brother of GOP Congressional power-broker Asa Hutchinson. It said:
"I am certain you are overwhelmed by the situation regarding Hurricane
Katrina. I apologize for bothering you at this critical time and for
going directly to you about this," wrote former Sen. Tim Hutchinson
(R-Ark.) "I would very much appreciate being able to bring the
President of Blu-Med Response Systems, Gerritt Boyle, in to meet with
you as soon as your schedule permits."
While Blu-Med indeed supplies emergency health facilities and might have been of use in the immediate crisis, that was not what this urgent meeting was about. It was, instead, scheduled to be a face-to-face whine about the fact one of Blu-Med's competitors had won a non-Katrina contract Blu-Med itself had wanted, and they were using their friendly ties with Hutchinson to push the issue.
Yes-Men Taunt Halliburton
Posted by Brooke Shelby Biggs on May 10th, 2006
Have we mentioned how much we love the Yes Men, since even before the Dow Hoax that suckered the BBC in 2004?
They have now come out with a faux press-release and website claiming that Halliburton has solved global warming. Good for a laugh, and an inevitable cease-and-desist, so we repost here the press release before it is wiped from the ether.
An advanced new technology will keep corporate managers safe even
when climate change makes life as we know it impossible.
SurvivaBalls save managers from abrupt climate change
"The SurvivaBall is designed to protect the corporate manager no
matter what Mother Nature throws his or her way," said Fred Wolf, a
Halliburton representative who spoke today at the Catastrophic Loss
conference held at the Ritz-Carlton hotel in Amelia Island, Florida.
"This technology is the only rational response to abrupt climate
change," he said to an attentive and appreciative audience.
Most scientists believe global warming is certain to cause an
accelerating onslaught of hurricanes, floods, droughts, tornadoes,
etc. and that a world-destroying disaster is increasingly possible.
For example, Arctic melt has slowed the Gulf Stream by 30% in just
the last decade; if the Gulf Stream stops, Europe will suddenly
become just as cold as Alaska. Global heat and flooding events are
also increasingly possible.
In order to head off such catastrophic scenarios, scientists agree we
must reduce our carbon emissions by 70% within the next few years.
Doing that would seriously undermine corporate profits, however, and so
a more forward-thinking solution is needed.
At today's conference, Wolf and a colleague demonstrated three
SurvivaBall mockups, and described how the units will sustainably
protect managers from natural or cultural disturbances of any
intensity or duration. The devices - looking like huge inflatable
orbs - will include sophisticated communications systems, nutrient
gathering capacities, onboard medical facilities, and a daunting
defense infrastructure to ensure that the corporate mission will not
go unfulfilled even when most human life is rendered impossible by
catastrophes or the consequent epidemics and armed conflicts.
"It's essentially a gated community for one," said Wolf.
Dr. Northrop Goody, the head of Halliburton's Emergency Products
Development Unit, showed diagrams and videos describing the
SurvivaBall's many features. "Much as amoebas link up into slime
molds when threatened, SurvivaBalls also fulfill a community
function. After all, people need people," noted Goody as he showed an
artist's rendition of numerous SurvivaBalls linking up to form a
managerial aggregate with functional differentiation, metaphorically
dancing through the streets of Houston, Texas.
The conference attendees peppered the duo with questions. One asked
how the device would fare against terrorism, another whether the
array of embedded technologies might make the unit too cumbersome; a
third brought up the issue of the unit's cost feasibility. Wolf and
Goody assured the audience that these problems and others were being
"The SurvivaBall builds on Halliburton's reputation as a disaster and
conflict industry innovator," said Wolf. "Just as the Black Plague
led to the Renaissance and the Great Deluge gave Noah a monopoly of
the animals, so tomorrow's catastrophes could well lead to good - and
industry must be ready to seize that good."
Goody also noted that Jean-Michel Cousteau's Ocean Futures Society
was set to employ the SurvivaBall as part of its Corporate Sustenance
(R) program. Another of Cousteau's CSR programs involves accepting a
generous sponsorship from the Dow Chemical Corporation, whose general
shareholder meeting is May 11.
Michael Pollan and your Industrialized Lunch
Posted by Brooke Shelby Biggs on May 8th, 2006
I could try cool, professional detachment, but it would be dishonest: I'm elated to see Michael Pollan now blogging over at The New York Times. As an idealist, a foodie, an amateur cook, and a guilty liberal, my passions and my ethics often collide over a corn-fed steak, an osso bucco or a prawn ceviche. But there are so many choices ... there is very little to defend a corn-fed, industry-raised and slaughtered beef meal, other than the fact it tastes really good. (And vegetarians, trust me, I've heard your arguements and I have felt the requisite guilt - I am simply weak-willed when it come to culinary self-indulgence. Although the movie "Babe" did end my consumption of most pork products, and I haven't bought veal in two decades.)
I have taken small steps - having locally-grown organic produce delivered weekly at ridiculously inflated prices; I hit farmer's markets when possible; I shop at Trader Joe's; I buy free-range, cage-free, antibiotic-free whatever; I buy organic at my local supermarket; I buy artisanal foods when I can afford them (which, in honesty, is pretty much never, but that's what credit is for). But is this really changing anything?
Pollan helps answer the questions tortured gourmands like me wrestle with daily. And not all of his answers make me feel any better. For example, your suspicions are correct if you think "free-range" is essentially meaningless in practice. The truth is, industrial agriculture is busily co-opting the organic and ethical foods market because suckas like me will pay more just to assuage our guilt. I'd rather believe the chicken on my plate lived a long happy life romping in the grass and sun. I'll pay to have the lie told me.
Anyway, Pollan's new book is out, which I'll buy of course (from Powell's!), but more happily, I will have his blog to tempt and torture me. Don't miss it if you are a food sensualist and a thinker about ethics.
Jordan: The New Saipan
Posted by Brooke Shelby Biggs on May 8th, 2006
I received an urgent update from Charlie Kernaghan over that the National Labor Committee about the situation in Jordan, where a free-trade arrangement has created a labor force of indentured servants, and spawned a human-trafficking industry. He writes:
Tens of thousands of foreign guest workers, stripped of their passports, trapped in involuntary servitude, sewing clothing for Wal-Mart, Gloria Vanderbilt, Target, Kohl's, Thalia Sodi for Kmart, Victoria's Secret, L.L.Bean and others.
In the Western factory, which was producing for Wal-Mart, four young women, including a 16-year old girl, were raped by plant managers. Despite being forced to work 109 hours a week, including 20-hour shifts, the workers received no wages for six months. Workers who fell asleep from exhaustion were struck with a ruler to wake them up.
At the Al Shahaed factory, also producing for Wal-Mart, there were 24, 38 and even 72-hour shifts. The workers were paid an average wage of two cents an hour. Workers were slapped, kicked, punched and hit with sticks and belts.
In a factory called Al Safa, which was sewing garments for Gloria Vanderbilt, a young woman hung herself after being raped by a manager.
The issue isn't news to us, since we've been on top of the issue for years. In 2003 we reported that the free-trade agreement inked with the U.S. had some very political overtones:
Late last year (2002), Assistant Deputy Secretary of State Elizabeth Cheney paid a visit to the Al-Tajamout compound. The State Department official is also the daughter of Vice President Dick Cheney. "Jordan is a strategic tool for both the US and Israel," Marar says, noting the importance of the visit.
And yet, Jordanians own almost none of the factories. Most are owned and operated by entrepreneurs from China, Taiwan, Korea, India, Pakistan or the Philippines who import workers from over-seas.
Of the some 40 thousand workers employed in these Qualified Industrial Zones, fewer than half are Jordanian. Ninety percent are women under the age of 22, and almost all of them pay the minimum wage, about $3.50 a day.
Factory owner Syed Adil Ali says his factory only contracts Sri Lankan girls.
"They are very peace minded girls," he says. "I found some kind of problem with the boys. They made some kind of union, some kind of disturbance in the factory. So we prefer the girls."
And while we roll our eyes that The New York Times only managed to sniff out the story three years later, we give them props for a pretty good story on it last week.
When Death Really Pays
Posted by Brooke Shelby Biggs on May 2nd, 2006
You have to marvel at how news coverage of business so skews one's view of the world. It seems to strip writers of all human perspective. For example, this headline from the Cincinnatti Business Courier today:
"Mild flu season boded ill for Alderwoods' 1Q profits"
Alderwoods is one of the nation's largest funeral home chains. The view from the bottom line is quite upside-down: Not enough people died, dammit!
Pentagon Attacks Labor Trafficking by US Contractors
Posted by David Phinney on April 24th, 2006
It has been long in coming. The Pentagon is now demanding that contractors fight labor trafficking and lousy working conditions in Iraq endured by tens of thousands of low-paid south Asians working under US-funded contracts in Iraq.
In an April 19 memorandum to all Pentagon contractors in Iraq and Afghanistan, the Joint Contracting Command demands that the widespread practice of taking away workers passports come to end. Contractors engaging in the practice, states the memo, must immediately "cease and deist."
"All passports will be returned to employees by 1 May 06. This requirement will be flowed down to each of your subcontractors performing work in this theater."
Contractors and subcontractors routinely hold workers passports -- in direct violation of US labor trafficking laws -- to prevent them from changing employers or leave wartorn Iraq.
As many as 35,000 low-paid workers are employed under Halliburton's sweeping, multibillion logistics contract serving the US military. Many of these workers are brought to Iraq by subcontractors from neighboring Arab countries -- countries that have been frequently cited by the US State Department for the exploitation of foreign workers.
A new April 4 contracting directive (I know the PDF is upside down!) also officially confirms the dirty little secret that reporters, military people and contractors have been complaining about ever since the March 2003 invasion of Iraq: Employers routinely have been exploiting many of the tens of thousands of south Asian workers working under US contracts.
The directive notes that inspections of Defense contractors in Iraq has revealed deceptive hiring practices, excessive recruiting fees that indebt workers for months if not years, substandard living conditions that include crammed sleeping quarters and poor food, and the circumventing of Iraqi immigration procedures.
These conditions, endured by south Asian workers sometimes making only dollars a day, are all chronicled in my October story, Blood, Sweat & Tears: Asia's Poor Build U.S. Bases in Iraq.
One contractor that has been accused of coercing employees to work in Iraq against their will is now the prime contractor tasked with building new $592-million US embassy project in Baghdad.
The April military directive announces that contractors will be required to take part in new education and awareness programs, policy enforcement and inspections by Joint Contracting Command's Inspector General in the coming months for compliance.
Cheney Profits From Katrina
Posted by Brooke Shelby Biggs on April 19th, 2006
A Notre Dame professor has analyzed Dick Cheney's 2005 tax return and concluded that our fair Vice President exploited a new tax law instituted post-Katrina to save himself several million dollars. It turns out that Smirky Dick used a loophole intended to encourage charitable donations for Katrina relief to write off charitable contribution which went to non-Katrina causes. That alone might not be enough to get irked about, except that it looks like the exploitation of the loophole was deliberate to minimize his overall liability, and he used Halliburton money to do it.
Cheney exercised some of his Halliburton options in late 2005, during which time that company's profits were soaring in part because of fat no-bid reconstruction contracts granted to its subsidiary KBR in the wake of Katrina. Cheney used those proceeds -- $6.8 million -- to donate to charities per his 2001 agreement to use his options only for charity.
Says the prof: "While there's nothing inappropriate about that from a legal
perspective, it does demonstrate how the legislation, which was sold to
the public as providing relief to Katrina victims, provided significant
tax benefits to the VP (and potentially other wealthy individuals) in
situations that have nothing to do with Hurricane Katrina."
Not illegal but definitely soulless, cynical, opportunist, and greedty. So, no big surprise.
Saving Money by Dumping Kids!
Posted by Brooke Shelby Biggs on April 18th, 2006
Accenture, that former consulting arm of the scandal-plagued Arthur Andersen, won a contract last year to operate a call center in Texas to direct children and families to publicly available social services.
Today's story in the Houston Chronicle says "lawmakers once were told the project would save the state $646 million over five years." I guess they should have asked how before privatizing this aspect of their public services.
Turns out accenture is saving the state money by rejecting claims from families attempting to access the state's Children's Health Insurance Progam. The number of kids covered has plunged from 500,000 to 300,000.
I don't think Jonathan swift himself could come up with a more fail-safe modest proposal for saving money.
One Expensive Education
Posted by Brooke Shelby Biggs on April 12th, 2006
Two stories this week, that deserve to be looked at side-by-side:
You'd have had to have been sleeping to not know this before today, but the government had to conduct an expensive investigation to discover to their apparent surprise: "Army Corps overpaid on Katrina classrooms contract." (We are constantly tempted by the news media to start a blog called the "Duh Files," or the "No S--t Files.") Turns out the politically connected winner of that fat contract submitted an estimate, won the contract, then submitted a hugely inflated estimate, while a local Mississippi contractor had submitted a lower overall bid from the start.
So imagine our surprise (read: total lack of same), when PBS discovered that a school district in Mississippi where the well-compensated contractor was to build portable classroom buildings is actually holding classes in travel trailers, while students and teachers alike sleep in tents and cars.
No criminal investigation planned.
Posted by Brooke Shelby Biggs on April 4th, 2006
I was reading this article about Wal-Mart tricking its customers into signing up for a stealth PR campaign to burnish the retailer's image, when this stopped me cold:
Thousands of area Wal-Mart shoppers have been asked in recent weeks to
join Working Families for Wal-Mart, a group headed by former Atlanta
Mayor Andrew Young. Those who did so may not have realized that they
had become the newest recruits in a fierce public relations war between
Wal-Mart and national labor unions.
Andrew Young?! Former program director of the SCLC? Friend and confidant of Martin Luther King, Jr.?!
Oh, how the mighty have fallen.
Posted by Brooke Shelby Biggs on April 3rd, 2006
Its hard to be a conspiracy theorist when you keep being proved right.
Scotland's Sunday Herald reveals the United States' future plans to engage in world-wide information warfare using everything from PDAs to cell phones, to the web.
But are they really future plans? Our story on the use of poor-man's iPods to disseminate "information" and "education" to the people of Afghanistan would seem to indicate the plan is quite underway. Says the Herald:
"[P]sychological military operations, known as psyops, will be at the
heart of future military action. Psyops involve using any media – from
newspapers, books and posters to the internet, music, Blackberrys and
personal digital assistants (PDAs) – to put out black propaganda to
assist government and military strategy. Psyops involve the
dissemination of lies and fake stories and releasing information to
wrong-foot the enemy."
Of course, some of the pie-in-the-wi-fi plans do strike us as spooky (and kinda cool, in a dystopian horror-flick sort of way):
Thirdly, the US wants to take control of the Earth’s electromagnetic
spectrum, allowing US war planners to dominate mobile phones, PDAs, the
web, radio, TV and other forms of modern communication. That could see
entire countries denied access to telecommunications at the flick of a
switch by America.
That'll teach France.
See No Corruption, Address No Corruption
Posted by Brooke Shelby Biggs on April 3rd, 2006
It seems that not only does the right hand not know what the left hand is doing, the right hand doesn't even knows what it's doing.
Last week the Pentagon, presumably with a collective straight face, finished reviewing its contract procurement system (specifically with regard to its primary vendors), and found that, hey! the system works great!
Never mind that Iraq contractor Custer Battles was found guilty of $3 million in fraud just the week prior. Never mind that the Defense Logistics Agency confessed that it had been overcharged more that $300,000 by its suppliers of such crucial terror-fighting implements as refrigerators and ice-cube trays. ($32,000 for a refrigerator somehow didn't spark suspicion for years, nor did a $20 ice-cube tray; I'm in the wrong business). Never mind that the DLA decided to discontinue contracts with several suppliers deemed to have scammed them.
If it weren't my money, as a United States taxpayer, it would be hard to feel sorry for the feds for getting, er, used and abused. After all, the only way they can avoid being embarassed is to deny that they were suckered. Its like enabling an abuser. Rumsfeld pops up with a black eye, and says "I ran into a door," instead of "I bought a $32,000 fridge." Maybe he thinks deserves it.
Selling Out, or Infiltrating?
Posted by Brooke Shelby Biggs on March 21st, 2006
The news in the past week that Tom's of Maine is being sold to Colgate-Palmolive, and The Body Shop will be acquired by L'Oreal disappoints some ... but creative thinkers might see opportunity where cynics see surrender.
Anita Roddick, a personal friend of mine and founder of The Body Shop, says L'Oreal won't change The Body Shop's core values (environment, human rights, fair trade, etc.), but rather that L'Oreal will be transformed. As she says, "I am, of course, pathologically optimistic. But that doesn’t mean I am wrong.
After all, Unilever bought Ben & Jerry's years ago, and the brand is still free of BGH and antibiotics, and the milk is bought from family farmers. Does it mean Unilever is any less evil? No, but neither is B&J, which is something, isn't it? Two steps forward, one step back is better than three steps back.
Colgate-Palmolive has been criticized for being anti-union, for putting unlabelled toxics in its products, and lacing its toothpaste with borderline toxic ingredients. Acquiring Tom's can be seen either as swallowing an embarrassing competitor, or an acknowledgement that Tom's natural formula works - there's a market for chemical-free products.
L'Oreal, after all, fired a counter clerk in 2003 for not being "hot" enough. And it has joined competitors such as Estee Lauder and Revlon in opposing "safe cosmetics" legislation. Is The Body Shop window-dressing, or is it an admission that doing good can actually be good for business? Guess it depends on how cynical you are. Maybe Roddick is right - maybe a vastly expanded market will be good for the communities from which The Body Shop souces its products. No one has accused The Body Shop or L'Oreal with being OxFam - they sell stuff you don't need. But at least with The Body Shop, if you're going to buy Body Butter anyway, its good to know you're helping women in Ghana feed their families at the same time.
Personally, I get irked at progressives who attack other progeressives for not being pure enough, for questioning any motives that don't keep us marginalized. Seems to me there's a place for open minds and optimism. At least until they are proven to be misplaced.
ABCs of the Custer Battles Scandal
Posted by David Phinney on March 10th, 2006
Here are some answers to some common questions about the Custer Battles federal contract fraud trial and its aftermath:
1. Why didn't the US Justice Department join in the Custer Battles lawsuit?
The plaintiffs invited them. After investigating under closed seal, the department decided against it. BUT, I did notice a Justice official sitting in the courtroom quietly taking copious notes on the proceedings.
2. Will there be criminal prosecution of Michael Battles and Scott Custer now that they have been found guilty of fraud in a federal civil case?
The plaintiffs' attorney Alan Grayson thinks not: "This is a huge embarrassment for the administration and they don't want to do anything to publicize it," Grayson said. "It's just another example of corruption and fraud that the administration does nothing about and willingly participates in. The Bush administration had people running around lining up contracts for contractors who turned out to be people who stole millions upon millions from the taxpayer."
3. Because Custer Battles was largely paid with seized Iraqi Assets, will Iraq be entitled to any or all of the damages?
No. It is considered war booty and property of the invading forces.
Custer Battles Royale
Posted by David Phinney on March 10th, 2006
Our man in DC, David Phinney, has been covering the upstart private security contractor Custer Battles since long before the mainstream media had a clue who they were. Now the company, which has made millions in taxpayer money in Iraq, has been found guilty of federal contract fraud amounting to nearly $3 million. The firm was ordered pay nearly $10 million in restitution.
David has been at the trial in recent weeks, and sends us this post-verdict dispatch:
Scott Custer and Michael Battles discovered contracting business to be so good in Iraq for their new private security firm that they soon paid themselves bonuses between $3 million to $4 million in January 2004.
One month later company managers fired off internal memos warning the two entrepreneurs that the firm was regularly charging for goods and services never delivered or, if they were, at freakishly inflated prices.
That’s just one of the tasty items to come out of the three-week trial that found their company, aptly named Custer Battles, liable for massive contract fraud while working for the Coalition Provisional Authority after the March 2003 invasion On Thursday, a federal jury in Alexandria, Va., determined that Custer Battles must now shell out more than $10 million in penalties and damages.
"What they did is treason," claims attorney Alan Grayson, the lead attorney for two former Custer Battles business associates who filed the fraud suit more than two years ago. "There's no other word for it."
The $10 million judgment addresses only part of the complaint filed by the two whistleblowers, Robert Isakson and William Baldwin, which accuses Custer Battles of orchestrating a sweeping swindling scheme on Iraq contracts with the use of bogus invoices, forgery and shell companies in the Cayman Islands to fraudulently pump up their billings.
Thursday's verdict rules on a CPA contract to protect the multi-billion currency exchange program that replaced money used by Saddam Hussein's regime with new Iraqi dinars. A second trial is expected on a $16 million security contract for Baghdad's airport. Damages for the airport contract could reach $40 million or more if the company is found of wrongdoing.
During the three-week trial, Grayson was able to tease out the tale of the $3-million-plus bonuses.
"On January 2nd, 2004, you took a bonus of $3 million out of the company, did you not?" Grayson asked Michael Battles as he sat on the witness stand.
"I didn't take a bonus necessarily, but I took a draw," Battles, a 2002 Republican candidate for Congress in Rhode Island, responded curtly.
Grayson: "What's a draw?"
Battles: "A draw is a disbursement of funds to the principals.... And I was happy to say that, yes, we were successful enough that I took a $3 million draw."
At one point Battles attempted to deflect any responsibility in the management of his company by insisting he was largely involved with business development and "strategic initiatives." He rarely took a hands-on executive role, he said.
"One thing I learned as lieutenant is that the secret to successful leadership is to surround yourself with people smarter than you are," he said.
Later, Battles shared another lesson: "In retrospect, one of the things I've learned is don't put your name on your company,"
Meanwhile, it looks as though Isakson and Baldwin will be counting their money. Individuals are allowed to sue on behalf of the government when they have knowledge that the government is being defrauded. They may receive up to 30 percent of the money paid by Custer Battles.
Those not counting their money will be the Iraqi people. Much of the money paid to Custer Battles was from seized Iraqi assets. Judge T. S. Ellis III, of the Federal District Court in Alexandria, Va., had ruled early in the trial preliminary proceedings that the False Claims Act applies only to bills paid directly from the American treasury.
The CorpWatch Oscars
Posted by Brooke Shelby Biggs on March 3rd, 2006
This year, several big-budget and award-nominated films have dared stray into the subject areas we at CorpWatch cover everyday, validating our sense that we are really not laboring obsessively in the shadows on inconsequential things (don't you get your esteem from Hollywood?). We loved "Lord of War" for its remarkably honest protrayal of the international arms trade, "Syriana" for not trying to make the issue of oil, war and corruption in the Middle East any simpler than it really is, "The Constant Gardner" for daring to take on Big Pharma so baldly, and "North Country" for its impeccable timing and for keeping mining issues in the public eye.
But these films are just the latest in a long line of brilliant anti-corporate films. In the spirit of random lists and Oscar-season bandwagon-jumping, we present you the completely subjective CorpWatch Oscars, honoring our 10 favorite non-documentary films in Hollywood history dealing with corporate malfeasance. Your fave not here? Nominate your own!
In no particular order:
A Civil Action
Wal-Mart Waltons Get All Cultural
Posted by Brooke Shelby Biggs on February 23rd, 2006
Here's a story that will make your blood boil: The Walton family, owners of Wal-Mart, the world's largest corporation, are planning a huge art museum in Bentonville, Arkansas. There's nothing wrong with a little culture in the Midwest, right?
Except when you consider how much they are spending on their little hobby, while resisting spending a fraction as much to simply pay their employees a living wage.
Rebecca Solnit's article on the subject will enrage you. She discusses a single painting the family recently bought for $35 million:
The average Wal-Mart cashier makes $7.92 an hour and, since Wal Mart
likes to keep people on less than full-time schedules, works only 29
hours a week for an annual income of $11,948--so a Wal-Mart cashier
would have to work a little under 3,000 years to earn the price of the
painting without taking any salary out for food, housing, or other
Read the article at Alternet.