Blackwatergate: Bush Administration Lets Corporate Criminals Off Again

By Charlie Cray, Huffington Post. Posted October 4, 2007.

"More than in most criminal law areas, prosecution of corporate criminals has a significant element of general deterrence," the Department of Justice's new strategic plan for 2007-2012 suggests.

Yet everyday we see more evidence that the Bush Administration's Department of Justice has no interest in deterring the ongoing epidemic of corporate crime.

During yesterday's House Oversight and Government Reform Committee hearing on Blackwater, for instance, we heard about how a drunk Blackwater employee killed one of Iraqi Vice President Abdul-Mahdi's bodyguards in the Green Zone on December 24.

Not only was the unnamed Blackwater employee almost immediately flown out of Iraq to avoid prosecution under the Iraqi legal system, but ten months after the case was referred to the Department of Justice, he apparently has yet to face any charges. In fact, not one Blackwater or other private military contract employee has been charged for crimes committed in Iraq.

It's obvious that problems like that are the inevitable result of the use of private contractors. And rather than try to regulate them (as Rep. Price has proposed in his bill -- an approach that I previously endorsed but now do not because, as Jeremy Scahill has pointed out, the law would be virtually unenforceable), we need to push for a reversal of the privatization of war. More on that soon.

But what escapes this discussion so far, is how the Blackwater case fits the broader pattern of the Bush Administration's almost total failure to enforce the law against corporations.

Take the many False Claims Act cases filed by whistleblowers against the U.S. companies contracted in Iraq. As attorney Alan Grayson has testified numerous times before Congress, "the Administration has not actively litigated one single case of fraud, or even breach of contract, against any contractor in Iraq. Iraqis have looked on in disbelief, and then in anger, as one botched Iraq reconstruction job after another has been paid in full, and they see that this Administration won't even protect our own troops from cheating and overcharging. Many Americans feel the same anger."

Indeed, David Rose reports in the November issue of Vanity Fair that whistleblowers have filed dozens upon dozens of lawsuits, trying to prod the Bush Administration to fight contractor fraud. The response: The administration has obtained court order after court order barring the filers and their attorneys from even discussing the cases - i.e. to keep the American people from knowing how bad the cronyism and corruption really is.

Grayson, who has handled many of the cases says "the Defense Department itself has been vigorous in its efforts to protect its troops from war profiteering. … The problem has been that the Bush Administration Justice Department won't do anything to recover the stolen money, much less punish the wrongdoers."

Grayson cited the role of Peter Keisler, Assistant Attorney General of the Civil Division, who not only stifled the cases, but was also responsible for reducing settlement payments with the tobacco industry from $130 billion to $10 billion.

The point is that when it comes to corporate crime, the Department of Justice has become a major sinkhole, where cases of alleged fraud and corruption are routinely referred, and where they often disappear or are "settled" for pennies on the dollar, ending any chance of bringing the war profiteers to justice. (After four years, the Bush Administration recovered just $14 million through settlements of whistleblower cases - which will pay for about half an hour's cost of the war).

The problem goes well beyond the war profiteers. Other corporate crime cases that have been tossed into the prosecutorial blackhole include:

• The Department still has not cleared Halliburton of any charges resulting from a grand jury investigation into the company's decision to conduct business in Iran in violation of Treasury Department regulations.
• The Department has failed to complete an investigation into one of the biggest cases of corporate bribery in history - the Halliburton Nigeria case - which extends back to Dick Cheney's tenure as CEO of the criminogenic company.
• According to the Corporate Crime Reporter, the House Judiciary Committee has begun to ask why the Justice Department abruptly dropped a federal criminal probe into allegations of insurance fraud at Berkshire Hathaway's General Reinsurance (Gen Re) unit.

Meanwhile, the Justice Department is rolling over as leading business groups push legislation that would weaken key enforcement tools against corporate crime. A campaign orchestrated by the Chamber of Commerce, the Business Roundtable, the Association of Corporate Counsel and their allies at the ABA and ACLU seeks to pass the so-called "Attorney-Client Privilege Protection Act," which would limit the government's power to pursue corporate fraud by prohibiting federal agencies (including the Department of Justice and the SEC) from demanding that companies cut off legal support for employees under investigation - a policy established by the Justice Department's guidelines for corporate cases, a policy that was key to the prosecution of prominent corporate criminals such as WorldCom's Bernie Ebbers. The Department of Justice has gone on record in opposition to this policy, but has done little to stop the legislation, which members of both parties are supporting.

See more stories tagged with: blackwater, doj, bush

Charlie Cray is director of the Center for Corporate Policy in Washington, DC.

Liked this story? Get top stories in your inbox each week from AlterNet! Sign up now »