Charlie Cray

A Conservative Shadow Army Is Secretly Buying Off the Election for the GOP

The midterm elections are days away, but the winners are virtually certain: the corporations and conservative operatives like Karl Rove who have taken advantage of the Supreme Court’s Citizens United ruling to establish a well-heeled “shadow party” of networked trade associations and G.O.P. front groups.

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How the Palm Oil Trade Causes a Food Chain of Destruction

ADM used to be known as the country’s corporate welfare king, and its top executives drew headlines as they perp-walked to prison. That was then, when the company ran elaborate price-fixing schemes in the lysine and other global commodity markets. This is now:  For the second year in a row, ADM topped Fortune magazine’s list of most admired food production companies.

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Obama Is Tinkering with Changes to the Banking System While Big Finance Collapses

A congressional oversight panel appointed to monitor the Wall Street bailout (TARP) outlined a few of the problems so far in its second report (released yesterday) including:

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Putting a Check on Corporate Power

If we get seduced into seeing the vicissitudes of electoral politics as the only means to the ends of equity and justice we will end up with a situation much like 1992, when many progressives concluded that there was little need to put pressure on the Clinton/Gore administration because they believed it would represent their views.

Many would later feel betrayed. The reason is that the ultimate enemy of democracy -- corporate power -- extends far beyond the two major parties and the three major branches of government. The permanent government inside the beltway -- the 30,000 lobbyists that work for corporations and the dozens of corporate legal foundations, public relations firms, think tanks, trade associations and front groups -- will doubtless continue pushing their agenda forward regardless of who sits in the White House.

Therefore, it makes little sense to hang our hopes on progressive candidates unless we can also build the kind of institutional strength and momentum that will be necessary to stiffen their spines.

Whatever administration comes into office will also be saddled with two major handicaps before they can turn to a proactive plan -- the war in Iraq and a downward-spiraling economy. Nevertheless, progressives can start pushing now for a few measures which have the potential to begin building momentum for other parts of the progressive agenda.

Public Funding of Elections

Virtually all single issue groups have been disappointed by the Congressional obsession with limited, partisan goals. For example, the evidence is clear that we have less than ten years before catastrophic climate change is virtually irreversible. The power of Big Oil and King Coal to minimize any attempts to displace their domination over energy policy is fueled in large part by millions of dollars of campaign contributions.

In conjunction with Oil Change International, the Center for Corporate Policy recently looked at the key climate and energy votes of the past four years and found that members who voted against clean energy and measures to address the impending climate catastrophe took four times as much money from Big Oil as those who voted for clean energy policies and the public interest.(link:

There is little doubt that the same pattern exists with other legislation that has the potential to directly affect a powerful and entrenched industry.

Business has a right to argue its case, but it shouldn't be able to use its wealth to dominate the discourse. One of the ways we can restore some balance and seed the ground for a more expansive policymaking process is to liberate candidates from the pull of corporate money by pushing for public funding of elections.

There is much potential for progressives and conservatives to share some ground here. Regardless of where they stand along the political spectrum, members of Congress are tired of the fundraising rat race and spending their time dialing for dollars instead of debating the issues. Public funding of elections (aka "voter-owned elections") has succeeded at the state level in places like Maine and Arizona, where it has opened the political process to citizens not indentured to a political machine or group of corporate contributors. It could have as salutary or greater an effect on a Congress.

The good news is that after ten years of progress at the state level, bi-partisan legislation was introduced for the first time in 2007 in both the Senate and the House. Another Abramoff-like scandal could be all it takes to tip the balance and get such legislation passed. (See and to learn more.)

Restore Regulatory Integrity

Over the past eight years hundreds of industry executives, lobbyists and other corporate shills have passed through the revolving door into government, where they have worked assiduously to gut key regulations.

This phenomenon didn't start with Bush but it certainly reached a new level in the past eight years. A famous example is Robert Rubin (who joined Citigroup after pushing Congress to pull the plug on the 1933 Glass-Steagall Act -- which prohibited commercial banks from marketing or underwriting securities, leading to the conflicts of interest that fed Enron and the current mortgage securities debacle).

The Bush administration has virtually eviscerated important environmental, food/product safety, and workplace safety standards and their enforcement. And the result is seen all over - from coal mine collapses to Vioxx to the discovery that our kids are chewing on lead-contaminated toys imported from China.

One hopes the new administration will appoint people who are more interested in regulating media ownership than owning a luxury car, who won't parlay their position at the Department of Education into contracts for their cronies, and who believe in real enforcement of the law.

Restoring regulatory integrity will require a range of specific measures but it is also important that each agency be truly independent of the companies regulated, which means tightening restrictions on the revolving door, encouraging the appointment of career public servants and providing strong protections for whistleblowers.

Given the fragility of our economy, the need to place stronger regulations over the financial sector is perhaps of greatest importance. As Robert Kuttner and Kevin Phillips have explored in two superb books recently published on the topic, both parties are guilty of failing to learn the lessons of the S&L Crisis and Enron. The blind faith in financial deregulation that both parties have maintained in the face of the facts speaks volumes about the depth of the Right's ideological hegemonic hold over regulatory policy.

In all of these areas much is to be done. The issues are not technical so much as political. Measures to tax speculative investment and trades, restore structural divisions between commercial and investment banking, and aggressively enforce existing antitrust laws are all relevant and doable.

Put Corporations in Their Place

During their 7 years in office, government contractors have become a new "shadow government," as Rep. Henry Waxman recently suggested, sucking up 40 percent of discretionary spending by 2006.

The consequences extend far beyond mere questions of accountability and waste, and go to the core of the corporate agenda. Under the guise of economic efficiency, the Bush administration announced in 2002 that it would turn about half of the federal government over to corporations by outsourcing well over 800,000 positions - a move designed to undermine federal workforce unions. The result is a shift from Democratic to Republican civil service, and a government riddled with corporate self-dealing.

Halliburton and Blackwater are just two chapters in this sordid saga. The list of functions outsourced to corporations include managing federal prisons, handling regulatory and scientific reviews (an arrangement rife with potential conflicts of interest), processing (or not) Freedom of Information requests, writing the president's daily intelligence brief, interrogating prisoners of war, etc.

There are bright lines that progressives can draw here, just as we succeeded in squashing the attempt to privatize Social Security, local and state coalitions are emerging to take on attempts to privatize highways, lotteries, essential services like water, education and so forth. It is outrageous that corporations like Diebold will be counting our votes in the upcoming election when they have so much at stake in the outcome.

In addition to engaging those fights where they exist, progressives can use them to develop a more sophisticated argument about those functions and services that are properly performed by government and other public institutions versus those that are best left to the market. By making the commons in all its forms - natural, cultural and even political - the focus of our struggle, we begin to demonstrate the places where corporations have no legitimate place at all.

Establish Equitable Treatment

The polarization of wealth in today's society has almost reached Depression-era levels. This Congress has failed to pass even the most modest measures such as proposal to close the loopholes that allow hedge fund managers to enjoy lower tax rates than their own secretaries.

Like single payer, universal healthcare, progressives should begin to push for a national living wage policy, or even a guaranteed income policy. With a few champions these will have to be pushed from the margins into the mainstream of debate, but if we succeed, it's likely that much of the nation's political discourse will be dragged with it back to the center.

It will take time. But the willingness of progressive members to raise the bar will would make it easier for the Congressional leadership to do more modest things to restore fairness in the workplace, such as reforming labor law so workers can more effectively organize themselves to improve employment conditions.

At the other end, executive pay has to be brought under control once and for all. Companies should not be allowed to award top executives ever-increasing compensation packages without binding majority approval from shareholders and no taxpayer money should go to companies that pay their top executives more than 50 times the lowest-paid employees.

Close Liability Loopholes

If businesses had full financial liability for their toxic waste, for their contributions to global warming, for the aiding and abetting of fraud and other harmful practices, there would be strong incentives to use safer materials and cleaner, more efficient technologies, and to stop cooking the books.

In addition to restoring the Superfund tax on toxic chemical producers and passing a moratorium on major sources of global warming gases (esp. coal-fired power plants), Congress should start standing up for those hurt by corporate practices who have lost their ability to pursue the perps in civil court as a result of twenty years of "tort reform."

In addition, new measures like those considered by Senator Arlen Specter during a hearing of the Senate Judiciary Committee in 2007 could be introduced to attach criminal liability to life-threatening products and production processes where corporate officials fail to notify the affected parties and appropriate regulators. Such "corporate killing" statutes recently came into force in the UK and Canada. While such a law will not be easy to pass here in the U.S. in the face of opposition from the U.S. Chamber of Commerce (the most powerful lobbying machine of them all), the campaign to pass such a measure has great potential to solidify a progressive alliance whose core includes consumer groups, labor, and environmentalists.

Mobilize the Masses

Some of the initial measures passed by Democrats at the beginning of the current Congress (e.g. the minimum wage increase and rollback of oil industry tax breaks) suggest that an increase in the number of members who identify themselves as progressives will make it easier to push for bigger and better policies in the future. But none of these ideas will get much traction with a new president and Congress unless a strong movement intent on making them happen begins to push for them.

Executive Excess on Capitol Hill

If there were a futures market for the fate of the so-called "carried interest loophole" (and who knows, these days, maybe there is), its value would be in a state of near constant fluctuation. Herewith, a quick recap of its ups and downs.

Last summer, the Democrats proposed closing the multibillion-dollar tax loophole for managers of hedge funds and private equity firms. Under the current tax code, they now pay a mere 15 percent capital gains rate on the fees and bonuses (i.e., "carried interest" income) they get paid to manage investment funds they do not own, rather than the 35 percent rate they'd pay under normal income tax schedules. Estimates are this loophole--actually, it's more the size of a levy breach--will sap the Treasury of $26 billion over the next ten years.

But in October, Senate majority leader Harry Reid seemed to backtrack, saying that the Senate schedule was a little too tight to fit in a vote on the measure. Then, on Friday, the House revived hope for the provision when it passed Charlie Rangel's tax reform bill (HR 3996), which would, among other things, close the loophole. But the revival may be short-lived, since the bill now has to make it through the Senate Finance Committee, where one key Democrat, Charles Schumer, has indicated outright opposition and another key member, John Kerry, shied away from endorsing it back in May, suggesting the hedge funds be given a ten-year grace period before the loophole is closed.

All this back and forth would be more understandable if the bill itself were controversial, but on the merits and on the politics, it's a no-brainer. On Wednesday the Washington Post did an excellent job of unraveling why such a red-meat issue for Democrats has lost steam in the Senate, focusing especially on Schumer, the Senate Democrats' chief fundraiser, who, the Post reported, switched his position not long after James Simons, a hedge fund manager who earned $1.7 billion last year (you read that right), donated $28,500 to the Democratic Senate Campaign Committee, which Schumer chairs.

And of course the New York senator also represents Wall Street, which these days is chock-full of fiscal conservatives and cultural liberals who are leaning more Democratic than Republican. Hedge funds and investment firms, the Post reports, more than doubled their giving from 2006 to 2007, handing nearly $12 million so far to campaigns, parties and PACs--a stunning 83 percent of which has gone to Democrats. And the majority of staff working for the new industry trade association--the Private Equity Council--are former Democratic Hill staffers. "If you're a Democrat and you have to choose between the alternative minimum tax and the hedge fund industry, that's one tough ideological choice," Viva Hammer, a former Treasury Department staffer, told the Post. "It's a choice between your votes and your wallet."

But what about John Kerry, whom the Post doesn't touch? Kerry supports a proposal to close the loophole that allows hedge fund managers to shelter their pretax income offshore (part of the bill that the House passed Friday) but hasn't endorsed the proposal to close the larger loophole giving the same Wall Street barons preferential tax treatment.

On Friday, The Nation contacted Kerry's office to ask where he stood and received a statement in which, for the first time, Kerry went on the record in support of closing the loophole: "We should be dealing with deferred compensation, tax havens, and capital gains, and, yes, we should be fixing the carried interest issue," he said in a statement. He then proceeded to leave himself considerable wiggle room: "But we should do it in a way that avoids unintended consequences and is thoughtful about the fact that carried interests are common features not just in private equity and hedge funds but in real estate, venture capital, and start-up companies, and fields including healthcare and biotech."

This is progress, but it's pretty easy to see why Kerry would want to preserve an exit strategy (and not just in the interest of maintaining the narrative suspense in the tale of our poor benighted tax fix). According to one lobbyist (who doesn't work for the firms), two prominent Boston-based firms that are members of the Private Equity Council--Bain Capital Private Equity and Thomas H. Lee Partners--have been lobbying Kerry hard on the issue. Moreover, FEC data indicate that not long after closing the loophole was first proposed back in April, a number of Bain private equity partners started to make big contributions to Kerry. Partners Josh Bekenstein, Diane Exter and Jonathan Lavine have all given in excess of $4,000 each to the Kerry Senate campaign fund. Bain's mananging director, Mark Nunnelly, and two staffers have also all maxed out to Kerry this cycle with $4,600 each to his Senate campaign.

Some of these Bain partners have also given tens of thousands of dollars to key Democratic party campaign committees in recent years. But even that is chump change compared with what is at stake. According to Executive Excess, a report by the Institute for Policy Studies and United for a Fair Economy, while US corporate CEOs made an average of $10.8 million last year, the top twenty private equity/hedge fund managers pocketed an average $657.5 million, or 22,255 times the pay of an average US worker.

So Kerry (like many of his colleagues) is in an all-too-familiar position, caught between the interests of his voters and his donors. Given what the partners at Bain and elsewhere have to lose, smart money in DC is on the loophole surviving this legislative session intact. But as Kerry's recent statement shows, the first step to ending the suspense over its fate is simply to ask Democratic elected officials just which side they're on.

Hold Corporations Accountable for Killing People

This just came across the transom:

In late July the British government agreed to introduce a new law called the "Corporate Manslaughter Statute," which will make companies criminally responsible for deaths caused by a firm's gross negligence.

Penalties for violating the act potentially include unlimited fines, a "publicity order" (requiring the company to publicize its crime) and even remedial steps to correct the source of the lawbreaking activity.

Wouldn't it be nice if we had a law like that in the U.S. to protect workers and consumers. How many examples can you think of where serious injuries or death might have been prevented? I can think of a few, like the 2005 BP refinery explosion in Houston, the Ford-Firestone tire fiasco, the McWane pipe company deaths (covered an excellent NYTimes series by David Barstow and Lowell Bergman), and the 5,000 other "deaths on the job" that the AFL estimates result from the flouting of work safety regulations .

With a law like that, prosecutors might also be able to go after companies that regularly violate mine safety regulations and then claim an "act of nature" was responsible for their workers' deaths.

The UK is not the only country out ahead of US on this issue. To our shame, so are our neighbors to the north. A major mining accident in Westray, Ontario in 1992, led (after much organizing by the families of the victims -- with the help of the United Steelworkers) to support for and passage of Canada's new "Westray law" -- a law that similarly penalizes corporate crimes that contribute to serious injury or death.

Here in the U.S., it's very difficult to hold either corporations or corporate executives responsible for cases of gross negligence. Can you name any corporate executives who are likely to do as much time as Bernie Ebbers for causing an estimated 100,000 people to needlessly suffer heart attacks after taking Merck's Vioxx?

We all know that the fines that corporations receive for regulatory violations are routinely treat as the "cost of doing business," yet few of us are probably aware that the Supreme Court has been continuously cutting back on the availability of punitive damages (a legal sanction they don't have at all in the UK) under state and federal laws.

The corporate criminals are getting away with murder. At a minimum, Congress should provide Americans with the same legal protections that citizens in other countries receive.

Ten Things the Democrats Can Do to Hold Corporations Accountable

The midterm election demonstrated a deep dissatisfaction with the Bush administration's handling of the war and with the cornucopia of corruption that infected the Republican-controlled Congress. Yet it was more than a partisan victory for the Democrats. It also represented a popular backlash against business-friendly policies that have left many Americans behind.

The new Congress faces a staggering list of corporate abuses that have been ignored by lawmakers for years -- including executive pay levels that remain out of control, rampant contract fraud and war profiteering in Iraq and at home, widespread corporate tax avoidance, the offshoring of well-paying jobs, and the shredding of health, safety and environmental standards. It's enough to keep many congressional committees working overtime for years.

But the election must be seen as much more than a rejection of government of the Halliburtons, by the Enrons and for the Pfizers. It was also a sign that the myth of the good corporate citizen providing for broad prosperity has been punctured, providing an opportunity for deep change in the entire relationship between government and big business.

Some of the initial measures planned by Democrats, such as a minimum wage increase and a rollback of oil industry tax breaks, will begin to rectify the situation. But much more needs to be done. Twelve years ago, when the Republicans won control of Congress, they proposed a Contract with America. Now is the time for what might be called a Contract with Corporate America -- an effort to put limits on the power of big business.

What follows are a few clauses that Congress might include in such a contract. They come out of an ongoing conversation we've been having with leading corporate campaigners and policy experts poised to help Congress take a tough stance on business oversight and regulation.

Provide financial oversight
Business apologists want us to believe corporate fraud is a thing of the past, yet we continue to see business corruption in activities like the widespread backdating of stock options. Rather than tightening controls, the Bush administration and business groups have been seeking to relax the rules. Just last week, the Securities and Exchange Commission announced that companies would be given more flexibility in structuring their internal financial controls. The adjustment is touted as necessary to avoid excessive recordkeeping and auditing costs. Yet this limited relief will only encourage business to push for even more radical deregulation. Now is the time for stricter not weaker financial oversight.

Curb corporate crime
Also last week, the Justice Department announced it was putting new restrictions on the ability of federal prosecutors to use methods such as pressuring companies to waive the confidentiality of their legal communications -- a common technique in developing evidence against an executive suspected of fraud. The claim is that these changes restore "balance" to the process; in truth, Justice is caving in to demands from right-wing academics and former prosecutors who have moved to lucrative careers in the leading white-collar criminal defense firms. It should go without saying that Big Business has not earned the right to lax enforcement.

Restore regulatory integrity
Serious regulation -- on the environment, product safety, occupational safety and health, etc. -- is also being eviscerated as top positions at federal agencies have been filled with industry lobbyists who pass through the revolving door from the private sector and later return to the corporate world. Restoring reasonable oversight is possible only if those making regulatory policy are truly independent of the companies they are supposed to be regulating, which means tightening restrictions on the revolving door, encouraging the appointment of career public servants and providing strong protections for whistleblowers.

Address corporate concentration
Today more than half of the top 100 economies of the world are corporations. Mammoth companies dominate sectors such as energy, food processing and media. The consequences of this concentration are many. While a few start-ups strike it rich, the barriers to entrepreneurial success are formidable. In industries such as oil, a handful of major players can gouge consumers by colluding to keep prices high. In other cases, such as Wal-Mart's growing domination of retailing, prices are kept low, but workers and suppliers are squeezed. Media concentration has impoverished journalistic standards and threatened free speech.

At a minimum, antitrust enforcement must be reinvigorated and updated for the 21st-century economy. Congress could take the lead by creating a subcommittee tasked to investigate the extent of corporate consolidation and control, and the consequences for small businesses, consumers, communities, the culture and our democracy.

Close liability loopholes
If businesses had full financial liability for their toxic waste, for their contributions to global warming and other harmful practices, there would be strong incentives to use safer materials and cleaner, more efficient technologies. Congress should push business along this path by measures such as restoring the Superfund tax on toxic chemical producers. A moratorium on major sources of global warming -- such as the dozens of coal-fired power plants planned for Texas and the Ohio River Valley -- should be mandated, while substantial efforts are need to be made in order to accelerate the introduction of wind, solar and other alternatives.

Push transparency and democracy
Following the 1929 stock crash, publicly traded companies were required to disclose some information about their finances and operations. Today we need more disclosure, especially about environmental matters such as greenhouse gas emissions. Given the size to which some privately held companies have grown, Congress should consider imposing some disclosure requirements on them as well.

Disclosure is also an element of shareholder rights. Congress should ensure there are no limits on the rights of shareholders to request relevant and material information from management. With transparency should come a greater measure of corporate democracy. Shareholders should be allowed to nominate board candidates, so there is a greater chance truly independent directors can be elected.

Establish equitable treatment
Too many employers these days think they can chew their workers up and spit them out. Apart from increasing the minimum wage, Congress can restore fairness in the workplace by reforming labor law so workers can more effectively organize themselves to improve employment conditions. Large companies should be barred from shifting costs onto taxpayers by failing to provide decent health care benefits, thereby forcing low-wage workers to enroll in public programs such as Medicaid. At the other end, executive pay has to be brought under control once and for all. Companies should not be allowed to award top executives ever-increasing compensation packages without majority approval from shareholders, and limits on the tax deductibility of such packages should be tightened.

Let government do what it does best
More and more functions of government have been outsourced to the private sector. While the private sector is sometimes capable of greater efficiency than government, excessive privatization -- actually, corporatization -- and outsourcing of inherently governmental functions, have undermined accountability and oversight, often resulting in massive waste and inefficient delivery of services. As the Iraq and post-Katrina reconstruction contracts revealed, an excess of outsourcing can lead to an epidemic of abuses and outright fraud. Inherently governmental responsibilities like contract oversight should always be conducted by public employees.

Restore integrity to the legislative process
Undue corporate influence is not the only reason for the moral decay of Congress, but it deserves a lot of the blame. Many members of Congress have come to depend on campaign contributions from corporate interests. The expectation they will move into lucrative private-sector positions after leaving office makes many legislators, like regulatory officials, inclined to favor corporate interests. Business has a right to argue its case, but it shouldn't be able to use its wealth to dominate policy debates. We need stricter controls on corporate contributions and lobbying expenditures in order to restore integrity to public policymaking, while public funding of campaigns is long overdue as a means of opening the election process to those not beholden to moneyed interests.

Government is not the problem
Despite the frequent claim that "government is the problem," large corporations have more impact on the life of most Americans. To an extraordinary degree, they control how we earn a living, what we consume and even what we think. They also have enormous influence over our public life. For too long, the federal government has been acting as a virtual captive of big business interests. The change in control of Congress is the first opportunity in years to start shifting power back to the rest of us.

The 10 Most Brazen War Profiteers

The history of American war profiteering is rife with egregious examples of incompetence, fraud, tax evasion, embezzlement, bribery and misconduct. As war historian Stuart Brandes has suggested, each new war is infected with new forms of war profiteering. Iraq is no exception. From criminal mismanagement of Iraq's oil revenues to armed private security contractors operating with virtual impunity, this war has created opportunities for an appalling amount of corruption. What follows is a list of some of the worst Iraq war profiteers who have bilked American taxpayers and undermined the military's mission.

No. 1 and No. 2: CACI and Titan

In early 2005 CIA officials told the Washington Post that at least 50 percent of its estimated $40 billion budget for that year would go to private contractors, an astonishing figure that suggests that concerns raised about outsourcing intelligence have barely registered at the policymaking levels.

In 2004 the Orlando Sentinel reported on a case that illustrates what can go wrong: Titan employee Ahmed Fathy Mehalba, an Egyptian translator, was arrested for possessing classified information from the Guantanamo Bay prison camp.

Critics say that the abuses at Abu Ghraib are another example of how the lines can get blurred when contractors are involved in intelligence work. CACI provided a total of 36 interrogators in Iraq, including up to 10 at Abu Ghraib at any one time, according to the company. Although neither CACI, Titan or their employees have yet been charged with a crime, a leaked Army investigation implicated CACI employee Stephen Stefanowicz in the abuse of prisoners.

CACI and Titan's role at Abu Ghraib led the Center for Constitutional Rights to pursue companies and their employees in U.S. courts.

"We believe that CACI and Titan engaged in a conspiracy to torture and abuse detainees, and did so to make more money," says Susan Burke, an attorney hired by the Center for Constitutional Rights (CCR), whose lawsuit against the companies is proceeding into discovery before the Federal Court for the District of Columbia.

The private suits seem to have already had some effect: In September 2005 CACI announced that it would no longer do interrogation work in Iraq.

Titan, on the other hand, has so far escaped any serious consequences for its problems (in early 2005, it pleaded guilty to three felony international bribery charges and agreed to pay a record $28.5 million Foreign Corrupt Practices Act penalty). The company's contract with the Army has been extended numerous times and is currently worth over $1 billion. Last year L-3 Communications bought Titan as part of its emergence as the largest corporate intelligence conglomerate in the world.

No. 3: Bechtel: precast profits

The San Francisco-based construction and engineering giant received one of the largest no-bid contracts -- worth $2.4 billion -- to help coordinate and rebuild a large part of Iraq's infrastructure. But the company's reconstruction failures range from shoddy school repairs to failing to finish a large hospital in Basra on time and within budget.

Recall that USAID chief Andrew Natsios originally touted the reconstruction as a Middle Eastern "Marshall Plan." Natsios should have known that all would not go smoothly with Bechtel in the lead: Prior to joining the Bush administration, he was chief executive of the Massachusetts Turnpike Authority, where he oversaw the Big Dig -- whose costs exploded from $2.6 billion to $14.6 billion under Bechtel's lead.

In July, the company's reputation for getting things done unexpectedly plummeted like a 12-ton slab of concrete when Stuart Bowen, the special inspector general for Iraq Reconstruction (SIGIR), released an audit of the Basra Children's Hospital Project, which was $70 million to $90 million over budget, and a year and half behind schedule. Bechtel's contract to coordinate the project was immediately cancelled.

Now that the money is running out, American officials are beginning to blame Iraqis for mismanaging their own infrastructure. But as Bowen warns, contractors like Bechtel, the CPA and other contracting agencies will only have themselves to blame for failing to train Iraqi engineers to operate these facilities (esp. water, sewage and electricity) when they leave.

No. 4: Aegis Defense Services

The General Accounting Office (GAO) estimates 48,000 private security and military contractors (PMCs) are stationed in Iraq. The Pentagon's insistence on keeping a lid on military force requirements (thereby avoiding the need for a draft) is one reason for that astronomical growth, which has boosted the fortunes of the "corporate warriors" so much that observers project the industry will be a $200 billion per year business by 2010.

Yet the introduction of PMCs has put "both the military and security providers at a greater risk for injury," the General Accounting Office says, because PMCs fall outside the chain of command and do not operate under the Code of Military Justice.

George Washington University professor Deborah Avant, author of Market for Force and an expert on the industry, says that while established PMCs may act professionally, the government's willingness to contract with a few cowboy companies like Aegis -- a U.K.-based firm whose infamous founder and CEO Tim Spicer was implicated for breaking an arms embargo in Sierra Leone -- only reinforces the fear that U.S. foreign policy is being outsourced to corporate "mercenaries."

An industry insider told Avant that the $293 million contract was given despite the fact that American competitors had submitted lower bids, suggesting the government wanted to hire the foreign company to shield both sides of the transaction from accountability for any "dirty tricks."

Industry critics, including Rep. Jan Schakowsky, D-Ill., say that, at a minimum, Spicer's contract suggests that government agencies have failed to conduct adequate background checks. While it's hard to say how often PMCs have committed human rights violations in Iraq, the Charlotte News-Observer reported in March that security contractors regularly shoot into civilian cars. The problem was largely ignored until a "trophy video" of security guards firing with automatic rifles at civilian cars was posted on a web site traced back to Aegis.

Although the Army's Criminal Investigation Division says no charges will be filed against Aegis or its employees, critics say that only proves how unaccountable contractors are under current laws. Since the war on terror began, just one civilian, CIA contract interrogator David A. Passaro, has been convicted for felony assault associated with interrogation tactics.

Even The International Peace Operations Association, a fledgling industry trade association that insists the industry abides by stringent codes of conduct has rejected Aegis' bid to join its ranks.

No. 5: Custer Battles

In March, Custer Battles became the first Iraq occupation contractor to be found guilty of fraud. A jury ordered the company to pay more than $10 million in damages for 37 counts of fraud, including false billing. In August, however, the judge in the case dismissed most of the charges on a technicality, ruling that since the Coalition Provisional Authority was not strictly part of the U.S. government, there is no basis for the claim under U.S. law. Custer Battles' attorney Robert Rhoad says the company's owners were "ecstatic" about the decision, adding that "there simply was no evidence of fraud or an intent to defraud."

In fact the judge's ruling stated that the company had submitted "false and fraudulently inflated invoices." He also allowed the jury's verdict to stand against the company for retaliating against the whistleblowers that originally brought the case under the False Claims Act, the law that allows citizens to initiate a private right of action to recover money on taxpayers' behalf. During the trial, retired Brig. Gen. Hugh Tant III testified that the fraud "was probably the worst I've ever seen in my 30 years in the Army."

When Tant confronted Mike Battles, one of the company's owners, with the fact that 34 of 36 trucks supplied by the firm didn't work, he responded: "You asked for trucks and we complied with our contract and it is immaterial whether the trucks were operational."

The Custer Battles case is being watched closely by the contracting community, since many other fraud cases could hinge on the outcome. A backlog of 70 fraud cases is pending against various contractors. Who they are is anyone's guess (one case was recently settled against Halliburton subcontractor EGL for $4 million), since cases filed under the False Claims Act are sealed and prevented from moving forward until the government decides whether or not it will join the case. The means some companies accused of fraud have yet to be publicly identified, which makes it difficult for federal contracting officers to suspend or debar them from any new contracts. The U.S. Air Force moved to suspend Custer Battles from new contracts in September 2004, after the alleged fraud was revealed.

In May, however, the Wall Street Journal reported that attempts were made to bypass the suspension order by two former top Navy officials who had formed a company that purchased the remnants of Custer Battles. Meanwhile, Alan Grayson, the attorney who filed the Custer Battles case, says that because of orders passed by the CPA, Iraqis have no chance of recovering any of the $20 billion in Iraqi money used to pay U.S. contractors. The CPA effectively created a "free fraud zone," Grayson says.

No. 6: General Dynamics

Most of the big defense contractors have done well as a result of the war on terror. The five-year chart for Lockheed Martin, for instance, reveals that the company's stock has doubled in value since 2001.

Yet The Washington Post reported in July that industry analysts agree that of the large defense contractors, the one that has received the most direct benefit from the war in Iraq is General Dynamics. Much of that has to do with the fact that the company has focused its large combat systems business on supplying the Army with everything from bullets to tank shells to Stryker vehicles, which made their debut during the 2003 invasion.

In July, the Post reported that the company's profits have tripled since 9/11. That should make some people happy, including David K Heebner, a former top aide to Army Chief of Staff Eric Shinseki, who was hired by General Dynamics in 1999, a year before the Stryker contract was sealed. According to Defense watchdogs at the Project on Government Oversight (POGO), General Dynamics formally announced it was hiring Heebner on November 20, 1999, just one month after Shinseki announced a new "vision" to transform the Army by moving away from tracked armored vehicles toward wheeled light-armored vehicles, and more than a month prior to Heebner's official retirement date of Dec. 31, 1999.

Less than a year and a half later, Heebner was present for the rollout of the first Stryker in Alabama, where he was recognized by Shinseki for his work in the Army on the Stryker project.

Although the Pentagon's inspector general concluded from a preliminary investigation that Heebner had properly recused himself from any involvement in projects involving his prospective employer once he had been offered the job, critics say the current ethics rules are too weak.

"It's clear that the Army was leaning toward handing a multibillion-dollar contract to General Dynamics at the very time Heebner may have been in negotiations with the company for a high-paying executive position," says Jeffrey St. Clair, author of Grand Theft Pentagon, a sweeping review of war-profiteering during the "war on terror."

Heebner's case is similar to Boeing's infamous courtship of Darlene Druyan, the Air Force acquisition officer who was eventually sentenced to nine months in prison and seven months in a halfway house for arranging a $250,000 a year job for herself on the other side of the revolving door while negotiating contracts for the Air Force that were favorable to Boeing.

This March, Heebner reported owning 33,500 shares in the company, worth over $ 4 million, along with 21,050 options.

Not everyone has been happy with the outcome of the Stryker contract. Tom Christie, the Pentagon's director of operational testing and evaluation, sent a classified letter to Donald Rumsfeld before it was deployed in Iraq, warning that the $3 million vehicle was not ready for heavy fire. Meanwhile, the GAO warned of serious deficiencies in vehicle training provided, a concern that turned serious when soldiers accidentally drove the Stryker into the Tigris rivers. Despite public praise from top Army officials, an internal Army report leaked to the Post in March 2005 revealed that the vehicles deployed in Iraq have been plagued with inoperable gear and maintenance problems that are "getting worse not better."

Perhaps as insurance against any flap, General Dynamics has added former Attorney General John Ashcroft to its stable of high-powered lobbyists. Working the account are Juleanna Glover Weiss, Vice President Dick Cheney's former press secretary, Lori Day Sharp, Ashcroft's former assistant, and Willie Gaynor, a former Commerce Department official who also worked for the 2004 Bush-Cheney reelection campaign.

No. 7: Nour USA Ltd.

Incorporated shortly after the war began, Nour has received $400 million in Iraq contracts, including an $80 million contract to provide oil pipeline security that critics say came through the assistance of Ahmed Chalabi, Iraq's No. 1 opportunist, who was influential in dragging the United States into the current quagmire with misleading assertions about WMDs. Chalabi has denied reports that he received a $2 million finder's fee, but other bidders on the contract point out that Nour had no prior related experience and that its bid on the oil security contract was too low to be credible. Another company consultant who hasn't denied getting paid to help out is William Cohen, the former defense secretary under President Clinton. Many Iraqis now believe that Chalabi is America's hand-picked choice to rule Iraq, despite being a wanted fugitive from justice in Jordan and despite being accused of passing classified information along to Iran. Iyad Allawi, a potential rival for power in Iraq, has publicly criticized Chalabi for creating contracts for work that he says should be the responsibility of the state.

No. 8, No. 9 and No. 10: Chevron, ExxonMobil and the Petro-imperialists

Three years into the occupation, after an evolving series of deft legal maneuvers and manipulative political appointments, the oil giants' takeover of Iraq's oil is nearly complete.

A key milestone in the process occurred in September 2004, when U.S.-appointed Interim Prime Minister Iyad Allawi preempted Iraq's January 2005 elections (and the subsequent drafting of the Constitution) by writing guidelines intended to form the basis of a new petroleum law. Allawi's policy would effectively exclude the government from any future involvement in oil production, while promising to privatize the Iraqi National Oil Co. Although Allawi is no longer in power, his plans heavily influenced future thinking on oil policy.

Helping the process move along are the economic hit men at BearingPoint, the consultants whose latest contract calls for "private-sector involvement in strategic sectors, including privatization, asset sales, concessions, leases and management contracts, especially those in the oil and supporting industries."

For their part, the oil industry giants have kept a relatively low profile throughout the process, lending just a few senior statesmen to the CPA, including Philip Carroll (Shell U.S., Fluor), Rob McKee (ConocoPhillips and Halliburton) and Norm Szydlowski (ChevronTexaco), the CPA's liaison to the fledgling Iraqi Oil Ministry. Greg Muttitt of U.K. nonprofit Platform says Chevron, Shell and ConocoPhillips are among the most ambitious of all the major oil companies in Iraq. Shell and Chevron have already signed agreements with the Iraqi government and begun to train Iraqi staff and conduct studies -- arrangements that give the companies vital access to Oil Ministry officials and geological data.

Although Iraqi Oil Minister Hussain al-Shahristani said in August that the final competition for developing Iraq's oil fields will be wide open, the preliminary arrangements will give the oil giants a distinct advantage when it comes time to bid. The relative level of interest by the big oil companies depends on their appetite for risk, and their need for reserves. Shell, for example, has performed worse than most of its peers in finding new reserves in recent years -- a fact underscored by a 2004 scandal in which the company was caught lying to its investors. At this point the key challenge to multinationals is whether they can convince the Iraqi parliament to pass a new petroleum law by the end of this year.

A key provision in the new law is a commitment to using production sharing agreements (PSAs), which will lock the government into a long-term commitment (up to 50 years) to sharing oil revenues, and restrict its right to introduce any new laws that might affect the companies' profitability. Greg Muttitt of Platform says the PSAs are designed to favor private companies at the expense of exporting governments, which is why none of the top oil producing countries in the Middle East use them. Under the new petroleum law, all new fields and some existing fields would be opened up to private companies through the use of PSAs. Since less than 20 of Iraq's 80 known oil fields have already been developed, if Iraq's government commits to signing the PSAs, it could cost the country up to nearly $200 billion in lost revenues according to Muttitt, lead researcher for "Crude Designs: the Rip-Off of Iraq's Oil Wealth."

Meanwhile, in a kind of pincer movement, the parliament has begun to feel pressured from the IMF to adopt the new oil law by the end of the year as part of "conditionalities" imposed under a new debt relief agreement. Of course pressuring a country as volatile as Iraq to agree to any kind of arrangement without first allowing for legitimate parliamentary debate is fraught with peril. It is a risky way to nurture democracy in a country that already appears to be entering into a civil war.

"If misjudged -- either by denying a fair share to the regions in which oil is located, or by giving regions too much autonomy at the expense of national cohesion -- these oil decisions could fracture, and ultimately break apart, the country," Muttitt suggests.

Dancing with the Wolf

If the World Bank's board had applied the same kind of "due diligence" to Paul Wolfowitz that they purport to apply to major development projects, they might have uncovered a significant conflict of interest that could have led them to rethink their embrace of the architect of the Iraq war.

Just consider his role in the U.S. occupational authority's (CPA) looting of the Iraqi people's oil revenues to pay off well-connected crony contractors like Halliburton. As president of the World Bank, he will be in a position to quash an important related investigation.

The president of the World Bank is a leading member of the International Advisory Monitoring Board (IAMB) -- a multilateral organization established by U.N. Security Council Resolution 1483 in May 2003. The IAMB's principle mission is to oversee U.S. stewardship of the Development Fund of Iraq (DFI), the successor to the Oil-for-Food Program.

Despite delays and efforts by the Bush administration to obstruct their work, the IAMB's auditors have so far uncovered significant financial abuses. More worrisome for Wolfowitz and the Bank is the potential for the investigation to lead up the Pentagon's chain-of-command to Wolfowitz himself.

The evidence for this is a March 6, 2003 e-mail, first uncovered by conservative watch-dog group Judicial Watch, which indicates that Wolfowitz authorized a sole-source contract to Halliburton for Operation Restore Iraqi Oil (RIO) before the war began.

A U.S. Army Corps of Engineers official, whose name is redacted, writes that he or she secured "authority to execute RIO" after "DepSecDef [that is, Wolfowitz] sent us to UnderSecPolicy [Under Secretary of Policy Douglas] Feith and gave him authority to approve" a decision to give it to Halliburton without seeking bids from any other potential contractors.

The coded e-mail added that the "action has been coordinated with the Vice President's office." Vice President Dick Cheney, of course, was Halliburton's boss from 1995 to 2000. Cheney also has been Wolfowitz's political patron since the first Bush administration.

That contract has become a source of huge controversy, as allegations have mounted concerning Halliburton's long series of improprieties in executing it. (For details see the Halliburton Watch website).

As Deputy Secretary of Defense, Paul Wolfowitz played a major role in the reconstruction program, which before the war was projected to be a kind of Middle Eastern Marshall Plan.

If the CPA had finished the job, perhaps the various tales of cronyism and corruption might not be a big deal. But pervasive mismanagement and endemic corruption aggravated many problems that broadened and hardened popular opposition to the occupation.

For example, at the end of 2003 Wolfowitz barred foreign companies from receiving reconstruction contracts, a policy that delayed the procurement of spare parts for machinery and electrical generating equipment. The result: lower-than-estimated electrical generating capacity, further civil unrest and increased support for the resistance.

So far, Wolfowitz and Cheney's friends who control Congress have expressed far less interest in these matters than the alleged Oil-For-Food Program "scandal" that Paul Volcker's investigation reveals to be a minor transgression by comparison.

(This week, Newsweekpublished a photo of CPA officials holding stacks of cash, with a caption that reads "Free Fraud Zone.")

"We arguably have a greater obligation to oversee the DFI than the Oil for Food Program given that the DFI was under U.S. control," Congressman Henry Waxman (D-Calif.) pointed out in a letter to U.S. Rep. Christopher Shays (R-Conn.), chair of one of the five committees investigating the former.

On March 15, Waxman published what he called "evidence that Administration officials -- acting at the request of Halliburton -- intentionally withheld information from international auditors in violation of U.N. Security Council Resolution 1483." He said this "suggests that the United States used Iraqi oil proceeds to overpay Halliburton and then sought to hide the evidence of these overcharges from the international auditors." Waxman's dogged investigation has so far been met with little interest by his colleagues.

The IAMB's ongoing investigation began at a meeting on March 17, 2004. The board decided to conduct a special audit of large, sole-sourced contracts paid out of the DFI. In April 2004, the IAMB requested further information from the CPA regarding the $1.4 billion Operation RIO contract awarded to Halliburton.

In June 2004, and again in September, the IAMB registered its "regrets" that CPA officials had not complied with its "repeated requests." Finally, in October 2004, the Bush/Cheney administration provided the IAMB with the audit, but only after Halliburton was allowed to redact key information.

Halliburton itself edited the audit, according to Waxman, who produced a September 28, 2004, letter from Halliburton's KBR subsidiary to the U.S. Army Corps of Engineers in which contract manager Michael Morrow says KBR redacted information that "could be used by a competitor to damage KBR's ability to win and negotiate new work."

Waxman produced two versions of the audit, before and after Halliburton made the changes. In the final version, black boxes hide language that specified over $162 million in "questioned," "unsolved," and "unreasonable" payments to KBR. References to many other KBR "noncompliances and inadequacies" also vanished. According to Waxman, independent experts said "both the redactions and the process by which they appear to have been made would be improper."

On March 15, Waxman requested that the House National Security Subcommittee, chaired by Rep. Shays, issue a subpoena for documents related to Halliburton and government officials' attempts "to conceal the extent of the overcharges." The potential subpoena would force hearings and testimony by "Defense Department officials responsible for reviewing Halliburton's redactions and submitting the audits to the IAMB."

The underlying questions are those timeless Washington favorites: What did Wolfowitz know with regard to Halliburton's inside advantage, and when did he know it?

These are questions that the world's governments should have considered before acceding to Wolfowitz's installation as the head of the World Bank.

The fact that they did not is a troubling sign. As Joseph Stiglitz, the Nobel-winning former chief economist at the World Bank has suggested, the Bank under Wolfowitz's leadership is likely to "become an explicit instrument of U.S. foreign policy" around the world. "It [the Bank] will presumably take a lead role in Iraqi reconstruction ... . That would jeopardize its role as a multilateral development body."

By recusing himself from a position that will allow him to influence the monitoring board's investigation, Wolfowitz would be taking a modest first step toward dispelling such concerns.

Debating Halliburton

"I clearly have spent a lot of time in executive positions, running large organizations, both in private business as well as in government. And that's a set of qualifications that Governor Bush found attractive when he selected me," Dick Cheney said four years ago in his debate with Joe Lieberman when describing his readiness to serve as vice president.

But at the end of a full term, there are more questions than answers about Vice President Cheney's tenure as CEO of Halliburton and the favors he has since done for the company. Tuesday night's debate affords Cheney an opportunity to clarify matters.

Four years ago, Cheney bragged about his role in the private sector as Halliburton CEO; his tenure no longer looks so rosy. KBR, a Halliburton subsidiary purchased during Cheney's reign, is in bankruptcy. The company continues to be the target of multiple criminal investigations stemming from activities that occurred on Cheney's watch, including fraudulent billing associated with its work in the Balkans and a scheme to bribe officials in Nigeria. Is the vice president still proud of his role as Halliburton CEO? Does he have any knowledge of the alleged bribery scheme in Nigeria, involving contracts valued at hundreds of millions of dollars?

While Dick Cheney was CEO of Halliburton, the company conducted business with the government of Iran, a member of the Bush administration's so-called "axis of evil." Halliburton still uses a Cayman Islands subsidiary to do business in Iran, a dubious circumvention of the restrictions that is being investigated by a grand jury in Houston. How are these activities compatible with efforts to isolate governments that sponsor terrorism?

On the campaign trail, Cheney has repeatedly referred to trial lawyers filing "frivolous lawsuits." But nearly half of the civil lawsuits that Cheney says are "clogging the courts" are filed by corporations like Halliburton, and the company filed at least 151 lawsuits against corporations and individuals while Cheney was CEO. If billion-dollar companies deserve their day in court, why not injured individuals?

The vice president's involvement with Halliburton continues, though in an interview on "Meet the Press," Cheney asserted that he has had "no financial interest in Halliburton of any kind and haven't had, now, for over three years." Cheney has received over $150,000 from the company in each of those years and still has over 433,000 stock options (which he says are irreversibly being held in a charitable trust), whose value can rise and fall as a result of government contracts and penalties. How is that not an ongoing financial interest?

Halliburton is the largest contractor in Iraq, with over $18 billion in contracts. Halliburton employees have returned with stories about $45 charges per case of soda, $100 per 15 pound bag of laundry, the ditching of $85,000 trucks because of flat tires and other minor repairs, and the use of five-star hotels in Kuwait while the troops sweat it out in tents in the desert. Criminal investigations are underway in association with kickbacks and tens of millions of dollars in excess charges for gas imported from Kuwait. Does Vice President Cheney – and the same should be asked of Senator Edwards – support legislation introduced by Sens. Durbin (D-IL) and Craig (R-ID) to establish a special committee modeled after Harry Truman's World War II committee, to root out corruption and save taxpayers the millions of dollars lost through the kind of waste, abuse and outright fraud seen at his old company?

Other questions about Halliburton could arise in the debate, including the company's accounting practices, treatment of its retired workers and history of doing business with Burma and even Saddam Hussein. These are all matters that should be openly debated by any candidate claiming to have the gravitas necessary for leadership.

Bringing Halliburton To Heel

Criminologist Edwin Sutherland could not have imagined the heights of war profiteering reached by Halliburton in Iraq. In his 1949 groundbreaking study White Collar Crime , Sutherland wrote about the role of corporations in last century�s world wars. He observed that: �� the large corporations in time of war, when Western civilization was endangered, did not sacrifice their own interests and participate wholeheartedly in a national policy, but instead they attempted to use this emergency as an opportunity for extraordinary enrichment of themselves at the expense of others. � Profits are more important to large corporations than patriotism.�

As the largest contractor in the war on terror, Halliburton deserves all the scrutiny it has received�disregarding the partisan expectation that any resulting scandal would rub off on ex-CEO Dick Cheney.

Recently, John Kerry finally took off the gloves and used the H-word in a blistering attack on the Bush administration�s Iraq quagmire.

�As president,� Kerry said, �I will stop companies like Halliburton from profiting at the expense of our troops and taxpayers. � And as commander in chief, I will have two words for companies that cheat the U.S. military: �You're fired.'�

Leading Pentagon watchdogs have been calling for Halliburton�s debarment or suspension from Pentagon contracts since August. At that time the Defense Contract Audit Agency (DCAA) issued a memo complaining that Halliburton could not account for more than $1.8 billion of $4.3 billion of work in Iraq and Kuwait. For the third time, the DCAA recommended that the Pentagon not pay Halliburton until it coughed up all the receipts.

The long list of waste, fraud, bribery and other abuses associated with Halliburton�s Iraq contracts now fill volumes. Vigilant oversight by Rep. Henry Waxman�s office and Pentagon investigators � with the help of company whistleblowers � have uncovered attempts to charge taxpayers $45 per case of soda, $100 per bag of laundry, $10,000 a day to use five-star hotels in Kuwait. (Meanwhile, the troops are sweating it out in tents in the desert). There�s been $167 million worth of price gouging for imported gasoline, and $186 million charged for meals that were never served to the troops, and a $6 million kickback to two employees (fired by the company) from a subcontractor.

Nor has the company�s record in Iraq been the only basis for calls for debarment, which come not only from members of Congress but also from watchdog groups like the  Project on Government Oversight. POGO is a Washington, D.C.-based non-partisan non-profit organization with more than two decades experience monitoring Pentagon contracts. 

Halliburton�s Rap Sheet

In fact, there have been so many Halliburton scandals that it�s been hard to keep up (go to Halliburton Watch for an up-to-date rap sheet). A few of the bigger ones:

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