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By BILL SIZEMORE
The Virginian-Pilot
A two-year investigation has finally begun to shed some light on the trail of taxpayer dollars that paid for Blackwater USA's famously ill-fated security mission in Fallujah, Iraq, in March 2004.
Blackwater's contract was less than a month old when four of its security operatives were ambushed and killed, some of their bodies mutilated and hung from a bridge in an incident that changed the course of the Iraq war.
Blackwater was at the bottom of a four-tiered chain of contractors. The Moyock, N.C.-based company says it billed the next company up the chain $2.3 million. At the top of the chain was KBR, a subsidiary of Vice President Dick Cheney's former employer, Halliburton Co.
Now the Pentagon has calculated that by the time KBR got around to billing the government, the tab to the taxpayers for private security work had reached $19.6 million. The government is moving to take that money back, charging that it was improperly spent.
Last week, federal investigators identified $10 billion they said has been squandered in the war because of contractor overcharges and unsupported expenses. More than a quarter of that amount, $2.7 billion, was charged by Halliburton.
Because of the Fallujah ambush and its fallout, Blackwater is center stage in a case study of the booming, multi layered world of wartime contracting and whether the safety of America's private soldiers takes a back seat to corporate profits.
Congress will likely be grappling with those issues for months, if not years. Already two House members, Reps. David Price, D-N.C., and Jan Schakowsky, D-Ill., have introduced legislation aimed at injecting more transparency and accountability into the contracting process.
Sen. Jim Webb, D-Va., also has called for aggressive monitoring of Iraq contracting.
According to the latest Pentagon estimate, 100,000 civilian contractors work in Iraq - almost as many as there are uniformed soldiers. As many as half of those are said to work for security companies.
One of the most persistent critics of the private military industry is Rep. Henry Waxman, D-Calif. For two years he has been trying to get to the bottom of the Blackwater-to-KBR chain and how much it cost taxpayers.
The Democratic takeover of Congress in November landed Waxman in the chairman's seat of the House Oversight and Government Reform Committee, allowing him to pursue the investigation more aggressively. Now he is beginning to get some answers.
Until recently, not even the Pentagon had been able to sort out the players. Last year, the Army told Waxman it could find no indication that Blackwater had been hired to provide security under KBR's multibillion-dollar contract to support the U.S. military operation in Iraq.
But this month the Army said extensive research had revealed that Blackwater had in fact been hired through two intermediary companies.
Furthermore, the Army said, that appears to be a violation of KBR's contract, which prohibits hiring private security services. So the Pentagon has moved to take back the estimated $19.6 million that KBR charged the government for security services.
It is still unclear whether that amount was all for work performed by Blackwater or included other security providers.
It's not even completely clear that KBR was the prime contractor. One of the companies in the chain also had contracts with another company, Fluor Corp. But Fluor has denied hiring Blackwater.
KBR is disputing the Army's findings and said in a statement that its contract does not prohibit its subcontractors from hiring private security.
A key question for congressional investigators is whether the taxpayer dollars paid to KBR, based in Houston, ever reached the security personnel on the ground.
Family members of the four dead Blackwater contractors are suing Blackwater, charging that the company - in the interest of cutting corners and turning a profit - sent their loved ones into hostile territory without the protection of armored vehicles, rear gunners or automatic weapons.
An internal Blackwater e-mail exchange released by Waxman's committee seemed to bolster that allegation. The day before the fatal ambush, the four men's supervisor wrote to Blackwater management pleading for better equipment. His superior, Mike Rush, wrote back that it was the responsibility of the next contractor up the chain, Regency Hotel & Hospital Co.
"Mr. Howell, the e-mail from Mr. Rush reads to me like someone is passing the buck. Do you agree?" Waxman asked Andrew Howell, Blackwater's general counsel, at a hearing this month.
"I don't agree, Mr. Chairman," Howell replied. "It was the responsibility of Regency to fund the acquisition of that equipment."
Howell said that, beyond a small initial payment, Regency failed to pay Blackwater for its work.
"Had we been paid," he said, "our profits would have been slightly over 1 percent."
Another e-mail released by the committee suggests that KBR was not totally unaware that its subcontractors were hiring private security workers.
"We should not attempt to effect a material change in our contract with the government by hiring a company that we know uses armed escorts," James Ray, a KBR contract administrator, wrote to several company executives. "That company is an agent of KBR and if anything happens KBR is in the pot with them. Even with lipstick, a pig is a pig."
Double-billing by security contractors is another concern of congressional investigators. A January 2005 audit of a different Blackwater contract, with the State Department, found that Blackwater was charging the government separately for "drivers" and "security specialists," who were in fact the same people.
The audit also found that Blackwater was improperly including profit in its overhead costs, resulting "not only in a duplication of profit, but also a pyramiding of profit because, in effect, Blackwater is applying profit to profit."
The company's proposed profit represented 23.6 percent of its costs.
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This sounds like exactly what I've been looking for. Decent pay and a chance to do what I love. Thank God for our great President.
Typical...
Typical dealings of the US Military Industrial Complex. Check out Chalmers Johnson new book 'Nemesis' for more clarity on this picking of our pockets.
Misinformation
The money is not tax free, we pay taxes on it just as everyone else does. My husband is a contractor and I am proud of him. Yes he gets paid decent, but if they didn't pay for the higher risk who would work it? He spent his years in the Army as a Ranger, got out, became a CCParamedic, and now he is doing something that serves his country and helps others as well. Yes the money helps, but we are not getting rich, the more you make the more taxes you pay out. We also do not have the health benefits and have to pay for those ourselves. It isn't a get rich scheme, he is gaining valuable experience he can apply to his stateside, job, he is providing professional security, and doing a job our gov't didn't provide enough military for thanks to Clinton era downsizing of military. Is there corruption? yes there is corruption in every Government form in the USA. So start with your politicians and work your way down.
The Iron triangle.
War prostitutes in the white house and out. The iron triangle and the Bush war machine. How many of our young men and women will Bush Cheney and the neocons have to send home in coffins before America begins to take a stand against them. How stupid can our country get. Over and Over they lie and lie again, and we let Bush just get away with murder. Walter Reed hospital is a mess and we continue to let sycophants like Thelma Red Hand Drake, continue to insult us with comments like things are going "great in Iraq" and give us this crap that she "supports the troops". Hogwash! We all know what she supports! Black water is black gold. This prostitutes are getting rich off of spilled blood.
Are you people nuts!?!
I am a contractor here in Iraq! I am not getting rich! I am just working; purifying water for the soldiers. I face the same rockets, morters, & and snipers as the soldiers do. I am an American! Blackwater exclusively hired former American special forces. These guys do a hard job that is extremely dangerous. You!! would not even get past the first round of cuts for this job. Once again these guys are Americans!!!!! Who do you think you are picking the insurgants over Americans!! We are just working and helping out our soldiers. I cannot believe the hypocrisy coming from ya'lls mouths: "We support the troops!" Well, I really support the troops!! Blackwater security provided security for the triuckdrivers bringing food into the D-facs for the troops!!!! Listen to yourselves: "getting rich", I think not! We are Americans doing a rough job. Our main benifit is not paying taxes if we are gone 330 days out of the year. So what we are not in the US. Americans!!!
War Profitering, Waste, Fraud, Abuse = Halliburton, Carslile
War Profitering, Waste, Fraud, Abuse - any person caught doing this should be punished to fullest extent of the law, everytime, to set examlpes. We need to pass law= Any govt employee will be be fired immediately if they r caught with any monetary interests in companies doing business with the govt. including any of their family members, partners,... Their can be no tolerance for waste n fraud in our govt. - we have to set examples with punishment quick n sever to motivate people/companies to walk a straight ine . Any company caught doing this out never be allowed to do govt. contracts/work ever and punish them to the fullest extent of the law - or just pull their business license. I bet Channey or his family have stock in Halliburton. I say put Halliburtons work up for bib and then have them return the trillions they over charged us taxpayers, then close them down - or no more govt. contracts.
No Oversight
Thats the problem-No Oversight on where and who got the money. To echo a writer's statement-I too would love to work for Blackwater. As to this overpayment? Wait a few years and then use the RICO act to find the money. Let's face it- the RICO act gives law enforcement the ability to take away the profits from organized crime. It takes away the money! There are perhaps hundreds of little off shore accounts somewhere that have names of the present administration-from a senior senator right on up the chain of command. Money goes in, and years later its pulled thru another "clean account" and there you have it. The trick is finding these accounts and who payed, and when and where! The pols know "we the people know", they are just, sad to say, quite adept at creating a dog & pony show! We lose no matter what! Does anyone think arrests will be made in this case? What a joke!
How long will we stand for this?
How much longer will we as Americans stand for this? Isn't it time for us to stand against the government and the corruption and to demand answers and to hold accountable those who are responsible for this whole mess in the first place? Democracy will never be able to fully evolve in a country or even an area where religion plays such a dramatic role in the way these people live their lives. Each day the blood shed continues to get worse and more people die. Welcome to Vietnam II. I for one am sick of it and I think its time to let the current administration know we're tired of their lies and deceptions and to hold them accountable. This is proof to the world what the war was really about. Money. God bless the troops for doing their job and I hope that sooner rather than later someone in the Administration wakes the heck up and smells something other than money.
Money, Money, Money, Monnn-neyyyy...
It is the American way and the way of the world...unfortunately. The opportunistic embezzlement of tax dollars is going to catch up with someone...but will it be the right someone? This war is not about right and wrong anymore, if it ever was...it is about the all mightly dollar. It's good that those who are paying the most for this war don't see it that way. Our soldiers pay in blood. Their families pay with lifelong heartache and pain. They fight for justice. Is it all in vain if the politicians and money makers are in it only to make millions? They have so much blood on their money grubbing hands. God bless our soldiers.
Employment
I would go to work for Blackwater tomorrow.
They go for the money
I feel for the family members who lost love ones. But I dont belive anyone made them go over there. The contractors go over there to make the big money from $600.00 to $1000.00 per day tax free. So the chances they take with inproper equipment is there own doing.
Its Amazing how Bush destroyed a country &
Created a billionaire mercenary. There is nothing patriotic or American about all this. America does not radomly invade sovereign nations unprovoked. There never was WMD, the UN & EU told us so. They warned us about this invasion as well. Even our own top Generals warned!
America does not hire Mercenaries! We have our own military. This is a scam! They havn't done anything but drive Iran to get the bomb.
This is Banana Republic style corruption except on a grander scale. 600,000 Iraqi civilians died because of this war. More than when Sadam was in Charge. This war was designed to get a few people rich and leave us taxpayers holding the bag.
This Prince guy has a serious attitude problem if hes being elusive & not answering ,himself open & transparent, to the people who are paying him.
Remember the soldiers serve the people, we don't serve the military. That was the USSR! We have every right to dig deep & demand the truth! Bush really turned the US into a Banana Republic
Duuuuuuuuuuuuh!!!!
It's about time somebody put 2+2 together & held these contractors' feet to the fire. Dick Cheney & his buddies have had their way with this stupid war long enough! Wake up folks... that's why we were conned into going into Iraq to begin with! Yes... the only reason for the Iraq war was $$$ for the "contractors"!!!