Former high-ranking Bush officials enjoy war profits

Now working inside America's "shadow" spy industry, George Tenet, Richard Armitage, Cofer Black and others are cashing in big on Iraq and the war on terror.

Topics: CIA, Terrorism, Iraq, Middle East, Espionage, Homeland Security,

Former high-ranking Bush officials enjoy war profits

Richard L. Armitage, who served from 2001 to 2005 as Deputy Secretary of State, was a rarity in the Bush administration: an official who delighted in talking to the press. Reporters loved him for his withering criticism of the neoconservative zealots around President George W. Bush and in part because he fed them tidbits about the White House they could obtain nowhere else. His accidental disclosure to conservative columnist Robert Novak that Valerie Plame, the wife of Iraq war critic Joseph Wilson, was working undercover for the Central Intelligence Agency remains one of the most notorious leaks of the Bush era.

But perhaps because of his cozy ties to the Washington press corps and the media’s obsession with Plamegate, very little has been written about Armitage’s extensive business dealings. In fact, Armitage is one of the most successful capitalists in Washington. He has successfully parlayed his experience in covert operations and secret diplomacy into a thriving career as a consultant and adviser to some of the biggest players in America’s Intelligence Industrial Complex — corporations that are working at the heart of U.S. national security and profiting handsomely from it.

Armitage, currently an adviser to presidential candidate John McCain, had once been Colin Powell’s closest ally during the bitter disputes inside the Bush administration over the invasion and occupation of Iraq. According to the Washington Post’s Bob Woodward, Armitage advised Powell on more than one occasion to tell the neocons to “go fuck themselves,” and, at one point, even refused to deliver a speech about Iraq drafted for him by Vice President Dick Cheney’s office.

Yet, three years after those epic battles, Armitage is enjoying life as a stakeholder in a dozen private companies that are making money directly from the war started by his former nemeses.

Over the past decade, contracting for America’s spy agencies has grown into a $50 billion industry that eats up seven of every 10 dollars spent by the U.S. government on its intelligence services. Today, unbeknownst to most Americans, agencies once renowned for their prowess in analysis, covert operations, electronic surveillance and overhead reconnaissance outsource many of their core tasks to the private sector. The bulk of this market is serviced by about 100 companies, ranging in size from multibillion dollar defense behemoths to small technology shops funded by venture capitalists.

Nearly every one of them has sought out former high-ranking intelligence and national security officials as both managers and directors. Like Armitage, these are people who have served for decades in the upper echelons of national power. Their lives have been defined by secret briefings, classified documents, covert wars and sensitive intelligence missions. Many of them have kept their security clearances and maintain a hand in government by serving as advisers to high-level advisory bodies at the Pentagon, the Central Intelligence Agency, the National Security Agency and the White House. Now, with their government careers behind them, they make their living by rendering strategic advice to the dozens of information technology vendors and intelligence contractors headquartered along the banks of the Potomac River and the byways of Washington’s Beltway.

Ever since the 1950s, with the rise of America’s modern military-industrial complex, high-level U.S. officials and military men have moved between the government and private sectors. But what we have today with the intelligence business is something far more systemic: senior officials leaving their national security and counterterrorism jobs for positions where they are basically doing the same jobs they once held at the CIA, the NSA and other agencies — but for double or triple the salary, and for profit. It’s a privatization of the highest order, in which our collective memory and experience in intelligence — our crown jewels of spying, so to speak — are owned by corporate America. Yet, there is essentially no government oversight of this private sector at the heart of our intelligence empire. And the lines between public and private have become so blurred as to be nonexistent.

Shortly after leaving government in 2005, Armitage was recruited to the board of directors of ManTech International, a $1.7 billion corporation that does extensive work for the National Security Agency and other intelligence collection agencies. He’s also since advised two private equity funds with significant holdings in intelligence enterprises. Veritas Capital, where Armitage served as a senior adviser from 2005 to 2007, owns intelligence consultant McNeil Technologies Inc. and DynCorp International, an important security contractor in Iraq. For a time, Veritas also owned MZM, Inc., the CIA and defense intelligence contractor that was caught — before the Veritas acquisition — bribing former Republican Congressman Randy “Duke” Cunningham.

In 2007, Armitage, along with several Veritas executives, moved over to DC Capital Partners, an intelligence-oriented buyout firm with some $200 million in assets. One of its first acquisitions after Armitage came on board was Omen Inc., a Maryland company that provides information technology and consulting services to the NSA. The fund has since combined Omen with two other intelligence contractors to form a new company called National Interests Security Company LLC, which has 850 employees, more than half of them holding top secret or higher security clearances.

Through his own eponymous consulting firm, Armitage has lobbied on behalf of L-3 Communications Inc., one of the nation’s largest intelligence contractors, to help it sell anti-submarine surveillance systems to Taiwan. L-3, like ManTech, is also heavily involved in Iraq. (Further topping off Armitage’s investment interests in the war: He sits on the board of directors of ConocoPhillips, which is aiming to become a major player in Iraq’s energy industry through a joint venture with Russia’s Lukoil.)

In these jobs, former high-level officials like Armitage continue to fight terrorist threats and protect the “homeland,” as they once did while working in government. But by fusing their political careers with business, these former officials have brought money-making into the highest reaches of national security. They have created a new class of capitalist policy-makers that is bridging the gap between public policy and private business in ways that are unprecedented in American history.

Take the case of George Tenet, who retired in 2004 from his service as President Bush’s CIA director. As he was writing his memoirs and preparing for a new career as a professor at Georgetown University, Tenet quietly began cutting deals with companies that earn much of their revenues from contracts with the intelligence community. And, as I was the first to report a year ago in Salon, Tenet began to make big money off of the Iraq war. By the end of 2007, he had made nearly $3 million in directors’ fees and other compensation from his service as a director and adviser to four companies that provide the U.S. government with technology, equipment and personnel used for the war in Iraq, as well as in the broader war on terror.

Those companies include L-1 Identity Solutions Inc., an intelligence and biometric conglomerate that holds a near-monopoly on software that identifies people by their fingerprints and facial characteristics; Guidance Software, a Pasadena, Calif., supplier of investigation and forensic software to the FBI and the Intelligence Community; and the Analysis Corp., a Fairfax, Va., intelligence contractor founded by Tenet’s former chief of staff, John Brennan. Brennan himself went into the spy business after serving as chairman of the National Counterterrorism Center — which is one of the Analysis Corp.’s biggest clients.

In Tenet’s most prestigious position, he was the only American director of QinetiQ, the British defense research company that was privatized in 2003 and acquired by the well-connected Carlyle Group. Earlier this year, Tenet left QinetiQ’s UK parent to join the board of QinetiQ North America, the company’s U.S. subsidiary and one of the fastest-growing contractors in the U.S. intelligence market. There, Tenet is working with CEO Duane P. Andrews, a former assistant secretary of defense who was the chief intelligence adviser to Dick Cheney when he was Secretary of Defense in the early 1990s. (Prior to joining QinetiQ, Andrews would have had plenty of contact with Tenet, as Andrews was a senior executive with Science Applications International Corp., a major CIA and NSA contractor.)

In January, QinetiQ North America expanded its intelligence network by hiring Stephen Cambone, who was the assistant secretary of defense for intelligence under Donald Rumsfeld, as its vice president for strategy. That appointment came just days after the company won a $30 million, five-year contract to provide unspecified “security services” to the Pentagon’s Counter-Intelligence Field Activity office, a controversial domestic security agency that was created by Rumsfeld and Cambone in 2002 and later took heat from Congress for illegally spying on antiwar and religious activists.

One of the most spectacular transitions from intelligence to business took place at Blackwater USA, the security contractor infamous for its trigger-happy soldiers in Iraq. One of Blackwater’s first major contracts, negotiated by founder Erik Prince, was a secret no-bid $5.4 million deal with the CIA signed shortly after the September 11 terrorist attacks. Shortly thereafter, Blackwater hired as its vice chairman Cofer Black, the CIA’s former top counterterrorism official who was dispatched by Tenet in the days after 9/11 to brief President Bush and his advisers on the CIA’s plans for overthrowing the Taliban in Afghanistan. Rob Richer, the CIA’s former Associate Deputy Director of Operations and, before that, head of its Near East division, became Blackwater’s Vice President of Intelligence, and later went to work for a private intelligence company.

Appointments like this, observes intelligence expert Steven Aftergood, reflect the “incestuous” relationships that exist between former officials and private intelligence contractors. “It’s unseemly, and what’s worse is that it has become normal,” he told me after the news broke about Stephen Cambone’s move to QinetiQ. “The problem is not so much a conflict of interest as it is a coincidence of interests — the Intelligence Community and the contractors are so tightly intertwined at the leadership level that their interests, practically speaking, are identical.”

Former high-ranking officials bring tremendous value to a government contractor seeking new work or a private equity fund looking for companies to buy. “You understand the decision-making process inside the Beltway, and that is liquid gold,” says Roger Cressey, who worked in President Clinton’s National Security Council as deputy director of counterterrorism and is now a partner in Good Harbor Consulting, a company he founded with his former boss at the NSC, Richard Clarke. Cressey, who is a terrorism consultant for NBC News, adds that the influence of a retired official lasts only a limited period of time after he or she leaves office. “You have 18 to 24 months to translate your rolodex into real services,” he says.

But the value of a CIA director or national security official goes much further than a rolodex. Because high-ranking officials have been privy to classified and top-secret information for years — and sometimes, in the cases of people like Armitage and Tenet, decades — they have details about intelligence programs, classified operations and the internal affairs of other countries that few others can claim.

Armitage, who was a senior Pentagon official during the Reagan administration, was deeply involved in covert operations in Vietnam as a Navy officer and, shortly after September 11, flew to Pakistan on behalf of the Bush administration to deliver a stark message to its military president, Pervez Musharraf, that drastic measures would follow if Musharraf did not support the war on terror. He also led an influential group of U.S. officials who quietly pushed the Japanese government to adopt a more militaristic role in global affairs over the last seven years.

In all of these tasks, Armitage would have had access to the most classified intelligence available to U.S. officials, including telephone intercepts provided by the NSA. That kind of experience is extremely valuable to a company like ManTech, which sells and operates signals intelligence systems to the NSA and provides “cyber and physical security” for U.S. embassies and consulates around the world. According to ManTech CEO George J. Pedersen, who also employed Armitage as an adviser during the 1990s, Armitage was brought on as a director for his “enormous insight into our corporation’s capabilities and operations.” (Armitage did not respond to a written request for an interview.)

Tenet is even more connected: With the former CIA director on board, L-1′s CEO Robert LaPenta told analysts last year, “a phone call gets us in to see whoever we want.” Tenet, of course, has extensive knowledge about intelligence services in Saudi Arabia, the UK and Pakistan as well as secret operations in Iraq, Afghanistan and Somalia. His insights have already helped L-1 in its acquisition strategies. Shortly after Tenet joined L-1′s board, the company acquired one of the CIA’s hottest contractors, SpecTal, which has 300 employees with top-secret security clearances who work extensively in Afghanistan. Months before, during a 2006 meeting with L-1 executives about SpecTal’s potential business in that country, Tenet urged company executives to “call the SpecTal guys” because “they know everybody in every one of these ministries that you need to go talk to,” according to LaPenta. L-1 not only called them; it bought them out, and has since combined SpecTal with its latest acquisition, Advanced Concepts Inc., a systems engineering firm holding contracts at the NSA. Tenet, through a spokesman, declined to comment.

Power also flows out of a former high-ranking official’s presence as a policy-maker. During the 1990s, when Armitage was building his reputation as a private consultant and defense industry adviser, he was a member of President Clinton’s Defense Policy Board. Although Armitage, like any board member, was prohibited from divulging contents of meetings with his clients, the internal discussions and access to classified documents helped shape the advice he gave his clients. That’s certainly the impression one gets from officials at CACI International, a key intelligence contractor where Armitage served on the board of directors during that time. During his tenure as a director in the 1990s, CACI officials wrote in 2001, Armitage provided “valuable guidance on CACI’s strategic growth plans and the federal government and Defense Department markets.”

The same can be said of many of Armitage’s contemporaries in the defense and intelligence industries who advise their clients while holding positions in government advisory boards at the Pentagon, the CIA and the NSA. One of Armitage’s fellow directors at ManTech, for example, is Retired Admiral David E. Jeremiah. He is a member of President Bush’s Foreign Intelligence Advisory Board and a paid adviser to the National Reconnaissance Office, the super-secret agency that manages the nation’s spy satellites. A third ManTech director, Richard J. Kerr, a 32-year veteran of the CIA, led a 2005 study for the CIA into the agency’s prewar assessments of Iraq and its weapons of mass destruction.

One of the most representative figures in America’s new private intelligence elite is Joan A. Dempsey. She is currently a vice president of Booz Allen Hamilton, where for the last three years she has worked alongside former CIA director Jim Woolsey and more than 1,000 other former intelligence officers. Dempsey, a steely-looking blonde, began her career as a naval technician listening to Soviet bomber and submarine traffic at Misawa Air Base in Japan, a key NSA listening post. Over the years, she slowly worked her way up the intelligence chain of command at the Pentagon, from Naval Intelligence to the Defense Intelligence Agency. In 1997, she was appointed deputy assistant secretary of defense for intelligence and security in the Clinton administration, the highest civilian intelligence position in the Department of Defense at the time. There, she had responsibility over the NSA, the NGA and the NRO, the three national collection agencies controlled by the Pentagon, as well as the DoD’s tactical command, control, communications and intelligence (C3I) efforts.

By 1999, Dempsey had become George Tenet’s representative to the rest of the Intelligence Community as the CIA’s director of community management. In that position in 1999 she won the everlasting support of the Intelligence Community — and its growing army of contractors — when she led negotiations with the Republican-led Congress that added $1.2 billion to the intelligence budget. That figure still remains one of the largest single-year increases in the history of the National Foreign Intelligence Program. Five years later, partly in recognition of this feat, Dempsey was given the William O. Baker award for meritorious intelligence service by the Security Affairs Support Association (SASA), which from 1979 to 2005 represented the largest prime contractors at the NSA and the CIA. Her remarks at that ceremony serve as a kind of leitmotif for the outsourcing phenomenon in intelligence.

In her acceptance speech, Dempsey paid effusive praise to the corporations she had known over the years, many of whom had purchased tables for the event: General Dynamics, Essex Corporation, Oracle Corporation, Computer Sciences Corporation, AT&T Government Solutions, ManTech and Lockheed Martin. She thanked her “Pentagon friends” from L-3 Communications, with whom she had worked “on my favorite program of all time, the U-2” spy plane. She spoke of her pride in working with the Boeing Company on the Future Imagery Architecture, a $4 billion project by the NRO and the NGA to build and operate the next generation of imagery satellites (the project was cancelled in 2005). At the CIA, Dempsey said, she had “benefited enormously” from her work with Booz Allen Hamilton and SAIC.

Then she went slightly off-script: “I like to call Booz Allen the shadow IC,” she said, using the common acronym for the intelligence community, because it has “more former secretaries of this and directors of that” than the entire government. That must have caused some chuckles at the lead table, where Woolsey was sitting. But Dempsey, of course, got the last laugh. Fifteen months later, she joined the “shadow IC” herself as a vice president. In her job at Booz Allen, she “provides strategy consulting services to the US government, including the national security and civil sectors, as well as commercial industry,” according to company spokesperson George Farrar. Then, in January 2007, Dempsey’s joke came full circle when Mike McConnell, her boss at Booz Allen, was appointed Director of National Intelligence. In the space of a few years, Booz Allen had been transformed from a “shadow” intelligence community player into the real thing.

It was most intriguing, then, to hear what Dempsey is actually doing in her new job at Booz Allen. In the spring of 2006, Dempsey was invited to speak to a seminar on intelligence reform at Harvard University. In a remarkably candid speech, Dempsey disclosed that her office at Booz Allen was evaluating the entire decision-making process within the intelligence community. Under her supervision, she said, Booz Allen was “studying the implications of the many decisions that are being made on a daily basis right now all over the intelligence community,” including by the staff of the Office of the Director of National Intelligence. “No one has thought through the implications of those decisions in a strategic or aggregate sense for the future,” she added. So Booz Allen is helping out by “trying to forecast” what these decisions “mean for the intelligence community of the future — what it’s going to look like, how it’s going to operate — along a trend line.”

It was a remarkable circumstance: Booz Allen was conducting a study for the DNI, a position that was about to be filled by one of the company’s own — Mike McConnell. The shadow IC was now helping the real IC prepare for an immediate future when the real IC would be led by the shadow IC. This was more than a revolving door: The private and the public sides of intelligence were now sharing the same room.

Tim Shorrock is the author of Spies for Hire: The Secret World of Intelligence Outsourcing. You can follow his frequent postings on Twitter at @TimothyS

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