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War Profiteers Still Finishing First

Posted By Kelley B. Vlahos On January 7, 2013 @ 10:00 pm In Uncategorized | 10 Comments

So who’s the fool? The outfit that turned its business of peddling useless propaganda to U.S. occupied countries onto America itself – by smearing journalists that dared criticize it – or the government that hired them for hundreds of millions in the first place?

Let’s say the government. At least Leonie Industries gets to keep the $60 million contract it extended last June. A potentially crippling suspension put on the company after it was reported that its co-founder and principle owner had covertly set up phony websites to besmirch two USA Today reporters, is suddenly off, and Leonie Industries is free to bid on more Pentagon contracts. It doesn’t appear to matter that the firm had to be shamed into paying $4 million in back taxes, and was under investigation for mistreating its Afghan employees just last year.

Employees of security contractor ArmorGroup North America, which in 2011 settled a federal lawsuit charging it submitted false claims for payment, and that it knew employees were visiting brothels in Afghanistan. The company continued to work in Afghanistan until July 2012.

But to the Department of Defense such transgressions must seem small, considering its other wayward relationships with war contractors over the last 10 years. For example, the big daddies like Blackwater-turned-Xe-now-Academi have been accused of killing people and stealing guns, and Uncle Sam is still throwing tens of millions of taxpayer money at them. So what’s the big deal about some crummy little hatchet job and a bunch of thin-skinned Afghan workers anyway?

In the great, grand scheme of things, probably not much. The story of Leonie’s lifted suspension last week hardly registered a blip on the radar. Just another case of a highly paid private "information operations" enterprise getting a pass from the Pentagon, despite its screwball antics and questionable performance outcomes (doesn’t anybody notice that we clearly lost that war for Afghan hearts and minds years ago?).

But what is worth looking at is why the government continues to outsource millions to operations so opaque that they won’t even name their CEOs or key staff on their websites. In fact, for the page entitled "our people" Leonie clearly presents a stock photo of a bunch of office jockeys fronted by Mr. Boss-in-the-Box. The page "about us" starts with "Leonie is a customer-focused company. We listen," and ends with "Expertise Where You Need It" – and absolute marshmallow fluff in between. Each page is embellished with photos of a perfectly orchestrated multicultural staff that clearly does not exist in their real offices, situated in Arlington just inside the Beltway.

Propaganda indeed. What we do know from last year’s reporting by USA Today’s Tom Vanden Brook and Ray Locker, Leonie Industries, or The Leonie Group, was started in 2004 by a Lebanese-American brother-sister team, Camille Chidiac, then 29, and Rema Dupont, then 38. They began working as subcontracted propagandists in Iraq, despite the fact neither had any experience in military information operations nor with obtaining government contracts at this level.

Two years later, according to USA Today, they were both living in Los Angeles homes worth $2 million, and the Iraq War, well, it was going so badly the U.S. had to eventually pull a Holy Mary – "The Surge" – to get out of there. Chidiac and Dupont starting getting Afghanistan contracts in 2008, raking in millions for essentially developing public relations exercises – like dropping leaflets, putting up billboards, staging concerts and arranging radio broadcasts – to win support of the people away from the Taliban. Meanwhile, Leonie reportedly owed $4 million in back taxes and was admonished by its Pentagon bosses because it did not "pay for heat for its Afghan employees or provide medical care in the cold and increasingly dangerous war zone," according to USA Today. After being threatened with the loss of the contract, Leonie has since rectified the situation and was deemed "highly valued by the customer" in later documents reviewed by the reporters. We guess so – according to the USAspending.gov search engine, Leonie has received a total of $220 million in defense department contracts since 2008.

Graphic from Leonie Industries company website.

Yet we may never know if Leonie’s work was worth the trouble because most of these military propaganda operations, which at their peak in 2009 had a $580 million budget, are largely hidden from view. Not only that, even when the military has studied the effectiveness of these media efforts, many run by contractors with little to speak for them save a few influential Beltway names on their boards of advisers,they’ve kept the results secret. The Government Accountability Office (GAO), at the urging of members of congress following the February 2012 USA Today article, is finally conducting an open review of information operations or "IO" in the military, the results of which are expected in April, according to a spokesman.

But it wasn’t until a Pentagon probe launched after Vanden Brook and Locker published the story last winter did Chidiac and Dupont pay their back taxes. The results of that inspector general’s investigation have never been released. Meanwhile, Chidiac admitted to setting up anonymous websites here to smear Vanden Brook’s and Locker’s credibility after the February 12 story, prompting the Army to suspend Chidiac –who owns 49% of the company – from getting new contracts, but at the same time retaining Leonie on its $60 million Afghan contract over the next year, in July.

Despite the opening of a new, formal IG investigation into Chidiac’s "misinformation campaign" against the reporters in October, the Army lifted its suspension on Chidiac in November (reporters hadn’t found out until just before New Year’s.)

According to USA Today:

The Army, in a statement from spokesman Matthew Bourke, decided that Chidiac should be reinstated because the Army concluded that he conducted the smear campaign on his own time without Leonie’s resources. Chidiac put his ownership stake in a trust in an agreement reached with the Army. That prompted the Army to lift its suspension of Chidiac, according to Bourke…The Army refused to provide copies of its investigation or the agreement.

So, somehow we are to believe Chidiac is worthy of millions of our tax dollars because he used his own money to smear two reporters who were just doing their jobs? Obviously that’s enough for the Pentagon, which also suggested in that same report that it would cost some $500,000 to bid out the current media contract to someone else. Seriously?

"It’s hard to see how it is that this particular person is indispensable to the army. Surely the US army has the capacity to find someone to do its propaganda in Afghanistan that doesn’t smear reporters in their spare time," noted Benjamin Freidman, defense analyst with the Cato Institute.

"It would also be nice to know whether these information operations actually work, given their considerable expense," Friedman told Antiwar.com in an interview, "and also why this is something we need to hire contractors for rather than doing in house."

This perfectly reasonable response has been pondered for at least the last seven years, as it’s become clear the Pentagon has relied more and more on contractors, in many cases to the point of counter-productivity. There are reams of reports detailing how major contractors have overcharged the government for critical services like fuel, equipment, security and even food and water for the troops, while providing shoddy work, cutting corners, breaking the law and even putting soldiers’ and civilian lives in danger (Google "electrocution + KBR" and see what comes up).

So why the strange dependence on firms like Leonie – are there no competitors who can be trusted? Is their work so stellar it’s worth the off-putting reputation? We may never know, considering the secrecy of the contracts and internal investigations.

"Certainly there has been enough press about [Leonie] and seems it would make government agencies think twice about doing business with them, but we have found is what we got here is a creature of habit and [the Pentagon] is more inclined to do business with a company that is less reputable instead of taking the time to search for a new contractor," said Scott Amey, general counsel for the Project on Government Oversight (POGO) in an interview with Antiwar.com

"It seems like there is a lot of public outcry against a lot of these contractors, but the government continues to do business with them."

You bet. The history of the Iraq and Afghanistan Wars is peppered with shady companies that got very rich profiting from the protracted operations and failed nation-building efforts over there. One need only look at The Lincoln Group to see how Leonie has made it this far. In 2005 while working on a "strategic communications" contract worth "several million dollars" for the DoD in Iraq, the small, practically unknown firm was outed for passing off pro-American stories written by the U.S. military as news and planting them in local papers by paying Iraqi news outlets. The exposure touched off an outcry from the public and members of congress, but after an internal probe (the results of which are still secret), the Pentagon determined the Lincoln Group did nothing illegal and continued to give it work. In fact, the Lincoln Group won part of a $300 million information operations contract with Leonie and other firms in 2008 for Iraq and Afghanistan, and continued to work for the DoD through at least 2009, according to USAspending.gov.

Of course the Lincoln Group looks like Romper Room compared to the likes of Blackwater, KBR and Triple Canopy, all of which have been targeted by numerous lawsuits and federal investigations (resulting in few real penalties, but many undisclosed settlements) for more dastardly deeds, including manslaughter, negligence and murder. And yet, they still rake in the lucrative contracts.

Blackwater is probably the worst. After being accused of killing Iraqi and Afghan civilians and other sordid activities attributed to its founder Erik Prince, who once bragged about being a part of an off-the-books assassination program, Blackwater changed its name to Xe, and then more recently to Academi. But accusations of fraud and theft have followed the company no matter the name, and now Academi is facing charges that its employees fudged performance records of Afghan recruits for its own gain. The fact that any incarnation of Blackwater is still getting contracts – $31.3 million in 2012 alone – should raise the hackles of all good citizens and taxpayers.

From time to time we read high-minded laments over the loss of that little known virtue "responsibility," which begins with facing the consequences of one’s actions, otherwise known as "accountability." We can teach the children until our faces are blue, but when our most ubiquitous role models – celebrities, athletes, politicians, generals, CEOs – are routinely rewarded socially and financially for their bad behavior, should we be surprised when our lessons suddenly seem quaint and fail to take root?

It’s like the greatest, now most successful, propaganda campaign of all time: "nice guys always finish last." Most of us will never profit from it. But we will pay – that is for certain.

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