Corporate Watch: 9 June 2004
CONTROVERSIAL COMMANDO WINS IRAQ CONTRACT
Mercenary Lieutenant-Colonel Tim Spicer, whose Sandline work in Papua New Guinea turned into a public relations and military fiasco, has now landed a plum defence contract in Iraq with another company.
By PRATAP CHATTERJEE
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Occupation authorities in Iraq have awarded a $293 million contract effectively creating the world's largest private army to a company headed by Lieutenant Colonel Tim Spicer, a former officer with the SAS, an elite regiment of British commandos, who has been investigated for illegally smuggling arms and planning military offensives to support mining, oil, and gas operations around the world.
On May 25, the Army Transportation command awarded Spicer's company, Aegis Defense Services, the contract to coordinate all the security for Iraqi reconstruction projects.
"I am pleased to confirm that we've been awarded a contract to assist the Project Management Office (PMO) in Iraq by the United States Department of Defense," said Spicer, who started Aegis just over a year ago on Picadilly in London, only a short walk from Buckingham Palace. "The contract involves coordination of security support for reconstruction contractors and for the protection of PMO personnel."
Under the "cost-plus" contract, the military will cover all of the company's expenses, plus a pre-determined percentage of whatever they spend, which critics say is a license to over-bill. The company has also been asked to provide 75 close protection teams--comprised of eight men each--for the high-level staff of companies that are running the oil and gas fields, electricity, and water services in Iraq.
Major Gary Tallman, a spokesperson for the U.S. Army, explained that the contract was to create an "integrator" or coordination hub for the security operation for every single reconstruction contractor and sub-contractor. "Their job is to disseminate information and provide guidance and coordination throughout the four regions of Iraq."
In Iraq, there are currently several dozen groups that provide private security to both the military and the private sector, with more than 20,000 employees altogether. The companies include Erinys, a South African business, that has more than 15,000 local employees charged with guarding the oil pipelines; Control Risks Group, a British company that provides security to Bechtel and Halliburton; and North Carolina-based Blackwater Consulting, which provides everything from back-up helicopters to bodyguards for Paul Bremer, the American ambassador in charge of the occupation.
Private security companies have been asking the military for help in coordinating work for several months. In April, following the killing of several private security contractors in Baghdad, Falluja, and Kut, the companies started to pool information on an ad-hoc basis. At the time, Nick Edmunds, Iraq coordinator for the Hart Group, which provides security to media and engineering groups in Iraq, told The Washington Post, "There is absolutely a growing cooperation along unofficial lines. We try to give each other warnings about things we hear are about to happen."
But this newest military contract in Iraq is different. Aegis has no history in this business, Spicer has a debatable track record, and there's speculation that the contract was given for political reasons.
Wanted: A Few Good Men for Very Good Salaries
Rumors of lucrative new jobs with Spicer have been circulating for a couple of months. In late March, Britain's Lieutenant Colonel Alan Browne, who is in charge of finding jobs for members of the Royal Signals regiment in Blandford Camp, Dorset, posted ads offering Aegis positions in Iraq for qualified radio technicians at the salary of $110,000 a year, three times higher than most other jobs offered at the regimental resettlement office. The contract also provides a generous 100 days vacation per year.
"Our men can repair anything from a radio to a satellite phone, but the pay here in the UK is just 25,000 pounds ($46,000)," said Browne. "I posted the job to the guys and now it's up to them to go get the jobs."
Also in late March jobs were posted at the Adjutant General's Corps in Worthy Down, Winchester, for clerks to maintain "clerical and administrative support for a headquarters-type environment similar to a military brigade/divisional headquarters with many of the same divisions of responsibility." Salaries offered for candidates with senior non-commissioned officer qualifications were $129,000, and salaries for junior non-commissioned officer were $110,000.
Tallman says that six companies bid for the coordination contract. According to other CorpWatch sources, three of the bidders were Dyncorp, a Virginia based company that is in charge of training the Iraqi police; Military Professionals Resources Incorporated (MPRI), which was working on training the Iraqi army; and a joint venture between Control Risks Group, Erinys, and Olive Security, three of the largest providers of private security in Iraq.
Industry insiders speculate that Aegis won the contract because of growing anger in Britain that UK-based companies have not been awarded large contracts in the reconstruction of Iraq, despite the leading role that the Tony Blair's government has played in the "coalition of the willing." The only other British bid for the contract, the Control Risks joint venture, was disqualified because one of the partners was under investigation for undisclosed reasons at the time the bids were evaluated.
Because of the politics in the decision, some groups are questioning the contracting process. "It's not evident why they they would run a rent-a-cop contract through an Army transportation division in Virginia except that maybe the staff there are more experienced and can write a professional contract that can withstand a bid protest better than the Heritage foundation interns that run contracting in Baghdad," said John Pike, a spokesman for the military watchdog group Globalsecurity.org. For the first 12 months, all contracts in Iraq were evaluated by a group of six men and women in their 20s who were hired on the basis of job resumes they posted at the right-wing foundation's website.
Tallman defended the Army system. "It is inherently decentralized for efficiency and to make sure the process is impartial," he said. "The Defense Contract Audit Agency still retains oversight but this way no one office can control all the contracts. Also, we can issue contracts in fairly short order by taking advantage of the best placed office to do the job."
Questionable Track Record
Analysts like Peter Singer, author of Corporate Warriors: The Rise of the Privatzied Military Industry and a fellow at the Brookings Institution, a liberal think tank in Washington, D.C., say that the news took them by surprise. " It's like a blast from the past, like I took a leap back into the time-machine to late '90s," said Singer. "To be honest, though, I am doubtful that the folks awarding the contract had any sense of Spicer's spicier history."
But not everyone agrees with this assessment of Spicer's work. In Sierra Leone, Spicer's efforts have been heralded by the private military industry as the "work of angels." In 1998, Sandline was contracted to sell 30 tons of arms to the forces of Ahmad Tejan Kabbah, the former leader of Sierra Leone, in contravention of a UN arms embargo but in apparent cooperation with Craig Murray, a junior staffer at the British Foreign Office.
Doug Brooks, the president of International Peace Operations Association (IPOA), a non-profit advocacy group for private military companies, says Sandline's assistance in Sierra Leone saved the lives of thousands of civilians. "Sandline was remarkably effective," Brooks said. "Their goal of restoring the democratically elected government was achieved. They maintained a low profile but played a critical role in the success."
Nonetheless, Sandline's Sierra Leone project provoked a furor and multiple government investigations in Britain when it was discovered that the contract violated the United Nations embargo on providing arms to either side in the military conflict. Spicer maintains that he was unaware that the scheme was illegal and the government eventually agreed to draw up new rules on arms trafficking and the conduct of private military companies in Britain.
Spicer's work in Papua New Guinea, another public relations fiasco, was not even a military success. The eastern half of the South Pacific island of New Guinea, Papua New Guinea (PNG), was a British and German colony and then an Australian protectorate until 1975. That year, both PNG and the outlying island of Bougainville, some 500 miles northeast of the capital, Port Moresby, declared independence. PNG quickly took over Bougainville, where an Australian company, CRA (now part of Rio Tinto, the world's largest mining company), had begun to mine copper in 1972.
In 1989, local landowners shut down the Bougainville copper mine to protest the environmental destruction it caused and to demand independence. In February 1997, the PNG government, which had received about 44 percent of its revenue from the mine, paid Sandline International $36 million to rout the Bougainvilleans.
The very next month, PNG Prime Minister Julius Chan sacked the military commander, Brigadier General Jerry Singarok, for denouncing the contract with Sandline and arguing that the money would be better spent on his own troops, who were desperately underpaid and ill-equipped. Riots ensued after soldiers loyal to Singarok led protests that included at least 2,000 civilians. The soldiers arrested and deported a number of the Sandline contractors.
Less than a month later, dressed in crumpled jeans, Spicer was led into a Papua New Guinea court. His suitcase, bulging with $400,000 in cash, was produced as evidence of his contract with the disgraced government. At the hearings, Spicer revealed that one aspect of the project (code-named "Operation Oyster") was to wage a psychological campaign against the Bougainvilleans with the help of Russian style attack helicopters (see related article on Spicer for more on Sandline).
Spicer's lawyers worked overtime to get the charges reduced and eventually dismissed but Chan was forced to resign from his job.
In 2000, Spicer left Sandline's offices in Chelsea to set up another company, Strategic Consulting International (SCI) in Knightsbridge, where he offered advice to governments and shipping companies on the threat from international terrorism. He eventually changed the name of this company to Trident Maritime and moved offices once again, to his current location in Picadilly.
At first things didn't go too well. Spicer had Sara Pearson, his publicist, register SCI at her office, which got them into hot water when the media discovered that the shareholdings and directorships were incorrectly registered and that no accounts had been filed. "It was a shock to discover we hadn't properly organized [our company records]," Pearson later told Duncan Campbell, a British investigative journalist.
Likewise, Trident's original business plan was drawn up for Spicer by a group of students at the University of Maryland, who were named as vice-presidents of the company, in exchange for an agreement to allow them to submit the plan a college competition, which they subsequently lost.
After these initial management problems, Spicer slowly created a more respectable image. He won a contract from insurers Lloyds of London to engage in a security audit of the Sri Lankan defence system, after the Tamil Tiger rebel group practically destroyed the international airport in July 2001. After giving the government a clean bill of health, Spicer started to get more work in the shipping industry.
In 2002, Spicer was approached by Per Christiansen, a Norwegian shipping expert who was director of Hudson Maritime, a 16-year-old company that did emergency response to crises like the Exxon Valdez oil spill. New Jersey-based Hudson had just won a contract from the Department of Homeland Security to review security at ports around the country.
"Some people in the insurance business in London gave me Spicer's name," recalled Christiansen. "I knew he had a rather colorful reputation but he knows the sharp end of security, so we set up a joint venture together."
Spicer brought with him an old friend who had fought beside him in the Falklands War, Mark Bullough, who had spent the past decade in India, Hong Kong, Malaysia, and Singapore, working for Jardine Fleming, a Hong Kong-based investment bank.
"I can recall Mark and me liberating a bottle of champagne and drinking it by the sea wall and then getting into a slight confrontation with a staff officer," Spicer wrote in his autobiography, recalling the day after the British routed the Argentine army in the Falklands in 1982.
After the Falklands War, Bullough had left the British Army to work in banking. He ran an office for Jardine Fleming in Bombay for five years, where the government had just opened up the financial markets on Dalal Street (the Indian equivalent of Wall Street) to foreign banks. Even in the financial business, Bullough maintained his reputation for being unorthodox. Traders in Bombay were astonished to see the head of this distinguished international bank arrive for work on a motorbike.
Bullough brought with him another well-respected researcher from the banking business, Dominic Armstrong, who had worked for him at Jardine. "It's fantastic energy working with Spicer--he's a tremendous doer," Armstrong said. "Of course, he does have his reputation, but frankly I find all that irritating. We are a very commercial and diverse enterprise today working in many different sectors from the food business to marine security."
With the Hudson Trident venture off to a flying start, Spicer and Bullough established Aegis, a more secretive business, based in the same building with the same phone numbers, to provide private military support services. A fourth man, Jeffrey Day, who bankrolled the operation, joined them as chief financial officer.
To beef up the security side of matters, the four Aegis partners hired Major General Jeremy Phipps, another ex-SAS man who was once well known for leading a daring rescue of hostages at the Iranian embassy in London in 1980. He was later disgraced for his failure to stamp out corruption at London's prestigious Jockey Club, to which many members of the Royal family belong and by which Phipps was employed (for more on Phipps, see "From Embassy Hero to Racing Disgrace" box).
To counter any negative publicity, they brought in a high-level public relations consultant Sara Pearson, who had helped Spicer on both the Papua New Guinea and Sierra Leone scandals. Pearson has her own press outfit called the SPA Way, which works for up-market British retail and food stores. Her other clients include dental clinics, fresh breath companies and hair stylists.
Previously, Pearson had hired a ghost writer to help remake Spicer's image for the new millennium after the two disastrous Sandline events. Spicer's 1999 autobiography, An Unorthodox Soldier, presented him as the "modern, legitimate version of the new mercenaries."
Today, Singer says that the new contract raises many questions about what kind of background check and vetting of firms and contracted employees are occurring at the Pentagon. "It's not only good policy, but a basic rule of good business, but not clear that it is always happening with Iraq contracting," he said.
Pratap Chatterjee is program director/managing editor of CorpWatch.