The Iraq war is many things to different people. It is called a strategic blunder and a monstrous injustice and sometimes even a patriotic mission, much to the chagrin of rational human beings. For many big companies, however, the war is something far different: a lucrative cash-cow. The years-long, ongoing military effort has resurrected fears of the so-called “military-industrial complex.” Media pundits are outraged at private companies scooping up huge, no-questions-asked contracts to manufacture weapons, rebuild infrastructure, or anything else the government deems necessary to win (or plant its flag in Iraq). No matter what your stance on the war, it pays to know where your tax dollars are being spent.
Following is a detailed rundown of the 25 companies squeezing the most profit from this controversial conflict.
The first name that comes to everyone’s mind here is Halliburton. According to MSN Money, Halliburton’s KBR, Inc. division bilked government agencies to the tune of $17.2 billion in Iraq war-related revenue from 2003-2006 alone. This is estimated to comprise a whopping one-fifth of KBR’s total revenue for the 2006 fiscal year. The massive payoff is said to have financed the construction and maintenance of military bases, oil field repairs, and various infrastructure rebuilding projects across the war-torn nation. This is just the latest in a long string of military/KBR wartime partnerships, thanks in no small part to Dick Cheney’s former role with the parent company.
2. Veritas Capital Fund/DynCorp
At first blush, a private equity fund (and not, say, Exxon-Mobil) being the number 2 profiteer in the Iraq war might sound strange. However, the cleverly run fund has raked in $1.44 billion through its DynCorp subsidiary. The primary service DynCorp has provided to the war efforts is the training of new Iraqi police forces. Often described as a ‘state within a state‘, the sizable company is headed by Dwight M. Williams, former Chief Security Officer of the upstart U.S. Department of Homeland Security. With this and other close ties to defense agencies, Veritas Capital Fund and DynCorp are well-positioned to capitalize on Iraq even more.
3. Washington Group International
The Washington Group International has parlayed its expertise the repair, restore, and maintenance of high-output oil fields into $931 million in Iraq-related revenue from 2003-2006. The publicly traded 25,000 employee company’s other specialties include the building and maintenance of schools, military bases, and municipal utilities, such as watering systems. Some have complained that Washington Group’s hefty government payoffs have served primarily to raise its trading price on the New York Stock Exchange. One thing is for sure - with oil prices continuing to rise, there will be no shortage of demand for the oil protection services Washington Group International brings to bear.
4. Environmental Chemical
All war zones eventually becomes cluttered with spent ammunition and broken/abandoned weapons, creating a lucrative niche for any company willing to clean it all up. In Iraq, this duty has fallen into the hands of Environmental Chemical. The privately held Burlingame, California company has stockpiled $878 million by the end of fiscal 2006 for munitions disposal, calling upon its “decade of experience planning and conducting UXO removal, investigation, and certification activities.” The company has close ties to several defense agencies and is staffed by graduates of the U.S. Navy’s Explosive Ordinance Schools, as well as the U.S. Army’s Chemical Schools at Anniston.
Aegis has done the United Kingdom proud after reeling in a contract to coordinate all of Iraq’s private security operations. The Pentagon contract is good for $430 million (incredibly lucrative by any standard) but it has landed Aegis in some hot public relations water. The company’s decision to contribute to Iraq war efforts has lead to a rejected membership application from the International Peace Operations Association. According to The Independent, the influential trade organization does not consider Aegis worthy of inclusion in the “peace and stability industry.” It remains to be seen whether Aegis will continue to be ostracized for participating in the training of Iraqi security forces.
6. International American Products
Even with all of the blinding innovation and trailblazing advances in military technology, none of it would be very useful without electricity. Running electrical wiring in hostile war zones is dicey business, but International American Products has stuck their neck out and collected a cool $759 million in just 3 years for its efforts. While avoiding enemy fire, their work has become increasingly dangerous - and yet, critically necessary - as Coalition forces struggle rebuild cities, put down warring forces, and stabilize the chaotic nation. Schools, oils wells, and other public infrastructure have relied on IAP for the electricity needed to operate. With Iraq slowly beginning to stabilize, International American Products is holding out hope that its job will eventually become less treacherous.
London-based Erinys has so far scored $136 million for its effort in securing Iraq’s precious oil reserves. Riding the coattails of its considerable mining, petroleum, and construction expertise, the company has already made considerable headway toward this critically important goal. In the space of just 16 months, Erinys successfully trained, equipped, and mobilized an all-Iraqi guard force of nearly 20,000 to protect the nation’s oil pipeline from terrorist attack or sabotage. With crude oil prices skyrocketing and no end in sight, Erinys looks to have its hands full for years to come.
Fluor scored a monster $1.1 billion contract in 2004 to build, service, and manage water/sewage systems in Iraq. The deal is actually a joint venture between Fluor (a 44,800 employee company based on Aliso Viejo) and London’s AMEC, PLC and actually encompasses two separate contracts. The first - worth $600 million - obligates Fluor to build a water distribution infrastructure and cleaning system for Iraq’s major cities. A second $500 million deal will have the lucrative joint venture performing similar tasks in other, less hostile regions of the country.
Perini (controlled by financier Richard Blum) is one of the more controversial companies to have scored big-time Iraq war money. That’s because Blum’s wife, Senator Dianne Feinstein, appears to have used her seat on the Military Construction Appropriations subcomittee to steer the $650 million environmental cleanup deal in his favor. This has lead to outrage and cries for conflict of interest investigations among those in the media, as well as Feinstein’s peers in Congress. Feinstein has also neglected to comment on this potential conflict of interest. This has lead to what Metroactive.com calls an “omission [that] has called her ethical standards into question.”
10. URS Corporation
Another widely disparaged, Blum-controlled company that has profited from Iraq is URS Corporation. Long known as one of the nation’s major defense contractors, San Francisco-based URS has collected $792 million in environmental cleanup fees in Iraq war zones. As with Perini, both Blum and Feinstein have come under intense scrutiny to answer questions about the apparent conflict of interest inherent in Feinstein helping to secure such an exorbitant government contract for her investment banker husband. Both Blum and Feinstein have refused to produce copies of the ethics commitee’s rulings on Perini and URS, leading to considerable suspicion.
Few Iraq contractors have come under fire as much as Parsons, who reportedly mismanaged the construction a police academy so poorly that human waste dripped from its ceilings. Far from being an isolated incident, reports from federal government auditors revealed lackluster work on 13 of the 14 Iraq projects entrusted to Parsons. Unfortunately, that hasn’t stopped the Pasedena-based firm from making off with $540 million in U.S. government funds for the poorly executed reconstruction projects at Iraq’s healthcare centers and fire stations. For obvious resaons, Parsons’ work in Iraq has generally been considered an embarassment.
“This is the lens through which Iraqis will now see America,” lamented Rep. Henry Waxman (D-Calif.) said. “Incompetence. Profiteering. Arrogance. And human waste oozing out of ceilings as a result.”
12. First Kuwaiti General Trading & Contracting
First Kuwaiti General Trading & Contracting is another example of the apparent cronyism that has gone into the process of awarding Iraq war contracts. It now seems that the company has succeeded on the strength of its ties to Bush Administration officials than its business merits. Rival companies have been extremely vocal in their displeasure at First Kuwaiti being awarded $500 million to build a United States Embassy in Baghdad.
“First Kuwaiti was not the lowest bidder”, complained Framco senior vice-president Gilles Kacha.
13. Armor Holdings
Armor Holdings (now a subsidiary of publicly traded BAE Systems) is one company whose opinion of the Iraq war can’t be all that negative. Since combat commenced in 2001, the company’s revenue has skyrocketed by a mind-blowing 2,247%, up to $634 million. Armor Holdings’ specialty is providing state-of-the-art armor for military vehicles and important personell as they traverse dangerous Iraqi war zones. The civil war between opposing Sunni and Shia and general unrest throughout the country have greatly increased the demand for the company’s products.
14. L3 Communications
L3 Communications has carved out a neat $359 million slice of Iraq’s security screening needs as of fiscal 2006. The New York-based company has been charged with overseeing the screening and training of law enforcement personell for the growing all-Iraqi security force, as well as replacing equipment in the field. Linguistics is another one of L3’s specialties, one that is heavily relied upon to interface with native speaking Sunni and Shia forces.
L3 Communications has also purchased Titan, a corporate intelligence company with a $1 billion Iraq contract. Prior to being acquired by L3, Titan plead guilty to international bribery charges (a felony) and paid a record-breaking $28.5 million under the Foreign Corrupt Practices Act.
15. AM General
AM General (a subsidiary of Renco) is another company that has seen its revenue sail toward the heavens since the beginning of combat in Iraq. The renowned maker of extra-wide all terrain vehicles (shown below) has seen its Pentagon revenues soar by 92%, a phenomenal leap for any business. This placed Renco sixth in a 2005 analysis of the fastest growing contractors by dollar amount, and sixth in an analysis of fastest growing contractors by percentage. Growing hostilities prior to the Bush Administration’s “surge” strategy in 2007 helped fuel the sudden demand for AM’s heavy duty combat vehicles.
16. HSBC Bank
Already the third largest financial institution on the planet, HSBC has seen its fortunes brighten beyond its wildest dreams since the start of combat. It has purchased a controlling stake (70%) of the newly created Iraqi national bank, Dar es Salaam Investment Bank, which, though small, has already amassed assets of $91 million. HSBC’s chief executive of Middle East operations, David Hodgkinson, was quoted as saying HSBC intends to “develop the bank’s services by investing in computerised payment systems and cash machines.’
HSBC’s stake in the fledgling Iraqi bank could turn out to be a significant strategic foothold in the developing country. According to a BBC report, the bank already has 14 operating branches across Iraq and a modest but growing staff of 450. It is also the first private bank in Iraq since the toppling of Saddam Hussein, as the late dictator did not allow them during his rule.
Cummins has staked its claim to $45 million in Iraq war-related revenue with its robust line of diesel engines and power stations. According to a press release, United Kingdom-based Cummins”signed a distribution agreement with HMBS in Iraq for all Cummins brand products and equipment.” Antonio Leitao, Cummins’ General Manager of the commercial power generation business in Europe, spoke approvingly of the deal.
“Cummins Power Generation is proud to be the first generator set manufacturer to establish a distributorship in Iraq that covers the whole country.”
Cummins and power-generating companies like them will be instrumental over the coming years, as the world learns whether Iraq truly has a future as a rebuilt, independent nation.
MerchantBridge got its “in” to the growing money pot of Iraq’s fledgling financial sector by casting a wide net. The investment banking group has ambitiously targeted marketshare in Iraq’s developing construction, telecommunications, financial services, real estate, hotels, and information technology industries, all of which have been made easier by being the “lead advisor” to Iraq’s Ministry of Industry. The inside partnership has paved the way for MerchantBridge’s factory lease program, the opening of Mansour Bank, and an overall capitalization of $61 million.
Furthermore, 90% of MerchantBridge’s initial operating capital in Iraq has been supplied by Iraqi investors.
19. GlobalRisk Strategies
Risk management is a lucrative business the world over, and the stakes are nowhere higher than the high-pressure war zones of a foreign nation. GlobalRisk Strategies has capitalized on the bewildering uncertainty to the tune of $24.5 million, which it has primarily earned by advising U.S. and Coalition forces on the risks of various counter-terrorism strategies. Some of the more noteable risks the company’s 2,000 employees have managed include distributing fresh currency to the locals and guarding the heavily fortified Baghdad airport during 2004.
Alternatively, GlobalRisk has also assisted with reconstruction and delivering humanitarian aid in the banking, aviation, oil and infrastructure sectors throughout Iraq.
ControlRisks is another risk management company that has successfully hopped on the Iraq bandwagon. The UK-based firm has extracted roughly $37 million in war-related profits by providing discreet armed security and logistics support to troops on the ground and in the air. With a presence of 250 employees in Iraq, ControlRisks has provided security for the disastrous Parsons Usaid buildings (prior to the revelation of the embarassing shoddy work scandal) and has also been tasked with protecting Iraq’s active duty UK forces. While Iraq has recently begun to cool down in terms of insurgent violence and infighting, the region should provide opportunities for companies like ControlRisks to profit for years or even decades to come.
CACI was called upon by the U.S. government to provide 36 interrogators to Iraq, 10 of which were assigned to Abu Grhraib. While all the details have not yet come to light, it looks like CACI profited from Iraq in the worst possible way. One website notes that a leaked Army investigation implicated CACI employee Stephen Stefanowicz in the abuse of prisoners.” Furthermore, the allegations have led the Center for Constitutional Rights to agitate for trying CACI and its affiliates in U.S. courts.
Susan Burke, an attorney working on the case on CCR’s behalf, was quoted as saying “We believe that CACI and Titan engaged in a conspiracy to torture and abuse detainees, and did so to make more money.”
Bechtel is yet another Iraq contractor who seems to have benefited from close ties to the Bush Admistration. How else would a company recommended by the man who oversaw the Big Dig disaster possibly be awarded a $2.4 billion, no-bid reconstruction contract for Iraq’s infrastructure? Journalists and competitors are scratching their heads at why the Bush Administration trusted the choice of USAID chief Andrew Natsios after his woefully ineffective tenure at the head of the Massachussetts Turnpike Authority. While in that capacity, the Big Dig’s operating costs ballooned from an initial $2.6 billion to $14.6 billion, and the job still took years to complete!
In line with Natsios’ track record of recommendations, this one turned out to be a flop. Bechtel proceeded to lose its contract for the Basra Children’s Hospital Project after falling a year and a half behind schedule and $70-$90 million over budget.
23. Custer Battles
Custer Battles has the dubious distinction of being the first Iraq war contractor to be found guilty of fraud. In March 2006, a jury ordered Custer to pay damages in excess of $10 million for 37 counts of fraud, including what the judge called “false and fraudulently inflated invoices.” While Custer wriggled out of serious penalties on a technicality (the Coalition Provisional Authority is not part of the U.S. Government and therefore crimes against it cannot be tried under U.S. law), the whole ordeal has muddied the company’s reputation greatly, possibly beyond repair. It also seems to have opened the floodgates for similar cases of contractor fraud. As of fall 2006, a backlog of 70 fraud cases were pending against Iraq contractors doing all manner of work.
During the trial, a retired Army general testified that the inflated invoice scandal stood out to him as “probably the worst I’ve ever seen in my 30 years in the Army.”
24. Nour USA
Of all the companies on this list, Nour USA might be the only one who actually did not exist until the Iraq war got underway. Since its opportunistic opening, the company has recieved $400 million in Iraq-related contracts, including a gigantic $80 million deal to secure the nation’s oil pipelines. Some critics allege the contract was pushed through by Ahmed Chalabi (whom one website calls “Iraq’s No. 1 Opportunist.”) While Chalabi has denied this allegation, several other bidders on the pipeline contract point out how awfully strange it is for a company with no prior experience to be awarded such a large contract.
Of course, it probably didn’t hurt Nour to have William Cohen (former Defense Secretary under Bill Clinton) on board as a company consultant, but that’s another story.
25. General Dynamics
According to a Washington Post report in July of 2006, General Dynamics is one of the big-name defense contractors that has gotten the biggest monetary boost from the Iraq war. The key to General’s war profiteering strategy has been a broad focus on virtually everything the government needs to wage war, including tank shells, bullets for small arms, and even Stryker vehicles, which were first put to use during the initial 2003 invasion to remove Saddam.
All of this has lifted the company to tripled profitability since 9/11, and critics are speculating that ties to top Defense Agencies helped grease the wheels. According to the Project on Government Oversight, Genearl Dynamics formally announced that it was hiring a former top aide to the Army Chief of Staff in November 1999 - conveniently, just a month after the aid announced a grand new vision to introduce wheeled, light armored vehicles like the Stryker into regular use.