Crony capitalism goes to war

Capitalism's crown jewel: The Iraq contract.

Published April 23, 2003 7:42PM (EDT)

Quick quiz: What's the most exclusive club in America? How about the Augusta National Golf Club, whose 300 members withstood the slings and arrows of Martha Burk with nary a scratch earlier this month? Or maybe it's the U.S. Senate, where a seat at one of the historic roll-top desks can go for as much as $60 million?

Nope, not even close. Our proud democracy's most select body is the tiny group of contenders invited to bid for capitalism's crown jewel: The Iraq contract.

Talk about cozy. Sneaking a peek through the blackout curtains the Bush administration has used to cloak the awarding of contracts to rebuild Iraq is like catching a glimpse of a very special incest episode of "ElimiDate": a bunch of muscular, cash-drunk, hand-picked corporate Lotharios vying for the affection of their governmental kissing cousins.

The relationship between those doling out these fantastically valuable deals and those receiving them is so intimate taxpayers should demand that the participants be checked for STDs before the first mega-buck check is left on the dresser. An orgy of unsafe corporate intercourse has been going on.

For full impact, this column should be a flow chart. Like the ones the FBI uses to show the inner workings of a Mafia crime family. But instead of illustrating the interrelationships of the "Sopranos" crew, this chart would lay out the connections that guaranteed that the big winners in the post-Saddam sweepstakes would be those two ultimate Washington insiders, Halliburton and Bechtel Group.

We all know about Halliburton and its former CEO in the very highest of secure and undisclosed places, Dick Cheney. But the Bechtel chart is really Byzantine -- starting with George Shultz, former Bechtel president, former Reagan administration secretary of state, and currently both a Bechtel board member and chairman of the Committee for the Liberation of Iraq.

Then there is Jack Sheehan, a senior V.P. at Bechtel and a member of the Pentagon's influential Defense Policy Board. And then we have chairman and CEO Riley Bechtel, who in February was appointed by Bush to the hoity-toity President's Export Council.

Of course, using access, influence, and positions of ostensible public service to make a buck or two -- or, say, 680 million of them -- off Iraq is nothing new to the fine folks at Bechtel. They offer their customers the most precious commodity of all: experience. Back in the 1980s, the company wanted to build a pipeline to carry oil from Iraq to the Jordanian port of Aqaba -- a project ardently supported by the Reagan administration, which included Shultz and a fellow Bechtel alumnus, Secretary of Defense Caspar Weinberger.

Backers of the Bechtel pipeline lined up a veritable who's who of former Reagan-Bush power players to push for the scheme, including former secretary of defense and CIA chief James Schlesinger, former National Security Advisor William Clark, former National Security Advisor Robert McFarlane, and former Attorney General Edwin Meese. I guess the thought being that all that political star power might help people forget Saddam's annoying little habit of gassing people.

And even though he wasn't on the Bechtel payroll, one of those working hardest to convince the Iraqis to hop into bed with the company was the macho man himself, Don "We Don't Need No Stinkin' Antiquities" Rumsfeld. While working as Reagan's special envoy to the Middle East in 1983, Rumsfeld met with Saddam personally and tried to convince him to sign on to Bechtel's pipeline pipe dream.

And Rummy isn't the only current administration official with a close encounter of the Bechtel kind on his C.V. Andrew Natsios, administrator of the U.S. Agency for International Development, the agency responsible for handing the lucrative Iraqi rebuilding contract to Bechtel, used to be in charge of overseeing Boston's "Big Dig," a massive highway project managed by Bechtel that went from a projected cost of $4.5 billion to an actual cost of $14 billion.

In a scathing letter sent to Natsios, the Massachusetts inspector general called Bechtel's handling of the Big Dig "an invitation to fraud, waste and abuse." Apparently, this amounted to a sterling recommendation in Natsios' eyes because, three years later, when the time came to draw up the very short list of companies invited to bid on $1.5 billion in Iraq contracts, he didn't hesitate to include the old gang at Bechtel. Hey, what's a little "fraud, waste and abuse" among chums?

In today's business-loving Washington, a propensity for playing fast and loose with taxpayer money clearly qualifies as "no harm, no foul." It certainly hasn't hurt Halliburton, which, despite being fined $2 million for routinely over-billing the Pentagon, continues to land hugely profitable government contracts -- like the $2.2 billion it scored to provide troop support in the Balkans. According to a GAO study, the company boosted its bottom line by charging the Army $85 for plywood that cost $14, and racked up profits by cleaning the same base offices up to four times a day.

It goes without saying that everyone involved in these cushy deals denies any impropriety. In fact, they are downright offended by the suggestion that these contracts -- bid on by a very select group of well-connected companies, and awarded based on secretive, unexplained criteria -- were anything but on the up-and-up.

"We won this work on our record, plain and simple," crowed Riley Bechtel in an e-mail to employees, making it sound as if their record of scheming and insider dealing was something to brag about. And a spokesman for the company assured reporters that Bechtel had not "attempted to bring any political pressure to bear." They didn't have to. When the fix is in, no one has to remind the referee to count to 10 when the chump takes his dive. It's all done with a wink and a nod. And sometimes not even that.

The perfect explanation for how this all works came from none other than Our Man in Baghdad, retired Gen. Jay Garner. When asked about his uncanny success as a businessman following his long military career -- especially how he helped Sy Technology boost its government contracts from $8.5 million in 1999 to $46.8 million in 2001, with much of that business coming from the Army division he used to run -- Garner replied: "I do not go to friends for business. I get business from my friends, but it's not solicited by me." Don Corleone couldn't have put it any better.

Here's another way of looking at the process: "The purpose behind the abuse," said Sen. Charles Grassley, R-Iowa, "was so that cronies of the president could win the spoils of political gain for themselves." Although Grassley's description suits the Bechtel pact to a T, he was actually talking about Bill and Hillary's Travelgate.

Let's hope Sen. Grassley -- or anyone on his side of the aisle -- can muster a similar fit of indignation over a case of crony capitalism that makes Travelgate seem like a tempest in a Teapot Dome.

By Arianna Huffington

Arianna Huffington is a nationally syndicated columnist, the co-host of the National Public Radio program "Left, Right, and Center," and the author of 10 books. Her latest is "Fanatics and Fools: The Game Plan for Winning Back America."

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