Tim Shorrock

George Tenet cashes in on Iraq

The former CIA chief is earning big money from corporations profiting off the war -- a fact not mentioned in his combative new book or heard on his publicity blitz.

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George Tenet cashes in on Iraq

If you go by the book jacket of his new memoir, “At the Center of the Storm,” George Tenet is enjoying the life of a retired government servant teaching at Georgetown University, where he was appointed to the faculty in 2004. The former CIA director played up the academic image when he kicked off the recent media blitz for his new book by doing an interview for CBS’s “60 Minutes” from his spacious, book-lined office at the university. His academic salary, and the reported $4 million advance he received from publisher HarperCollins, should provide the former CIA director with more than enough money to live comfortably for the rest of his days and leave a substantial fortune to his children.

But those monies are hardly Tenet’s entire income. While the swirl of publicity around his book has focused on his long debated role in allowing flawed intelligence to launch the war in Iraq, nobody is talking about his lucrative connection to that conflict ever since he resigned from the CIA in June 2004. In fact, Tenet has been earning substantial income by working for corporations that provide the U.S. government with technology, equipment and personnel used for the war in Iraq as well as the broader war on terror.

When Tenet hit the talk-show circuit last week to defend his stewardship of the CIA and his role in the run-up to the war, he did not mention that he is a director and advisor to four corporations that earn millions of dollars in revenue from contracts with U.S. intelligence agencies and the Department of Defense. Nor is it ever mentioned in his book. But according to public records, Tenet has received at least $2.3 million from those corporations in stock and other compensation. Meanwhile, one of the CIA’s largest contractors gave Tenet access to a highly secured room where he could work on classified material for his book.

Tenet sits on the board of directors of L-1 Identity Solutions, a major supplier of biometric identification software used by the U.S. to monitor terrorists and insurgents in Iraq and Afghanistan. The company recently acquired two of the CIA’s hottest contractors for its growing intelligence outsourcing business. At the Analysis Corp. (TAC), a government contractor run by one of Tenet’s closest former advisors at the CIA, Tenet is a member of an advisory board that is helping TAC expand its thriving business designing the problematic terrorist watch lists used by the National Counterterrorism Center and the State Department.

Tenet is also a director of Guidance Software, which makes forensic software used by U.S. law enforcement and intelligence to search computer hard drives and laptops for evidence used in the prosecution and tracking of suspected terrorists. And Tenet is the only American director on the board of QinetiQ, the British defense research firm that was privatized in 2003 and was, until recently, controlled by the Carlyle Group, the powerful Washington-based private equity fund. Fueled with Carlyle money, QinetiQ acquired four U.S. companies in recent years, including an intelligence contractor, Analex Inc.

By joining these companies, Tenet is following in the footsteps of thousands of other former intelligence officers who have left the CIA and other agencies and returned as contractors, often making two or three times what they made in their former jobs. Based on reporting I’ve done for an upcoming book, contractors are responsible for at least half of the estimated $48 billion a year the government now spends on intelligence. But exactly how much money will remain unknown: Four days before Tenet’s book was published, the Office of the Director of National Intelligence decided not to release the results of a yearlong study of intelligence contracting, because disclosure of the figure, a DNI official told the New York Times, could damage national security.

That may be a real break for Tenet. Under his watch, according to former CIA officials and contractors I’ve interviewed, up to 60 percent of the CIA workforce has been outsourced. A spokesman for the CIA told me last week that that figure “is way off the mark,” but wouldn’t provide the actual figure, which he said is classified. But publication of that number could prove embarrassing to Tenet, particularly in light of his own deep involvement in the privatization of U.S. intelligence.

Despite making himself available for plenty of airtime of late, Tenet was not available for an interview with Salon, said Tina Andreadis, his publicist at HarperCollins. She referred me to Bill Harlow, Tenet’s co-author and his former director of public affairs at the CIA, who said Tenet’s work on corporate boards “is all a matter of public record.”

Tenet’s ties with contractors were underscored last week in a dispute between two groups of former CIA officials over Tenet’s legacy. On April 28, six former intelligence officers wrote to Tenet, saying he shared culpability with President Bush and Vice President Cheney for “the debacle in Iraq,” and suggesting he donate half the royalties from his book to Iraq war veterans and their families. All of the signatories had severed their ties to U.S. intelligence, although three of them, Phil Giraldi, Larry Johnson and Vince Cannistraro, work as consultants for news organizations, corporations and government agencies outside of intelligence.

A few days later, six recently retired officers responded. They called the first letter a “bitter, inaccurate and misleading attack” on Tenet and pointed out that it was drafted by officers who “had not served in the Agency for years.” Tenet, his supporters said, “literally led the nation’s counterterrorism fight.” And three of its six signatories were directly involved in that fight — as contractors. They included John Brennan of the Analysis Corp.; Cofer Black, Tenet’s former counterterrorism director and vice chairman of Blackwater, the private military contractor; and Robert Richer, the former deputy director of the CIA’s clandestine services. Richer recently left Blackwater to become the CEO of Total Intelligence, a new company formed with Black and other ex-CIA officials to provide intelligence services to corporations and government agencies.

The company with the closest ties to the CIA — and the biggest potential financial payoff for Tenet — is L-1 Identity Solutions, the nation’s biggest player in biometric identification. L-1′s software, which can store millions of ID records based on fingerprints and eye and facial characteristics, helps the Pentagon and U.S. intelligence “in the fight against terrorism by providing technology for insurgent registration [and] combatant identification,” the company says. L-1 technology is also employed by the State Department and the Department of Homeland Security for U.S. passports, visas, drivers’ licenses and transportation worker ID cards. L-1 clearly hired Tenet for the business he could secure at the CIA. “We want the board to contribute in a meaningful way to the success of the company,” CEO Bob LaPenta told analysts during an earnings conference call last year. “You know, we’re interested in the CIA, and we have George Tenet.”

Last fall, as part of its push into intelligence outsourcing, L-1 acquired SpecTal, a Reston, Va., intelligence contractor with at least 300 employees with security clearances, gaining instant access to several agencies where SpecTal had contracts, including the CIA, the NSA and the Defense Intelligence Agency. Just recently, L-1 picked up another intelligence contractor, Advanced Concepts Inc., where 80 percent of the 300 employees have top-secret clearances. Tenet, according to company filings with the Securities and Exchange Commission, was provided with 80,000 shares of L-1 stock when the company acquired Viisage, where Tenet was also a director. At the company’s recent price of $19.79, those shares are worth more than $1.5 million. According to an SEC filing on April 6, in 2006 Tenet received director’s compensation of $129,337, and $332,030 worth of stock. “George has amazing experience,” said Doni Fordyce, L-1′s executive vice president for communications. “We’re in the security business, right? So he’s a tremendous asset.” In 2006, L-1 earned $164.4 million, up from $66.2 million in 2005.

Last October, Tenet continued to profit from the defense industry by joining the board of directors of QinetiQ Group PLC. QinetiQ, whose name draws from the fictional British spook who made the gadgets in the James Bond movies, moved aggressively into the U.S. market in 2003 after a majority of its voting stock was acquired by the Carlyle Group. (Carlyle sold off its remaining shares in February, making a $470 million profit on its original investment.)

Here, too, Tenet is profiting from involvement in Iraq and the broader war on terror. QinetiQ’s recent acquisitions in the U.S. market include defense contractor Foster Miller Inc., which makes the so-called TALON robots used by U.S. forces in Iraq to neutralize IEDs. QinetiQ also controls Analex Corp., an information technology and engineering company that earns 70 percent of its revenue from the Pentagon. Among the clients listed on Analex’s Web site are the National Reconnaissance Office, which manages the nation’s spy satellites, and the Pentagon’s Counter-Intelligence Field Activity office — a secretive agency that has been criticized by members of Congress for collecting intelligence on American antiwar activists. According to QinetiQ’s Annual Report and Accounts for 2006, non-executive directors like Tenet are paid a minimum of $70,000, with some paid up to more than a quarter-million dollars.

At QinetiQ, Tenet is working with Duane P. Andrews, a former assistant secretary of defense who is QinetiQ’s CEO for North America. Prior to coming to QinetiQ, Andrews served for 13 years as a senior executive with Science Applications International Corp. SAIC is one of the largest U.S. intelligence contractors and a major provider of private sector analysts to both the CIA and the National Security Agency. Vanity Fair recently referred to it as a “shadow government.”

There is an intriguing detail about SAIC buried in Tenet’s acknowledgements in his new book: “Arnold Punaro of SAIC,” he writes, “graciously provided me with a secure workspace to review and work with classified material.” Punaro is identified on the SAIC Web site as the company’s executive vice president for government affairs, communications and support operations, as well as general manager of its Washington operations.

Getting use of such a secure room is no small feat. In the intelligence business, such rooms are known as sensitive, compartmented information facilities, or SCIFs. To prevent eavesdroppers from picking up top-secret conversations, a typical SCIF has film on the windows, walls fitted with soundproof steel plates and white-noise makers embedded in the ceiling. Punaro must have had approval from SAIC and the CIA to allow Tenet such access. Harlow, Tenet’s co-author, explained to Salon that Tenet could have used office space at the CIA to work on the book, but that he “believed it would be better not to be producing his memoirs at a government facility.” It was “a matter of convenience” to use the room at SAIC, Harlow said.

In 2006, shortly after he joined TAC’s advisory board, Tenet joined the board of directors of Guidance Software. One of Guidance’s products, EnCase, has been used extensively by U.S. law enforcement, intelligence and military agencies to collect evidence in criminal and counterterrorism cases, including the prosecution of Enron executives and the British “shoe bomber,” Richard Reid. Tenet’s “years of experience fighting terrorism and extensive knowledge of potential and existing threats will expand Guidance’s unparalleled expertise in computer forensics and network investigations,” the company noted in a press release. According to SEC records, Tenet earned $58,112 in 2006 as a director and holds 9,700 shares of company stock. At its recent price of $12.85 per share, that would make Tenet’s stock worth more than $124,000.

In his work at the Analysis Corp., Tenet has been reunited with John O. Brennan, his former chief of staff and, according to the book, one of his “closest advisers.” Brennan spent 25 years in the CIA, and was deputy executive director at the time of the 9/11 attacks. In 2003, he was dispatched by Tenet to run the CIA’s Terrorist Threat Integration Center. It eventually morphed into the U.S. government’s National Counterterrorism Center, which Brennan ran from December 2004 to August 2005, when he retired from government. (The center, which integrates intelligence from various agencies, the Pentagon and the Department of Homeland Security, is staffed primarily by contractors.) In November 2005, Brennan joined TAC, which has contracts with the State Department, Homeland Security and the Office of the Director of National Intelligence. Brennan, the company’s CEO, also declined a request from Salon for comment for this report.

In a statement TAC released when Tenet was appointed to that company’s board last year, Tenet said he would help the company “address critical needs as government and industry work together to fight terrorism.” Serving with Tenet on the advisory board there are Alan Wade, Tenet’s former chief information officer, and John P. Young, a former CIA senior analyst. TAC is a privately held company and no public information is available regarding compensation for its board members. But between the terrorist attacks of Sept. 11, 2001, and 2006, the company’s income quintupled, from less than $5 million in 2001 to $24 million in 2006.

The spy who came in from the boardroom

Why John Michael McConnell, a top executive at a private defense contractor, should not be allowed to run our nation's intelligence agencies.

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The spy who came in from the boardroom

The Bush administration’s choice last week of J. Michael McConnell to be director of national intelligence is a major blunder — and not just because the man who will be overseeing 16 different spy agencies, including the CIA, took the job after a “personal approach” from an old friend named Dick Cheney.

The problem is with McConnell’s résumé. At present, U.S. intelligence is more dependent on private contractors than it has ever been. About half of the rapidly expanding annual intelligence budget, or more than $20 billion, now goes to outside firms. The work those private contractors perform has been slammed repeatedly for mismanagement, privacy violations and bias — and yet the would-be head of the nation’s intelligence effort is a top executive at one of the worst offenders. McConnell, a retired vice admiral and former director of the National Security Agency, is the current director of defense programs at Booz Allen Hamilton.

With revenues of $3.7 billion in 2005, Booz Allen is one of the nation’s biggest defense and intelligence contractors. Under McConnell’s watch, Booz Allen has been deeply involved in some of the most controversial counterterrorism programs the Bush administration has run, including the infamous Total Information Awareness data-mining scheme. As a key contractor and advisor to the NSA, Booz Allen is almost certainly participating in the agency’s warrantless surveillance of the telephone calls and e-mails of American citizens.

If the Democrats now running the House and Senate intelligence committees do their job right, they could learn a great deal about these programs and the instrumental role contractors are playing in U.S. intelligence during McConnell’s confirmation hearings. McConnell should be compelled to answer some tough questions before the Democrats even consider confirming him.

The intelligence community’s reliance on outsourcing dates back to the late 1990s, when commercial advances in computer software and communications began to outpace the considerable lead U.S. intelligence once had in encryption and other technologies. These shortcomings were particularly acute at the NSA, which suffered a system-wide computer blackout in 2000 that shut down the agency’s global listening and surveillance system for more than two days, reducing the contents of the president’s Daily Briefing by more than 30 percent. In response, during the waning days of the Clinton era, the highly secretive agency had opened its doors to contractors.

The privatization of intelligence within the NSA accelerated as soon as the Bush administration took office. And then came 9-11. The attacks served as a hiring catalyst for other agencies — like the CIA and the Pentagon, which found themselves short of analysts, linguists and other specialists — to follow the NSA’s lead. Rather than take on new employees, intelligence agencies and counterterrorism centers sought out companies that, like Booz Allen, had hundreds of employees with security clearances on their staff — clearances nearly always earned during prior and less lucrative employment with the federal government.

Since 2001, intelligence spending has risen about 40 percent a year, and contracting has ballooned by about that much. In some agencies, contractors make up the majority of employees. At the Pentagon’s highly classified Counterintelligence Field Activity office, which has been strongly criticized in Congress for spying on U.S. antiwar protesters, 70 percent of the workforce are contractors.

U.S. intelligence budgets are classified, as are nearly all intelligence contracts. But the overall budget is generally understood to be running about $45 billion a year. Based on interviews I’ve done for an upcoming book, I estimate that about 50 percent of this spending goes directly to private companies. This is big business: The accumulated spending on intelligence since 2002 is much higher than the total of $33 billion the Bush administration paid to Bechtel, Halliburton and other large corporations for reconstruction projects in Iraq.

Booz Allen, along with Science Applications International Corp., General Dynamics, Lockheed Martin, Northrop Grumman, CACI International and a few other corporations, is one of the dominant players in intelligence contracting. Among its largest customers are the NSA, which monitors foreign and domestic communications, and the National Geospatial-Intelligence Agency, an amalgamation of the imagery divisions of the CIA and the Pentagon that was established in 2003.

A few years ago, Information Week reported that Booz Allen had more than 1,000 former intelligence officers on its staff. Asked to confirm that number last month, company spokesman George Farrar told me: “It is certainly possible, but as a privately held corporation we consider that information to be proprietary and do not disclose.”

Buried deep on the company’s Web site, however, I recently found an explanation of a Booz Allen I.T. contract with the Defense Intelligence Agency, which carries out intelligence for the Joint Chiefs of Staff and the secretary of defense. It states that the Booz Allen team “employs more than 10,000 TS/SCI cleared personnel.” TS/SCI stands for top secret-sensitive compartmentalized intelligence, the highest possible security ratings. This would make Booz Allen one of the largest employers of cleared personnel in the United States.

Among the many former spooks on Booz Allen’s payroll are R. James Woolsey, the well-known neoconservative and former CIA director; Joan Dempsey, the former chief of staff to CIA Director George Tenet and recently executive director of the President’s Foreign Intelligence Advisory Board; and Keith Hall, the former director of the National Reconnaissance Office, the super-secret organization that oversees the nation’s spy satellites.

For his part, McConnell was head of the National Security Agency from 1992 to 1996. Prior to that he was the chief intelligence officer for Colin Powell at the Joint Chiefs of Staff during the first Gulf War, where he worked closely with Dick Cheney. On Friday, McConnell told the New York Times that his work at Booz Allen had allowed him to “stay focused on national security and intelligence communities as a strategist and as a consultant. Therefore, in many respects, I never left.” That is an understatement. As a senior vice president at Booz Allen, McConnell is in charge of the firm’s assignments in military intelligence and information operations for the Department of Defense. In that work, his official biography states, McConnell has provided intelligence support to “the US Unified Combatant Commanders, the Director of National Intelligence Agencies, and the Military Service Intelligence Directors.”

And in a relationship that has been completely missed in media coverage of his appointment, McConnell is the chairman of the Intelligence and National Security Alliance, the primary business association of NSA and CIA contractors. As INSA chairman, I’ve been told, McConnell is presiding over an initiative to enhance ties between the intelligence agencies and their contractors and domestic law enforcement agencies.

McConnell has said little publicly about what he thinks of the administration he will be serving or of that administration’s policies. In an off-the-record address to an intelligence conference last year, however, McConnell did say that on the issue of domestic spying, he might be “a little more liberal” than the administration. “Any bureaucracy — NSA, CIA, FBI, you name it — can do evil,” he concluded. “My view is, you have to have oversight.”

McConnell is certainly right on that point. Many intelligence analysts believe that congressional oversight during the Bush administration has been virtually nonexistent. Despite the administration’s flagrant abuse of U.S. laws concerning privacy and NSA wiretaps of U.S. citizens, the Republican majority did very little to investigate its abuses.

Now there is a new Congress that actually believes in oversight. One intelligence program that should merit its attention, and that members might want to ask McConnell about during his confirmation hearings, is Total Information Awareness, a data-mining project run by former National Security Advisor John Poindexter that was outlawed by Congress in 2003. Between 1997 and 2002, according to a recent report by the American Civil Liberties Union, Booz Allen was awarded more than $63 million worth of TIA contracts. Last Friday, Newsweek reported that McConnell was a “key figure” in making Booz Allen, along with SAIC, the prime contractors on the project.

Shortly after the 9/11 terrorist attacks, Booz Allen was hired by the CIA to audit the agency’s monitoring of trillions of dollars in international financial transactions moving through a European cooperative called SWIFT. The company’s impartiality to monitor this program was questioned last year by a European Union panel, which recommended independent supervision and declared that “we don’t see such independent supervision under the current situation, and this must be established.”

The ACLU and Privacy International, an organization that monitors government intrusion, jointly issued a scathing report on the issue last September. “Though Booz Allen’s role is to verify that the access to the SWIFT data is not abused, its relationship with the US government calls its objectivity significantly into question,” the two organizations said.

Booz Allen rejected the charge. “What clients are buying from us is independence and objectivity,” spokeswoman Marie Lerch told the New York Times. But the company’s close ties to the intelligence community through its employment of former high-ranking officials calls that objectivity into question.

Another key area that Congress should examine is Booz Allen’s relationship with the NSA. Largely through McConnell, Booz Allen has very close ties to the NSA, once considered so secret its initials were said to stand for “No Such Agency.”

Booz Allen served as the NSA’s chief advisor on one of its most significant outsourcing projects. Called Groundbreaker, this huge project was launched shortly before the 9/11 attacks to overhaul the NSA’s internal I.T. systems. Booz Allen’s work on this project was outlined in a Booz Allen magazine piece on “Government Clients.” Working with the NSA, the article states, Booz Allen “helped create a new model of managed competition that outsourced key pieces of the agency’s IT infrastructure services.” Its work on Groundbreaker “included source selection support and evaluating vendor proposals.”

Last year, however, the Baltimore Sun investigated the project and concluded it was a failure. Over the course of the project, Groundbreaker’s $2 billion price tag had doubled, and the problems with the system, according to insiders who spoke to the Sun, were legion. “Some analysts and managers have said their productivity is half of what it used to be because the new system requires them to perform many more steps to accomplish what a few keystrokes used to,” the paper reported. Another NSA program that Booz Allen was involved in, Trailblazer, which was designed to overhaul the NSA’s signals intelligence system, is widely considered an even worse failure.

Booz Allen’s involvement with both projects would have directly involved the company in the NSA’s surveillance of U.S. domestic communications under what President Bush calls the “Terrorist Surveillance Program.” Although Bush claims that the NSA program is so narrow that the agency is only listening to calls where an al-Qaida operative is at the other end, longtime analysts of the NSA believe that the program is much bigger than it has been portrayed. “I think they’re listening to everybody,” says John Pike of GlobalSecurity.org, a highly respected defense research organization.

When the Groundbreaker and Trailblazer problems came to light, the Senate suspended the NSA’s independent acquisition authority. In July 2006, the oversight subcommittee of the House intelligence committee issued a blistering critique of the Pentagon’s management of the NSA and other intelligence programs. “Many of the major acquisition programs at the National Reconnaissance Office, the National Security Agency and the National Geospatial-Intelligence Agency have cost taxpayers billions of dollars in cost overruns and schedule delays,” the bipartisan report concluded. Booz Allen was deeply involved in all three, and as head of the firm’s defense intelligence programs, McConnell would have had direct participation.

Contracting has now become so ubiquitous in intelligence that the DNI itself is complaining. “Increasingly, the IC [intelligence community] finds itself in competition with its contractors for our own employees,” the DNI wrote in an unclassified report on personnel policies released last June. “[T]hose same contractors recruit our own employees, already cleared and trained at government expense, and then ‘lease’ them back to us at considerably greater expense.”

Concomitant with this report, the DNI launched its first study of intelligence contracting. The results, however, won’t be in until the end of this fiscal year. By then, McConnell will probably be firmly ensconced as the director of DNI. Getting a grip on these problems is too much to ask of a contractor who was himself deeply involved in them.

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