CorpWatch

Did Slave Labor Produce Your Favorite Wine?

"Bitter Grapes—Slavery in the Vineyards," a new Danish television documentary, alleges that many South African wineries pay their workers less than the legal minimum wage, discourages them from unionizing and exposes them to toxic pesticides. The documentary singles out Robertson's Winery in the Western Cape region.

The film, which was made by journalist Tom Heinemann, claims that workers are often paid R105 ($7.76) for a 12-hour shift and that living conditions for workers are abysmal. "I saw very very depressing things. I saw housing that was literally falling apart, rain coming down the roofs," Heinemann told 702, a Danish radio station. "I saw people have to live off water from a drain ditch alongside a road. I saw toilets that were locked up, so they had to walk into the vineyards to do their toilet."

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Meet 11 of the Private Defense Contractors That Are Raking It in from the Drone War

Hundreds of private sector intelligence analysts are being paid to review surveillance footage from U.S. military drones in Central Asia and the Middle East, according to a new report from the Bureau of Investigative Journalism.

Bureau reporters Crofton Black and Abigail Fielding-Smith name eleven companies that have won hundreds of millions of dollars in contracts to plug a shortage in personnel needed to analyze the thousands of hours of streaming video gathered daily from the remotely piloted aircraft that hover over war zones around the world: Advanced Concepts Enterprises, BAE Systems, Booz Allen Hamilton, General Dynamics, Intrepid Solutions, L-3 Communications, MacAulay-Brown, SAIC, Transvoyant, Worldwide Language Resources and Zel Technologies. (see details below)

“Contractors are used to fill the gap to give enough manpower to provide flexibility necessary for military to do things like take leave,” one analyst who worked with the Air Force at Hurlburt Field airbase in Florida, told the Bureau.

Private companies have been providing support for military intelligence for many years. Ever since CACI’s role in supplying interrogators at Abu Ghraib came to light in 2004 (http://www.corpwatch.org/article.php?id=10828), CorpWatch has regularly documented dozens of companies like BAE Systems, Booz Allen Hamilton, L-3 Communications and SAIC that have provided such services to the federal government ranging from surveillance equipment and weapons to propaganda experts and imagery analysts.

Today, these contractors are flocking to the drone business, which has become the linchpin of President Barack Obama’s military strategy, just as the ground war has wound down. Although the Central Intelligence Agency has garnered most of the media attention for targeted killing delivered by drones in countries like Pakistan and Yemen, the bulk of the so-called “War on Terror” is really conducted by U.S. Air Force pilots and support personnel who fly 65 round-the-clock “combat air patrols” of Global Hawk, Predator and Reaper drones around the world from faraway locations.

Each of these patrols, which involve three to four aircraft, require as many as 186 individuals who staff a complex and global system. Typically pilots and camera operators work out of bases like Creech in Nevada, while maintenance crews work in friendly countries like Afghanistan and Saudi Arabia. Video analysts work out of military bases like California and Florida while military lawyers who are required to approve strike decisions are stationed at the Al-Udeid base in Qatar.

Imagery analysts who review video footage are among the lowest ranked among the personnel who work in the drone war hierarchy. Typically these are entry level “airmen” who only need a high school diploma and eleven months of military training. The drone pilots are officers with undergraduate degrees and more years of training.

Both airmen and officers become eligible to work as private contractors after they complete their military service, where they can be paid twice as much for the same work, and get the added bonus of picking their hours and work locations. (The Air Force Times estimates that drone maintenance pilots stationed overseas who work for companies like Raytheon can make as much as $225,000 a year) Since all the initial training and the security clearances are provided by the military, all the contractors are required to do is recruit Air Force veterans and then put them on their payrolls.

By all accounts, the private contractors do not take part in making decisions as to who to kill nor are they allowed to fire missiles.

But contractors do sometimes play a key role in military missions by the very nature of their analytical work. In 2010, Major General Timothy McHale identified an SAIC staffer who led a team of imagery analysts to track three vehicles in Daikundi province, Afghanistan. The information provided by these analysts led to some two dozen people being killed but later investigations would reveal that none of the people on board the vehicles were militants.

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How the Toxic Tar Sands Industry Fuels the Ubiquitous Aluminum Can

Driving south from Vancouver, Canada, towards Seattle, the scenery is perfectly pastoral with rolling hills and grazing cows. But suddenly, dominating the horizon, the view is interrupted by a phalanx of refinery towers shooting white-gray plumes into the sky. These industrial spires of BP's Cherry Point refinery loom high over Whatcom county, a lush border region a little more than 100 kilometers north of Seattle.

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Military Subcontracters Are Providing Shoddy Services to Troops In Iraq and Afghanistan

Najlaa International Catering Services won a $3 million five-year contract in February 2010 to prepare food for the U.S. Agency for International Development compound in Iraq. The deal was approved despite the fact that Bill Baisey, CEO of the Kuwaiti company, faces numerous complaints and court actions for non-payment of bills and alleged fraud in Kuwait and Iraq.

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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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Pentagon Watchdog Misses Billion Dollar Audit

Military auditors failed to complete an audit of the business systems of an Ohio-based contractor even though it had billed for $1 billion worth of work over the last four years, largely done in Afghanistan. Immediately after this fact came to light at a public hearing of the bi-partisan Commission on Wartime Contracting, the Defense Contract Audit Agency (DCAA) scrambled to dispatch an extra 10 staff to catch up on the job.

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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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Meeting of Global Titans Tainted by Tanking Economy

The CEOs of three-quarters of the world's 100 largest companies have just completed an uncomfortable weekend at the tiny Swiss ski resort of Davos, while their companies' share prices nosedived on global stock markets, amid concern that the U.S. economy was staggering towards recession.

The Alpine village, which is virtually inaccessible to anyone without a helicopter, is ringed with barbed wire and tight security arrangements for the World Economic Forum (WEF) in late January every year. This 37-year-old private gathering brings together dozens of heads of states, hundreds of government ministers and a smattering of activists and celebrities to join the chief executives for a series of discussions and workshops, as well as private parties thrown by companies such as Google with the help of the world's most famous disc jockeys.

The price of attendance isn't cheap: each CEO spends roughly $60,000 a year to attend. But once they have made it onto the invite list they can look forward to schmoozing with their peers in Davos and hobnobbing with celebrities. This year they had a chance to meet Tony Blair, the former British prime minister; Al Gore, the former US vice-president and Nobel Prize-winner; and Bono, the Irish rock star and debt campaigner. Past gatherings have also given CEOs the opportunity to play chess with Antoly Karpov, the former Soviet champion, and to take a twirl on the ice with Russian skating stars.

Some CEOs have occasionally delighted in doing the incongruous: Rupert Murdoch, the billionaire owner of News Corporation, did a stint as a waiter at one party this year.

Questioning Capitalism

But the 2008 gathering was fraught with irony for the CEOs and the bankers who have financed them. Wrote Bruce Nussbaum of Business Week: "Last year, an army of slick-haired, Wall Street private equity and hedge fund guys turned up to show the doubting Europeans the clever and kindly face of American market capitalism ... (t)o the Europeans who complained that private equity and hedge fund wheeling and dealing were distorting economic growth, they gently suggested that the Old Country was out of touch with the new reality of financial innovation."

This year the Wall Street whiz-kids had to eat humble pie. "Turns out the Europeans were right," wrote Nussbaum. "The subprime junk packaged and repackaged as top prime credit collapsed and is taking the rest of the U.S. economy (and perhaps the world economy) down with it ... (s)o if the slick-haired guys can still afford to hop their private jets to get to Davos this year, they're going to find a lot of really angry Euros armed with really strong euros."

Indeed, Lionel Barber, editor of the Financial Times, suggests the Davos tradition of celebrating globalization has come to an uncomfortable halt: "In the past few years, globalization has enjoyed virtually unqualified applause from the power-players inside the Davos conference rooms, whatever the noisy protests outside in the snow-clad streets -- the triumphalism has disappeared, replaced by a pervasive uncertainty."

One of the world's best-known CEOs, Microsoft chairman Bill Gates, admitted to fellow participants that he had become skeptical of the very notion of capitalism. He told the Wall Street Journal that he had seen the failings of capitalism first-hand on visits to places such as the South African slum of Soweto, and had discussed them with dozens of experts on disease and poverty.

At one of the most widely attended events of the week, Gates called for a "creative capitalism" that uses market forces to address poor-country needs that he feels are being ignored. "We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well," Gates said. "I'm an optimist, but I'm an impatient optimist. The world is not getting better fast enough, and it's not getting better for everyone."

And billionaire George Soros, who made his fortune speculating on global currency exchange rates, took the opportunity of the WEF to call for major new regulations and oversight over financial markets. Soros said that the failure to restrain the free market has caused "not a normal crisis but the end of an era."

Not all CEOs agreed. "People have to keep in mind, throughout history we have always had cycles, people shouldn't be surprised," JP Morgan CEO James Dimon, co-chair of the WEF, told the closing debate.

Dow Chemical CEO Andrew Liveris went further when he told Reuters: "What's going on now should not have a 'Chicken Little' atmosphere. The sky is not falling."

Public Eye on Davos

While the CEOs finally acknowledged that a rising tide might not lift all boats, and that capitalism could indeed have a downside, Swiss activists showed up outside the WEF to "name and shame" companies with particularly egregious records of violating environmental and human rights.

Oliver Classen, the spokesman of Berne Declaration, a non-governmental organization in Zurich, announced in a press release: "Our message is: Global players watch out. We're watching you. We are a threat to their reputations. They know that, and they should behave accordingly."

Together with Pro Natura, the Swiss branch of Friends of the Earth, Berne Declaration organizes an annual counter-event called the Public Eye on Davos where anyone can vote to rank companies with the worst reputations.

This year Public Eye voters singled out Areva, a French multinational that has mined uranium for 40 years in the African nation of Niger, a former French colony.

Areva subsidiaries Somair and Cominak were condemned by Almoustapha Alhacen, president of Aghirin'man, the organization representing affected workers. He reported numerous "suspicious deaths among the workers, caused by radioactive dust and contaminated groundwater" above internationally accepted safety levels.

Alhacen says that mine workers are given inadequate information about the health risks of open-air storage of radioactive materials. The activists allege that the company evades paying for workers' medical treatment. They claim the company hospital issues false diagnoses for sick workers, and signs death certificates blaming AIDS when workers die of cancer.

For The Love of Money

Yet despite the doom and gloom inside and accusations of abuse and hypocrisy from outside, the parties barely slowed in Davos.

Disc jockey Norman Jay (also known as the Minister of Sound) flew in from Australia to spin records at the biggest party of the weekend, thrown by Google. The invitation-only event was attended by Lauren Bush, niece of President Bush, Sheikh Salman bin Hamad Al Khalifa, the crown prince of Bahrain, Jordan's Queen Rania and U.S. Congressman Tom Davis. A Wall Street Journal blogger announced that party-goers danced the night away to songs like "For The Love of Money" by the O'Jays.

Top Rumsfeld Aide Gets Cushy Contract From Spy Agency He Created

A Pentagon office that claims to monitor terrorist threats to U.S. military bases in North America -- and was once reprimanded by the U.S. Congress for on antiwar activists -- has just awarded a multi-million dollar contract to a company that employs one of Donald Rumsfeld's former aides. That aide, Stephen Cambone, helped create the very office that issued the contract.

On January 7, QinetiQ (pronounced "kinetic") North America (QNA), a major British-owned defense and intelligence contractor based in McLean, Virginia, announced that its Mission Solutions Group, formerly Analex Corporation, had just signed a five-year, $30 million contract to provide a range of unspecified "security services" to the Pentagon's Counter-Intelligence Field Activity office, known as CIFA.

According to Pentagon briefing documents, CIFA's Directorate of Field Activities "assists in preserving the most critical defense assets, disrupting adversaries and helping control the intelligence domain." Another CIFA directorate, the Counterintelligence and Law Enforcement Center, "identifies and assesses threats" to military personnel, operations and infrastructure from "insider threats, foreign intelligence services, terrorists, and other clandestine or covert entities," according to the Pentagon. A third CIFA directorate, Behavioral Sciences, has provided a "team of renowned forensic psychologists [who] are engaged in risk assessments of the Guantanamo Bay detainees."

The new CIFA contract with QinetiQ expands work that Analex has provided CIFA and its various directorates since 2003. Under its first contract, according to the QinetiQ website, Analex staffers were sifting through information "from traditional to non-traditional providers, ranging from unclassified through top secret classification using sophisticated information technologies and systems specifically designed by CIFA analysts."

The CIFA contract was awarded just two months after QinetiQ hired Stephen Cambone, the former undersecretary of defense for intelligence and a longtime Rumsfeld aide, as its vice president for strategy. Cambone is the most senior of a savvy group of former high-ranking Pentagon and intelligence officials hired by QinetiQ to manage its expansion in the U.S. market. (See boxes.)

While he was at the Pentagon, Cambone oversaw CIFA and was deeply involved in the Pentagon's most controversial intelligence programs. It was Cambone, for example, who reportedly issued orders to Major General Geoffrey Miller to soften up Iraqi prisoners for intelligence interrogators in Abu Ghraib in 2003. With Rumsfeld, he also set up a special unit within the Pentagon that alienated the CIA and the State Department by running its own covert actions without seeking input from other agencies.

The new CIFA contract comes on the heels of a series of QinetiQ deals inked with the Pentagon in the booming new business of "network centric warfare" -- the space-age, technology-driven intelligence and warfighting policies established by Rumsfeld and Cambone during their six-year tenures at the Pentagon. Other Cambone-pioneered programs that QinetiQ has won (before he went to work at their Crystal City offices that lie just two miles from the Pentagon) include military drones and robots, low-flying satellites and jamming technologies.

Cambone's appointment at QinetiQ reflects the "incestuous" relationships that exist between former officials and private intelligence contractors, said Steven Aftergood, the director of the Project on Government Secrecy at the Federation of American Scientists and a long-time observer of U.S. intelligence. "It's unseemly, and what's worse is that it has become normal," he told CorpWatch.

Aftergood pointed out the similarities between Cambone and the career trajectory of the current Director of National Intelligence, Michael McConnell. Following McConnell's tenure as director of the National Security Agency, "he went on to receive a seven-figure salary at Booz-Allen Hamilton, a major intelligence contractor," said Aftergood. "And now he's back at the helm of the intelligence community (IC). The problem is not so much a conflict of interest as it is a coincidence of interests -- the IC and the contractors are so tightly intertwined at the leadership level that their interests, practically speaking, are identical."

QinetiQ Evolution

QinetiQ was created in 2001 when the British Ministry of Defense (MoD) split up the Defense Evaluation Research Agency (DERA), its equivalent to the U.S. Defense Advanced Research Projects Agency (DARPA). One part of the company remained inside the MoD, but the other half was sold to the private sector and became QinetiQ.

For its first 18 months, QinetiQ was run by the MoD. But in February 2003, control slipped decisively out of government hands when 33 percent of its shares were acquired by the Carlyle Group, the powerful Washington-based private equity fund with close ties to the Bush administration. Carlyle invested $73 million in the company, and the MoD retained the other 66 percent. In an unusual arrangement, however, Carlyle was granted 51 percent of the voting shares, which meant that the investment fund and its appointed executives had effective control over the company. Carlyle sold off its remaining shares in February 2007, making a $470 million profit on its original investment.

Its initial expansion into the U.S. market was led by its first CEO, Graham Love. A ten-year veteran of DERA, where he rose to the position of finance director, Love had left DERA in the late 1990s by taking one of its divisions private. In 2003, he was brought back to head up QinetiQ's North American operations. With assistance from Carlyle's managers, Love went on the acquisition binge that made QinetiQ what it is today.

In November 2004, it bought Foster-Miller, which builds what it calls "mobile platforms" for the U.S. military, including the Talon robot, a battery-powered machine loaded with night-vision cameras and sensors that can fire both machine gun bullets and anti-tank weapons. Talons are also used on reconnaissance missions to detect mines and disarm roadside bombs in Iraq; more than 600 have been acquired by the Pentagon, according to Fortune magazine. The Foster-Miller website says Talon robots were initially developed with funds from DARPA and have been used in Special Operations missions in Afghanistan, Bosnia and Iraq.

In January 2007, QinetiQ acquired Analex Corporation, an information technology and engineering company that earns 70 percent of its revenue from the Pentagon (after the acquisition, Analex was renamed the QNA Mission Solutions Group). Analex, which has received extensive funding from DARPA for its technologies, also holds contracts with SPAWAR, the U.S. Navy intelligence research center in San Diego, and with the U.S. Army's First Information Operations Command. For the latter, according to Analex, it provides "subject matter experts" in psychological warfare, information security, electronic warfare and general tactics in the war on terror. With $1.5 billion in defense revenue in 2006, QNA is now the 11th largest U.S. intelligence contractor. The QinetiQ story must be told without speaking to the company, however: QinetiQ officials were not available for comment on Cambone's appointment or any other matter. As for the former undersecretary of defense, "Stephen Cambone is not interested in an interview at this time," Sophie Barrett, QNA's spokesperson, told CorpWatch on January 10.

Stephen Cambone

QinetiQ's main reason for hiring Stephen Cambone was the fact that he had held the unprecedented job of commanding the full spectrum of defense intelligence agencies controlled by the Pentagon, under the 2002 legislation that created his position as the nation's first undersecretary of defense for intelligence. For example he had direct line control over the three national intelligence collection agencies, the National Security Agency (NSA), the National Geospatial Intelligence Agency (NGA) and the National Reconnaissance Office (NRO).

He also oversaw CIFA, which he helped set up in 2003 and transformed into one of the U.S. government's largest collectors of domestic intelligence. Despite occasional criticism from the U.S. Congress for spying on ordinary U.S. citizens, it has thrived at the Pentagon during the administrations of both Donald Rumsfeld as well as Robert Gates, the current secretary of defense.

Cambone was the chief architect of Rumsfeld's so-called "transformation" policies at the Pentagon, which fused data flowing from those agencies into the Pentagon's high-tech war machine. The decisions he made greatly reduced the Pentagon's acquisitions of large weapons systems like aircraft carriers and radically increased its purchases of space-age war technologies such as communications systems, sensors, robots, low-flying satellites and unmanned aerial vehicles (UAVs).

It is precisely these technologies that QinetiQ produces. Its work for CIFA, the company said in the release announcing the deal, reflects QinetiQ's role "as a pioneer in planning and executing the protection of government personnel, critical infrastructure and sensitive defense programs." QinetiQ is the largest suppliers of UAVs and robots to the Pentagon and the U.S. intelligence community. It developed the Zephyr, the world's most advanced UAV, a solar-powered drone that can transmit data and pictures continuously for periods up to three months. QinetiQ also specializes in a jamming technology (called "interference protection") that protects satellite systems from outside activity. And the company is a major supplier of acoustic microsensors designed to track the movements of "insurgents" or "illegal immigrants."

For QinetiQ and Cambone, therefore, this is a match made in heaven. Cambone's insights into "national security affairs and priorities," said CEO Duane Andrews, will help shape QinetiQ's ability "to rapidly deliver solutions to the complex challenges that face our defense and intelligence customers." In other words, there was a natural fit between QinetiQ's products and Cambone's inside knowledge of the future plans and strategies behind the U.S. "intelligence enterprise."

Re-Inventing the Pentagon

Cambone's early career was shaped by his deep involvement with technologies associated with missile defense. His first job out of school was as a staffer for the director of Los Alamos National Laboratory, the defense and nuclear power research center in New Mexico. After that, he worked for SRS Technologies, a defense consultancy that worked closely on missile defense.

From 1990 to 1993, Cambone worked under Duane Andrews, his future boss at QinetiQ, as director for strategic defense policy in the office of Secretary of Defense Dick Cheney. There, he advocated for building a laser- and satellite-based missile defense system known derisively by its opponents as Star Wars, a cause he also took up during the Clinton administration as a senior fellow at the Center for Strategic and International Studies.

During the 1990s, Cambone joined the Project for a New American Century (PNAC), the core advocacy group for the cause of neoconservatism, a radical philosophy that views the U.S. as the political savior of humankind, supposedly through "exporting democracy," and advocates the use of force to expand U.S. power and influence around the world. There, he associated with many of the officials he would later serve with in the George W. Bush administration, including Rumsfeld (another Star Wars fan), Cheney and Paul Wolfowitz, who was deputy secretary of defense from 2001 to 2005.

In 1998, Rumsfeld hired Cambone as staff director of a commission he chaired to study the foreign ballistic missile threat. The commission was created by the Republican-led U.S. Congress specifically as a counterpoint to the CIA, which had downplayed the foreign missile threat in a 1997 National Intelligence Estimate. Among the commission's members were Wolfowitz and former CIA director R. James Woolsey, a prominent necon with close ties to the defense intelligence industry. The final report, largely drafted by Cambone, flatly contradicted the CIA by warning of an imminent threat from North Korea and Iran, and became the centerpiece of the Bush administration's initial defense policies.

After Rumsfeld became defense secretary in 2001, he selected Cambone as his special assistant. Cambone quickly became his most trusted trouble-shooter. And in the initial months of the Bush administration, there was plenty of trouble.

Rumsfeld, with Cheney's support, set out from the beginning to "transform" the U.S. military into a high-tech, computerized fighting force designed specifically to shoot down missiles from "rogue states" and defeat counterinsurgencies and other "low intensive" threats to U.S. national security, primarily in the Middle East. None of this sat very well with the uniformed military and the defense industry, both of which were slow to embrace Rumsfeld's network centric policies and the accompanying cuts imposed on Cold War-era weapons such as aircraft carriers and artillery systems. But the grumbling stopped after September 11, which provided the opening for Rumsfeld and his allies in the administration to make intelligence the centerpiece of their new "war on terror."

In 2002, the U.S. Congress embraced a proposal backed by Cheney and Rumsfeld to create a new undersecretary slot at the Pentagon specifically for intelligence, and Cambone was given the job. The position provided enormous powers: under the law, he exercised the Secretary of Defense's "authority, direction and control" over all DoD intelligence, counterintelligence and security policy, plans and programs. That included the key national agencies, which Rumsfeld and Cambone tenaciously fought to keep within the Pentagon's command and control system (for more on this struggle, see Foreign Policy in Focus http://www.fpif.org/fpiftxt/4795). By 2004, according to a profile in the New York Times, Cambone was presiding biweekly conference calls that included the three-star generals and an admiral who ran the Defense Intelligence Agency (DIA), the NGA, the NRO and the NSA. In theory, they also reported to Rumsfeld and Tenet. But Cambone, the newspaper noted, "has made himself their most active overseer."

With their newfound power, Rumsfeld and Cambone set about to give the Pentagon greater authority in the area of human intelligence, traditionally dominated by the CIA. In 2005, Rumsfeld created a new clandestine espionage branch called the Strategic Support Branch, run out of the DIA and under Cambone's control, to end what he called his "near total dependence" on the CIA. By 2005, under the command of Cambone's controversial deputy, Army Lieutenant General William G. "Jerry" Boykin, the support branch was deploying small, covert teams of case officers, interrogators and special operations forces to places like Somalia, Iran and the Philippines, sometimes without contacting the U.S. ambassador or the CIA station chief, to launch covert military operations and prepare for future U.S. action.

Those were heady days for Cambone: in May 2006, the New York Times would comment that Cambone's "low public profile masks his status as one of the most powerful intelligence officials in the United States." But other publications weren't so kind. Within days of the Times piece, C4ISR Journal, a military publication, described Cambone as a grim and determined ideologue. "'Unpleasant,' 'deeply unpleasant,' 'doesn't joke much' and 'Rumsfeld without the personality' are just some of the ways other reporters and analysts" describe Cambone, the Journal said.

In expanding the power and influence of the Pentagon's special forces, Cambone pushed for policies and technologies that would later make him so useful to QinetiQ, which by 2003 was beginning its expansion in the defense intelligence market. Throughout his tenure at the Pentagon, for example, Cambone pushed for increased spending on satellites, lasers and computer networks that would link the national collection agencies with soldiers and commanders on distant battlefields. In 2004, one year into the intensifying war in Iraq, Cambone proposed spending $30 billion -- one-third of the Pentagon budget for information technology -- on what he called a "transformational satellite system." This was a laser-based project run by the Air Force that would allow the national agencies and the military to share intelligence data and speed its delivery to bomber pilots and ground troops.

During this time, Cambone was also deeply involved in Pentagon planning for a multi-billion dollar "Space Radar" project, a constellation of satellites designed to detect moving and stationary objects from the skies in any weather condition and in darkness. The U.S. Congress only approved a portion of what Cambone wanted for the Air Force and Space Radar projects, however.

In 2006, Cambone presided over an intelligence community review of major intelligence and reconnaissance programs. It concluded that the Pentagon should increase its use of UAVs such as the Global Hawk, which operated at altitudes of 60,000 feet and could stay in the air for 24 hours and more. By this time, the Pentagon was also operating secret "stealth" UAVs as a substitute for satellites. (By 2008, the Associated Press reported in January, the military's reliance on UAVs "that can watch, hunt and sometimes kills insurgents" had soared to more than 500,000 hours in the air, mostly in Iraq. Between January and October 2007 alone, AP found, the Pentagon had more than doubled its monthly use of drones).

Revolving Door

When Cambone's tenure at the Pentagon drew to a close, shortly after the resignation of Donald Rumsfeld in late 2006, the future course of defense spending had already been set: the big money was going to UAVs and low-orbit satellites for the transmission and sharing of intelligence data. (These projects became more crucial in 2007, when the Space Radar was declared a failure and scrapped by Director of National Intelligence Mike McConnell.) And, in response to the increasingly sophisticated tactics of the Iraqi insurgents, millions of dollars were plowed into robots and other technologies aimed at curbing the deadly effects of homemade roadside bombs, that the military has dubbed improvised explosive devices (IEDs).

By joining QinetiQ, less than a year after he resigned from the Pentagon, Cambone has been hired to implement the very policies he helped pioneer at the Pentagon, not as a public servant but as a private businessman benefiting from taxpayer dollars. And with Cambone in the driver's seat in northern Virginia, QinetiQ is set to build on its already thriving business to become one of the premier suppliers of technology to the "intelligence enterprise" that Cambone built.

Climate Change Fueling Boom in Corporate Greenwashing

On the Indonesian island of Bali, thousands of senior government officials are negotiating a plan to slow global warming. The meeting, which will focus on how to limit the greenhouse gas emissions that cause climate change, will run for the first two weeks of December and include 192 countries. This year's conclave is the 13th in a series launched by the United Nations Framework Convention on Climate Change that came into force in 1994.

The coal, gas and oil companies that are major producers of greenhouse gases are finally taking notice of these high-level political discussions, and many have mounted spirited public relations exercises to defend themselves, and even win endorsements of their products.

For example, the weekend before negotiations began, Neste Oil announced plans to build the world's largest bio-diesel facility a few hundred miles northeast of Bali, in the Tuas industrial zone on the island of Singapore. The Finnish company is betting that widespread concern, as well as mandatory limits on greenhouse gases generated by fossil fuels such as coal and petroleum, will increase demand for vegetable-based fuels.

Neste's proposed $800 million plant will use palm oil, which is readily available throughout the region. The company has pledged to buy palm oil certified by the Roundtable on Sustainable Palm Oil and to use proprietary NExBTL technology that produces fuel with lifecycle greenhouse gas emissions 40 to 60 percent less than those of conventional diesel fuel.

"We have a very clear principle that we are aware of the source of all raw materials used in our biodiesel, including palm oil … and that it is produced by sustainable methods," Neste CEO Resto Rinne told reporters, explaining that he expected this market to expand substantially. "In Europe alone, [annual] production will be well over 10 million tons by the end of the decade, and our share of this production will be some 800,000 tons."

Some environmental groups charge that Neste's claims are "greenwash": misleading public relations masking unsustainable practices. Greenpeace, for example, explains that the new plant in Singapore is likely to cause more environmental problems, not fewer, by increasing demand for new palm oil plantations that displace environmentally sensitive forests or wetland areas. In addition to destroying endangered habitats, the scheme could exacerbate global warming.

"Certification does not stop the rainforests from disappearing, for there is no doubt that the increase in demand for palm oil will lead to further destruction of rainforest. There is absolutely no way to grow enough sustainable palm oil for all the producers," said Harri Lammi, the program director for Greenpeace Finland. The week before the climate meeting got underway in Bali, his group attempted to highlight Neste's environmental record by blockading its ships in waters off of Finland.

The clash between Neste and Greenpeace highlights one of the key ideological debates over climate change: Business and politicians believe that a "technological" fix such as alternative fuels can solve the problem and also generate profits; many environmental groups believe the real solution to global warming lies in reducing consumption.

Guaranteed Markets, But Are They Guaranteed Green?

The arguments of the alternative fuel lobby are finding significant political backing. Earlier this year the European Union agreed to binding targets: By 2020, ten percent of its transportation industry's annual 300 million ton fuel consumption must come from alternatives such as biodiesel. China has predicted that it can switch 15 percent of its transport fuel consumption to biofuels, and India has set an ambitious target of 20 percent by 2020.

Even U.S. President George Bush in his January 2007 State of the Union address pledged to "increase the supply of alternative fuels by setting a mandatory fuels standard to require 35 billion gallons of renewable and alternative fuels in 2017 -- and that is nearly five times the current target."

Palm oil is one of the three key biofuels that governments and corporations are promoting as alternatives to fossil fuels. (The others are soy and rapeseed.) An edible vegetable oil obtained from the fruit of the oil palm tree, palm oil has been used as a popular cooking oil in West Africa for centuries. In recent years, it has become a key component of processed foods ranging from KitKat candy bars to Pringles potato chips to Oreo cookies.

The biggest producers of palm oil are Indonesia and Malaysia, where the crop has been grown on plantations established by British colonists in 1917. It was first exported for use as an industrial lubricant and as a base for Sunlight and Palmolive soaps.

The new green boom in biofuels has accelerated the demand for plantations, which in turn has led to widespread forest and peatland clearing. Indeed, a 2007 United Nations Environment Program report earlier this year, found that oil palm plantations are now the leading cause of forest destruction in Indonesia and Malaysia. And more is to come: The Indonesian government wants to put 10 million hectares of land into oil palm cultivation by 2015, up from the current total of 6 million hectares. In Malaysia, palm oil producers are targeting the island province of Sarawak for major expansion.

Local groups have spoken out strongly against this new trend. Meena Raman, head of Friends of the Earth Malaysia, said "Agrofuels is a disaster in the making. Their production, development and trade largely stem from unsustainable energy demand in industrialized countries. We are strongly urging our government to reconsider its decision of turning Malaysia into a major agrofuel producing country, as it is leading to further destruction of our forests and violations of the customary rights of indigenous peoples."

A new Greenpeace report, "Cooking the Climate," points out that razing of forests to create the oil palm plantations is, in itself, a major cause of greenhouse gas emissions. The environmental organization calculates that the burning and drying of carbon-rich peatlands on the Indonesian island of Riau releases about 1.8 billion tons of greenhouse gases a year. The removal of the forests also eliminates one of the planet's crucial air-filtration systems.

A British government report estimated that clearing land for agro-fuel cultivation creates two to nine times more greenhouse gases than the cleaner-burning fuel saves.

Fossil Fuels in Green Packaging

Another company ratcheting up the green rhetoric on climate change is General Electric (GE). Its television advertisement for "clean coal" technologies [which you can view in the upper right corner of this page] portrays scantily-clad models working in a coal mine, while an announcer sums up the message: "Thanks to emissions reducing technology from GE Energy, harnessing the power of coal is looking more beautiful every day."

The ad is part of GE's "ecomagination" campaign to promote "green" products such as lower-energy houses, wind turbines, solar power and water-purification systems, as well as a range of new coal technologies.

The company has joined the U.S. Climate Action Partnership, a coalition of industry and environmental groups that claim to be concerned about global warming. "The time has come for constructive action that draws strength equally from business, government, and non-governmental stakeholders," said Jeffrey Immelt, CEO of Connecticut-based GE, in a statement timed for the day before George Bush's backing of alternative technologies.

While some of the technologies GE sells -- such as wind and solar power -- are indeed carbon neutral, others -- such as its "clean coal" integrated gasification combined-cycle coal power plants -- are questionable.

The term "clean coal" refers to a variety of new technologies under development: chemically washing the fossil fuel of minerals and impurities, burning it at higher pressure and temperature, and increasing efficiency by trapping and burning waste gases that would otherwise have escaped out the smokestack. Another "clean coal" technology is "carbon capture and sequestration," or CCS, which captures coal plant emissions before they enter the atmosphere, and stores them underground.

Many environmental activists note that these "clean coal" technologies are only marginally more efficient and far more expensive. Others, such as CCS, are still on the drawing board and may never work. (In fact, GE has yet to convince any of its clients to buy these new "clean coal" plants, according to California-based Rainforest Action Network, or RAN.)

"Why waste billions of dollars to research an uncertain technology when safer, cleaner energy solutions already exist?" asks Matt Leonard of RAN. "Even if we could capture coal's dangerous emissions, why create such massive waste streams in the first place? All fossil fuels, including coal, are running out. The longer we keep relying on them, the worse off our environment, climate, and society will be."

Immelt has admitted that the new promotion campaign was based on tapping public opinion and profits. "I can't lay claim to be a big environmentalist or nature lover here," the GE head told NBC television this May. "I know that when society changes its mind, you'd better be in front of it, and not behind it. And this is an issue on which society has changed its mind. I came to the conclusion that technology that my company makes can help make it [the climate situation] better, and I can make money doing it, and I can do something good."

Do Nothing, Collect Praise

Other companies have managed to win environmental praise for effectively doing nothing. A case in point is the much heralded $45 billion purchase of Texas state utility TXU by private equity firm Kohlberg, Kravis and Roberts and Texas Pacific Corporation. The buyers won backing from Washington DC-based environmental groups Environmental Defense and the Natural Resources Defense Council in exchange for scrapping plans to build eight of 11 proposed coal plants.

Not everybody is convinced. RAN executive director Michael Brune is skeptical of the scheme, pointing out that TXU could easily shelve its concessions in the future. "The commitments by TXU's new owners should be binding, not voluntary, and the three Texas coal plants TXU still intends to build are three plants too many," he said.

Warning: Greenwash Ahead

The cases of TXU's non-binding concessions in Texas, GE's amorphous "clean coal" promises, and Neste's palm oil strategy in South Asia illustrate a widening trend: As the climate change issue becomes mainstream, more and more companies are jumping on the public relations bandwagon. If these examples serve as models, they will try to win endorsements for agreeing to do nothing, promise things that they cannot guarantee, and take advantage of the debate to profit from environmentally unfriendly technologies.

Activists attending the Bali gathering say that the real answer to climate change will not be generated by profit-motivated corporations, but by the concrete commitments of political leaders backed by the force of law. Raman of Friends of the Earth International, puts it simply: "We need Northern countries to develop stringent policies to reduce their energy consumption and attempt to find solutions to their energy needs locally."

Bush Goes Private to Spy on You

A new intelligence institution to be inaugurated soon by the Bush administration will allow government spying agencies to conduct broad surveillance and reconnaissance inside the United States for the first time. Under a proposal being reviewed by Congress, a National Applications Office (NAO) will be established to coordinate how the Department of Homeland Security (DHS) and domestic law enforcement and rescue agencies use imagery and communications intelligence picked up by U.S. spy satellites. If the plan goes forward, the NAO will create the legal mechanism for an unprecedented degree of domestic intelligence gathering that would make the United States one of the world's most closely monitored nations. Until now, domestic use of electronic intelligence from spy satellites was limited to scientific agencies with no responsibility for national security or law enforcement.

The intelligence-sharing system to be managed by the NAO will rely heavily on private contractors, including Boeing, BAE Systems, L-3 Communications and Science Applications International Corporation (SAIC). These companies already provide technology and personnel to U.S. agencies involved in foreign intelligence, and the NAO greatly expands their markets. Indeed, at an intelligence conference in San Antonio, Texas, last month, the titans of the industry were actively lobbying intelligence officials to buy products specifically designed for domestic surveillance.

The NAO was created under a plan tentatively approved in May 2007 by Director of National Intelligence Michael McConnell. Specifically, the NAO will oversee how classified information collected by the National Security Agency (NSA), the National Geospatial-Intelligence Agency (NGA) and other key agencies is used within the United States during natural disasters, terrorist attacks and other events affecting national security. The most critical intelligence will be supplied by the NSA and the NGA, which are often referred to by U.S. officials as the "eyes" and "ears" of the intelligence community.

The NSA, through a global network of listening posts, surveillance planes, and satellites, captures signals from phone calls, email and internet traffic, and translates and analyzes them for U.S. military and national intelligence officials.

The National Geospatial-Intelligence Agency (NGA), which was formally inaugurated in 2003, provides overhead imagery and mapping tools that allow intelligence and military analysts to monitor events from the skies and space. The NSA and the NGA have a close relationship with the supersecret National Reconnaissance Agency (NRO), which builds and maintains the U.S. fleet of spy satellites and operates the ground stations where the NSA's signals and the NGA's imagery are processed and analyzed. By law, their collection efforts are supposed to be confined to foreign countries and battlefields.

The National Applications Office was conceived in 2005 by the Office of the Director of National Intelligence (ODNI), which Congress created in 2004 to oversee the 16 agencies that make up the U.S. intelligence community. The ODNI, concerned that the legal framework for U.S. intelligence operations had not been updated for the global "war on terror," turned to Booz Allen Hamilton of McLean, Va., one of the largest contractors in the spy business. The company was tasked with studying how intelligence from spy satellites and photoreconnaissance planes could be better used domestically to track potential threats to security within the United States. The Booz Allen study was completed in May of that year and has since become the basis for the NAO oversight plan. In May 2007, McConnell, the former executive vice president of Booz Allen, signed off on the creation of the NAO as the principal body to oversee the merging of foreign and domestic intelligence collection operations.

The NAO is "an idea whose time has arrived," Charles Allen, a top U.S. intelligence official, told the Wall Street Journal in August 2007 after it broke the news of the NAO's creation. Allen, the DHS's chief intelligence officer, will head the new program. The announcement came just days after President George W. Bush signed a new law approved by Congress to expand the ability of the NSA to eavesdrop, without warrants, on telephone calls, email and faxes passing through telecommunications hubs in the United States when the government suspects agents of a foreign power may be involved. "These [intelligence] systems are already used to help us respond to crises," Allen later told the Washington Post. "We anticipate that we can also use them to protect Americans by preventing the entry of dangerous people and goods into the country, and by helping us examine critical infrastructure for vulnerabilities."

Donald Kerr, a former NRO director who is now the No. 2 at ODNI, recently explained to reporters that the intelligence community was no longer discussing whether or not to spy on U.S. citizens: "Our job now is to engage in a productive debate, which focuses on privacy as a component of appropriate levels of security and public safety,'' Kerr said. ''I think all of us have to really take stock of what we already are willing to give up, in terms of anonymity, but [also] what safeguards we want in place to be sure that giving that doesn't empty our bank account or do something equally bad elsewhere.''

What will the NAO do?

The plan for the NAO builds on a domestic security infrastructure that has been in place for at least seven years. After the terrorist attacks of Sept. 11, 2001, the NSA was granted new powers to monitor domestic communications without obtaining warrants from a secret foreign intelligence court established by Congress in 1978 (that warrantless program ended in January 2007 but was allowed to continue, with some changes, under legislation passed by Congress in August 2007).

Moreover, intelligence and reconnaissance agencies that were historically confined to spying on foreign countries have been used extensively on the home front since 2001. In the hours after the Sept. 11, 2001, attacks in New York, for example, the Bush administration called on the NGA to capture imagery from lower Manhattan and the Pentagon to help in the rescue and recovery efforts. In 2002, when two deranged snipers terrified the citizens of Washington and its Maryland and Virginia suburbs with a string of fatal shootings, the Federal Bureau of Investigation (FBI) asked the NGA to provide detailed images of freeway interchanges and other locations to help spot the pair.

The NGA was also used extensively during Hurricane Katrina, when the agency provided overhead imagery -- some of it supplied by U-2 photoreconnaissance aircraft -- to federal and state rescue operations. The data, which included mapping of flooded areas in Louisiana and Mississippi, allowed residents of the stricken areas to see the extent of damage to their homes and helped first-responders locate contaminated areas as well as schools, churches and hospitals that might be used in the rescue. More recently, during the October 2007 California wildfires, the Federal Emergency Management Agency (FEMA) asked the NGA to analyze overhead imagery of the fire zones and determine the areas of maximum intensity and damage. In every situation that the NGA is used domestically, it must receive a formal request from a lead domestic agency, according to agency spokesperson David Burpee. That agency is usually FEMA, which is a unit of DHS.

At first blush, the idea of a U.S. intelligence agency serving the public by providing imagery to aid in disaster recovery sounds like a positive development, especially when compared to the Bush administration's misuse of the NSA and the Pentagon's Counter-Intelligence Field Activity (CIFA) to spy on American citizens. But the notion of using spy satellites and aircraft for domestic purposes becomes problematic from a civil liberties standpoint when the full capabilities of agencies like the NGA and the NSA are considered.

Imagine, for example, that U.S. intelligence officials have determined, through NSA telephone intercepts, that a group of worshipers at a mosque in Oakland, Calif., has communicated with an Islamic charity in Saudi Arabia. This is the same group that the FBI and the U.S. Department of the Treasury believe is linked to an organization unfriendly to the United States.

Imagine further that the FBI, as a lead agency, asks and receives permission to monitor that mosque and the people inside using high-resolution imagery obtained from the NGA. Using other technologies, such as overhead traffic cameras in place in many cities, that mosque could be placed under surveillance for months, and -- through cell phone intercepts and overhead imagery -- its suspected worshipers carefully tracked in real time as they moved almost anywhere in the country.

The NAO, under the plan approved by ODNI's McConnell, would determine the rules that will guide the DHS and other lead federal agencies when they want to use imagery and signals intelligence in situations like this, as well as during natural disasters. If the organization is established as planned, U.S. domestic agencies will have a vast array of technology at their disposal. In addition to the powerful mapping and signals tools provided by the NGA and the NSA, domestic agencies will also have access to measures and signatures intelligence (MASINT) managed by the Defense Intelligence Agency (DIA), the principal spying agency used by the secretary of defense and the Joint Chiefs of Staff.

(MASINT is a highly classified form of intelligence that uses infrared sensors and other technologies to "sniff" the atmosphere for certain chemicals and electromagnetic activity, and "see" beneath bridges and forest canopies. Using its tools, analysts can detect signs that a nuclear power plant is producing plutonium, determine from truck exhaust what types of vehicles are in a convoy, and detect people and weapons hidden from the view of satellites or photoreconnaissance aircraft.)

Created by contractors

The study group that established policies for the NAO was jointly funded by the ODNI and the U.S. Geological Survey (USGS), one of only two domestic U.S. agencies that is currently allowed, under rules set in the 1970s, to use classified intelligence from spy satellites. (The other is NASA, the National Aeronautics and Space Administration.) The group was chaired by Keith Hall, a Booz Allen vice president who manages his firm's extensive contracts with the NGA and previously served as the director of the NRO.

Other members of the group included seven former intelligence officers working for Booz Allen, as well as retired Army Lt. Gen. Patrick M. Hughes, the former director of the DIA and vice president of homeland security for L-3 Communications, a key NSA contractor; and Thomas W. Conroy, the vice president of national security programs for Northrop Grumman, which has extensive contracts with the NSA and the NGA and throughout the intelligence community.

From the start, the study group was heavily weighted toward companies with a stake in both foreign and domestic intelligence. Not surprisingly, its contractor-advisers called for a major expansion in the domestic use of the spy satellites that they sell to the government. Since the end of the Cold War and particularly since the Sept. 11, 2001, attacks, they said, the "threats to the nation have changed, and there is a growing interest in making available the special capabilities of the intelligence community to all parts of the government, to include homeland security and law enforcement entities and on a higher priority basis."

Contractors are not new to the U.S. spy world. Since the creation of the Central Intelligence Agency (CIA) and the modern intelligence system in 1947, the private sector has been tapped to design and build the technology that facilitates electronic surveillance. Lockheed, for example, built the U-2, the famous surveillance plane that flew scores of spy missions over the Soviet Union and Cuba. During the 1960s, Lockheed was a prime contractor for the Corona system of spy satellites that greatly expanded the CIA's abilities to photograph secret military installations from space. IBM, Cray Computers and other companies built the supercomputers that allowed the NSA to sift through data from millions of telephone calls and analyze them for intelligence that was passed on to national leaders.

Spending on contracts has increased exponentially in recent years along with intelligence budgets, and the NSA, the NGA and other agencies have turned to the private sector for the latest computer and communications technologies and for intelligence analysts. For example, today about half of staff at the NSA and NGA are private contractors. At the DIA, 70 percent of the workers are contractors. But the most privatized agency of all is the NRO, where a whopping 90 percent of the work force receive paychecks from corporations. All told the U.S. intelligence agencies spend some 70 percent of their estimated $60 billion annual budget on contracts with private companies, according to documents this reporter obtained in June 2007 from the ODNI.

The plans to increase domestic spying are estimated to be worth billions of dollars in new business for the intelligence contractors. The market potential was on display in October at GEOINT 2007, the annual conference sponsored by the U.S. Geospatial Intelligence Foundation (USGIF), a nonprofit organization funded by the largest contractors for the NGA. During the conference, which took place in October at the spacious Henry B. Gonzalez Convention Center in downtown San Antonio, many companies were displaying spying and surveillance tools that had been used in Afghanistan and Iraq and were now being rebranded for potential domestic use.

BAE Systems Inc.

On the first day of the conference, three employees of BAE Systems Inc. who had just returned from a three-week tour of Iraq and Afghanistan with the NGA demonstrated a new software package called SOCET GXP. (BAE Systems Inc. is the U.S. subsidiary of the U.K.-based BAE, the third-largest military contractor in the world.)

GXP uses Google Earth software as a basis for creating three-dimensional maps that U.S. commanders and soldiers use to conduct intelligence and reconnaissance missions. Eric Bruce, one of the BAE employees back from the Middle East, said his team trained U.S. forces to use the GXP software "to study routes for known terrorist sites" as well as to locate opium fields. "Terrorists use opium to fund their war," he said. Bruce also said his team received help from Iraqi citizens in locating targets. "Many of the locals can't read maps, so they tell the analysts, 'there is a mosque next to a hill,'" he explained.

Bruce said BAE's new package is designed for defense forces and intelligence agencies but can also be used for homeland security and by highway departments and airports. Earlier versions of the software were sold to the U.S. Army's Topographic Engineering Center, where it has been used to collect data on more than 12,000 square kilometers of Iraq, primarily in urban centers and over supply routes.

Another new BAE tool displayed in San Antonio was a program called GOSHAWK, which stands for "Geospatial Operations for a Secure Homeland -- Awareness, Workflow, Knowledge." It was pitched by BAE as a tool to help law enforcement and state and local emergency agencies prepare for, and respond to, "natural disasters and terrorist and criminal incidents." Under the GOSHAWK program, BAE supplies "agencies and corporations" with data providers and information technology specialists "capable of turning geospatial information into the knowledge needed for quick decisions." A typical operation might involve acquiring data from satellites, aircraft and sensors in ground vehicles, and integrating those data to support an emergency or security operations center. One of the program's special attributes, the company says, is its ability to "differentiate levels of classification," meaning that it can deduce when data are classified and meant only for use by analysts with security clearances.

These two products were just a sampling of what BAE, a major player in the U.S. intelligence market, had to offer. BAE's services to U.S. intelligence -- including the CIA and the National Counter-Terrorism Center -- are provided through a special unit called the Global Analysis Business Unit. It is located in McLean, Va., a stone's throw from the CIA. The unit is headed by John Gannon, a 25-year veteran of the CIA who reached the agency's highest analytical ranks as deputy director of intelligence and chairman of the National Intelligence Council. Today, as a private sector contractor for the intelligence community, Gannon manages a staff of more than 800 analysts with security clearances.

A brochure for the Global Analysis unit distributed at GEOINT 2007 explains BAE's role and, in the process, underscores the degree of outsourcing in U.S. intelligence. "The demand for experienced, skilled and cleared analysts -- and for the best systems to manage them -- has never been greater across the Intelligence and Defense Communities, in the field and among federal, state and local agencies responsible for national and homeland security," BAE says. The mission of the Global Analysis unit, it says, "is to provide policymakers, warfighters and law enforcement officials with analysts to help them understand the complex intelligence threats they face, and work force management programs to improve the skills and expertise of analysts."

At the bottom of the brochure is a series of photographs illustrating BAE's broad reach: a group of analysts monitoring a bank of computers; three employees studying a map of Europe, the Middle East and the Horn of Africa; the outlines of two related social networks that have been mapped out to show how their members are linked; a bearded man, apparently from the Middle East and presumably a terrorist; the fiery image of a car bomb after it exploded in Iraq; and four white radar domes (known as radomes) of the type used by the NSA to monitor global communications from dozens of bases and facilities around the world.

The brochure may look and sound like typical corporate public relations. But amid BAE's spy talk were two phrases strategically placed by the company to alert intelligence officials that BAE has an active presence inside the United States. The tip-off words were "federal, state and local agencies," "law enforcement officials" and "homeland security." By including them, BAE was broadcasting that it is not simply a contractor for agencies involved in foreign intelligence but has an active presence as a supplier to domestic security agencies, a category that includes the Department of Homeland Security (DHS) and the FBI, as well as local and state police forces stretching from Maine to Hawaii.

ManTech, Boeing, Harris and L-3

ManTech International, an important NSA contractor based in Fairfax, Va., has perfected the art of creating multiagency software programs for both foreign and domestic intelligence. After the Sept. 11, 2001, attacks, it developed a classified program for the Defense Intelligence Agency called the Joint Regional Information Exchange System. DIA used it to combine classified and unclassified intelligence on terrorist threats on a single desktop. ManTech then tweaked that software for the Department of Homeland Security and sold it to DHS for its Homeland Security Information Network. According to literature ManTech distributed at GEOINT, that software will "significantly strengthen the exchange of real-time threat information used to combat terrorism." ManTech, the brochure added, "also provides extensive, advanced information technology support to the National Security Agency" and other agencies.

In a nearby booth, Chicago-based Boeing, the world's second largest defense contractor, was displaying its "information sharing environment" software, which is designed to meet the Office of the Director of National Intelligence's new requirements on agencies to stop buying "stovepiped" systems that can't talk to each other. The ODNI wants to focus on products that will allow the NGA and other agencies to easily share their classified imagery with the CIA and other sectors of the community. "To ensure freedom in the world, the United States continues to address the challenges introduced by terrorism," a Boeing handout said. Its new software, the company said, will allow information to be "shared efficiently and uninterrupted across intelligence agencies, first responders, military and world allies." Boeing has a reason for publishing boastful material like this: In 2005, it lost a major contract with the NRO to build a new generation of imaging satellites after ringing up billions of dollars in cost overruns. The New York Times recently called the Boeing project "the most spectacular and expensive failure in the 50-year history of American spy satellite projects."

Boeing's geospatial intelligence offerings are provided through its Space and Intelligence Systems unit, which also holds contracts with the NSA. It allows agencies and military units to map global shorelines and create detailed maps of cities and battlefields, complete with digital elevation data that allow users to construct three-dimensional maps. (In an intriguing aside, one Boeing intelligence brochure lists among its "specialized organizations" Jeppesen Government and Military Services. According to a 2006 account by New Yorker reporter Jane Mayer, Jeppesen provided logistical and navigational assistance, including flight plans and clearance to fly over other countries, to the CIA for its "extraordinary rendition" program.)

Although less known as an intelligence contractor than BAE and Boeing, the Harris Corp. has become a major force in providing contracted electronic, satellite and information technology services to the intelligence community, including the NSA and the NRO. In 2007, according to its most recent annual report, the $4.2 billion company, based in Melbourne, Fla., won several new classified contracts. NSA awarded one of them for software to be used by NSA analysts in the agency's "Rapidly Deployable Integrated Command and Control System," which is used by the NSA to transmit "actionable intelligence" to soldiers and commanders in the field. Harris also supplies geospatial and imagery products to the NGA. At GEOINT, Harris displayed a new product that allows agencies to analyze live video and audio data imported from UAVs. It was developed, said Fred Poole, a Harris market development manager, "with input from intelligence analysts who were looking for a video and audio analysis tool that would allow them to perform 'intelligence fusion'" -- combining information from several agencies into a single picture of an ongoing operation.

For many of the contractors at GEOINT, the highlight of the symposium was an "interoperability demonstration" that allowed vendors to show how their products would work in a domestic crisis.

One scenario involved Cuba as a rogue nation supplying spent nuclear fuel to terrorists bent on creating havoc in the United States. Implausible as it was, the plot, which involved maritime transportation and ports, allowed the companies to display software that was likely already in use by the Department of Homeland Security and Naval Intelligence. The "plot" involved the discovery by U.S. intelligence of a Cuban ship carrying spent nuclear fuel heading for the U.S. Gulf Coast; an analysis of the social networks of Cuban officials involved with the illicit cargo; and the tracking and interception of the cargo as it departed from Cuba and moved across the Caribbean to Corpus Christi, Texas, a major port on the Gulf Coast. The agencies involved included the NGA, the NSA, Naval Intelligence and the Marines, and some of the key contractors working for those agencies. It illustrated how sophisticated the U.S. domestic surveillance system has become in the six years since the 9/11 attacks.

L-3 Communications, which is based in New York City, was a natural for the exercise: As mentioned earlier, retired Army Lt. Gen. Patrick M. Hughes, its vice president of homeland security, was a member of the Booz Allen Hamilton study group that advised the Bush administration to expand the domestic use of military spy satellites. At GEOINT, L-3 displayed a new program called "multi-INT visualization environment" that combines imagery and signals intelligence data that can be laid over photographs and maps. One example shown during the interoperability demonstration showed how such data would be incorporated into a map of Florida and the waters surrounding Cuba. With L-3 a major player at the NSA, this demonstration software is likely seeing much use as the NSA and the NGA expand their information-sharing relationship.

Over the past two years, for example, the NGA has deployed dozens of employees and contractors to Iraq to support the "surge" of U.S. troops. The NGA teams provide imagery and full-motion video -- much of it beamed to the ground from Unmanned Aerial Vehicles (UAV) -- that help U.S. commanders and soldiers track and destroy insurgents fighting the U.S. occupation. And since 2004, under a memorandum of understanding with the NSA, the NGA has begun to incorporate signals intelligence into its imagery products. The blending technique allows U.S. military units to track and find targets by picking up signals from their cell phones, follow the suspects in real time using overhead video, and direct fighter planes and artillery units to the exact location of the targets, and blow them to smithereens.

That's exactly how U.S. Special Forces tracked and killed Abu Musab al-Zarqawi, the alleged leader of Al Qaeda in Iraq, the NGA's director, Navy Vice Adm. Robert Murrett, said in 2006. Later, Murrett told reporters during GEOINT 2007, the NSA and the NGA have cooperated in similar fashion in several other fronts of the "war on terror," including in the Horn of Africa, where the U.S. military has attacked Al Qaeda units in Somalia, and in the Philippines, where U.S. forces are helping the government put down the Muslim insurgent group Abu Sayyaf. "When the NGA and the NSA work together, one plus one equals five," said Murrett.

Civil liberty worries

For U.S. citizens, however, the combination of NGA imagery and NSA signals intelligence in a domestic situation could threaten important constitutional safeguards against unwarranted searches and seizures. Kate Martin, the director of the Center for National Security Studies, a nonprofit advocacy organization, has likened the NAO plan to "Big Brother in the Sky." The Bush administration, she told the Washington Post, is "laying the bricks one at a time for a police state."

Some Congress members, too, are concerned. "The enormity of the NAO's capabilities and the intended use of the imagery received through these satellites for domestic homeland security purposes, and the unintended consequences that may arise, have heightened concerns among the general public, including reputable civil rights and civil liberties organizations," Bennie G. Thompson, a Democratic member of Congress from Mississippi and the chairman of the House Homeland Security Committee, wrote in a September letter to Secretary of Homeland Security Michael Chertoff. Thompson and other lawmakers reacted with anger after reports of the NAO and the domestic spying plan were first revealed by the Wall Street Journal in August. "There was no briefing, no hearing, and no phone call from anyone on your staff to any member of this committee of why, how or when satellite imagery would be shared with police and sheriffs' officers nationwide," Thompson complained to Chertoff.

At a hastily organized hearing in September, Thompson and others demanded that the opening of the NAO be delayed until further studies were conducted on its legal basis and questions about civil liberties were answered. They also demanded biweekly updates from Chertoff on the activities and progress of the new organization. Others pointed out the potential danger of allowing U.S. military satellites to be used domestically. "It will terrify you if you really understand the capabilities of satellites," warned Jane Harman, a Democratic member of Congress from California, who represents a coastal area of Los Angeles, where many of the nation's satellites are built. As Harman well knows, military spy satellites are far more flexible, offer greater resolution, and have considerably more power to observe human activity than commercial satellites. "Even if this program is well-designed and executed, someone somewhere else could hijack it," Harman said during the hearing.

The NAO was supposed to open for business on Oct. 1, 2007. But the congressional complaints have led the ODNI and DHS to delay their plans. The NAO "has no intention to begin operations until we address your questions," Charles Allen of DHS explained in a letter to Thompson. In an address at the GEOINT conference in San Antonio, Allen said that the ODNI is working with DHS and the Departments of Justice and Interior to draft the charter for the new organization, which he said will face "layers of review" once it is established.

Yet, given the Bush administration's record of using U.S. intelligence agencies to spy on U.S. citizens, it is difficult to take such promises at face value. Moreover, the extensive corporate role in foreign and domestic intelligence means that the private sector has a great deal to gain in the new plan for intelligence sharing. Because most private contracts with intelligence agencies are classified, however, the public will have little knowledge of this role. Before Congress signs off on the NAO, it should create a better oversight system that would allow the House of Representatives and the Senate to monitor the new organization and to examine how BAE, Boeing, Harris and its fellow corporations stand to profit from this unprecedented expansion of America's domestic intelligence system.

Child Suicide No Deterrent for Profit-Hungry Drug Maker

A striking young woman with a talent for painting, Sharise Gatchell was -- like many teenagers -- painfully self-conscious. At 14, she moved with her family from South Africa to England where at first she found it hard to make friends. By the age of 16 she was acutely embarrassed that her periods hadn't started and felt she was sweating excessively. Just the sort of thing to make adolescence even more painful than usual. Her mother, Stephanie, took her to see a consultant physician at the local hospital. Stephanie Gatchell recalls:

"During that consultation she became a bit emotional because she was explaining to him about the problems she had and how it affected her social life. Then she started crying and I was amazed. He asked her, 'Sharise, do you sometimes feel like ending it all?', and I couldn't believe it when she said 'Yes I do.' And then he started talking about paroxetine and suggesting that she try it."

"Off-label" Prescriptions

Paroxetine -- better known as Paxil in the U.S. -- is an antidepressant. It is licensed only for adults, but doctors are allowed to prescribe any medicine if they think it will help their patient, a practice called "off-label" prescribing. Sharise was not the only teenager getting paroxetine off-label. Around 7,000 children a year were on the drug in the UK; and many more in the U.S.

Within days of starting on paroxetine, Stephanie noticed a dramatic change in her daughter: she became more confident. But with the confidence came aggression and worse:

"One day in the kitchen her sleeve pulled up slightly and I noticed that there were cut marks on her left arm. I couldn't believe my eyes. She was obviously self-harming while she was on the drug, something she's never ever done before."

Stephanie persuaded her daughter to stop taking paroxetine. But in 2003 Sharise went back on it without telling her mother. When her parents returned from a weekend break, Stephanie immediately realized something was terribly wrong:

"I went upstairs before my husband came in, and the moment I got to the landing at the top and I turned round and looked, she was hanging from the loft hatch. I tried to revive her, but before I even started I realized I was too late."

Next to her daughter's suicide note lay a packet of paroxetine. Stephanie instinctively blamed the drug and now blames herself for letting her daughter take it. But she couldn't have known what the drug's manufacturer had known for years.

GlaxoSmithKline Experiments on Children

UK-based GlaxoSmithKline (GSK), the second largest drug company in the world, which recorded 2006 sales of over $45 billion, had begun a series of clinical trials in the mid-1990s to test whether paroxetine would work in depressed children. Paroxetine had already been hailed as a wonder drug in adults as a treatment for everything from depression and stress to anxiety and even shyness. By the new millennium 100 million paroxetine prescriptions had been written worldwide, bringing in $2 billion a year for GSK and placing the antidepressant a close second to Prozac in popularity.

With the adult market sewn up, the company sought new ways to make money from the drug, or "life cycle management," as the approach is known in the pharmaceutical industry. The U.S. Food and Drug Administration wanted to boost the number of medicines tested for children and had introduced an incentive that would give companies a six-month extension on their patent just for carrying out pediatric trials. For paroxetine alone that would be worth $1 billion. And if GSK could be the first company to prove its antidepressant was safe and effective for children, the rewards would be even higher, as paroxetine could become the market leader.

Hundreds of children were recruited from around the world to take part in three clinical trials. One group was given the drug, the other a placebo. They were randomized controlled trials (RCT) where neither the children nor their doctors knew whether they were taking the active drug or the placebo until the end of the study. This is widely accepted as the best way of working out whether a drug causes a particular effect: the gold standard in terms of evidence.

But the outcome of these the trials was not what GSK had been hoping for. Paroxetine proved no better than placebo. In the biggest trial, Study 329, which was conducted across several sites in the U.S., 11 of the 93 children who took paroxetine developed serious side-effects; seven had to be hospitalized. Significantly more had self-harmed or attempted suicide on the drug than on placebo.

The BBC (British Broadcasting Corporation) obtained confidential case reports from Study 329 which detail what happened to them:

"[13 days after starting paroxetine] the patient became very angry. He punched pictures, broke glass and sustained lacerations that required six sutures... he expressed hopelessness and possible suicide thoughts."

"The patient began exhibiting symptoms of disinhibition, grandiosity and expansive mood around week four [after eight weeks] the patient became agitated and said she would kill herself."

"[11 days after starting paroxetine] the patient was hospitalized for psychosis with auditory hallucinations and superficial cuts."

Yet this was a drug that was supposed to make children happier and reduce the risk of suicide.

The company knew it had a problem. In an internal memo to senior executives in 1998 the product director for paroxetine admitted:

"The results of the studies were disappointing. The possibility of obtaining a safety statement from this data was considered but rejected. Consultation of the marketing teams confirmed that this would be unacceptable commercially."

In other words, publishing the data in full would undermine the drug's safety profile and put profits at risk. It took five years for this information to reach the public domain and only then as a result of the BBC investigation. In the intervening years doctors continued to prescribe a drug to tens of thousands of vulnerable children, ignorant of the fact that it had not been shown to work and was harmful to some.

Lawsuits Reveal Questionable Paper Trail

This has been described by British psychiatrist Dr. David Healy as "the biggest medical scandal since thalidomide." Dr. Healy, rather than the regulatory authorities charged with monitoring the safety of medicines, was instrumental in uncovering the evidence at the heart of the scandal. It was a series of U.S. legal actions that led Dr. Healy, as an expert witness, and the legal team with whom he was working, deep into GSK's secret archives, where they found a series of damning internal documents.

What this paper trail reveals is how the company, with no hope of obtaining a children's license, devised a back-door method of marketing paroxetine for childhood depression. In came the spin-doctors to bury the inconvenient facts and spread the good news to doctors around the world that paroxetine was safe and effective for children.

Drug companies discovered long ago that doctors are much more likely to be persuaded by their peers than by the hard sell of sales reps. So GSK built a business relationship with several leading academics to write articles and speak at conferences, effectively selling paroxetine for the company. They are known in the trade as "Key Opinion Leaders."

Internal company documents reveal that Professor Martin Keller, Chair of Psychiatry at Brown University in the U.S., was one of the company's leading Key Opinion Leaders. He was named as the author of Study 329. But the documents cast doubt on whether he actually analyzed the data himself and wrote the final paper. In a memo, Professor Keller thanks a ghost writer for the initial preparation of the study manuscript -- a ghost writer who works for a medical public relations company hired by GSK:

"You did a superb job with this. Thank you very much. It is excellent. Enclosed are some rather minor changes from me."

It is clear from the internal correspondence that the ghost writer was making some important decisions about how to present the data for publication. At one point a senior GSK executive comments that: "It seems incongruous that we state that paroxetine is safe yet report so many Serious Adverse Events."

GSK suggests to the public relations person that she make clear paroxetine may have caused all 11 of the serious side-effects. But the final article says: "Of the 11 patients, only headache (1 patient) was considered to be related to the treatment."

The paper never states clearly how many children became suicidal, nor does it explore whether the drug was to blame. Instead, it concludes that paroxetine is "generally well-tolerated and effective".

The next step in GSK's marketing plan was to get the study published. Doctors rely on medical journals to give them advice they can trust. The first journal GSK approached spotted flaws in the study and rejected it. So the company sent it to the premier children's mental health magazine, the Journal of the American Academy of Child and Adolescent Psychiatry. Its peer reviewers also spotted the flaws, as is clear from their confidential comments:

"Overall. Results do not clearly indicate efficacy, authors need to clearly note this."

"The relatively high rate of serious adverse effects was not addressed in the discussion."

"Given the high placebo response rate, are [these drugs] an acceptable first-line therapy for depressed teenagers?"

Nevertheless, the journal published the study. Who knows how many child and adolescent psychiatrists around the world were influenced by the article's misleading conclusion?

At the same time, another of GSK's PR people was saying in an internal memo:

"Originally we had planned to do extensive media relations surrounding this study until we actually viewed the results. Essentially the study did not really show paroxetine was effective in treating adolescent depression, which is not something we want to publicize."

Objective Medical Opinion?

When I first started looking at Study 329 for the BBC in 2002, I was confused about its findings. The published article's conclusions seemed at odds with the details of the study. I went to Philadelphia to interview one of the authors and came across another of GSK's Key Opinion Leaders -- Dr. Neil Ryan, an eminent child psychiatrist at the University of Pittsburgh. He was speaking at an American Psychiatric Association symposium sponsored by GSK but I had no reason at that time to think he was anything other than independent.

Dr. Ryan told the audience that paroxetine was effective for children with depression. He didn't mention anything about the apparent high rate of psychiatric side-effects of paroxetine in Study 329. But the more I studied the data, the more convinced I became that paroxetine was causing serious problems for some kids who took it. When I returned to Britain, I pursued him by telephone but he refused to talk to me about it.

Fast forward four years, when the internal GSK documents revealed what had actually been going on behind the scenes. Dr. Ryan had been asking the company that sponsored his research how he should deal with my awkward questions, emailing all my correspondence to them. In one email he said:

"I'll call you again later today and you can advise on how might be best to handle this."

GSK denies that it promoted paroxetine for off-label use through Key Opinion Leaders or any other route, laying the responsibility firmly at the door of individual clinicians.

A statement issued by the company reads: "Any decision to prescribe a medicine outside its authorized indications, in the EU or the U.S., is made by a doctor on the basis of his/her clinical judgement and the interests of their patient."

But where do doctors get the information from that gives them the confidence to prescribe off-label? From medical journals and conferences.

It was the documents that in the end exposed the Key Opinion Leaders and the drug company. Without the U.S. legal action we would have been none the wiser. The drug is now effectively banned in the UK for use in under-18s and in the U.S. it carries a "black box" warning about the risk of suicidal behaviour.

This drug was GSK's golden egg for many years and a lucrative business was built around its promotion. So it is perhaps not surprising the company dismissed my investigation as media scaremongering. What is surprising, though, is how many doctors on both sides of the Atlantic who claim to practice evidence-based medicine still refuse to acknowledge the damage the drugs can do -- even though the evidence comes from GSK's own RCTs and the company's internal correspondence clearly shows how they tried to cover it up.

Sales Affected by Warning Labels

Dr. Mike Shooter, former President of the Royal College of Psychiatrists and a child psychiatrist who used to prescribe paroxetine, says:

"I personally felt cheated and heaven only knows what the children, adolescents and their parents and their doctors on the other end of that felt. Very much the same. This has huge implications, right through medicine."

Professor Keller and Dr. Ryan seem unabashed by their role in the scandal. A few months ago Professor Keller co-authored another paper, on the impact of media reporting on prescribing. Rather than exploring how those conducting the trials overlooked the damage to children caused by the drug, he and his co-authors expressed concern that prescriptions of antidepressants to children have declined sharply in the U.S. since the addition of the black box warning -- as if the increased risk of suicidal behaviour on the drugs wasn't something that should affect prescribing.

The FDA is now considering whether to remove the black box warning on paroxetine and other similar antidepressants because it is scaring doctors. In the UK, the regulatory authorities are investigating whether GSK acted fraudulently in its conduct over Study 329. Theoretically, criminal charges could be brought, but the medicine's regulator is fully-funded by the drugs industry, so don't hold your breath.

Meanwhile, Stephanie Gatchell and her husband have moved away from the home that holds so many awful memories, to start a new life in Ireland. They can't forgive GlaxoSmithKline for concealing what it knew about paroxetine:

"I can't understand how they could possibly be so devious, and all just because of profit. I think the decision-makers in that company should be brought to justice. They have a lot to explain."

How Much Iraqi Crude Oil is Being Stolen? Mystery of the Missing Meters

The line of ships at the Al Basra Oil Terminal (ABOT) stretches south to the horizon, patiently waiting in the searing heat of the Northern Arabian Gulf as four giant supertankers load up. Close by, two more tankers fill up at the smaller Khawr Al Amaya Oil Terminal (KAAOT). Guarding both terminals are dozens of heavily-armed U.S. Navy troops and Iraqi Marines who live on the platforms.

These two offshore terminals, a maze of pipes and precarious metal walkways, deliver some 1.6 million barrels of crude oil, at least 85 percent of Iraq's output, to buyers from all over the world. If the southern oil fields are the heart of Iraq's economy, its main arteries are three 40-plus inch pipelines that stretch some 52 miles from Iraq's wells to the ports.

Heavily armed soldiers spend their days at the oil terminals scanning the horizon looking for suicide bombers and stray fishing dhows (boats). Meanwhile, right under their noses, smugglers are suspected to be diverting an estimated billions of dollars worth of crude onto tankers because the oil metering system that is supposed monitor how much crude flows into and out of ABOT and KAAOT -- has not worked since the March 2003 U.S. invasion of Iraq.

Officials blame the four-year delay in repairing the relatively simple system on "security problems." Others point to the failed efforts of the two U.S. companies hired to repair the southern oil fields, fix the two terminals, and the meters: Halliburton of Houston, Texas, and Parsons of Pasadena, California.

The Special Inspector General for Iraq Reconstruction (SIGIR) is scheduled to publish a report this spring that is expected criticize the companies' failure to complete the work.

Rumors are rife among suspicious Iraqis about the failure to measure the oil flow. "Iraq is the victim of the biggest robbery of its oil production in modern history," blazed a March 2006 headline in Azzaman, Iraq's most widely read newspaper. A May 2006 study of oil production and export figures by Platt's Oilgram News, an industry magazine, showed that up to $3 billion a year is unaccounted for.

"Iraqi oil is regularly smuggled out of the country in many different ways," an oil merchant in Amman told the Nation (U.S.) magazine last month. "Emir al-Hakim [the head of the Supreme Council of the Islamic Revolution in Iraq] is spending all his time in Basra selling oil as if it were his own. People there call him Uday al-Hakim, meaning he is behaving the same way Uday Saddam Hussein was acting. Other merchants like myself have to work through him with the big deals or smuggle small quantities on our own. The petroleum is now divided among political parties in power."

The resource curse

The smuggling and black market operations bear striking parallels to Saddam Hussein's tactics for circumventing the UN embargo. Saddam was accused of selling some $5.7 billion worth of petroleum products on the black market over the six years of the Oil-for-Food program while United Nations inspectors turned a blind eye. Today, his successors stand accused of similar abuses.

Iraq sits on 115 billion barrels of proven oil reserves, the third largest in the world (behind Saudi Arabia and Canada). From a society that once used its oil revenue to create a social welfare state that provided education, health care and social services, the country has plummeted into the ranks of the poorest countries of the world.

Economists call this the "resource curse." Those blessed with non-renewable resources often benefit the least, because a few wealthy people control the resources, or war prevents almost anyone from the benefiting.

Iraq's main revenue source - earnings from the export sales of petroleum, petroleum products and natural gas - is currently managed by the Development Fund for Iraq. DFI's May 21, 2003 document, United Nations Security Council Resolution 1483, assigns this money to benefit the Iraqi people. The resolution replaces the previous United Nations-run Oil-for-Food scheme that lasted from 1997 until the March 2003 invasion.

Almost four years after the DFI was created, officially logged crude sales have generated more than $80 billion. The U.S.-led Coalition Provisional Authority (CPA) managed the DFI from the immediate aftermath of Saddam's removal until June 28, 2004, when the CPA was disbanded. During those 14 months, the CPA spent $19.6 billion of Iraq's DFI funds. The three succeeding governments have been officially in charge of the DFI revenues, although the influence of the U.S. military and political advisors has remained significant throughout. In the 32 months after the CPA left, the three governments spent $47 billion more.

Halliburton & Parsons

U.S. contractors have played a key role in the repair and upgrading of Iraq's oil infrastructure and expected the industry to pay for reconstruction. In January 2004, under project Restore Iraqi Oil II (RIO II), the Bush administration contracted with Halliburton to fix southern Iraq's oil fields and with Parsons to handle the northern fields. The two companies were supposed to be supervised by yet another contractor, New Jersey-based Foster Wheeler. (The first RIO contract was the infamous, secret no-bid contract issued to Halliburton before the invasion of Iraq. Although RIO II was competitively bid, Sheryl Tappan, a former Bechtel employee wrote a book criticizing the award as unfair.)

Halliburton and Parsons have long histories in Iraq, going back more than 40 years. Brown & Root, which is now part of Halliburton , began work in Iraq in 1961, while Parsons dipped into Iraq's oil sector in the 1950s. Foster Wheeler dates its work in Iraq to the 1930s.

These companies have a lot of experience at the terminals where the black market now thrives. Indeed, Halliburton built the ABOT terminal, then known as Mina al-Bakr, in the early1970s. After it was damaged during the Iran-Iraq war in the 1980s, Halliburton repaired the terminal, before it was bombed yet again during the 1991 Persian Gulf War.

The Khor al-Amaya oil terminal also saw a similar cycle of destruction and rebuilding. Built with Halliburton 's help in 1973, it was heavily damaged by Iranian commandos during the Iran-Iraq war, then again during Operation Desert Storm in 1991, and most recently in May 2006 by a major fire that destroyed 70 percent of its facilities. During the sanctions, Ingersoll Dresser Pump Company, a Halliburton subsidiary, had a secret contract to sell Iraq spare parts, compressors, and firefighting equipment for the refurbishment.

( Halliburton also a long history near the Turkish port of Ceyhan, from where Iraq sells oil produced at Kirkuk in northern Iraq. Halliburton runs the nearby U.S. military base at Incirlik, which was the staging ground for Operation Northern Watch that provided air protection for the Kurds during the 1990s.)

Measuring the oil

With billions of dollars to spend and extensive experience with oil infrastructure and Iraqi ports, Haliburton and Parsons seem unable to deal with the routine problem of broken meters at the Southern Iraq terminals.

The kinds of meters they were supposed to repair or replace at ABOT are commonly found at hundreds of similar sites around the world. Because they are custom-built, shipped, then assembled and calibrated on site, the process can take up to a year. But the probelm has persisted for four years.

After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields. (The northern oil fields in Kirkuk, which supply the Beiji refinery in Iraq and export crude to the Turkish port of Adana, has reliable metering but little oil to measure since insurgent attacks largely shut down the facility.)

Lieutenant Aaron Bergman, the U.S. Navy officer in charge of Mobile Security Squadron 7 at ABOT, says export authorities have "guesstimated" how much is being sold, with a back-of-the-envelope formula: Every centimeter a tanker lowers into the water equals 6,000 barrels of oil cargo.

"So you can imagine," he said earlier this month to Stars & Stripes, a newspaper serving the U.S. military, the numbers could be off, "A couple of inches could equal 180,000 barrels of fuel."

"I would say probably between 200,000 and 500,000 barrels a day is probably unaccounted for in Iraq," Mikel Morris, who worked for the Iraq Reconstruction Management Organization (IRMO) at the U.S. embassy in Baghdad, told KTVT, a Texas television station.

Neither US officials nor contractors have provided good reasons why, four years into the US occupation, the meters have not been calibrated, repaired, or replaced. One excuse is that the job of calibration requires special devices to assess the current meters and security issues make importing these devises problematic. Yet that and other security-related explanations fall apart given that the oil terminals are under 24 hour high security guard, lie more than 50 miles off-shore, and are accessible only by helicopter or ship.

There are two possible explanations: that the project has been delayed by bureaucracy or that vested interests benefiting from the lack of oil metering (such as smugglers or corrupt officials) have prevented the project from moving forward.

Skyrocketing Costs

The RIO II project, which includes the meter repair work, has come under much criticism, although specific details are scarce.

For example, the Bush administration issued Halliburton the RIO II order in January 2004 and gave detailed task orders in June. But despite not starting work until November 2004, the company charged the government millions of dollars for engineers who sat idle. Halliburton 's $296 million bill included at least 55 percent overhead. (In an estimate due later this month, SIGIR may predicts even higher overhead costs.)

A Parsons joint venture (with Worley of Australia), was also issued a contract in January 2004, given detailed task orders in June, and started work in July 2004. It has also been accused of charging high overhead costs while idle, although not as much as Halliburton . SIGIR estimate pegs its overhead at 43 percent.

In addition, in a series of scathing internal reports uncovered by Congressman Henry Waxman, supervisors Foster Wheeler criticized Halliburton 's cost. The U.S. Army Corps of Engineers issued a "cure" notice on January 29, 2005, ordering Halliburton to do a better job or else. After Halliburton did improve its cost controls, the military turned over the southern oil work to Parsons in mid 2005.

When Parsons took over the contracts, two years after the invasion, it hired a Saudi Arabian sub-contractor, Alaa for Industry, to help repair or replace the meters.

The turbine meters were shipped to Kuwait for repairs but do not appear to have been fixed in a timely manner, although some have been fixed and re-installed earlier this year. Unofficial sources suggest that the Kuwaiti bureaucracy delayed the repair work: "The real reason for the hindrance to work at the ABOT is because Kuwait has a vested interest in minimizing Iraqi oil exports," an anonymous source who worked on the project said. His claim could not be verified.

In mid-September 2006, the Iraqi oil ministry abruptly announced that it would pull the plug on the oil metering project, making future monitoring even less certain.

Asim Jihad, the oil ministry spokesman, told Al Hayat: "The American company had failed in keeping its promise to finish installing these meters; also, refusing to reveal the exact cost, except for saying that it is executing it within the American grant to Iraq and the sum of that grant is unknown to us too. This relieves the ministry from its obligation to it. Besides, many international companies presented good offers to implement the project in a record time due to its importance."

The oil ministry then invited British Petroleum and Shell to plan a comprehensive national metering project that would cover not only the oil terminals, but also the productions wells and the even the refineries.

A SIGIR team traveled to ABOT in November 2006 to check on progress. Its unpublished report suggests that the work was less than half complete.

Suddenly, in December 2006, a high-level U.S. team traveled out to ABOT to inspect the meters. In a little-noticed announcement issued on a Saturday just before Christmas, John Sickman, the resident oil expert at the U.S. Embassy in Baghdad, said the meters had been fixed and were working fine.

"The measurement using the existing turbine meters and displacement meters at the offshore terminal at ABOT is transparent and the measurement devices are more than adequate," Sickman was quoted in the press release. "Furthermore, the crude oil vessels have measurement and quality samplers."

Indeed this is how the Dutch company Saybolt measured oil export under the United Nations Oil for Food program. The problem even today, according to experts consulted for this report, is that the meters have yet to be calibrated, so the data are basically useless.

Even if the meters are working properly, smuggling could still occur. "It's easy to steal crude if you knew what you were doing," Don Deaver, a petroleum metering expert who worked for Exxon for 33 years, said. "If you meaure too low or too high, someone will lose and some will one gain. It's why you need professionals who understand how the meters work to make sure that nothing is being lost or stolen."

U.S. government officials claim that little is being stolen. SGS (a British consultancy) "is providing independent third party loading certifications onsite for the customers. This, coupled with the recent installation of ultrasonic meter provides more than redundant measurement capability," said Sickman in December.

Days after the press release, in early January 2007, Parsons began work on the meters under a $57.8 million U.S. government-funded contract supervised by Major Dale Winger of the Joint Contracting Command in Basra. Almost as soon as work started, Winger was replaced by Lieutenant Commander Brian Schorn. Reached for this article, Schorn said he was not up to speed on what work had been done, and referred questions to his "front-office" in Baghdad at the U.S. Army Corps of Engineers.

Parsons Iraq Joint Venture spokesman Don Lassus also refused to comment. The contract with the military does not permit the release of "any unclassified information," he said, without prior approval of the military.

Today no government officials have been able to establish conclusively whether oil is being smuggled or not. Even the future of the oil metering remains unclear. The latest report issued by SIGIR in January 2007 notes that repair and rehabilitation work at ABOT is scheduled to be finished by May 2007, but "it is unclear whether this project will be completed because of de-obligation requirements" that is to say that the funding could be cut.

Health Care in Iraq Was Better Under Saddam Hussein

The convoy of flat-bed trucks picked up its cargo at Baghdad International Airport last spring and sped north-west, stacked-high with crates of expensive medical equipment. From bilirubinmeters and hematology analyzers to infant incubators and dental appliances, the equipment had been ordered to help Iraq shore up a disintegrating health care system. But instead of being delivered to 150 brand-new Primary Health Care centers (PHCs) as originally planned, the Eagle Global Logistics vehicles were directed to drop them off at a storage warehouse in Abu Ghraib.

Not only did some of the equipment arrive damaged at the warehouse owned by PWC of Kuwait, one in 14 crates was missing, according to the delivery documents. The shipment was fairly typical: Military auditors would later calculate that roughly 46 percent of some $70 million in medical equipment deliveries made to the Abu Ghraib warehouse last spring had missing or damaged crates or contained boxes that were mislabeled or not labeled at all.

Not that it really mattered. Just over three weeks before the April 27th delivery, the U.S. Army Corps of Engineers had canceled the construction of 130 of the 150 PHCs for which the materiel was intended. As a result, the equipment that could help diagnose and treat Iraqi illness (and escalating bomb or gun injuries) now sits idle waiting for someone to figure out what to do with it.

Even if the equipment finally makes it through the bureaucratic logjam, lack of trained personnel to operate it, especially outside major cities, will severely limit its utility. The Army Corps had written a 15-day training plan into the contract, but over time, this had been whittled it down to ten and then to just three days. Iraqi Ministry of Health officials have given up hope that any training at all will accompany the sophisticated equipment.

But if Iraqis have failed to benefit from the idle PHCs, the $70 million contract to supply them has been a shot in the arm for Parsons Global. The Pasadena, California-based engineering company reaped a $3.3 million profit according to an audit report issued by the Special Inspector General for Iraq Reconstruction (SIGIR), an independent U.S. government agency. And that is in addition to the $186 million that U.S. taxpayers shelled out to Parsons to build dozens of clinics that have yet to dispense a single aspirin.

While the new buildings remain uncompleted and millions of dollars worth of expensive equipment are stored under lock and key, a dwindling number of doctors at existing hospitals perform operations without basic supplies of disinfectant and anaesthesia. A severe shortage of nurses further imperils patient care.

This failed planning and wasted money has been a hallmark of the last three years of healthcare in Iraq. Today the country faces a medical crisis that many say exceeds conditions under sanctions. Compounding this crisis is the violence that creates a steady flow of seriously injured victims.

What we asked for, we did not get

Days before the equipment arrived in Abu Ghraib, Dr Lezgin Ahmed, general director of planning at the Kurdish health ministry offices, just below the ancient hilltop city of Erbil, northern Iraq, proclaimed his frustration with the U.S. plan to fix the Iraqi healthcare system to this reporter.

"They told us that they had money for seven PHCs in Erbil, three in Dohuk. We were asked where they should build them, that's all," said Dr Ahmed. "We didn't approve it but we accepted it without interference because it was part of the plan for all of Iraq. They simply asked us for the numbers and locations. What we asked for, we did not get," he said, noting that the ministry would have preferred repair of existing facilities.

Six of the 150 PHCs were slated for the western Kurdish region of northern Iraq. In the Brayati neighborhood of Erbil, just five miles from Ahmed's office, a partially constructed grey building topped with red water tanks, appeared abandoned. The windows and doors were sealed with cinder blocks to prevent intruders after work halted in late March. No construction workers or security guards were to be found. In other cities across northern Iraq, such as Koya and Sulamanya the story was the same: buildings, most lacking even paint, stood abandoned. In Halabja Taza, close to the eastern border with Iran, a security guard at an empty Parsons PHC agreed to talk. Nawshin Shakir Qasim explained that the contractors did a really bad job and the roof was leaking. "The Americans soldiers fired the contractor. Now there is no more money so all the work has stopped," he said.

Indeed, just two months before my visit, SIGIR inspectors traveled to five PHCs in Kirkuk, northern Iraq, and came to similar conclusions about the quality of the work. The auditors snapped pictures of poorly placed roof beams, honey-combed concrete, walls made of brick fragments held together with plaster, and staircases crumbling into dust even before they were finished.

The SIGIR auditors also questioned Parsons' progress reports. One building, declared 56 percent complete, was a shell of uneven bricks. Another floor that was balanced on wooden sticks was listed as half complete, according to the SIGIR report.

If health care is in short supply, blame is plentiful. The SIGIR report concludes that a wide range of factors contributed to the failures, ranging from disputes among Iraqi construction companies, poor quality of local materials, and lax oversight by the Army Corps, which conducted "windshield surveys" - hasty drive-by inspections.

The Army Corps blames Parsons. "They failed to adequately plan project schedules to include known issues, resulting in unrealistic, risky construction and purchasing schedules," wrote the division' commander, Brigadier General William H. McCoy Jr. "They failed to exercise adequate due diligence to control costs."

And predictably, Parsons blames the Army Corps. In a written reply to the military, the company says that it estimated the job would take two years, but the Army Corps. ordered it to finish the clinics in one year. (The contract was canceled after Parsons failed to complete the job in 25 months.) The company also says that it informed the military that did not have enough supervisory staff to oversee all 150 clinics simultaneously as the military demanded.

In a reply, included as an appendix to the SIGIR report, McCoy counters that Parsons "ignored, or failed to respond adequately to, numerous expressions of concern by the government over these issues, and in some cases failed or refused to provide the government with information that would have allowed the government to make decisions to assist Parsons in regaining control over subcontractor performance and cost," he added.

By the time the contract was canceled on April 3, 2006, Parsons had completed only six clinics. Project managers estimated that another 14 could eventually be completed and equipped.

Meanwhile, some 130 sets of medical equipment, partially damaged, are warehoused at Abu Ghraib, in the hope that someday the project might be completed.

The PHC program "was the most important program in the health sector," Stuart Bowen, the director of SIGIR, told the Los Angeles Times. "It sought to fulfill a strategy to get health services to rural and remote poor in Iraq."

In September 2006, four months after the contract was canceled, Congressman Chris Van Hollen (D-MD) questioned Ernest Robbins, the manager of Parson's Iraq project: "What is the recourse for the taxpayer under these circumstances? Don't you think that Parsons, given what has turned out to be a very shoddy job, should return some of its profits to the taxpayer"?

Robbins told the Congressional hearing: "No, sir, I will not."

Iraq's health care system

While some critics focused on the failure to deliver the PHC system, others questioned the whole U.S. approach. Iraq had developed a centralized free health care system in the 1970s using a hospital based, capital-intensive model of curative care. The country depended on large-scale imports of medicines, medical equipment and even nurses, paid for with oil export income, according to a "Watching Brief" report issued jointly by the United Nations Children's Fund (UNICEF) and the World Health Organization (WHO) in July 2003.

Unlike other poorer countries, which focused on mass health care using primary care practitioners, Iraq developed a Westernized system of sophisticated hospitals with advanced medical procedures, provided by specialist physicians. The UNICEF/WHO report noted that prior to 1990, 97 percent of the urban dwellers and 71 percent of the rural population had access to free primary health care; just 2 percent of hospital beds were privately managed.

Infant mortality rates fell from 80 per 1,000 live births in 1974, to 60 in 1982 and 40 in 1989, according to government statistics. A similar trend characterized under-five mortality rates which halved from 120 per 1,000 live births in 1974 to 60 in 1989. (Later studies have questioned these optimistic Iraqi government figures.)

With the 1991 Gulf War that followed Iraq's invasion of Kuwait, the situation changed dramatically. The war damaged hospitals, power generation, and water treatment facilities; foreign nurses left the country; and the health budget was slashed. From US$500 million in 1989, the import budget plummeted to US$50 million in 1991 and then to $22 million in 1995. Spending per capita fell from a minimum of US$86 to US$17 in 1996.

In the eight months following the 1991 war, mortality rates for children under five shot back up to 120 per 1,000 live births, the highest recorded increase for any country in the world in the 1990s, according to the UNICEF/WHO report. (Only 14 countries had an overall mortality increase among young children during the 1990s. Nine of them were in Africa, where HIV infection was the predominant cause of elevated mortality.)

For over-50 year olds, the mortality rate rose from 1,685 per month in 1989 to 6,731 in 1994 according to the UNICEF/WHO report. Iraq's health care system was accelerating fast in the wrong direction.

The war and the sanctions destroyed the capital-intensive model of free and sophisticated care. Water was often contaminated and the electricity supply erratic, making it difficult to operate the expensive medical equipment. Deaths from diarrhea rose fivefold and malnutrition-related diseases such as respiratory infections became widespread.

From 1996 to 2002, the UN-administered Oil-for-Food program allocated US$4.8 billion for medical supplies and related support. The program's emphasis on basic health care including vaccination caused a drop in infant mortality. But because the UN program barred cash transfers, Iraqi salaries stayed low and there was no money for training or recurring expenses.

In 1994, hoping to prevent doctors from emigrating, the Iraqi government encouraged private medical practices. Four years later it allowed hospitals to charge some fees. The government also encouraged organizations including the Red Cross and the Red Crescent to build PHCs and help support hospitals.

After the invasion, sanctions were lifted, and the government finally started to earn cash on its oil income, allowing it to raise medical salaries. But the damage to the health care system was hard to reverse. For example, according to the UNICEF/WHO report, Iraq now has more doctors than nurses -- an unusual predicament for a poor country -- and very few of them specialize in the community or social medicine the country needs.

Today Iraq needs either to initiate a major renovation program to resurrect its old medical system or it needs to switch to a preventative health care model based at primary health case clinics. In the last three years, owing to lack of money and security, it has done neither.

Post-invasion planning

The failure by the occupation forces to revitalize healthcare tracks back to immediately after the invasion, when U.S. Agency for International Development (USAID) dispatched Fred "Skip" Burkle to run the Ministry of Health. A doctor with four post graduate degrees, the American had worked in Kosovo, Somalia and northern Iraq after the Gulf War.

He faced a health sector that-like the oil and electricity sectors -- was devastated by post-war looting and had lost much of its infrastructure to theft and violence. Some 12 percent of hospitals were damaged and 7 percent looted. Central records were destroyed along with the country's two major communicable disease laboratories and four out of seven of its central warehouses.

"I spent many months preparing for the invasion of Iraq, for what I expected to be a humanitarian crisis," Burkle told CorpWatch. "In the decade before the invasion, we saw a decline in every health indicator, which told me what to expect. I've been in a number of wars and humanitarian crises where we've developed systems over years, and we know how to do this, and how to do this on the run."

"So I spent my time planning a surveillance system and figuring out how to decentralize it, so that it was not Baghdad-centric. Remember, there were no communication systems between Baghdad and the provinces. I was also concerned about looting, as I had observed this first hand after the first Gulf War, as the first civilian to enter the country."

Burkle's suggestions were never implemented. Two weeks after arriving in Iraq, the White House informed him, he says, that it wanted a "loyalist" in the job and recalled him to the U.S.

More than two months passed before the new Republican appointee arrived. Unlike his predecessor, Jim Haveman was not a doctor, had never lived outside the U.S. and had never taken part in post-war or post-disaster reconstruction, He had a degree in social work, experience as director of community health in the state of Michigan, and was a former director for International Aid, a faith-based relief organization that promotes Christianity in the developing world. He also previously headed up Bethany Christian Services, a large adoption agency that urges pregnant women not to have abortions.

Haveman said that he arrived to find that the ministry was still a mess. "I walked into a situation with two empty 11 story towers, 120,000 employees, 240 hospitals and 1,200 clinics (but the) employees had not been paid for three months. The ministry had a $16 million dollar budget."

He says he is proud that he got the administrative staff back into the building within 45 days, get the ministry up and running, draw up a budget, completed large-scale immunizations successfully, and respond to disease outbreaks. He believes that he helped the ministry to switch from a prescription-based healthcare system to prevention and primary health care, wrote up a mental health code, implemented new training systems, supported professional groups and worked closely with NGOs and international agencies. (see box for Haveman email to CorpWatch)

Critics acknowledge that Haveman got the ministry building and payroll up and running but say that he focused on the wrong priorities such as rewriting the list of medicines that the state medical company should import. Asked what medicines they were able to buy, Dr Nasser Jabar Sheyal, an assistant to the health minister, told CorpWatch in spring 2004: "We make recommendations but we don't decide anything. This is an occupied country, not a democracy, and the Americans make all the decisions."

"The fact is that Kimadia, Saddam's medical supply bureaucracy created under the UN's failed oil-for-food program, was so riddled with corruption and bribery that little medication was available," Haveman wrote later to defend his decision to rewrite the list. "Suppliers received kickbacks and sent expired drugs that were exorbitantly overpriced. Half of the medications on hand were unusable, and some were 30 years old."

Meanwhile, under orders from Paul Bremer, the U.S. administrator of Iraq, senior doctors and health administrators with decades of experience, were fired because they were members of the Ba'aath party. The ministry was handed over to the Da'wa party, a conservative Islamic group, with little experience in this field.

The party appointed Dr Khudair Abbas, a respected breast cancer surgeon to head the ministry. He started with a disadvantage: Abbas, who had studied in India and practiced in the UK, had not worked in the Iraqi health system since 1979. A year later, after Haveman left, Abbas also quit the ministry.

Some Da'wa officials struggled along bravely. Amar al-Saffar, the deputy minister in charge of finance for the health ministry, candidly confessed that he too, was out of his depth. "I was not planning to be a part of the crew at the ministry. I came to serve my party [Da'wa] and I don't know how I found myself in this ocean, but I have to swim. Unfortunately the current is very strong," he said. "My only experience is that for six years, I was the executive manager of an optical instruments business in Dubai."

While many top bureaucrats quit, he stayed on until he was kidnapped in November 2006 from his home in Adhamiya. His fate was unknown at the time of writing.

Meanwhile doctors in Iraq began to resent the expatriates who were given control of the system in which they had labored for so long. Dr Koresh Al Qaseer, president of the Iraqi Surgeons Association, explained that he had a lot of respect for Dr Abbas's medical expertise, but did not believe that his team knew Iraq's needs.

"Who are these people who left for 20 years and now think they can run our country? They don't know anything about it, and they don't care," he said angrily. "Believe me they did not leave because of Saddam, they left to pursue their careers and to make money. We have 35,000 doctors in Iraq, we don't need outsiders to come and run our hospitals but we do need training."

Richard Garfield, a professor of nursing from Columbia University in New York who has visited Iraq almost every year since 1996 as an advisor to UN health adviser, agreed that training was necessary, but he believed that that was just the first step - a fundamental overhaul of the system should have been conducted.

What Iraq needed, he said, was a focus on community health, health education, outreach for basic health promotion programs, and the elaboration of financial management, systems planning, and pharmaceutical administration systems appropriate to a middle-income developing country.

He summarizes the mistakes the CPA made:

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The Dirty Truth About Green Fuel

The town of Columbus, Nebraska, bills itself as a "City of Power and Progress." If Archer Daniels Midland gets its way, that power will be partially generated by coal, one of the dirtiest forms of energy. When burned, it emits carcinogenic pollutants and high levels of the greenhouse gases linked to global warming.

Ironically this coal will be used to generate ethanol, a plant-based petroleum substitute that has been hyped by both environmentalists and President George Bush as the green fuel of the future. The agribusiness giant Archer Daniels Midland (ADM) is the largest U.S. producer of ethanol, which it makes by distilling corn. ADM also operates coal-fired plants at its company base in Decatur, Illinois, and Cedar Rapids, Iowa, and is currently adding another coal-powered facility at its Clinton, Iowa ethanol plant.

That's not all. "[Ethanol] plants themselves -- not even the part producing the energy -- produce a lot of air pollution," says Mike Ewall, director of the Energy Justice Network. "The EPA (U.S. Environmental Protection Agency) has cracked down in recent years on a lot of Midwestern ethanol plants for excessive levels of carbon monoxide, methanol, toluene, and volatile organic compounds, some of which are known to cause cancer."

A single ADM corn processing plant in Clinton, Iowa generated nearly 20,000 tons of pollutants including sulfur dioxide, nitrogen oxides, and volatile organic compounds in 2004, according to federal records. The EPA considers an ethanol plant as a "major source" of pollution if it produces more than 100 tons of any one pollutant per year, although it has recently proposed increasing that cap to 250 tons.

Sulfur dioxide is classified by the EPA as a contributor to respiratory and heart disease and the generation of acid rain. Nitrogen oxides produce ozone and a wide variety of toxic chemicals as well as contributing to global warming, according to the EPA, while many volatile organic compounds are cancer-causing. Last year, Environmental Defense, a national environmental group, ranked the Clinton plant as the 26th largest emitter of carcinogenic compounds in the U.S.

For years, ADM promoted itself as the "supermarket to the world" on major U.S. radio and television networks like NPR, CBS, NBC, and PBS where it underwrites influential programs such as the NewsHour with Jim Lehrer. Now, as it actively promotes its ethanol business, ADM has rolled out its new eco-friendly slogan, "Resourceful by Nature" which "reinforces our role as an essential link between farmers and consumers."

Despite the company's attempts at green packaging, ADM is ranked as the tenth worst corporate air polluter, on the "Toxic 100" list of the Political Economy Research Institute at the University of Massachusetts. The Department of Justice and the Environmental Protection Agency has charged the company with violations of the Clean Air Act in hundreds of processing units, covering 52 plants in 16 states. In 2003 the two agencies reached a $351 million settlement with the company. Three years earlier, ADM was fined $1.5 million by the Department of Justice and $1.1 million by the State of Illinois for pollution related to ethanol production and distribution. Currently, the corporation is involved in approximately 25 administrative and judicial proceedings connected to federal and state Superfund laws regarding the environmental clean-up of sites contaminated by ADM operations.

Friends in high places

Environmentalists have cried foul, but they are up against the 56th largest company in the United States, as ranked by revenue in Fortune Magazine. ADM has more than 25,000 employees, net sales last year of $35.9 billion, with $1 billion in profits, as well as a recent 29 percent profit increase in the last quarter. The comany is a global force: ADM is one of the world's biggest processors of soybeans, corn, wheat, and cocoa, which it buys from growers in the U.S. and around the world. The company recently hired Patricia A. Woertz, an executive vice president of Chevron Corporation, as its chief executive officer.

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Target as Bad as Wal-Mart? You Decide

Shopping in a Target store, you know you're not in Wal-Mart. But the differences may be mostly skin deep.

Targets are spaciously laid out and full of attractive displays and promotions. While many people associate Wal-Mart with low-income, rural communities perhaps dominated by a prison or power plant, life-size photos throughout Target stores remind you that their customers are a lively, beautiful cast of multi-cultural hipsters.

"Their image is more upscale, more urban and sophisticated, sort of a wannabe Pottery Barn," said Victoria Cervantes, a hospital administrator and documentary-maker in Chicago who regularly shops at Target. "I'm not sure if their customers really are more upscale. But that's the image they're going for. They have a very good PR campaign."

In contrast to this image, however, critics say that in terms of wages and benefits, working conditions, sweatshop-style foreign suppliers, and effects on local retail communities, big box Target stores are very much like Wal-Mart, just in a prettier package.

Of more than 1,400 Target stores employing more than 300,000 people nationwide, not one has a union. Employees at various stores say an anti-union message and video is part of the new-employee orientation. At stores in the Twin Cities, where Target is headquartered, the United Food and Commercial Workers (UFCW) union Local 789 has been trying for several years to help Target employees organize, with little luck.

"People ask what the difference between Wal-Mart and Target is," said UFCW organizer Bernie Hesse. "Nothing, except that Wal-Mart is six times bigger. The wages start at $7.25 to $7.50 an hour [at Target]. They'll say that's a competitive wage, but they can't say it's a living wage. We know a lot of their managers are telling people, 'If we find out you're involved in organizing a union you'll get fired.'"

Wal-Mart has about 3,800 stores nationwide and another 2,600 worldwide, employing about 1.6 million people. Target plans to open at least 600 more stores by 2010, for a total of about 2,000 in 47 states. Like Wal-Mart, a typical Target sells a wide range of consumer goods including clothing, household items, office supplies, toys, sports equipment, furniture, art, and electronics; and the stores often have photo laboratories and pharmacies. About 160 SuperTargets nationwide also sell "upscale" groceries, as the company's website describes them, and often contain banks, Starbucks, and Pizza Hut Express outlets. Total revenue was up 12.3 percent in 2005 - $52.6 billion compared to $46.8 billion in 2004.

Wage Slaves

A survey by the UFCW found that starting wages are similar in Targets and Wal-Marts -- possibly higher overall at Wal-Marts - and that Target benefits packages are often harder to qualify for and less comprehensive. (Target's media relations department refused to comment on its wages and benefits policies; individual wages and benefits policies are not included in their annual report.)

"We know that Target and Wal-Mart are constantly checking each other out and seeing how cheap they can get by," says a UFCW statement on the website Targetunion.org, urging Target employees around the country to post their wages.

A Target employee who asked that his name and store location be kept secret said he can barely make ends meet on his salary of $8.40 an hour.

"After three years, I have received less than $1 an hour in raises. I started at $7.65," said the worker, adding that he does love his job because of camaraderie with his co-workers. "We are never compensated and rarely even recognized for meeting our goals."

The starting wage he describes would put a single parent with two kids working full time at Target just slightly above the poverty line; someone with more children or working fewer hours would fall below the poverty line.

Compare that to Target CEO Robert Ulrich, who earned $23.1 million in 2005, according to Forbes, making him the second-highest paid CEO in the retail sector. That's more than 1300 times as much as the worker we spoke to.

Sweat on the Racks?

Meanwhile a glance at labels on a few racks of stylish $20 cardigans and capri pants shows that, like Wal-Mart and most major clothing retailers, Target itself sources its products in India, Indonesia, Guatemala, Mexico, Bangladesh, Kenya, Sri Lanka, the Philippines, Vietnam, Cambodia and other low-wage, developing countries.

In October 2005 representatives of a Mexican labor federation protested outside a Bronx Target to call attention to alleged child labor and illegal worker lockouts at a Mexican factory that supplies the store's Halloween costumes.

"The way the global garment industry is, there are so few factories that respect workers' rights that there is no way Target gets its clothes from workplaces where workers' rights are being respected," said Allie Robbins, national organizer of the group United Students Against Sweatshops.

Race to the Bottom

Target doesn't differ from most major clothing vendors; you usually have to seek out small specialty companies to find union-made, American-made textiles. But as one of the country's major retailers, Target is an industry leader, fostering and profiting from the U.S.'s general culture of consumerism: We buy, buy, buy at ever lower prices in a market system sustained by very low-paid, non-union workforces in impoverished countries.

Even as American consumerism thrives, however, there is growing public awareness and critique of the problems it spawns. Wal-Mart is becoming a lightning rod for the public's increasing dissatisfaction and animosity. A recent study by the University of Massachusetts at Lowell showed that 63 percent of people would oppose a Wal-Mart opening in their community. Groups such as Wal-Mart Watch, several documentarians have harshly critiqued Wal-Mart's working conditions and its effects on communities and international labor standards.

But somehow, perhaps because of its relative small size compared to Wal-Mart, Target has largely avoided negative publicity.

In fact, it benefits from anti-Wal-Mart anger, a fact that isn't lost on company officials.

Media reports describe Target executives booing and hissing at a Wal-Mart logo during sales meetings and calling it the "evil empire." While communities often fight tooth and nail against new Wal-Marts, residents usually welcome Targets, as local governments offer the corporation generous tax breaks and subsidies to locate in their area.

That is what happened last fall in West St. Paul, Minn., where a new Target reaped $731,000 in local tax breaks, while 30 miles away, Ham Lake was fighting Wal-Mart's efforts to open a superstore. The Target in downtown Minneapolis received $68 million in public subsidies, according to the Star Tribune newspaper. In Chicago in 2004, a city-wide coalition formed to oppose two proposed Wal-Marts and the fight roiled the city council for months. Meanwhile at least three new Target stores have been built in the metro area in the last several years.

Target definitely works hard on its image. Last summer it became the first company to sponsor an entire issue of The New Yorker, with 17 pages of ads. With a 2005 advertising budget of $1.028 billion, it regularly takes out full page ads in major daily papers and magazines, promoting the company's products, and sophisticated image as well as its charity work. The company's website says that 96 percent of Americans recognize the Target logo, "more than the Swoosh or Apple." Unlike Wal-Mart's low-budget, cluttered decor, Target sports artsy, larger-than-life photos of everything from cleaning products to desserts to women in lingerie. It is the exclusive marketer of specialty items such as the Roots "retro-futurism" official gear for the 2006 Winter Olympics. Target's website notes that its average consumer has a median household income of $55,000, and 43 percent have completed college.

"It's like they're trying to be Marshall Fields or something," said Chicago high school student Stephanie Evans, shopping for a bikini for spring break. "But it's really the same things as at Wal-Mart, just at higher prices."

The first Target discount store opened in Roseville, Minnesota, a suburb of St. Paul, in 1962. It was run by the Dayton Company, which originated in 1902 with a retail store called Goodfellows owned by George Dayton in Minneapolis. Along with the discount stores, Target Corp. runs Target Financial Services, which manages the Target REDcard credit card.

Target: We Train the FBI

Perhaps Target's oddest singularity is the fact that it boasts one of the nation's top forensics labs at its company headquarters. A product of its efforts to stop shoplifting and property destruction at its stores, its mastery of surveillance and investigative technology and strategy is now eagerly subscribed to by law enforcement agencies nationwide, including the FBI. The company provides training for police and federal agents on investigation and prevention of everything from arson and robbery to smuggling.

Target does more proportionately for the community in the form of community grants and charity than Wal-Mart does, and spends considerably less boating about it. According to the company website, which says Target donates more than $2 million a week to local and national non-profit organizations. The company gives grants of $1,000 to $3,000 to community organizations, and shoppers can donate 1 percent of Target REDcard charges to a local school. The website says more than $154 million has been donated to schools since 1997. The company also runs Target House, a luxury residential facility in Memphis where families can stay while their seriously ill children are treated at a nearby medical center.

In comparison, Wal-Mart, with revenue of $288 billion in 2005, donated $200 million (or 7/100ths of a percent) to charities and organizations in 2005, according to its web site.

While many customers and employees praise Target's charity efforts, critics counter that the company would have more positive impact on communities by providing living wage, stable jobs to local residents.

Following the general trend in retail and the U.S. job market as a whole, Target relies on part-time workers. This schedule may work well for some students and retired people, but it contributes to a dearth of full-time, fully benefitted, stable employment - especially in communities reeling from the store's impact on small local businesses.

"If I needed a full time job I couldn't afford to work here," said "Rosa" a 57-year-old who works part time at a St. Paul Target near her house. (Her name has been changed because she fears retribution.) "It starts at $7.50 an hour and you only get a 50-cent raise once a year. So how long will it take you to even get to $10 an hour! You can't live on that."

Diversity Dilemma

Target's website says diversity is a core value for employees and customers. It says Target is above national averages in employing minorities, both in the overall workforce (21 percent) and managerial positions (38 percent).

But that may depend on the store. Hesse said that some of the many Somalis refugees employed in the Twin Cities stores complain about cultural insensitivity and discrimination.

"Entry level management people just don't know how to handle it, they seem to be insensitive to immigrant workers," said Hesse. "In one store, there's a lot of friction between managers and Somali workers. They hire these young white boys as managers, and then they run a crew of Somalis with a very condescending attitude."

An African-American employee at the flagship Roseville, Minn. store (who asked that her name not be used for fear of retribution), said she feels as if she constantly suffers racial discrimination. She said there are no black supervisors on the overnight shift she works. "There are a lot of Somalis working on the overnight shift, but no Somali team leader." She said she is tired of young white "team leaders" repeatedly telling her to work faster or do things differently.

"It's the same conversation over and over," said the middle-aged woman. "They treat us like we're kids. And they'll approach you in front of other crew members, not in the office or somewhere private."

She thinks she was unfairly given a document from management saying she needed to increase her work speed.

"I feel like I was discriminated against because I'm black," she said. "I talked to white co-workers who I was working side by side with, and I could see I was working just as fast as them. I asked them if they had to sign the paper [from management] saying they were too slow and they did not. The majority who got the "guidance" slips were Somali or African-American like myself."

Beat the Clock

Workers generally complain about a pressurized and patronizing work atmosphere where they are constantly pressed to work harder and faster and at the same time to act cheery and invested in the store's success. The company's website boasts that workers will respond with "cheetah-like" speed within 60 seconds to customer calls on the red phones throughout the store.

Rosa said employees are constantly exhorted to get shoppers to sign up for Target REDcards; some stores have weekly quotas. "They'll have little employee promotions, it's so ridiculous, you'll get candy or a liter of pop if you get two people to sign up," she said.

She said the store is generally understaffed and workers are expected to do numerous jobs at the same time.

"You're running around, feeling like you're being pulled in every direction," she said. "There's never enough people on the sales floor. You're getting calls to come up to the cash register, to do pulls [of merchandise] in the back room, to deal with returns at guest services, all at once. And the whole time you're constantly picking up and folding stuff, getting things off the floor. At my age it's a really hard day, on your feet the whole time on these linoleum floors. I'm aching when I get home. I have to take Ibuprofen just to be able to sleep."

John Hayden had a similar experience working in a Target distribution center near his home in Oconomowoc, Wisc. After quitting his Target job in 2002, he was diagnosed with a hernia which he blames on lifting up to 700 boxes a day.

"It was hard work," said Hayden, who was in his late 50s at the time. "We never produced enough to keep the middle managers happy. I think they plan it that way - they always want more."

Could it Be Different?

In today's market, could retail really be any different? Fair labor advocates think so. Hesse notes that in several unionized grocery stores in the Twin Cities, hourly wages hover around $13 to $17 an hour, roughly double Target's. Now SuperTarget's sale of groceries threatens the survival of union grocery stores.

Even other major big box retailers have managed to pay significantly higher wages and achieve higher employee retention. The prices at Costco Wholesale Corp., the nation's fifth largest retailer, are competitive with those at Target and Wal-Mart, but it pays full-time employees an average of around $16 an hour along with generous health benefits.

Costco pulls this off by offering fewer brands of each item, keeping infrastructure costs low and forgoing advertising; and the company also benefits financially from low employee turnover. Labor advocates also note that The Container Store is known for decent wages and good working conditions.

"We've turned into a nation of consumers, not citizens," said Hesse. "We need to make retailers and employers bring back the old social contract where if you work hard and give them full time, they have to treat you with some degree of dignity and pay you enough that you don't need to worry about your basic needs all the time."

The Baghdad Embassy Bonanza

Work for what is planned to be the largest, most fortified U.S. embassy in the world was quietly awarded last summer to a controversial Kuwait-based construction firm accused of exploiting employees and coercing low-paid laborers to work in war-torn Iraq against their wishes.
 
More than a few U.S. contractors competing for the $592-million Baghdad project express bewilderment over why the U.S. State Department gave the work to First Kuwaiti General Trading & Contracting (FKTC). They claim that some competing contractors possessed far stronger experience in such work and that at least one award-winning company offered to perform the all but the most classified work for $60 million to $70 million less than FKTC.
 
“It's stunning what First Kuwaiti has been able to get from the State Department,� one contractor said.

Several other contractors that competed for the embassy contracts shared similar reactions and believe that a high-level decision at the State Department was made to favor a Kuwait-based firm in appreciation for Kuwait's support of the invasion and occupation of Iraq.
 
“It was political,� said one contractor.
 
Mohammad I. H. Marafie, chairman and co-owner of FKTC, is a member of one of the most powerful mercantile families in Kuwait.

Cheap labor from Asia

Undoubtedly, most of the 900 FKTC workers living and working on the construction site of the massive embassy project have been pulled from ranks of low-paid laborers flooding into Iraq from Asia's poorest countries to work under U.S. military and reconstruction projects.

Meanwhile, FKTC’s general manager and co-owner, Wadih al-Absi jets back and forth to the United States, dreaming of magazine covers celebrating his rise to a global player in large-scale engineering and construction.

Raised in Beirut, he says he began his career much like the people he now employs -- as a laborer installing drywall. The Lebanese Christian escaped war in his home country in the late 1970s and moved to Kuwait. The Persian Gulf country welcomes, even recruits, expatriate blue-collar workers like al-Absi once was to do the grunt work and domestic chores in its booming, oil-rich economy. Today glitzy shopping malls, flashy cars and sprawling villas have become the norm and migrants make up the nearly two-thirds of this tiny desert state's 2.3 million population.

Building his own personal fortune, al-Absi, too, relies on migrant labor. FKTC is one of the many Middle East companies that collectively ship tens of thousands of cheap day laborers to Iraq's war zones where they are paid just dollars a day.

Fortune favors a few

American contractors witnessing the plight of some of these migrants at military camps around Iraq have openly complained that the Asians endure abysmal working conditions, live in cramped housing, eat poor food, and lack satisfactory medical care and safety gear.

Typically, these migrants work 12 hours a day, often seven days a week, and earn as little as $500 a month performing tasks considered unsuitable for U.S. war fighters. They work construction, drive trucks, run laundries, clean latrines, pick up rubbish and operate stores, dining facilities and warehouses. Without them, and the "body shop" subcontractors that provide such laborers, the U.S. and coalition military camps -- virtually small cities -- would shut down.

It is a lucrative business for many companies, one that has helped trigger explosive growth of FKTC.

The company boasted of having $35 million in assets less than three years ago. Today, the firm has racked up hundreds of millions of dollars in U.S. contracts in Iraq, pushing the company well past the $1 billion mark. With 7,000 employees in Iraq, the company claims to be holding $800 million in construction and supply contracts directly with the Army for military camps, plus more than $300 million under Halliburton 's multibillion dollar contract to perform military logistics for the occupation forces in Iraq.

It's the kind of success that allows al-Absi to enjoy finely tailored suits with French cuff shirts, send his children to American universities and enjoy the fruits of being a newly-minted millionaire. "I love America," he says freely.

Meeting over a morning coffee last September at the posh Four Seasons Hotel in Washington, a legendary Georgetown retreat favored by pampered heads-of-state, Hollywood elite, the Rolling Stones and business executives, al-Absi's eyes widened as he talked about his company's greatest prize – the U.S. embassy in Baghdad.

The new embassy

Indeed, the massive $592-million project may be the most lasting monument to the U.S. occupation in the war-torn nation. Located on a on a 104-acre site on the Tigris river where U.S. and coalition authorities are headquartered, the high-tech palatial compound is envisioned as a totally self-sustaining cluster of 21 buildings reinforced to 2.5 times usual standards. Some walls as said to be 15 feet thick or more. Scheduled for completion by June 2007, the installation is touted as not only the largest, but the most secure diplomatic embassy in the world.

The 1,000 or more U.S. government officials calling the new compound home will have access to a gym, swimming pool, barber and beauty shops, a food court and a commissary. In addition to the main embassy buildings, there will be a large-scale U.S. Marine barracks, a school, locker rooms, a warehouse, a vehicle maintenance garage, and six apartment buildings with a total of 619 one-bedroom units. Water, electricity and sewage treatment plants will all be independent from Baghdad's city utilities. The total site will be two-thirds the area of the National Mall in Washington, DC.

Unlike most of Iraq's reconstruction, the embassy is "on time and on budget," according to a December report to U.S. Senate Foreign Affairs Committee which calls the progress an "impressive" feat given that construction is taking place in a country besieged by war.

"Most major construction projects undertaken in Iraq since 2003 have not met these standards," writes Patrick Garvey, a member of the Senate Foreign Relations staff who traveled to Baghdad in November 2005.

With the embassy making a prestigious notch on the company's belt, First Kuwaiti will step onto the world stage, al-Absi beamed. "I dream about what it means," he said. "We have become a global company."

But putting pride aside, al-Absi asked to keep the embassy contract a secret until the first floors were built. The dangers of an attack are just too serious, he said last September. Even his personal residence had been bombed in the past. "I am all for transparency, but this is Iraq," he explained.

Despite the new embassy's importance, and its rare on-schedule progress, the State Department has also resisted publicizing the contract. It was only after weeks of inquiries, that it confirmed that FKTC had been selected to construct the unclassified portions of the project. One day after the web site FedBizOpps posted a standard public notice for the first $370-million in FTKC contracts, it yanked the announcement. Department spokesman Justin Higgins cited security concerns.

Workers complain

While safety is part of the reason for keeping a profile low, labor conditions for Iraq's migrant workers are nothing to boast about.

When first asked about mistreatment of FKTC's labor force last August, al Absi threatened to sue if the allegations were published. At the time, CorpWatch was investigating the claims of Ramil Autencio and other Philippinos working for FKTC in Tikrit in late 2003 and early 2004. They claimed they were overworked, served poor food, and received less salary than what was agreed to in their contracts.

Originally recruited for employment by MGM Worldwide Manpower in the Philippines, Autencio said he had planned to work at Crown Plaza Hotel in Kuwait for $450 a month. Then his recruitment contract was sold to FKTC when he reached Kuwait where he says he was "forcibly" pressured to work in Iraq.

More recently, an October 10 story in the Chicago Tribune reported on four-dozen other Nepalese workers waiting in Kuwait for jobs on American military bases in Iraq. In September 2004, after watching television reports that 12 Nepalese hostages in Iraq executed at the hands of insurgents, they changed their minds.

A FKTC manager in Kuwait handed the panicked workers an ultimatum, reports the Tribune: either travel to Iraq to fulfill their contracts and they would be released on the streets of Kuwait City to fend for themselves. Undoubtedly, none had the resources to find their way back to Nepal.

"The company was forcing them to go to Iraq," Lok Bahadur Thapa, the former acting Nepalese ambassador to Saudi Arabia, told the Tribune.

Al-Absi, who speaks excellent English occasionally peppered with bluntness of a construction worker, denies the allegations of ill-treatment and trafficking.

"It's bullshit," he said, after emailing electronic documents apparently signed by Autencio and others agreeing to work in Iraq. "Total bullshit."

Such stories of mistreatment recently prompted the U.S. State Department to join forces with the Defense Department into possible labor trafficking by Middle East firms doing business in Iraq.

"Our people are investigating the issues," said State Department spokesman Justin Higgins after U.S. Ambassador John Miller, head of the Office to Monitor and Combat Trafficking of Persons, left for the Middle East in late January.

When CorpWatch inquired last July about widespread complaints about the poor working conditions and possible coercion of low-paid Asian laborers in Iraq working under Halliburton 's logistics contract, the Army said an investigation was underway. That inquiry began and ended with the Army raising the issues with Halliburton "for them to address with appropriate action within the terms of the contract," said Army spokeswoman Melissa Bohan in an e-mail this month.

Secretive contract

The contracts for building the largest, most-strongly fortified embassy in the world is a tale of fits and starts. From the Bush Administration's initial request for more than a billion dollars in emergency funding for the project to the selection of an inexperienced Kuwaiti firm to build it -- to even the small oversight effort is also a tale of secrecy.

Although White House had signaled Congress in early 2004 that it was planning a permanent embassy in Baghdad, it wasn't until spring 2005 that the Bush Administration formally pushed the funding request veiled as an emergency measure. The original proposal for $1.3 billion was almost three times the price of the new embassy in China.

Reeling from overcharges and costs around other Iraq contracts, Congress immediately cut the price tag for the new Baghdad project in half to $592 million and called for strict oversight. Wired with the most up-to-date technology and surveillance equipment, it will still be a super-bunker and the biggest U.S. embassy every built.

Once funding was secured last spring, the U.S. State Department quietly put the project up for competition among seven competitors – including some of the most accomplished U.S. engineering companies. Among the bidders, Framaco, Parsons, Fluor, and the Sandi Group have established track records for building secure embassies or large-scale construction projects.

But the award went to FKTC, a company with little experience in projects on the scale envisioned for the embassy.

"First Kuwaiti got the embassy job. [It] kinda surprised everyone that a foreign company would win," said an executive of one prominent firm in an email to another, both of whom bid against FKTC.

But publicly, the losing companies simply shrugged their shoulders and buttoned their lips. It takes guts for a contractor to publicly gripe about the decisions of government contract officers. Many fear they may not get future business if they do.

There may also be little reason for some of the losing competitors to complain. Some, including Framaco and The Sandi Group of Washington, DC, soon received other State Department contracts. The open-ended contracts call on the companies to work anywhere in Iraq when needed, including on the new embassy project.

The Sandi Group was given notice to prepare for some site clearing and for building temporary housing for the embassy workers, said Sandi's vice president for development, Muge Karsli. Then the order was abruptly suspended in January. "I was supposed to hear more from them in a week, but I didn't," she said matter-of-factly. "Now, it is on hold."

Bill Waldron is one contractor who will talk about the embassy project. He claims his Rocky Mountain Group lost more than $250,000 while preparing a bid to perform engineering oversight for FKTC and project inspection. Waldron said that his 25-year-old, veteran-owned Colorado company had already been given the word that his company would be the leading contender for the deal, which is why the firm spent so much effort on the proposal, including compiling a two inch thick file on the company's personnel experience in Iraq – experience that State Department contract officers said they were looking for.

Then the State Department put the job up for open bid three different times, each time with a new revision. The last solicitation was cancelled after the contracting officer went of vacation, according to Waldron.

Waldron's patience finally burst. Only after doggedly hounding the State Department for reasons why the competition had been cancelled did he find out what happened.

The contract was awarded without competition on an emergency basis to a Maryland company, Mil Vets, Waldron said. "We contacted Mil Vets and asked if they had any experience working in Iraq prior to being awarded the embassy project," Waldron said. "The answer was no."

Al-Absi, for his part, views his embassy agreement as based on merit and it is the success of his company that draws fire from his critics.

FKTC never, ever got any job without offering the best value at the lowest price," he said. "People will never criticize someone who fails."

That, says al-Absi, is a price he is willing to pay.

[Editor's Note: this story was updated by the author on March 10, 2006.]

Paving the Amazon with Soy

The sprawling state of Mato Grosso, in central west Brazil, could be thought a paradise of sorts, at least from a distance. The lush rainforest of the Amazon basin, often called the "lungs of the world," straddles the state, as does the grassy Brazilian savanna or cerrado. Parrots, jaguars and pumas are just a few of the abundant species found in the savanna, considered one of the most biodiverse in the world, along with endangered species like the maned wolf, anteater and river-dwelling giant otter.

The landscape, however, is rapidly being altered as vast fields of soybeans and cattle ranches replace grasslands and forests. Soy rules Mato Grosso and it's not the soy that much of the world associates with the ostensibly eco-friendly, vegetarian diet, either.

In the wake of the Mad Cow disease scare, soy producers have benefited from increased demand in affluent countries for meat from cows that are fed soy meal, rather than animal-based feed. This is only the latest in a series of factors that have allowed a company named the André Maggi Group to spearhead, along with the Brazilian government, the expansion of soy in Mato Grosso and adjacent states over the last two decades, with disturbing consequences.

"Soy – at this moment – is the most important driver for deforestation, directly and indirectly," says environmental analyst Jan Maarten Dros. "Directly because the cerrado is being converted from natural vegetation into soy fields. But indirectly, because in this region a lot of cattle farms are being replaced by soy farmers buying or renting land from cattle farmers." This means, according to Dros' 2003 WWF study on the impacts of soybean cultivation in Brazil, that the "cattle farmers tend to advance into new forest area, causing more deforestation."

The governor of the state of Mato Grosso is Blairo Maggi, the owner of the Maggi group, who is also known as the rei da soja – the Soybean King. In fact, the Maggi Group is the largest private soy producer in the world. The company grossed $600 million in sales this year, primarily managing the production, trade and processing of over 2 million tons of soy, most of it destined for livestock in Europe and Asia. Maggi has also been key in establishing transportation infrastructure that further opens the Amazon to development and deforestation.

In 2003, Maggi's first year as governor, the deforestation rate in Mato Grosso more than doubled. Last year when the New York Times pointed out that the destruction of the Amazon had risen by two-fifths, Blairo Maggi responded: "To me, a 40 percent increase in deforestation doesn't mean anything at all, and I don't feel the slightest guilt over what we are doing here. We are talking about an area larger than Europe that has barely been touched, so there is nothing at all to get worried about."

Despite the fragile ecosystem in which it operates, and the controversy around its practices, the Brazilian agribusiness giant has had little trouble getting bankrolled by private banks in Europe and Japan, and by public institutions like the International Finance Corporation (IFC), the private-lending arm of the World Bank. In 2002 the Maggi Group's soy production division, Amaggi Exportação e Importação Limitada, landed two back-to-back US $30 million loans from the IFC – one in 2002 and second that was granted in September of 2004.

World Bank Audits Loan to Amaggi

The Maggi Group, however, has encountered a bump in the road. Under pressure from NGOs in Brazil and abroad, World Bank president James Wolfensohn has called for an audit by the IFC's Office of the Compliance Advisor Ombudsman of the 2004 loan to Amaggi, stating in a letter to Brazilian NGOs that "the audit will provide an independent review of the issue and the results will be made public."

In the cases of both loans, the IFC assigned the projects a Category B social and environmental rating, meaning that "a limited number of specific environmental and/or social impacts may result which can be avoided or mitigated," according to Rachel Kyte, director of the IFC's Environmental and Social Development Department, although this classification may now be under review.

"If civil society's arguments were to have been considered two months earlier," says Roberto Smeraldi, director of Friends of the Earth Amazonia, in response, "this audit would not have been necessary." Brazilian and foreign NGOs have argued that the loan should have warranted a Category A classification, defined as "likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented." Such a categorization would flag the project's potential for serious harm to the fragile ecosystem of the cerrado.

The IFC loan provides Amaggi with capital to expand its inventory capacity for storing soy products while simultaneously supplying pre-finance loans to the 900 medium-sized soy farmers in Mato Grosso and Rondônia states from whom Amaggi buys the majority of the soy it sells. These tenant farmers tend to have limited capital and therefore must turn to Amaggi for financing, since the Brazilian government only provides loans at a very high interest rate. In return, the farmers sign contracts to sell their product to Amaggi on terms dictated by the agribusiness company.

The problem with this arrangement, says geographer Wendy Jepson, whose work focuses on soy production in the states of Mato Grosso and Rondônia, is that the pre-financing loans that Amaggi provides lack detailed conditions about the environment, while locking farmers into deals with Amaggi. "The IFC loan is wrongheaded because it doesn't seem there are any environmental stipulations on how these producers actually cultivate. It's facilitating the expansion of production and not dealing with the fact that these farmers have little choice in how they produce."

Steve Schwarzmann of the Washington DC-based Environmental Defense guardedly welcomes the World Bank audit, while scoffing at the IFC's Category B classification of the loan. "To say that financing the expansion of soybean production in the Amazon in 2004 is the kind of project whose impacts stop at the farm gate, is simply not credible."

Banking on 'Green Gold'

More significant than the direct consequences of the IFC loan, according to Dutch analyst Dros, is the prestige that the international lending body has given to Amaggi, which in turn has attracted much larger loans from private banks. Rabobank, the Netherlands' biggest agricultural bank, has lead a consortium of 11 banks, including ING Bank (Netherlands), HSBC (UK), BNP Paribas (France), Crédit Suisse First Boston (Switzerland), UFJ Bank (Japan), WestLB (Germany), Fortis Bank (Netherlands/Belgium), HSB Nord Bank (Sweden), Banco Bradesco and Banco Itaú (Brazil), to loan Amaggi $230 million.

This is the second large loan Rabobank has arranged for Amaggi. The first loan for $100 million, in 2002, included ABN Bank and Fortis Bank, Banque Cantonale, BBVA, WestLB, and Standard Chartered, as well as three Brazilian banks.

In September of this year, Rabobank launched an advertising campaign presenting itself as "a bank that puts corporate social responsibility into practice." Rabobank is a signatory of the IFC's Equator Principles, a voluntary set of guidelines for managing social and environmental issues, and also has its own official standards on forest protection.

Dros, who has written a number of studies on soy in Brazil and South America for the World Wildlife Fund and AIDEnvironment, believes that the IFC's imprimatur has given private banks a means of skirting their own environmental policies. "Rabobank's reasoning was that if IFC approves this project and they classify it only as a class B, low-risk project, we can safely invest $230 million, eight times more than what IFC is investing, in this corporation."

Rabobank public affairs manager Hans Ludo van Mierlo counters that the bank has an excellent record on environmentally sustainable lending. "We see no cause of concern by World Bank president James Wolfensohn's call for an audit of the IFC's loan to Amaggi," says van Mierlo. "The current discussion among NGO's is about the IFC procedures, which resulted in a classification of Category B. This is more an internal discussion about the procedures of IFC and does not mean that Amaggi is doing something wrong."

The Maggi Group has also received a loan of $24 million in March 2001 by a foreign banking syndicate arranged by Deutsche Investitions und Entwicklungsgesellschaft (DEG), two loans headed by Standard Chartered Bank in July 2001 and July 2002 for $70 million and $50 million respectively, a $80 million loan arranged by WestLB in June 2003 and a $34 million dollar loan from Banco Nacional de Desenvolvimento Econômico e Social (BNDES), Brazil's development bank, in June of this year.

Environmental Defense's Schwarzmann notes the irony of the IFC loaning money to the Maggi Group, given the corporation's ability to draw large private loans. "The ostensible justification of [IFC lending] is to take public resources to support private business in the developing world that would not have access to international capital markets," states Schwarzmann. "What the IFC has done with the Amaggi loans is anything but that."

Paving Paradise

The controversy around IFC and private bank loans to the Maggi Group has highlighted the agribusiness company's potential for ecological damage as soy producer and broker. But equally consequential has been Maggi's role in reshaping the Amazon region, owing partially to the substantial political and economic power of the Maggi family.

Governor Maggi, with largesse from the Brazilian and Mato Grosso state governments, as well as from private companies including his own, has built roads, ports and expanded waterways through the Amazon rainforest that, according to critics, have further opened up the region to soy farms, cattle ranches and small colonists.

Maggi has initiated the creation of roads cutting through the heart of the Amazon, including the BR-163 highway currently being paved from Cuiabá, the capital of Mato Grosso, to the deep-water Amazon River port of Santarém. The asphalting of BR-163 is part of a public-private arrangement between the Brazilian government, Maggi and US agribusiness giants Cargill, Bunge, ADM and others who want a cheap way to export soy. According to the Amazonian Institute for Environmental Research, or IPAM, this 1600 kilometer road will cut a 10 million hectare swath of land through the region, opening the area for further colonization.

Blairo Maggi has shrugged off criticisms by those who see a conflict of interest between his position as Mato Grosso state governor and Brazil's largest soy producer. "My electoral platform was based on the need to keep up economic development in Mato Grosso," Maggi told Soybean Digest last year. "As governor, my key goal is to ... triple agricultural production in Mato Grosso within 10 years, and to develop agro-industry in order to add value to that production."

No End In Sight?

Given the power of agribusiness interests like the Maggi Group, the march towards soy and cattle-driven deforestation may seem unstoppable. But the export-driven soy expansion may slow down for reasons of demand, for the time being.

After reaching a fifteen-year high in April, the price of soy has fallen on the world market to half its peak value, partly owing to record soy production in the US and to decreased demand from China. The price of soy started to slip this spring after China refused to accept shiploads of soy from Brazil owing to high levels of pesticides on the beans. The Maggi Group estimates that it could take several years for the price to pick back up.

Over the long run, demand for soy is only expected to grow. As long as consumers continue to demand meat from soy-fed livestock and international banks continue to finance its growth, the Maggi Group will stay in business. Meanwhile, the vital ecosystems of Mato Grosso's Amazon rainforests and cerrado remain in danger.

Insult to Injury

Rotten food crawling with bugs, traces of rats and dirt. Rancid meats and spoiled food resulting in diarrhea and food poisoning.

This is what detainees at the Abu Ghraib prison near Baghdad were regularly given to eat by a private contractor in late 2003 and early 2004, causing anger to swell to a furious boil between the U.S. military guards and the prisoners.

Foul as the food was, there never was enough. The private contractor, run by an American civilian who was subsequently killed, routinely fell short by hundreds of meals for Abu Ghraib's surging prison population. When the food did arrive, there were often late and frequently contaminated.

So went another sad chapter in the story of the Abu Ghraib prison, where U.S. military personnel and private contractors would make headlines and ignite international outrage over allegations of torture psychological abuse in May of this year.

Captured in photographs now infamous for portraying naked, hooded prisoners and smiling guards, the behavior is believed to be one of the most damning acts toward Iraqi civilians by coalition forces. Other acts of violence toward the prisoners include physical abuse and still unproved allegations of rape and murder.

The Abu Ghraib prison, already infamous under Saddam Hussein's regime, for overcrowding, ill-treatment and torture, was opened up by the over-extended military soon after the April 2003 occupation.

The inmates were a mix of petty and hardened Iraqi criminals, suspected members of the resistance, and thousands of innocent bystanders hauled out of their homes in midnight raids or off the streets of Baghdad. Many say that they just happened to be in the wrong place at the wrong time, but were held without charges by coalition forces for months before being released. Unable to run the prison themselves, the U.S. military hired private translators from Titan, a California-based company, interrogators from CACI, a Virginia-based company, two large and well known military contractors. In addition, they hired a small, virtually unknown contractor from Qatar, to provide food to the inmates.

A shocked Army Major, David Dinenna of the 320 Military Police Battalion, was one of the first to recognize the food problem. In a string of frantic e-mails to commanders during October and November of 2003, he called for assistance from his chain of command while working at the prison.

"Contract meals disaster," he called it in an October 27 e-mail last year. "That is the best way to describe this issue ... As each day goes by, the tension within the prisoner populations increases," he continued. "For the past two days prisoners have been vomiting after they eat."

The food was largely to blame for a Nov. 24, 2003 prison riots in which Army guards shot four detainees after the prisoners failed to comply with commands to stop and disburse. A subsequent Pentagon investigation found that prisoners were not attempting a "mass" escape as first thought.

"All evidence indicates that the detainees were simply protesting the deplorable food and living conditions," the report concludes, which attributes the same reasons to a second prison riot on Dec. 24, 2003.

Dinenna's messages and the riot investigations are part of a collection of documents from a classified report by Army Major General Anthony Taguba that was leaked to the news media last spring together with the now-famous photos of naked prisoners. The documents were originally obtained by several news organizations, including U.S. News & World Report, Rolling Stone and the Center for Public Integrity in October 2004.

Torin Nelson, a contract interrogator who worked at the prison from November 2003 until February 2004 and aided in the Taguba investigation as a witness, arrived at Abu Ghraib just days after the November riot.

He recalls being told by witnesses that none of the guards had been informed about the ongoing problems of bad food given to the prisoners. "Because the guards didn't understand Arabic, they didn't know the prisoners were complaining about the food," Nelson said. "They thought there was an uprising."

Frustration erupted into screaming and the protest ignited panic among the guards. Guns were pointed as more and more prisoners gathered in the outburst. The situation spun out of control, Nelson said. "The guards began firing non-lethal rounds at the prisoners, but ran out." Then, according to what I was told, they got permission to use lethal rounds.

While the U.S. Justice Department is now investigating six private contractors working as interrogators and translators for Titan and CACI, for their roles in the mistreatment, the food contractor remains forgotten and unnamed in the numerous Pentagon investigations of the prison conditions that have been made public.

The contractor's name, American Service Center (ASC), based in Qatar, has surfaced only after dozens of inquiries by CorpWatch over the past month to the Pentagon and military officials in Iraq.

The little known firm boasts on a simple company Web site that it offers services in the line of housing, furniture, vehicle rentals, telephone and internet services. Closely affiliated to a sister company, Advanced Internet Center, ASC claims to work with the U.S. Amy in Qatar and military contractors such as ITT and Dyncorp.

No mention is made of food services or Abu Ghraib. ASC's owner and chief executive, Ali Hadi, hesitates to talk about the contract or his company's performance at the prison and declined to respond to numerous e-mails with questions about his company.

"I have no information about the project," Hadi said during a phone call as he traveled to a Qatar airport en route to Dubai. "I am the owner of the company," he said, "not the operator," adding that ASC subcontracted the food contract for the prisoners to a local Baghdad caterer.

Despite the finding of abysmal performance in providing food to prisoners, Hadi said ASC holds about "10 to 16" other contracts with the U.S. military, but he is unsure if they are "active."

Any knowledge about the Abu Ghraib contract died with ASC's contract manager, Ray Parks, Hadi claimed. A 56-year-old West Virginia native and former Vietnam veteran, Parks was ambushed and murdered in his Baghdad driveway by three gunmen wearing black robes on the morning of Feb. 16. At the time, Parks was preparing to resign from his job as director of ASC.

Family members of Parks immediately demanded a thorough investigation of events surrounding his murder. Millie Mercer, sister to Parks, said that an Army investigator called the Parks family, but then disappeared. Very little came of the investigation, Mercer said. The investigator "was transferred."

Parks had been a government contractor for many years outside the United States and went to Iraq because he "wanted to help people." He took a job with ASC in June 2003 to work in computers, she added. Mercer wants to hear nothing more about her brother's death. She prefers holding on to the good memories. "So many contractors are seeing much bigger horrors," she said.

But Major Dinenna appeared to believe that Parks was contributing to the horror of Abu Ghraib in his e-mails. "Parks is full of shit and not the least bit trustworthy," Dinenna wrote in a second Oct. 27, 2003 e-mail complaining about food for prisoners marked "URGENT URGENT URGENT."

Dinenna was responding to an earlier e-mail from an Army Major Green, who discounted Dinenna's complaints about the food service and other services ASC was relied upon to provide. "Who is making the charges that there is dirt, bugs or whatever in the food?" Green asked in his e-mails. "If it is the prisoners, I would take it with a grain of salt."

Dinenna fired back: "Our MPs (military police), Medics and field surgeon can easily identify bugs, rats, and dirt, and they did."

In addition to providing food services, ASC was also retained under an $8.2 million agreement to provide "life support" services to the U.S. military at the prison, Hadi said.

But there appears to have been confusion about that support contract among prison commanders. In his string of e-mails, Dinenna faults Parks for constant delays in providing proper lighting for the prison to help in security and prevent escapes.

Then after months of pushing Parks to provide the lighting, Dinenna discovered from a commanding officer that ASC was not responsible for the job.

The ASC contracts are only another example of poor contracting performance in Iraq and bad planning on the part of the Pentagon, said Peter Singer, an expert on the contracting for military services at the Brookings Institution in Washington, D.C.

"It just shows how the Pentagon has operated on an ad hoc basis," Singer said. "They were lacking in the needed planning, services and doctrine to manage large scale prisons. Everything was done at the last minute."

Nelson believes that the end result of last minute planning resulted in long term problems for the United States and its role in Iraq. "All the sickness and rotten food not only produced a safety and security concern for the guards and the prisoners," he said. "It was also a morale factor. Here were all these rich Americans coming to Iraq to fix things and they couldn't even afford to feed the prisoners."

A group of interrogators also complained to Colonel Thomas Pappas, the Army officer in charge of the prison, in November 2003, about the poor quality of the food served to the inmates by the food contractors. Nelson says that the sickness made it hard for the interrogators to extract information from detainees. "Anything that affects the morale of the locals affect our mission," he added.

In May 2004, the contract for food service at Abu Ghraib was taken away from ASC, according to Army spokesman Jeff Magruder in Baghdad who said the company apparently was responsible for most aspects of the prison, ranging from power generation to food services.

ASC "did a good job on the other stuff but obviously not so good a job on the food services side for both detainees and soldiers," Magruder said. "Their main problem was that the food would sometimes be rotten and the calorie content was not up to their standards."

Today the food for detainees and soldiers is "much better," Magruder says. Meals for detainees "now far exceed all international standards for calorie content and provide food that is more culturally sensitive. Also, during Ramadan they worked an alternate chow schedule to assist those who were fasting."

Shell Games

In October, New York Attorney General Eliot Spitzer filed suit against the world's largest insurance broker, Marsh, accusing it of rigging bids and receiving kickbacks in order to defraud clients such as other corporations, city governments, school districts and individuals of billions of dollars through inflated premiums.

"Greedy trial lawyers were the usual excuse for premium increases. Now we know that greedy corporations also have a starring role," Spitzer said, accusing several insurance companies as co-conspirators in making phony or inflated bids and paying kickbacks to the brokerage to get business.

Spitzer also announced that two executives from the insurance conglomerate American International Group (AIG) had already confessed to related criminal charges. But his investigations into AIG may have only scratched the surface. A paper trail stretching back a decade reveals that AIG used offshore shell companies to skirt the law.

The current scam which Spitzer has uncovered works like this: Marsh, an insurance broker, is supposed to find the best insurance policies for its clients from a wide range of companies. Instead it steered the policies to companies such as AIG that agreed to pay kickbacks. It solicited phony competitive bids for insurance contracts to deceive customers into thinking there was real competition for their business. Marsh made $800 million on kickbacks in 2003 alone – over half its $1.5 billion profit. With a 40 percent share of the global insurance brokerage market, its fraud drove up prices for everyone.

AIG announced that its senior managers were not aware of the bid-rigging. But the family ties of three of the alleged co-conspirators make the claim hard to believe. The head of the Marsh brokerage was Jeffrey Greenberg, 53; the head of AIG is his father Maurice (Hank) Greenberg. A former AIG staffer told CorpWatch, "Greenberg is legendary as a hands-on person. Nothing happens in the company without him dealing with it. He knows the names of the elevator operators."

Another accused collaborator is Hank's other son, Evan, 49 who just happens to run ACE Ltd., another of the companies allegedly involved in the complex scam.

Jeffrey has resigned in disgrace, but so far the family patriarch is holding onto his executive seat. During a conference call with investors, he said, "I have never discussed business with Jeff or with Evan. ... We get together on a very rare occasion. But we never discuss business. We play tennis occasionally." Still, fallout from the scandal has already cut $24 billion from AIG's $150 billion market capitalization and knocked 12 percent off its stock price.

Lax Regulators Give AIG a Free Pass

At Spitzer's press conference, New York State Insurance Superintendent Gregory V. Serio said: "This has gone from an inquiry into failure to disclose compensation to an active investigation of bid rigging and improper steering. This certainly proves the adage that where there is smoke, there is fire." But AIG's comportment could not have been much of a surprise to Serio, who was New York's deputy insurance superintendent in the late 1990s. That's when New York and three other states gave the powerful company a pass on some very questionable practices. If they had paid attention to the smoke then, perhaps this billion-dollar fire wouldn't have ignited.

In the late 1990s, four state insurance departments New York, Delaware, Pennsylvania and California were aware that AIG was moving debt off its books via the use of an offshore shell company it secretly set up and controlled. But despite clear evidence of wrongdoing, no sanctions were ordered.

Insurance companies normally insure themselves by laying off part of their risk to reinsurance companies, so if a claim comes in above a certain amount, the reinsurance company will pay it. Insurance companies use re-insurers to reduce some of their risk and because state laws require them to keep a certain amount of capital available to pay out claims. If they have reinsurance, that amount can drop. If they have enough good reinsurance, they get a credit for that against their losses. The reinsurer, of course, has to be an independent company; the risk isn't reduced if it's just moved to another division of the same company.

In the mid-1980s, two of AIG's reinsurers failed. The bankruptcy liquidators paid creditors, including AIG, over several years but meanwhile the amount owed was liable to show up as unacceptably high levels of debt on the AIG books.

Trevor Jones, an insurance investigator who for 20 years has run Insurance Security Services in London, explained, "Hank [Greenberg] decided to set up Coral Re [a reinsurance company] to move the debts he couldn't claim as assets into this other company ... No other real company would play ball, because you are fiddling the accounts, moving your bad debts off your books."

So AIG went to elaborate lengths to set up a shell company in Barbados, where capital requirements and regulation was minimal compared to the U.S., where American regulators couldn't readily discover AIG's involvement and where, as an added incentive, it could move money out of reach of U.S. taxes. Some high-level corporate executives were persuaded to front for a company into which AIG could "cede" insurance.

Goldman Sachs and Robert Rubin

Coral Re, a Barbados reinsurance company, was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin, who would become President Clinton's Treasury Secretary and is now chairman of the executive committee of Citigroup. A confidential memorandum, (which Goldman Sachs ordered investors not to copy and to return on demand) told why the company was formed. "AIG's interest in creating the Company is to create a reinsurance facility which will permit its U.S. companies to write more U.S. premiums. For a U.S.-domiciled company, a high level of surplus is required to support insurance premiums in accordance with U.S. statutory requirements. The statutory requirements in Barbados are less restrictive."

A no-risk deal was offered by Goldman Sachs to selected investors who lent their names and credibility in exchange for guaranteed return of $25,125 in the first year and $45,225 each subsequent year. They were L. Donald Horne, chairman of Mennen Company; Charles Locke, chairman of Morton Thiokol; Kenneth Pontikes, former chairman of Comdisco; David Reynolds, chairman of Reynolds Metals; John Richman, former chairman of Kraft; and Samuel Zell, chairman of Itel Corporation. They didn't have to put up any money: they got financing from Sanwa Bank of Chicago secured by the Coral Re shares, a guarantee of enough dividends from Coral Re to cover the interest, and agreement they could hand off the shares and debt whenever they chose.

Rubin buddy Bill Clinton, then governor of Arkansas, may also have thrown his weight behind the project. The Arkansas Finance and Development Authority (ADFA), headed by a man who went to work in the Clinton White House, became lead investor, although state law banned it from buying stocks.

The new company was not a legitimately independent business. For investors, there was no money at risk; the board of directors never made a decision; and Coral Re had no office of its own but was managed by American International Management, a subsidiary of none other than AIG.

Eventually, the scheme unraveled. State insurance examiners look at company books every five years. "In 1992, Delaware examiners auditing Lexington [an AIG subsidiary] smelled a rat," a former regulator from one of the four investigating insurance departments told CorpWatch.

AIG initially refused to provide Coral Re documents to the examiners, and it took them a couple of years to nail the connection. When AIG finally supplied Coral Re's financial papers, the regulator was incredulous. He said, "The books were definitely cooked. I remember three years in a row [in the early 1990s] their pretax income came out to an even number. It was like somebody said 'show $250,000 pretax income.' I've been looking at financials for 35 years and have never seen pretax numbers come out even." The figures were 1987 $1.1 million; 1988 $1.555 million; 1989 $0.8 million.

The Regulatory Record

The Delaware report on AIG, finally issued in October 1996, suggested that Coral Re "may be an affiliate" of AIG. It described how AIG played an integral role in the creation of Coral Re; that the purpose for creating Coral Re was to reinsure risks for AIG companies; that virtually all of Coral Re's business originated from AIG units; and that Coral Re was managed by AIG subsidiary American International Management Co. Ltd. It concluded that the arrangement with Coral Re did not transfer risk, and it had to come off the books.

AIG insisted, in the face of overwhelming evidence, that Coral was independent. The regulator told CorpWatch, "It's clear AIG formed that company. They denied it, because if they owned it, it would be affiliated and they would not be able to take credit for reinsurance. Delaware should have suspended them, but did nothing."

New York and Pennsylvania also investigated, had similar experiences with AIG stonewalling, and reached similar conclusions.

The New York report on three AIG companies said the deal with Coral Re was "window dressing" and didn't "transfer underwriting risk," so AIG shouldn't take credit for it. New York described an accounting slight-of-hand which mirrors what indicted Enron officials did to change loans into earnings. In 1991, AIG insurance companies borrowed $190 million from an affiliate, AIG Funding Inc., but reported the loan as a sale to AIG Funding of their accounts receivable, i.e., the money owed them by Coral Re. Presto, a loan became revenue, and balance sheets showed no loss.

The Pennsylvania insurance department investigation also concluded, "There was no transfer of insurance risk."

The four states – Delaware, New York, Pennsylvania, and California – met in 1996 to coordinate their reports on AIG.

The Securities & Exchange Commission (SEC) also looked into the matter. The regulator said, "The SEC came to me; they wanted to know if we were going to rule they were affiliated. Then there would be penalties, because if AIG was affiliated with Coral and they hadn't disclosed it in 10k filings, that's a 'no-no' with the SEC."

It also would have been an issue for the Internal Revenue Service. If Coral Re was an AIG affiliate, it would have to pay taxes on its income. If it was "independent," that money came tax-free.

"But nobody had any guts; they wanted Delaware to say Coral Re is affiliated and use that to go after them. None of the agencies had the gumption to do it on their own," said the regulator. And AIG wasn't shy about its tactics. He said, "In 1996, AIG hired a private investigator to check into the background of the chief examiner in Delaware. The investigator actually told the department he was looking at the chief examiner at the request of AIG. It was intimidation. And Delaware officials allowed it to happen."

A Delaware examiner told the regulator. "When you do something with this company, they make it so difficult for you, so people just let it go."

Delaware reported what it found but didn't rule the companies were affiliated. "That would have meant hearings, endless hassles," the regulator concluded. And real punishment for AIG.

The New York Insurance Department said the violations of New York law were not serious enough to warrant a fine. Besides, an official said, it was hard to prove "control" of an offshore company – which, of course, is the reason for going offshore. The delays and stonewalling allowed AIG to use Coral Re for more than eight years. By the time it had to shut it down, it didn't need it anymore.

Things have gotten tougher for the company since the Enron affair caused the SEC to look more serious about corporate corruption. In the current climate, these regulatory agency findings would probably prompt investigations by state Attorneys General, perhaps they still could. Last year, AIG paid a $10 million fine to the SEC for helping the Indiana wireless telecom company Brightpoint commit accounting fraud. AIG marketed a "non-traditional" insurance product aimed at "income statement smoothing," spreading a loss over future reporting periods. The SEC called such financial products "just vehicles to commit financial fraud" and said the insurance giant refused to give it subpoenaed documents, compounding its misconduct. The U.S. Justice department is currently investigating but has yet to file criminal charges.

Business Insurance, a trade publication, editorialized on the timidity of regulators for giving AIG "little more than a tap on the wrist" in exchange for "a promise not to do it again." "The message delivered here is that a company of AIG's power and complexity can afford to be openly hostile to state oversight and, in the end, have things pretty much its own way. That is a disheartening message, indeed," wrote the magazine's editors.

AIG spokesman Andrew Silver told CorpWatch that "AIG was not involved in the offer and sale of Coral Re's shares. That was done by Goldman Sachs, which approached potential investors with which it had relationships. AIG did not control or have an equity interest in Coral Re. The issue raised by the regulators was whether these transactions should be booked as a deposit account or an insurance account. The regulators concluded that real risk was transferred and that these transactions should be accounted for as insurance. AIG insurance subsidiaries eventually commuted their Coral Re reinsurance."

Goldman Sachs failed to respond to inquiries about its role in setting up Coral Re.

Asked how AIG could say the regulators concluded that real risk was transferred when Pennsylvania stated clearly, "There was no transfer of insurance risk," Silver declined to reply.

Sweating the Athens Apparel

At the Olympic Games in Athens this year, the logos of McDonalds, Samsung, Coca-Cola, and other multinational advertisers are saturating the festivities to the tune of $1.339 million. But the corporate self-promotion and commercial branding won't end when the games come to a close. Sportswear companies have negotiated $81 million worth of licenses from the International Olympic Committee, allowing them to adorn their products with Olympic emblems. Behind the five intertwined rings and the Athens 2004 kotinos laurel wreath insignia, hidden from the eyes of the world, non-union, underpaid labor will be sewing the shirts, gluing the shoes, and putting zippers to running suits and track apparel branded as Olympic in working conditions that would make even the most highly trained athlete sweat.

While the sportswear market was valued at over $58 billion in 2002, and select athletes garner millions of dollars through corporate endorsements – such as football champion David Beckham's $161 million lifetime deal with Adidas - workers in sweatshops in Indonesia, Bulgaria, Cambodia, Turkey, China, Thailand, and elsewhere are paid a dollar or two a day, while facing hyper-exploitation, unhealthy working environments, sexual harassment, verbal and even physical violence from their employers.

This year, Global Unions, Oxfam, the Clean Clothes Campaign and other groups are aiming to change these conditions by turning the spotlight on the situation of workers producing apparel and athletic footwear for sportswear giants Nike, Adidas, Reebok, Fila, Puma, ASICS, Mizuno, Kappa, and Umbro. They call their campaign "Play Fair." "Play Fair campaigners interviewed close to 200 workers in factories worldwide and in factories producing goods for Olympic brands," says Katherine Daniels, trade policy advisor at Oxfam, "and they found cases of workers working shifts up to 16 – even 18 – hours for pittance wages that are not enough to live on. And they found gross intimidation and violations of workers rights, and intimidation for those who wanted to form or join trade unions."

Gearing up

In the past decade, anti-sweatshop activists have targeted highly visible firms like Nike, Reebok and Adidas, with campaigns on college campuses, at major retailers like the Gap, and at other athletic events. However, until recently sportswear giants like Fila, Puma, ASICS, Mizuno, Kappa, and Umbro have stayed below the radar. Now, these colossal Italian, British, Japanese, German, and American companies increasingly marketing sportswear as street clothes to young people using advertisements placing more emphasis on lifestyle than on athletic performance.

Fila and Puma are cases in point, selling their fashionable wear and old school sneakers to skaters, jocks, and hip-hop heads. Fila spends $116.4 million a year to maintain its image – the company shelled out $7 million to basketball star Grant Hill to peddle the Fila brand – while Puma pays more than $107 million per annum on advertising.

Originally an Italian company, Fila has been owned since 2003 by a private New York-based holding company called Sports Brands International, closely associated with the investment fund manager Cerberus Partners, which controls 20 sportswear and footwear subsidiaries, including the Ciesse brand. Fila promotes itself as on the luxury end of the sporting apparel industry, with "an Italian flair for style," partnering in promotion with the automakers Ducati, Ferrari, and Pininfarina. As a private company, SBI is not required to disclose its finances.

German-based Puma makes "lifestyle" sportswear such as funky suede trainers, track suits, and up-market Nuala yoga clothing endorsed by supermodel Christy Turlington. Puma is the world's sixth largest sportswear brand, doubling its profits in 2003 from $108 million to $228 million.

Sports brands like Fila and Puma do not manufacture shoes and apparel themselves, but instead subcontract out the work to factories around the globe, which are described by the Play Fair at the Olympics campaign as sweatshops. While both Fila and Puma have stated their commitment to honoring the labor rights of the workers who produce their merchandise, the reality on the factory floor seems to belie these claims.

"I have many health problems: headaches, diarrhea, stomach flu, back pains, and muscle cramps," says Fatima, a 22-year-old woman working for a Indonesian factory that produces for Puma, Fila, and other sportswear companies. "All these are caused by the situation in the factory – the bad air, having to stand all day, and the long hours of work without sufficient rest, water or food."

According to the campaign's report, Puma and Fila contract out to companies that regularly abuse workers, such as a factory in Indonesia where managers sexually harass the women, a Puma subcontractor in Bulgaria that threats to fire workers if they refuse to work overtime, and Puma and Fila subcontractors in Turkey that force overtime work on employees, among many examples.

Puma and Fila also subcontract out to companies that are virulently anti-union. Rana, a Turkish garment worker for a factory that produces for Puma and Lotto, says "Last year while the workers of the next factory were striking in front of their factory, our supervisor said to us 'You will see – all of them will lose their jobs. You never make this mistake. Otherwise you will face the same consequences."

Fair Play

Fila counters that it follows a very strict code of conduct. According to Fila spokesman Mark Westerman, "Fila takes the Oxfam report seriously and has very strict standards that we adhere to in the production of our products all around the world.... In addition, we have requested a meeting with the leaders of Oxfam so that we can better understand their claims, while at the same time clearing up any misunderstanding they may have with regard to our business practices."

Fila's Code of Business Conduct states that Fila will not do business with those who employ forced labor, that factories "must be free of any hazardous conditions," and that "Vendors/Suppliers must respect and recognize the rights of all employees to lawfully organize and bargain collectively."

While Puma did not respond to repeated inquiries from CorpWatch, Puma's Social and Environmental Report states: "The observance of human rights at all our global production sites is one of our fundamental requirements.... [Manufacturing partners production] must not be realized on the grounds of exploitative activities such as child labor or forced overtime work."

The actual impact of codes of conduct like these on the employment practices of sportswear companies is questionable. The Play Fair at the Olympics report documents the falsification of evidence during codes of conduct inspections at plants producing for Fila, Nike, Umbro, Speedo, Reebok, and ASICS, including the creation of false wage records, pressuring workers to say that they work a ten hour day and have two days off a week, and similar bogus claims.

Hee Wan Khym, senior research analyst with the US union UNITE HERE who has traveled around the world investigating sweatshops, says that codes of conduct and monitoring are limited. "My concern is whose paying these monitors? Is it the same corporations that are breaking the law?"

Picking up the Pace

According to critics, the companies are not just indirectly complicit in the treatment meted out to workers by their subcontractors. They are directly responsible for pushing their suppliers, who in turn squeeze their workers.

"When consumers go into a store we can buy any number of these sportswear brands, so you have Nike, Reebok, Fila, Puma in an intense price war with each other to gain our dollars," says Oxfam's Katherine Daniels. "What this means is that they in turn push that competition onto their suppliers, requiring their suppliers to reduce their prices, who in turn push down the competition, and squeezing competition out of their workers in the form of longer hours, requiring them to sew and manufacture faster, and lower wages."

Elsa, an Indonesian worker who makes apparel for Fila, Puma, ASICS, Lotto, and Nike, says that speed up in production is particularly hard on the factory workers. "In the garment division, the usual target is a thousand pieces per lane, per day. But during export days, the target doubles to two thousand pieces. This doubling is very stressful for us, and we often cannot reach it."

Seeing Red

Organizing around workers' rights in sweatshops poses many challenges, particularly since capital invested in the garment industry is some of the most mobile in the global economy. Campaigners and workers are constantly aware that shops may close down and relocate at the merest sign of labor unrest.

And while the conditions in apparel and footwear factories in the global South may be appalling, sweatshop jobs may often be better than other local jobs. Some critics in developing countries have expressed concern that anti-sweatshop activism might backfire and lead to the shutting down of factories and the loss of jobs.

Hee Wan Khym of UNITE HERE, which is an affiliate of the International Textile, Garment, and Leather Workers' Federation that is spearheading the Play Fair at the Olympics campaign, responds that closing these factories is not on the agenda. "In all of the international solidarity campaigns we undertake, our goal is not to shut the factory down. On the contrary we dialogue with the brands to ensure that they continue a steady order with the factory, at the same time trying to improve the working conditions, trying to implement the demands that the workers collectively outline as most pertinent to them."

The issue of the survival of jobs in the garment industry, including in sweatshops, is a pressing concern for other reasons. Many countries will face the devastation of sportswear jobs at the end of 2004 when the World Trade Organization lifts the quotas that have regulated trade in the apparel industry. "On December 31st of this year, those subsidies will be completely dismantled, says Alejandra Domenzain of Sweatshop Watch. "There are entire countries – for example, in Bangladesh something like 70% of their national income comes from their textile industry – [whose] economies are going to be devastated."

How those workers who produce for the sportswear industry will cope with such sea changes remains to be seen. Yet building international solidarity with other unions, targeting high profile companies like Fila and Puma at events like the Olympics and building consumer pressure will undoubtedly continue to be a central part of the strategy.

UNITES' Khym says that, despite the difficulties, working for collective bargaining rights is the most important issue. "At the end of the day, I believe the best monitors [of working conditions] are workers themselves – that is, when they organize and organize unions."

Democracy by the Dollars

What can a North Carolina firm teach Iraqis about democracy? Not much, as it turns out – not when it spends millions of dollars making life comfortable for its own staff rather than the Iraqis.

In March 2003, the U.S. Agency for International Development awarded the Research Triangle Institute (RTI) International of North Carolina a $167 million contract to help 180 Iraqi cities and towns "foster efficient, transparent, and accountable sub-national government that supports the country's transition to sovereignty."

More specifically, the RTI staff in Iraq were charged with setting up local neighborhood councils, providing technical advice for municipal services such as garbage collection and water supply, and funding new local community organizations and initiatives.

Little of the above was achieved in reality, however.

Three former RTI employees who worked on the project say that the company instead spent 90 percent of the money on expensive expatriate staff, gave out lots of advice and held lots of meetings, but did little to provide support for local community organizations or councils.

Services Not Elections

According to RTI Iraq chief Ronald Johnson, his company's mission was to teach Iraqis how to establish local governments that would eventually provide basic services to citizens. In an interview with Canadian reporter Naomi Klein, he explained that holding elections too early often lead to violence. Basic services were instead safer ground encourage civic participation.

"There really is not a Sunni way to pick up the garbage vs. a Shiite way vs. a Syrian way to pick up the garbage," said Johnson. "There's a lot of politics about how much you do, and there's certainly politics about picking up the garbage in one neighborhood and not picking it up in another neighborhood," he said.

To account for this, RTI held neighborhood meetings. According to Johnson, "Announcements are distributed, people are invited, they're urged to bring people and you have kind of a town meeting – only it's a town meeting that in a lot of cases covers a small geographic area. But its potential is for a lot of the adult residents of that neighborhood to actually physically come together in a meeting, in person."

According to RTI press releases, these initiatives were a tremendous success: "Throughout the first year, our in-country team of roughly 2,000 Iraqis and 200 international development specialists worked in 18 governorates on a wide range of locally selected priorities ranging from increasing access to basic utilities and healthcare to establishing and training local governing councils,"

Spending on the Good Life

But former RTI employees paint a very different picture of the institute's operations, which they say spent over 90 percent of its allocated funding on its own staff rather than the Iraqis. Despite all the meetings, there was little real funding for the local programs.

Three former RTI employees – Jabir Algarawi, an Iraqi-American from Arizona; Jerry Kuhaida, a former Tennessee mayor; and Jim Beaulieu, a former provincial deputy minister from Canada – all went to work with hopes of building democracy in Iraq.

Algarawi, a Shiite from Diwaniya, had fled Iraq in 1991 after taking part in an uprising to overthrow Saddam Hussein as called for by the first President Bush. Last December, Algarawi, who supported the 2003 invasion of Iraq, quit his job as executive director of the Arizona Refugee Community Center in Phoenix, and took a position with RTI, which flew him to Al Amarah, the capital of Maysan province in southeastern Iraq, to help Iraqis establish local governance.

At first, he says, "almost 95 percent of the people [in the south] supported us. Now there are only a few, and those who do don't have the courage to say it." He believes that the lack of tangible support for local communities is one of the principal reasons for the withdrawal of popular support.

Algarawi says that the only project he was able to finish was the creation of a women's organization, for which RTI allocated $90,000 in spending money.

"We spent more than that on entertainment for our staff alone, bringing in satellite television," he said. "Many of the expatriate staff individually earned twice or three times as much money as the annual budget of this organization. Probably we spent 90 percent of our money on RTI staff and very little on the community."

Algarawi also said that the RTI expatriate staff spent most of their time at their protected compound. "Some of my colleagues never left the compound; they spent all their time filling out forms for the United States government. It seemed like our main objective was satisfy our funders not to help people in Iraq," he said.

"Those of us who did go outside, were told we could not go anywhere without our four Australian bodyguards, but that made the local people afraid of us. Many people said we were CIA and especially since we were not supposed to speak to the media, this did nothing to dispel the rumors," Algarawi says.

He added that the company, whose supervisors stayed at the posh Sheraton Hotel in Kuwait, bought supplies, from food to televisions, from Kuwait, not Iraq. "[We] gave no money to Iraqi organizations, [so] local people started to say that they needed to get Saddam to get the Iraqi money back from Kuwait," Algarawi says.

In early April, Algarawi and all the other expatriate staff were told to evacuate Iraq because of the escalating violence. Then in late May, he heard that what little he had achieved might soon be undone. Dr. Kifaya Hussein, a staff member of the women's organization he had helped establish, was gunned down in front of the office. "When she was killed, RTI didn't pay out the money they had promised, so now all the women are just volunteers," he said.

The paucity of resources for actual community initiatives was confirmed by Jerry Kuhaida, the former mayor of Oak Ridge, Tennessee, who had also resigned from his job in the United States to work for RTI in late 2003. He was assigned to Karbala, a city of 500,000 people about 60 miles south of Baghdad.

Kuhaida was put in charge of determining how money had been spent in the south central region, which covers four of Iraq's 18 governorates. He calculated that RTI had given away eight to 10 grants of between $5,000 and $50,000 each. "It was all fluff," Kuhaida said. "We weren't really doing anything for the local organizations."

But Patrick Gibbons, a spokesperson for RTI in Baghdad, disagreed with Algarawi and Kuhaida, arguing that the local grant-making program was successful: "The original LGP (local governance program) budget had $10 million allocated for grants to support local projects. The grant program was so successful that LGP, with USAID approval, reallocated budgeted funds to administer more grants. To date, nearly $15 million worth of grant-funded projects have been approved, and almost all are completed or nearing completion."

Statistically speaking, the $15 million was slightly less than 10 percent of the total $154 million paid out to RTI for the first year of work, which suggests that 90 percent was spent on company staff and administration expenses.

What's the Plan?

Kuhaida also complained that RTI lacked a serious plan for delivering democracy. "We can't even get our own people in the United States to vote, how are we going to do that in Iraq?" he wondered. "We needed to at least do some strategizing and thinking, but I saw no evidence that we were doing that."

"There was no plan at all after the war," he added. "The whole thing was running on a whim, basically. There wasn't even a bad plan out there. I am totally disturbed by my government and the lies that were told to me. I take them personally."

In response, Gibbons told CorpWatch that the situation was "challenging for everyone involved."

"Our efforts to date have been successful by any reasonable standard, and we are looking forward to continuing to improve municipal government's service delivery, to ensure that councils are representative, to promote the role of local government in sovereign Iraq, and to promote public participation in national and local political processes," he said. "Is it easy? No."

Not all the former employees who spoke with CorpWatch blame RTI. Jim Beaulieu, a former deputy minister of urban affairs in the Canadian province of Manitoba, was hired by RTI in September 2003 to help the governor of Najaf, the highest-ranked politician in the region.

Beaulieu said this work was more challenging than that of the military contractor Bechtel, which was charged with helping rebuild and protect Iraq's infrastructure. "RTI had to deal with people, ordinary Iraqis, who had no fundamental concept of democracy," he said. "We needed expatriates to teach these concepts."

The problem, he believed, lay with the American occupation authorities in Baghdad, who had given the governor and the governing council "no money, no authority over anything other than their own offices, and no support staff. They were just a shell. They were trying hard to do things, but how can you do anything without money or authority?"

Gibbons countered that the councils did have some power. "It is not true that the roles and responsibilities of councils have been largely advisory during (the occupation)," he said. "Local councils across the country have been planning and developing priorities for their constituents and communities, and funding flows exceeding $2 million per province that are spent only on projects selected by the council have enabled councils to choose and then implement important projects. The system, of course, is not fully developed, but councils to date have played critical roles in conflict resolution, selecting governors/mayors, and implementing projects."

But by spring, disenchanted with the company and frustrated by the little work being done, all three men quit their jobs and returned to North America. Beaulieu explained his motives: "I resigned because it became obvious we could not do what we were hired to do," he explained. "There was simply no credible evidence that the United States had a plan of what they want to do."

Gibbons claims that the three men do not represent the views of all RTI staff. "A lot of people have come out to Iraq to accomplish important personal missions," he said. "In the face of (difficult) circumstances, some have left earlier than they originally planned, in frustration. Others have extended well beyond their original commitment and feel they are accomplishing critical tasks."

Algarawi, however, does not blame the realities on the ground for his disenchantment with RTI: "They went there to make a profit, not to help the people."

Halliburton Makes a Killing on Iraq War

As the first bombs rain down on Baghdad, thousands of employees of Halliburton, Vice President Dick Cheney's former company, are working alongside US troops in Kuwait and Turkey under a package deal worth close to a billion dollars. According to US Army sources, they are building tent cities and providing logistical support for the war in Iraq in addition to other hot spots in the "war on terrorism."

While recent news coverage has speculated on the post-war reconstruction gravy train that corporations like Halliburton stand to gain from, this latest information indicates that Halliburton is already profiting from war time contracts worth hundreds of millions of dollars.

Cheney served as chief executive of Halliburton until he stepped down to become George W. Bush's running mate in the 2000 presidential race. Today he still draws compensation of up to a million dollars a year from the company, although his spokesperson denies that the White House helped the company win the contract.

In December 2001, Kellogg, Brown and Root, a subsidiary of Halliburton, secured a 10-year deal known as the Logistics Civil Augmentation Program (LOGCAP), from the Pentagon. The contract is a "cost-plus-award-fee, indefinite-delivery/indefinite-quantity service" which basically means that the federal government has an open-ended mandate and budget to send Brown and Root anywhere in the world to run military operations for a profit.

Linda Theis, a public affairs officer for the U.S. Army Field Support Command in Rock Island Arsenal, Illinois, confirmed that Brown and Root is also supporting operations in Afghanistan, Djibouti, Georgia, Jordan and Uzbekistan.

"Specific locations along with military units, number of personnel assigned, and dates of duration are considered classified," she said. "The overall anticipated cost of task orders awarded since contract award in December 2001 is approximately $830 million."

Local Labor in Kuwait

The current contract in Kuwait began in September 2002 when Joyce Taylor of the U.S. Army Materiel Command's Program Management Office, arrived to supervise approximately 1,800 Brown and Root employees to set up tent cities that would provide accommodation for tens of thousands of soldiers and officials. Army officials working with Brown and Root say the collaboration is helping cut costs by hiring local labor at a fraction of regular Army salaries.

"We can quickly purchase building materials and hire third-country nationals to perform the work. This means a small number of combat-service-support soldiers are needed to support this logistic aspect of building up an area," says Lt. Col. Rod Cutright, the senior LOGCAP planner for all of Southwest Asia.

During the past few weeks, these Brown and Root employees have helped transform Kuwait into an armed camp, to support some 80,000 foreign troops, roughly the equivalent of 10 percent of Kuwait's native-born population.

Most of these troops are now living in the tent cities in the rugged desert north of Kuwait City, poised to invade Iraq. Some of the encampments are named after the states associated with the attacks of Sept. 11, 2001 -- Camp New York, Camp Virginia and Camp Pennsylvania.

The headquarters for this effort is Camp Arifjan, where civilian and military employees have built a gravel terrace with plastic picnic tables and chairs, surrounded by a gymnasium in a tent, a PX and newly arrived fast food outlets such as Burger King, Subway and Baskin-Robbins, set up in trailers or shipping containers. Basketball hoops and volleyball nets are set up outside the mess hall.

Meanwhile, In Turkey ...

North of Iraq approximately 1,500 civilians are working for Brown and Root and the United States military near the city of Adana, about an hour's drive inland from the Mediterranean coast of central Turkey, where they support approximately 1,400 US soldiers staffing Operation Northern Watch's Air Force F-15 Strike Eagles and F-16 Fighting Falcons monitoring the no-fly zone above the 36th parallel in Iraq.

The jet pilots are catered and housed at the Incirlik military base seven miles outside the city by a company named Vinnell, Brown and Root (VBR), a joint venture between Brown and Root and Vinnell corporation of Fairfax, Virginia, under a contract that was signed on Oct. 1, 1988, which also includes two more minor military sites in Turkey: Ankara and Izmir.

The joint venture's latest contract, which started July 1, 1999 and will expire in September 2003, was initially valued at $118 million. US Army officials confirm that Brown and Root has been awarded new and additional contracts in Turkey in the last year to support the "war on terrorism" although they refused to give any details.

"We provide support services for the United States Air Force in areas of civil engineering, motor vehicles transportation, in the services arena here -- that includes food service operations, lodging, and maintenance of a golf course. We also do US customs inspection," explained VBR site manager Alex Daniels, who has worked at Incirlik for almost 15 years.

Cheap labor is also the primary reason for outsourcing services, says Major Toni Kemper, head of public affairs at the base. "The reason that the military goes to contracting is largely because it's more cost effective in certain areas. I mean there was a lot of studies years ago as to what services can be provided via contractor versus military personnel. Because when we go contract, we don't have to pay health care and all the another things for the employees, that's up to the employer."

Soon after the contract was signed, Incirlik provided a major staging post for thousands of sorties flown against Iraq and occupied Kuwait during the Gulf war in January 1991 dropping over 3,000 tons of bombs on military and civilian targets.

Still ongoing is the first LOGCAP contract in the "war on terrorism," which began in June 2002, when Brown and Root was awarded a $22 million deal to run support services at Camp Stronghold Freedom, located at the Khanabad air base in central Uzbekistan. Khanabade is one of the main US bases in the Afghanistan war that houses some 1,000 US soldiers from the Green Berets and the 10th Mountain Division.

In November 2002 Brown and Root began a one-year contract, estimated at $42.5 million, to cover services for troops at bases in both Bagram and Khandahar. Brown and Root employees were first set to work running laundry services, showers, mess halls and installing heaters in soldiers' tents.

Future Contracts in Iraq

Halliburton is also one of five large US corporations invited to bid for contracts in what may turn out to be the biggest reconstruction project since the Second World War. The others are the Bechtel Group, Fluor Corp, Parsons Corp and the Louis Berger Group.

The Iraq reconstruction plan will require contractors to fulfill various tasks, including reopening at least half of the "economically important roads and bridges" -- about 1,500 miles of roadway within 18 months, according to the Wall Street Journal.

The contractors will also be asked to repair 15 percent of high-voltage electricity grid, renovate several thousand schools and deliver 550 emergency generators within two months. The contract is estimated to be worth up to $900 million for the preliminary work alone.

The Pentagon has also awarded a contract to Brown and Root to control oil fires if Saddam Hussein sets the well heads ablaze. Iraq has oil reserves second only to those of Saudi Arabia. This makes Brown and Root a leading candidate to win the role of top contractor in any petroleum field rehabilitation effort in Iraq that industry analysts say could be as much as $1.5 billion in contracts to jump start Iraq's petroleum sector following a war.

Wartime Profiteering

Meanwhile Dick Cheney's 2001 financial disclosure statement, states that Halliburton is paying him a "deferred compensation" of up to $1million a year following his resignation as chief executive in 2000. At the time Cheney opted not to receive his severance package in a lump sum, but instead to have it paid to him over five years, possibly for tax reasons.

The company would not say how much the payments are. The obligatory disclosure statement filed by all top government officials says only that they are in the range of $100,000 and $1 million. Nor is it clear how they are calculated.

Critics say that the apparent conflict of interest is deplorable.

"The Bush-Cheney team have turned the United States into a family business," says Harvey Wasserman, author of "The Last Energy War" (Seven Stories Press, 2000). "That's why we haven't seen Cheney --he's cutting deals with his old buddies who gave him a multimillion-dollar golden handshake. Have they no grace, no shame, no common sense? Why don't they just have Enron run America? Or have Zapata Petroleum (George W. Bush's failed oil-exploration venture) build a pipeline across Afghanistan?"

Army officials disagree. Major Bill Bigelow, public relations officer for the US Army in Western Europe, says: "If you're going to ask a specific question--like, do you think it's right that contractors profit in wartime--I would think that they might be better [asked] at a higher level, to people who set the policy. We don't set the policy, we work within the framework that's been established.

"Those questions have been asked forever, because they go back to World War Two when Chrysler and Ford and Chevy stopped making cars and started making guns and tanks," he added. "Obviously it's a question that's been around for quite some time. But it's true that nowadays there are very few defense contractors, but go back 60 years to the World War Two era, almost everybody was manufacturing something that either directly or indirectly had something to do with defense."

Sasha Lilley and Aaron Glantz helped conduct interviews for this article.

Pratap Chatterjee is an investigative journalist based in Berkeley, Calif. He traveled to Afghanistan and Uzbekistan in January 2002 and to Incirlik, Turkey, in January 2003 to research this article.

Spy Technology Meets Agribusiness

"Flip the tortilla" ("virar la tortilla") is a common Puerto Rican expression. It describes the act of taking someone's argument and turning it on its head. This is precisely what the biotechnology and agribusiness industries are now doing to confound their critics.

The corporations that brought us genetically modified (GM) crops fought a pitched battle against labeling and segregating their products from non-GM counterparts. Activists called for such measures because of concerns about the safety of genetically engineered foods.

Corporations countered that GM crops were perfectly safe, and that labeling and segregating them would be impractical and would create a cumbersome and prohibitively expensive regulatory apparatus.

Now, the GM corn tortilla is certainly being flipped as major biotech corporations begin to soften to activist demands to label and segregate GM crops. Far from being a sincere expression of corporate responsibility, critics say corporations are pushing for these measures in order to tighten their hold on farmers.

They charge that agribusiness hopes to extend its control over the food industry from the farm to the retail store. This unprecedented degree of corporate control will be made possible by a package of new surveillance technologies, which when put to agricultural use, are known as "precision farming."

Precision farming "benefits from the emergence and convergence of several technologies, including geographic information systems (GIS), automated machine guidance, infield and remote sensing, mobile computing, telecommunications and advanced information processing", according to GPS World magazine. The global positioning system (GPS) is a key technology used in precision farming that provides highly accurate geo-spatial information.

Which corporations are involved? Joining forces to promote precision farming are farm equipment manufacturers like John Deere, agrochemical companies like Monsanto and DowElanco, pharmaceutical/biotech companies like Rhone-Poulenc, Novartis and AstraZeneca, as well as information brokering/data management firms.

Not surprisingly, corporations with a long history of service to the military-industrial complex and intelligence agencies, like Rockwell and Lockheed Martin, are also jumping onto the precision farming bandwagon.

For example, in a 1,000-acre potato farm, aerospace behemoth Lockheed Martin can place meteorological stations that measure 13 different weather parameters every 15 minutes and telemeter the data to a computer base station.

"More than 430 gauges measure irrigation. Yield measurements are taken every three seconds during harvest. Crop quality samples are analyzed" Lockheed's promotional material boasts. What's more, "Soil is tested for 18 nutrient parameters. Microbial communities in the topsoil are studied."

The Downside

An interesting historical parallel comes to mind. Just as World War Two military contractors developed the chemicals and machinery that fueled the Green Revolution of the 1970's, precision farming is, to a large extent, an outgrowth of the space-age surveillance technologies used in the Cold War. The tight relationship between the military industries and industrial agriculture continues well into the twenty first century.

Some observers fear that these new technologies bode ill for sustainable agriculture and democratic governance, and could impose new forms of dependence on farmers. "Precision farming has less to do with mitigating agricultural pollution than with advancing industrial modes of production", according to social scientists Steven Wolf of the University of California, Berkeley and Fred Buttel of the University of Wisconsin.

Action Group on Erosion, Technology and Concentration (ETC Group) Research Director Hope Shand agrees. "Precision farming is about commodification and control of information and it is among the high-tech tools that are driving the industrialization of agriculture, the loss of local farm knowledge and the erosion of farmers rights", she told CorpWatch.

"With precision farming, farmers increasingly depend on off-farm decision making to determine precise levels of inputs. For example, dictating what seed, fertilizer, chemicals, row spacing, irrigation and harvesting techniques are used, and other management requirements," Shand explained.

Precision farming seeks to legitimate and reinforce the uniformity and chemical-intensive requirements of industrial agriculture under the guise of protecting the environment and improving efficiency, according to Shand.

How it Works: Remote Sensing

Remote sensing is an important component of precision agriculture. For example, NASA is a partner in Ag 20/20, a long-range research project that involves remote sensing. A satellite-mounted sensor looks down on farm fields, distinguishing as many as 256 light wavelengths. Similar systems that work with land-based and plane-mounted sensors are also in the works.

With the right hardware, software and know-how, the precision farmer can use this spectral information to find out a crop's health status. Does it need irrigation? Is it under attack by pests? Are weeds gaining ground? Are soil nitrogen levels OK? A great number of quantifiable variables can be measured.

The use of satellites in agriculture is already a reality. The government of the southern Pacific island of Tasmania is using GPS technology on some 600 farms as part of an identity protection pilot program, which it plans to extend to all of Tasmania's farms by 2005. In Argentina, satellite surveillance is being used to catch farmers who cheat on their taxes by underreporting the size of their fields, and to prevent them from saving seed, which is illegal there.

Who Will Benefit?

Will farmers want, or be able, to understand the advanced gadgetry of precision farming? In Puerto Rico, for example, only 14% of farmers have college degrees, and a higher percentage might be illiterate altogether. The average Puerto Rican farmer is 55 years old, according to the US Farm Census. Many are probably too traditional to embrace advanced software, satellite imaging and other new technologies.

To get around this obstacle, precision farming contractors plan to offer farmers a plethora of consulting services. Critics fear that these services will exacerbate farmers' dependence on the purveyors of agribusiness even further.

Of course the more fundamental question is what farmer will be able to afford precision farming technology, whose basic packages start at $15,000 to $20,000? How can American family farms, facing extinction by economic strangulation, afford these dazzling technological advances?

What will happen to rural America and farming communities worldwide if food processors, retailers and other major purchasers of agricultural produce start requiring suppliers to use precision farming and identity protection technology? Large American industrial farms, heavily capitalized and subsidized by the US government with tens of billions of dollars a year, will easily afford the technology. But struggling family farms could be put out of business.

Suing the Victim

These remote sensing technologies can also be used to distinguish GM from non-GM crops, and trace genetic pollution. Runaway pollen and seeds from GM crops like soy, corn and canola have been a great concern since the commercial cultivation of GM plants began in 1996. Last year, GM corn was found to be aggressively proliferating in Mexico, causing farmers, scientists and environmentalists to worry about potential consequences for the environment, biodiversity and world agriculture.

Agribusiness corporations can use satellite imaging to find out what farmers have had their crops contaminated with GM pollen and sue them.

This actually happened to Canadian farmer Percy Schmeiser of Saskatchewan. When he complained that his organic canola crop had been genetically contaminated by a GM canola field somewhere upwind, Monsanto's lawyers sued him for illegally planting the corporation's patented seed. Kafka could have hardly thought of a more bizarre scenario.

Monsanto didn't accept Schmeiser's argument that the corporation's GM canola had blown downwind to his farm, and neither did the judge, who ruled that how the GM seed got there is irrelevant. In September 2002 Schmeiser lost his appeal and now intends to take his case to Canada's Supreme Court.

Unfortunately, Schmeiser's ordeal is not an isolated case. Monsanto is suing farmers all over Canada and the United States for allegedly planting its patented GM seeds without authorization. Many of them claim they never knowingly planted Monsanto's patented seeds, and that their fields were contaminated by upwind GM plantations.

Once again, the tortilla gets flipped. The same corporations that vehemently denied that GM pollution by pollination would ever take place, may soon be eager -- too eager-- to believe every report of such contamination. Especially if the information can be used to sue the victims.

Precision Agriculture and Global Trade

This type of persecution can reach global proportions through the Trade-Related Intellectual Property Rights agreement (TRIPs) enforced by the World Trade Organization (WTO). Under TRIPs, the WTO can impose economic sanctions against countries deemed guilty of illegally using patented products, like seeds. The intellectual property rights provisions of NAFTA are even more draconian, since the agreement allows private entities to sue governments.

Given this possibility, one can visualize a scenario in which Monsanto sues Mexico under NAFTA for illegally planting its GM corn. The corporation could conceivably demand a compensation ranging in the hundreds of millions of dollars.

What are advocates of socially responsible and environmentally sustainable agriculture doing about precision farming? Many in the movement against corporate globalization hold that this and other new agro-technologies, like biotech, must be addressed within the context of a broader critique of industrial agriculture.

"The reality is that farmers do not control precision farming," notes Hope Shand of ETC Group. "Rather, precision agriculture is more likely to dictate decision making, control and management of the farmer."

Shand compares precision agriculture to a kind of high tech feudalism: "Precision farming reinforces bioserfdom and the role of the farmer as a "renter of germplasm."

Carmelo Ruiz-Marrero is a Puerto Rican journalist. He is a Fellow at the Society of Environmental Journalists and a Research Associate at the Institute for Social Ecology.

Afghan Pipe Dreams

A proposed natural gas pipeline through Afghanistan has governments jockeying for political control as well as a share in the billions of dollars that would come with it.

So far, however, international oil and gas corporations are sniffing around the region and the World Bank has hinted it might give it's blessing to the plan, but none has committed to a pipeline project.

Many political observers and critics of the US war in Afghanistan have voiced suspicions that the true aim of the fossil fuel friendly Bush administration's "war on terrorism" is to clear the way for such a pipeline. Others, like John Pike, Director of GlobalSecurity.org, say that while oil and gas are never far off U.S. policy makers' radar screen, they also have other objectives.

"The people who peddle fossil fuels are the most interested and most active in seeking to influence the United States government," notes Pike. "But right now I think the US policy is to keep a new pipeline out of Iran at any costs," adds the former military analyst for the Federation of American Scientists.

Meanwhile, human rights and environmental activists are keeping an eye on a potential pipeline in the volatile region.

Central Asia Jockeys for Position

On May 30th President Hamid Karzai, then chairman of Afghanistan's interim administration, Pakistan's president General Pervez Musharraf, and Saparmurat Niyazov, the president of Turkmenistan, signed a memorandum of understanding, laying out plans to build a 900 mile pipeline that would snake across southern Afghanistan, from Turkmenistan's Daulatabad gas fields to the Pakistani port city of Gwadar.

Two weeks earlier, World Bank president James Wolfensohn told reporters in Kabul that the international lending institution might be interested in such a project.

"We are not taking the entrepreneurial role, but were it to come up we would certainly take a look at it. There are a number of entrepreneurs already in the exercise so we will wait and see," he said.

Western governments are also taking a keen interest. "The pipeline is one of those things out there in the future," a United States State Department official told the Far Eastern Economic Review estimating that Afghanistan could earn $100 million-$150 million a year in transit fees.

Current estimates of natural gas reserves in four former Soviet republics: Azerbaijan, Uzbekistan, Turkmenistan and Kazakhstan equaled more than 236 trillion cubic feet while total oil reserves might reach more than 60 billion barrels of oil.

At current consumption levels, the region holds enough fossil fuels to service Europe's oil needs for 11 years: a prize that has many oil companies salivating, especially because labor costs in the region are low and environmental standards practically non-existent.

The high stakes have generated strong interest in tapping these reserves and piping them south through Afghanistan over the last decade or so, especially from Unocal, a California-based oil corporation. Among the other companies sniffing around for partners is Gazprom, a Russian oil behemoth.

Power Politics

Despite the institutional backing from financiers and local governments, analysts say that pipeline is still years from being built and the current discussions are really just an attempt to consolidate power in the region.

Julia Nanay, director of Caspian Services for the Petroleum Finance Corporation, an energy consulting group in Washington DC, told CorpWatch: "The United States is supporting this talk of a pipeline in an effort to isolate Iran and aggravate the situation. And the Russians want to make sure that oil and gas flows north not south."

Indeed, the two former superpower rivals are more interested in making sure that they have a place at the table, says Nanay, than in actual funding for such a pipeline. "What we are talking about is an effort to control any future venture. But right now it would be pretty foolish to build a pipeline while the various warlords are still feuding with each other in Afghanistan."

Alastair McKechnie, the Afghanistan country director for the World Bank, says that the Bank is also simply keeping tabs on the situation. "Any revenue whatsoever from apples to oil would be welcome in Afghanistan today. But I would not advise support for a pipeline right now because there are far more pressing needs. Even if someone were to approach us, we would look very hard at such a proposal," he told CorpWatch.

The Entrepreneurs Arrive

However, entrepreneurs are already setting up shop. Earlier this year Robert Mojave and Fariborz Shafei, two Iranian born businessmen, traveled to Kabul and Mazar-i-Sharif, to look into the possibility of setting up a Afghan branch office for Los Angeles-based Dynatek Corporation, a small supplier of industrial pumps. Their potential customers are the oil multinationals looking to build a pipeline from Central Asia through Afghanistan to the Indian Ocean.

"We want to be the first American company to set up an office in Kabul and we want to get the exclusive right to supply industrial pumps to whoever wants to build a pipeline," Mojave says.

Over the course of last few months, the two men have traveled to Dubai in the United Arab Emirates, Baku in Azerbaijan and Teheran in Iran, to seek out potential partners. In April Mojave was back in Kabul setting up his office.

"We are not betting on a company, we are betting on a strategy. Remember all that American aid money has to be spent on American companies and there aren't any other American companies there. We are the first," he told Corpwatch just before returning to Afghanistan.

Unocal

But US interest in a pipeline is not new. In 1997 a consortium led by Unocal drew up plans to build a four foot wide pipeline that would snake 875 miles from the Dauletabad Field in southeastern Turkmenistan, passing near the cities of Herat and Kandahar in Afghanistan, crossing into Pakistan near Quetta and linking with existing pipelines at Multan. An additional $600 million extension to India was also under consideration.

But in August 1998 Unocal halted development of the project after U.S. forces fired missiles at guerrilla camps in Afghanistan in the wake of bomb attacks on two U.S. embassies in Africa.

One of their consultants in the company's 1997 conversations with the Taliban was Afghan-born Zalmay Khalilzad, who was appointed special envoy from President George Bush to Afghanistan on December 31, 2001. As an adviser for Unocal, Khalilzad drew up a risk analysis of a proposed gas pipeline from Turkmenistan across Afghanistan and Pakistan to the Indian Ocean.

Today Unocal says it has no more interest in a Central Asian pipeline through Afghanistan and has closed its offices in Kazakhstan, Pakistan, Turkmenistan and Uzbekistan retaining operations only in Azerbaijan. "We have exited the region because we have long term commitments on other places and our plate is full," says Teresa Covington, a spokeswoman for the company.

Covington noted that other members of the original consortium such as Crescent of Pakistan and Delta of Saudia Arabia were still pondering their role in future joint ventures.

The biggest player still in the game is Gazprom, the world's largest natural gas company, which is 38% owned by the Russian government.

Dictators and Dollars

A few years ago the yellow bumper sticker on the car of Elizabeth Jones, then United States ambassador to Kazakhstan, read, "Happiness is Multiple Pipelines."

In reality the billion dollar pipeline investments have brought great wealth to the Central Asian political bosses, all former senior Communist party leaders from Soviet days, but not to their citizenry whose average monthly wage is around $20.

Recently Kazakhstan's foreign minister Kasymzhomart Tokayev acknowledged that in 1996 President Nursultan Nazarbayev moved $1 billion of oil funds into a secret Swiss bank account without telling his parliament.

And although substantial oil money has yet to flow into Turkmenistan's coffers, President Niyazov has spent millions building marble hotels to attract the multinationals to the region in addition to a gold statue of himself in the center of town that rotates to reflect the sun.

Others say that the venture will not help the common people. Keith Griffin, an economics professor at the University of California, expressed skepticism that the money will ever flow to the local people. "We cannot expect to re-float society on a pool of oil," he told a conference in Kazakhstan's financial center.

Environmental and human rights activists say that the oil pipelines have often brought more poverty and environmental destruction than wealth.

"Look at Nigeria and Colombia. Pipelines have only brought misery to local people in those countries such as massive pollution of rivers and farmland from spills and gas flaring and major human rights abuses by the military that guards these operations" explains Gopal Dayaneni, oil campaigner for Project Underground, a California-based activist group.

Indeed if Gazprom, the current front-runner for building the pipeline succeeds, the Afghan population does not have much of a track record to draw comfort from -- every month the company is reported to spill one million gallons of oil, 25 times the amount of oil that Exxon spilled in Valdez, Alaska. Activists like Dayaneni say they will keep a watchful eye on developments in the region.

Pratap Chatterjee is a freelance journalist based in Berkeley, California. Earlier this year he was on assignment in Afghanistan, Turkmenistan and Uzbekistan.

The Global Warming President

President G. W. Bush has moved quickly and decisively to burn his initials onto the most serious environmental issue the world has ever faced. He has made it clear for all to see that unless he dramatically reverses course, it's going to be "G" for global, "W" for warming, Bush from now on.

First the President reneges on a campaign promise to curb carbon dioxide emissions-the main cause of climate change. Then he threatens to pull the U.S. out of the global treaty negotiated in Kyoto, Japan, in 1997, arousing the ire not only of U.S. environmentalists, but fury from our allies in Europe and Japan.

Most of the world's governments, some large corporations, for example, Alcoa and DuPont, and even members of Bush's own administration, such Treasury Secretary Paul O'Neill and EPA Administrator Christine Todd Whitman, have recognized that climate change is a serious concern.

In fact, Whitman urged the President to keep his promises and "appear engaged" on the climate issue. She "strongly recommended" to him in a March memo "that you continue to recognize that global warming is a real and serious issue."

But Bush left Whitman twisting in global warming's winds, and seems to have taken the advice of his buddies (Vice President Cheney included) from the oil industry. In announcing his decision on carbon dioxide emissions, Bush said that the "scientific knowledge of the causes of, and solutions to, global climate change" is "incomplete."

Bush also said that carbon dioxide emissions from power plants are not officially classified as "pollutants." But this is just a smoke screen. Carbon dioxide emissions account for 64 percent of global-warming gases. A full 75 percent of human-caused carbon dioxide emissions come from burning oil, gas and coal, this according to a February report by a U.N. panel of the world's top climate scientists and experts.

What is the anticipated impact of carbon dioxide's pollution of the atmosphere? According to the U.N. panel, if it is not halted, climate change will probably result in increased frequency and severity of storms, floods and drought. And it will cause the spread of diseases, such as malaria. It will increase hunger and bring about displacement and mass migrations of people with ensuing social conflict.

Global warming is starting to make itself felt. The 1990s was the warmest decade and 1998 was the warmest year on record. The icecap atop Mount Kilimanjaro in Africa is melting away and will completely disappear in less than 15 years, scientists predict.

Bush argues that the "we must be very careful not to take actions that could harm consumers." Yet he's setting us all up to pay a huge price in the future. This is especially true for the poor. According to the U.N. panel, people who are highly dependent on farming, fishing or forestry are most likely to see their livelihoods destroyed by climate change. Meanwhile, the urban poor -- disproportionately people of color -- will be most vulnerable to climate-change related heat waves, diseases and respiratory ailments.

Bush seems less concerned about saving consumers money and more concerned with using the fear of high electricity bills to pry open the Arctic National Wildlife Refuge. This will make money for Bush's oil industry pals. It will also increase US carbon dioxide emissions.

The US, with 5 percent of the Earth's population, already produces one-quarter of the world's man-made carbon dioxide. Increasing carbon emissions, and therefore the US contribution to climate change, is obviously not a very popular move with our neighbors on this planet. Deciding to bail out of the Kyoto Protocol however, places the US firmly on the road to becoming the world's number one environmental rogue state.

Bush's ideologically driven policy may well sink the Kyoto Protocol. But there is a move afoot among European governments to challenge the US. "This isn't some marginal environmental issue that can be ignored or played down," said European Union Environment Commissioner Margot Wallstroem "It has to do with trade and economics." There is talk in European capitals of building a coalition among Europe, Japan and Russia to implement the Kyoto accord without the US.

This potential geopolitical fracture should make it clear to even the staunchest right-wingers in the Bush administration that it is in their interest to curb carbon emissions and support the Kyoto Protocol. Rather than aid the oil industry, Bush should not drill in the Arctic Refuge. And he should invest our country's resources in energy efficiency and renewable energy resources, such as solar, wind and biomass.

Time is of the essence. And G.W. Bush will have to reverse course soon unless he wants to go down in history as the global warming president.

Joshua Karliner is executive director of CorpWatch.

Dispatches from the World Social Forum

"Um outro mundo é possível." -- Another world is possible.

Porto Alegre, Brazil -- That's the slogan of the World Social Forum underway here. Or, as they said in Seattle, "This is what democracy looks like."

While thousands chanted that slogan in Seattle, Washington D.C., Chiang Mai, Melbourne and Prague, they were being tear gassed, preemptively arrested, harassed and generally denied their rights by an enormous show of state force on behalf of undemocratic international institutions.

In Porto Alegre, this is what democracy looks like: During a march of thousands against neo-liberalism I counted 10 police officers. When 200 Brazilian anarchists broke off from the march to throw white paint on a McDonald's, about six police stood by.

The next day, an ex-cop explained it this way, "We police were instructed to form partnerships with the social movements." By comparison Davos, Switzerland, where the World Economic Forum is meeting this week, has become a fortress.

Porto Alegre is an appropriate setting for the World Social Forum, while authorities have shut down the roads to Davos, deported activists, and banned marches. In Porto Alegre, the Governor of the State of Rio Grande do Sul, gave the opening speech. In fact, his government was a major funder of the Forum.

- In Porto Alegre, this is what democracy looks like: Hundreds of young people are camping nearby -- apparently without ever sleeping -- virtually without police presence.

- This is what democracy looks like: Participatory budgeting. For 12 years, Porto Alegre's budget has been decided made by hundreds of well-organized community and worker groups.

- This is what democracy looks like: There is no corporate sponsorship of the World Social Forum. No ads telling us how sustainable Shell is, or how clean Dow is, or how concerned for the poor Philip Morris is. No Nike swooshes. Just a few banners for the national bank of Brazil, saying "It's better because it's ours." The most ubiquitous logo around is that of the Workers' Party, on flags everywhere.

- In Porto Alegre, this is what democracy looks like: Lots of meetings and lots of talking. The humid rooms, over-packed with people, listening for the umpteenth hour to plans to stop new free trade agreements and models for local economic democracy.

- This is what democracy looks like: There are lots of unionized workers present. The state of Rio Grande do Sul has twice as many union members as the national average.

- This is what democracy looks like: The entire state of Rio Grande do Sul has been declared GMO-free, although some Roundup Ready soy has been smuggled in from Argentina, according to one knowledgeable government official from Brasilia. Two days ago activists traveled with French farmer/activist Jose Bove four hours out of Porto Alegre to tear up a few illegal acres of Monsanto's Roundup Ready Franken-soy.

The World Social Forum is the first significant post-Seattle gathering where the goal is not to disrupt the meetings of undemocratic institutions, in what has become a series of traveling protests. Rather it is a space for activists to think, talk and imagine another world -- a more just, democratic world.

The anti-corporate globalization movement has come to "an important stage in the counter-offensive that began in Seattle," says Walden Bello, Executive Director of Thailand-based Focus on the Global South.

Naturally, the rhetoric of democracy in Porto Alegre cannot be transferred everywhere, especially not to the U.S. In the opening ceremony, during introductions of the 120 countries represented by delegates, Cuba received the loudest ovation, while the U.S. and Israel got a smattering of boos. There is occasionally a flavor of old-style leftism that sounds irrelevant to most U.S. ears.

And, as one should expect in a gathering as large and diverse as this one, there are significant differences of opinion on policy and strategy. For example, some participants are working to incorporate social and environmental clauses into the WTO, others insist there must be no new round of the WTO.

Nevertheless, the overall feeling here is of fresh air coming into the debate over globalization, especially compared with the stale rhetoric in Davos. From Porto Alegre, the concept that a gathering of the rich and powerful is the answer for the poor and dispossessed, that the World Economic Forum has somehow transformed itself into a global poverty program, seems too absurd to bother debunking.

Yet neither is the Social Forum a poverty program. And that is one of most refreshing aspects of the gathering. It is not about money. It's not about growth, "sustainable" or otherwise. It's not even really about development -- a concept that has perhaps been hopelessly perverted by institutions like the World Economic Forum and the World Bank. Still, economic issues are prominent in the discussions here.

Rather the Forum is about democracy. Not the democracy that comes from more money and therefore more choices of things to buy, but rather the democracy of participation in local and society-wide economic decisions. This is the democracy that corporate globalization gazes so harshly on.

Even the most ardent supporters of the current form of globalization acknowledge that it is a web of powerful and unaccountable forces. They say the best we can do as individuals and as nations, is to prepare ourselves to flourish in this lightening-fast, hyper-competitive world, grabbing what we can for ourselves -- mobility, wealth, markets, computers.

The folks here would not be interested in this individualistic and competitive vision of society, even if the powerful institutions controlling globalization were to reduce the inequities and provide a safety net for those left out.

There are many challenges for the World Social Forum. Midway through the gathering, participants had not decided where, when and if there will be another one (it seems likely). Nor had they settled on producing a statement or manifesto (it seems unlikely). Activists must stay alert to the cooptation of our language and ideas by the World Economic Forum, by the WTO and World Bank. We must improve the democratic process within the Social Forum -- to include more students, more non-Brazilians, more indigenous people, and others. We must make sure to keep the momentum that started with the explosion in Seattle.

Seattle was the pivotal moment in the first plank of this complex movement -- protest and resistance. Porto Alegre will, I believe, come to be seen as an important step in moving forward the second part - innovation and alternatives.

It is important that many protestors have gone to Davos to continue to expose the injustice of the World Economic Forum. But I'm glad I came to Porto Alegre. As Walden Bello, a veteran of Davos meetings, says, "Davos is the past. Porto Alegre is the future."

And the present is a collective dream of the thousands gathered here: Um outro mundo é possível.

Kenny Bruno is a Corporate Watch Research Associate.

Bikinis Upset GOP Love-In

Philadelphia, August 1 -- Among the myriad corporate sponsors of the Republican Convention this year is Dale Carnegie and Associates, Inc., the self-described "global leader in business training." Along with a plastic cup from CNN, a mini First Aid kit from Blue Cross/Blue Shield and Kraft macaroni and cheese in the shape of elephants, every reporter who arrived to cover the convention received a little golden booklet with pearls of wisdom from Dale Carnegie, the granddaddy of American salesmanship. Tip number one from the late author of How to Win Friends and Influence People is "Don't criticize, condemn, or complain."

The Republicans seem to have taken that one to heart. So friendly are the Republicans this year that the delegates and lawyers I've talked to repeatedly marvel at how little work there is to do. Disagreements in the Rules and Platform committees were quickly squelched. All controversy, debate, and ideology have been squeezed out of the proceedings. However, anti-abortion language remains unchanged from the 1996 platform and efforts to remove anti-gay rights planks failed. Still, there is no floor debate, no political jockeying, no issues to be resolved. Nothing remains but a giant corporate schmoozefest.

As far as most attendees are concerned, that's a good thing. "We got rid of the rough edges," says former Congressman Bob Livingston, who helped Wisconsin Governor Tommy Thompson craft the feel-good Republican platform. In a draft of the platform based on the tenets that passed in 1996, Livingston says, "they wanted to get rid of the Department of Education, and cut off funding for the space program -- we got rid of all that," he adds proudly. Never mind that Livingston himself, as a Newt Gingrich loyalist, once campaigned on a proposal to axe the Department of Ed. Tip number six in Dale Carnegie's little golden book is: "Don't worry about the past."

A few protesters have arrived on the scene to break up the don't-worry-be-happy mood. On Tuesday morning, at a $1,000-a-plate breakfast for Senate Majority Leader Trent Lott (R-Miss) at the Four Seasons hotel, a cluster of Republicans and corporate lobbyists were suddenly confronted by a bikini-clad hooker with a Miss Liberty hat and a pair of thigh-high fishnet stockings stuffed with dollar bills. "Trent Lott's a corporate whore, we won't take no more!" the "prostitute" and two other women chanted.

Hotel staff rushed to push the three protesters out of the room and close the glass doors. Miss Liberty, a.k.a. Jessica Parsley of the Rainforest Action Network, blew kisses and waved through the glass at the gawking breakfast-goers. (Look for Miss Liberty doing her part to "make the issue of money in politics sexy" on a cross-country road show en route to the Democratic Convention in Los Angeles. Washington Action, a coalition of environmental, human rights, and campaign finance reform advocates will be driving a forty-foot bus donated by Ben and Jerry's papered with cash).

After being hustled outside the Four Seasons, the protesters posed in front of the giant elephant erected at the hotel entrance, waving and chanting "Lott, Lott, he's been bought, family values he ain't got." Half a dozen print journalists and seven photographers, all desperately seeking news, descended on the group.

Protest organizers, Randall Hayes, President of the Rainforest Action Network, and Medea Benjamin, co-director of Global Exchange, said they planned the event on Monday night at a cocktail party where people were passing plastic cups and tote bags promoting a fundraiser for Trent Lott. The souvenirs sported the names of the event's corporate sponsors, Lockheed Martin, Freddie Mac, AT&T, Union Pacific, American Bond Market Association, and other companies. "It's amazing how brazen these politicians have become that they even give out bags and cups with their corporate sponsors on them," says Benjamin. "There is no separation between corporations and politicians any more. They're proud to be seen together."

As attendees emerged from the coffee, Benjamin waved a fistful of fake $100 bills and called : "Yoohoo! Did you buy a Republican today? What did you get for $1,000?"

Hotel security officers tried to block the cameras' view of the demonstrators, and a few police officers came over. "Don't they have to keep moving?" one of the hotel security guards asked hopefully. The police explained that no, the protesters had a right to be on the public sidewalk, and gently drew the guards away.

"Sometimes we have to explain to them how it is -- not how they want it to be," Lieutenant Anthony J. McLaughlin of Philadelphia Police Department's Civil Affairs Unit said.

It was a typical response by the police this week. While there is an overwhelming police presence in Philadelphia around the convention hall, for the most part the protesters and police are acting friendly and cooperative. It's a new twist the concept of a blue/green alliance. In Philadelphia, a strong Democratic, pro-union town, some of the cops even appear sympathetic to the protesters' message.

As reporters double-teamed Miss Liberty, the police chatted with Rainforest Action's Hayes about the various demonstrations at this week's convention. Lieutenant McLaughlin pointed out a group of yellow-shirted union members from the United Food and Commercial Workers (UFCW) local 1776, which is in a stand-off with the state-operated liquor stores in Pennsylvania ever since Governor Tom Ridge moved to privatize the stores and scrap the workers' contract. "They haven't had a contract for four years," the cop told Hayes.

The soft talk and big stick approach by the police has helped keep conflict to a minimum -- there is a cop on every corner of the downtown, giving directions, smiling, and generally making the overwhelming law enforcement presence felt. Another reason the protest scene in Philadelphia is far tamer than at the massive anti-globalization demonstrations in Seattle or Washington, DC, is that it is dominated not by national groups but by local activists like the UFCW workers and the Kensington Welfare Rights Union. According to protest organizers, these groups made clear that they didn't want national organizations coming in and stealing the show.

On Monday, a 2,500-person march by the Kensington Welfare Rights Union drew attention to plight of Philadelphia's most impoverished neighborhoods. The Kensington group also ran "reality bus tours" of Philadelphia from the Liberty Bell through some of Philadelphia's most down and out communities. The tours drew a lot of interest from delegates and the media.

"We saw this as a chance to show that there is poverty in America," says Brian Wisniewski, an organizer with the welfare rights group. "In my neighborhood in Kensington the number-one source of income is welfare and the number-two source is drugs. When factories left Kensington everyone was pushed into underground economy."

"The Republicans haven't done anything for people in my neighborhood, and neither have the Democrats," he adds. "We're working to end poverty, not to get a little more money for social services or a homeless shelter -- those are just bandages on the problem. We're talking about ending poverty permanently."

The Republicans, meanwhile, are talking about "compassionate conservativism" and attempting to paper over their ideological rifts. The effort to project inclusiveness has not only unified the party, it also has helped stifle unrest outside the convention. Instead of marching in the streets like they did in Seattle and Washington, DC, the Teamsters are busy schmoozing in the convention hotels. RNC chairman Jim Nicholson hosted a "Salute to Jimmy Hoffa" on Monday night, at which Hoffa thanked the Republicans in Congress who opposed Permanent Normal Trade Relations with China, and posed for photos shaking hands with the RNC chair.

Blurring ideological lines and embracing gung-ho capitalism may be a winning formula for the Republicans this year. The same strategy of triangulation and cooptation won the Democrats eight years in the White House. In Philadelphia, it's up to a small band of demonstrators to get out the opposing view.

Ruth Conniff is Washington editor of the Progressive magazine.

Dubya in Bed with Environmental Outlaw

Early last October, every member of a ninth grade girls track team and the freshman football team at suburban Houston's Deer Park High School's north campus returned from practice reporting severe breathing problems. That day Deer Park registered 251 parts of ozone per billion, more than twice the federal standard, and Houston surpassed Los Angeles as the smoggiest city in the United States.

One of the biggest contributors to Deer Park's pollution is a plant owned by Enron, Houston's wealthiest company. Enron is also the single largest contributor ($555,000 and counting) to the political ambitions of Texas Governor George W. Bush, Republican Candidate for President of the United States. Kenneth Lay, the chief executive of Enron, has personally given over $100,000 to Bush's political campaigns, more than any other individual. He is also one of the "Pioneers" -- a Bush supporter who has collected at least $100,000 in direct contributions of $1,000 or less.

Enron is best known as the largest buyer and seller of natural gas in the country. Its 1999 revenues of $40 billion have made it the 18th largest company in the United States. Enron is invested in energy projects around the world including the UK, Argentina, Bolivia, Brazil, the Philippines, Indonesia, China, India and Mozambique.

The company has recently expanded from energy to "bandwidth" capacity for the Internet, making it one of the world's largest Internet-based trading companies, buying and selling a dizzying array of products ranging from pulp and paper to petrochemicals and plastics, as well as esoteric products like clean air credits that utilities purchase to meet emission limits.

Texas activists say that this tight connection between Bush and Lay bodes ill for the country, if Bush is elected. Andrew Wheat, from Texans for Public Justice, a campaign finance advocacy group in Austin, compared the symbiotic relationship between Enron and the Governor to "cogeneration" -- a process used by utilities to harness waste heat vented by their generators to produce more power. "In a more sinister form of cogeneration, corporations are converting economic into political power. A Bush election fueled by Enron dollars could fill the White House with dangerous levels of Enron gas. When that gas ignites in the public-policy arena, consumers will get burned," he said.

Indeed Bush campaign spokesman Ray Sullivan said that, if elected president, the governor is keen to promote the kind of policies that he has crafted with companies like Enron for the state of Texas. "The governor believes in competition, free enterprise, better service and technology improvements. He has promoted sweeping and effective reforms in education and has been the first governor in Texas to seriously address limits on emissions. He will carry his agenda to Washington to do what he believes is best for the country."

But is what Bush believes is good for Texas, good for the United States? Texas has one of the worst environmental records in the country, particularly in the field of air pollution. And its education record is not much better. Unfortunately, the Bush platform for the country is very similar to the kinds of programs that he has worked on with Enron, cutting corporate taxes, deregulating industry and replacing social programs with private sector volunteerism.

In addition Enron is invested in energy projects around the globe -- some of which have been tainted by charges of human rights abuses. For example, in India construction of it's controversial Dhabol power plant has brought charges by international groups like Human Rights Watch and Amnesty International of complicity with police brutality in rural communities. It is also accused of human rights violations in Bolivia, where it is building a major gas pipeline threatening indigenous communities and the rainforest environment, according to California-based Amazon Watch.

Houston, We Have a Problem

The Enron Methanol plant in Pasadena, Texas lies in the Houston Ship Channel area, the nation's largest concentration of petrochemical plants, just east of the city. The Enron Methanol plant has won special concessions from Governor Bush allowing the company to pollute without a permit, as well as giving the company immunity from prosecution for violating the law. Indeed, plants like this in Texas actually emit twice as many nitrogen oxides, a key ingredient of smog, as do all the nine million cars in Texas put together.

Only seven percent of the more than 3,500 tons of nitrogen oxide emitted by the Enron Methanol plant in 1997 were permitted. Enron got away with this under the "grandfather clause" of the 1971 Texas Clean Air Act which allows plants built before 1971 to continue their polluting practices. Governor Bush extended this clause under the 1999 Clean Air Responsibility Enterprise (CARE) program that his office drew up in a series of secret meetings with representatives of the top polluters in the state. CARE waives permit requirements for plants that volunteer to cut emissions.

The CARE program is backed up by an act that Bush signed in May 1995 giving sweeping protections to polluters who perform internal environmental or safety audits. The law makes these audit documents confidential from the public and allows polluters to escape responsibility for environmental violations. To date Enron has conducted five such audits and filed for immunity from prosecution for violations of the law, according to the Texas Natural Resources Conservation Commission (TNRCC), the state equivalent of the Environmental Protection Agency.

Tamara Maschini, who lives about five miles from the Enron plant is one of the founders of a local environmental group called Clean Air Clear Lake. "Whole families in this neighborhood have asthma because of the pollution from plants like Enron," she says. "It's gotten so bad that NASA has a problem recruiting people to work here at Mission Control which is just down the road. Houston is in trouble and George Bush is the reason -- he has allowed the situation to deteriorate over the past several years," according to Maschini.

Mark Palmer, head of public relations for Enron, says that the company's contribution to local pollution is minimal. "If the grandfather clause was canceled right now, we would benefit the most of any of the companies in Texas because our nitrogen oxide emissions add up to less than half a percent of the total," he said.

Neil Carman, a former employee of the Texas Air Control Board, who now works for the Sierra Club, agrees that Enron's grandfathered nitrogen emissions add up to less than one percent of the total for all of Texas. However, he points out that Enron Methanol plant alone contributes 3.6 percent of the nitrogen oxide emissions from the nearly 250 stationary sources of pollution for the city of Houston -- the equivalent of 152,500 cars.

What's more, he says that Enron is simply paying lip service to the Bush proposal to cut pollution at grand fathered plants. "Enron showed up at the governor's press conference to volunteer for the CARE program but they have been missing in action ever since. They haven't even bothered to file their voluntary plan."

Enron's Field Of Dreams

If environmental regulators wanted to speak to Enron's senior officials about the missing voluntary program, they would be well advised to follow the presidential candidate around as he is often chaperoned by Enron officials.

On April 7, 2000, Ken Lay, Enron's chief executive, played host to Bush junior and his father, former president George Bush, at the Houston Astros' first home game of the season at the baseball team's brand new stadium -- Enron Field -- which was built with the help of a $100 million donation from Enron. (The company got free advertising, a tax break and a $200 million dollar contract to supply power to the stadium in return.)

Less than three weeks later Lay joined Bush in Washington DC for a Republican fund-raiser that topped all previous records by bringing in a staggering $21.3 million, easily the biggest one-night haul for any political party in history.

That's not all. Lay makes sure that the Bush presidential campaign has access to other Enron facilities. For example last year the Bush campaign borrowed Enron's corporate jets eight times to fly aides around the country, more times than any of the 34 other companies that made their company aircraft available to the presidential hopeful. (Under federal law, campaigns must reimburse companies for transportation, typically at the cost of a first-class ticket so Enron received $25,000 from the Bush campaign for this favor).

Lay's ties to Bush junior begin with his father, former President George Bush, who was also a recipient of Enron/Lay's financial largesse. Like his son now, Bush senior was also happy to return the favor: from 1991 to 1993 Bush appointed Lay to the President's Export Council.

When we asked Ray Sullivan, a spokesman for the Bush campaign, about the relationship between the two men, he chose his words carefully. "Ken Lay is a noted business leader in Texas who has long been active in Republican politics. He is chair of the Governor's Business Council. But the governor has his own agenda based on what he believes is best for Texas and for the country."

Lay towed a similar line when recently interviewed by the New York Times. "When I make contributions to a candidate, it is not for some special favor, it's not even for access -- although I'll be the first to admit it probably helps access. It is because I'm supporting candidates I strongly believe in personally." Indeed both Lay and Enron are generous contributors to local and national politicians wherever they do business, often following the long standing corporate practice of funding candidates on both sides of the election.

According to campaign records, Enron and Lay have contributed to Democrats as diverse as Texas Land Commissioner Garry Mauro, U.S. Rep. Richard Gephardt of Missouri and Texas House Speaker Gib Lewis. In 1984, Lay was Harris County chairman of a $1,000-a-plate Reagan-Bush fund-raiser, while at the same time co-chairing a fund-raiser for U.S. Sen. Lloyd Bentsen, the vice presidential candidate on the opposing ticket.

Industry Volunteers

Bush delivers just the kind of results that Lay wants. Candidate Bush says he will "work with local jurisdictions using market-based solutions and not try to sue our way or regulate our way to clean air and water." He proposes allowing industries to voluntarily police themselves, just like he did for Enron and the other polluters in Texas.

Texas has regularly ranked as the most environmentally polluted state for years. According to the Environmental Defense Fund, Texas has the worst record of all 50 states in air pollution, water pollution, overall toxic releases, recognized carcinogens in the air, suspected carcinogens in the air, developmental toxins in the air (affecting brain and nervous-system development in children) and cancer risk.

While it is true that Texas was the most polluted state in the country long before George W. Bush became governor, the reason it has stayed that way is simple: Bush's policies have effectively allowed these industries to continue to pollute through a system of voluntary compliance.

Read His Lips?

Ken Lay and Enron's political beliefs overlap with candidate Bush in other arenas, such as education. For example on August 20, 2000 the Houston Astros will host a book drive at Enron Field to promote one of George W Bush and Enron's favorite charities -- the Reach Out And Read (ROAR) literacy program.

Launched in 1998, by Laura Welch Bush, the governor's wife, the program calls for physicians and nurse practitioners to give free culturally appropriate books to their pre-school age patients at every checkup. Enron also regularly volunteers its employees to read to children in area clinics and conducts book drives. The cost to Enron for this five year publicity program was $400,000.

"Along with good nutrition, exercise, care and love, doctors agree that children need a daily dose of parent-child reading. This program will serve as a model for clinics across Texas." said Laura Bush in a press release.

Susan Cooley, the director of Texas ROAR, was gushing in her support for the company, the governor and his wife. "I've been a nurse for 25 years. I don't know anything about sponsorship or advertising. But at Enron they have whole departments to do this, so finding a corporate sponsor has been a godsend," she said.

However Enron is less than supportive of schools that do not provide similar public relations opportunities. And its political reach goes beyond the governor's mansion. Some 20 miles north of the company's headquarters in Houston Enron has effectively cut approximately $225,000 from the annual budget of the Spring school district, one of Houston's ethnically diverse, poorer suburbs. Spring, Texas, sits on top of Bammel Field, a huge underground salt cave, where Enron stores large quantities of natural gas. As the largest business in Spring, Enron was required to pay taxes based on the value of its property and mineral holdings on January 1st of each year.

But under a special 1989 provision Enron and other large business property owners were allowed to choose September 1st as their tax assessment date, when the company has less gas stored in Bammel field. Enron was able to reduce its property taxes by $15 million in 1990, blowing a hole in the school districts budget, said Katherine Trumbull, a tax accountant with the school district.

The Spring school district went to court to challenge the new tax provision as unconstitutional and won at the appeals court level. Enron appealed this decision to the Texas Supreme Court. While the case was pending Enron's Political Action Committee (PAC) and senior executives contributed heavily to the election campaigns of every Republican judge vying for seats (all the members of the Texas Supreme Court are elected and may take money from contributors for the campaign expenses). Enron's employees and PAC doled out $78,700 between the seven of the winning justices in the 1996 campaign including more than $24,000 from Ken Lay personally. The Supreme Court justices ruled unanimously in Enron's favor on May 6, 1996, a month after Lay gave Chief Justice Thomas Phillips $5,000 for his campaign.

"I have nothing against Enron, after all they are our biggest taxpayer. They can afford to pay for good lawyers and lobbyists and we can't," says Trumbull simply. Enron's Palmer had no comment about the tax lawsuit brought by the Spring Independent School District.

Enron's Global Reach

Enron has also courted Bush's help for its business abroad. For example, in March 1997 Lay wrote a letter to Bush, that was subsequently released to the press under Texas open records laws, asking him to explain that "export credit agencies of the United States are critical to U.S. developers like Enron, who are pursuing international projects in developing countries."

These agencies include the Overseas Private Investment Corporation (OPIC), a federal agency which provides political risk coverage and financial support to United States companies investing abroad including hundreds of millions of dollars for Enron projects in countries from Brazil to India. Unfortunately for communities in these countries Enron's investments have had devastating impact.

In India where Enron received $200 million in political risk insurance for the Dabhol offshore oil and gas development project in 1996, the company has been blamed by both Human Rights Watch as well as Amnesty International, for financing local police brutality.

For example, just before dawn on June 3, 1997, police stormed the home of several women in Veldur, a fishing village in western state of Maharashtra, India.

"The policemen forcibly opened the door and dragged me out of the house into the police van parked on the road. (While dragging me) the police kept beating me on my back with batons. The humiliation meted out to the other members of my family was similar to the way I was humiliated... my one and a half year old daughter held on to me but the police kicked her away," says Sugandha Vasudev Bhalekar -- a 24 year old housewife who was three months pregnant at the time of her arrest, according to Amnesty International documentation.

The only "crime" committed by these women was to lead a peaceful protest against a massive new Enron natural gas plant. An investigative team from Amnesty International found that a number of the women subsequently sustained injuries, including bruising, abrasions and lacerations on arms and legs. Several hundred other peaceful protestors have been arrested and temporarily detained by Indian police since December 1996, according to the report. Meanwhile, a January 1999 investigation by Human Rights revealed that the police were directly on the Enron payroll.

Likewise, Enron has been severely criticized for the Cuiaba Integrated Energy Project in Bolivia and Brazil, for which it received $200 million (US dollars) in insurance from OPIC in 1999.

On February 4, 2000 an oil pipeline operated by Transredes, a joint venture between Enron and Shell in the Cuiaba Integrated Energy Project, erupted in the Bolivian altiplano and dumped an estimated 10,000 barrels of refined crude oil and gasoline into the Desaguadero River, which supports indigenous communities like the Uru Moratos. Facing starvation from the loss of their life-sustaining waterfowl and fish, the Uru Moratos left their ancestral lands at the southern shores of Lake Poopo in April and marched 85 miles to the city of Oruro to ask for government help.

White House Hopes

In January 1999 Enron pitched in $50,000 to help pay for Bush's inaugural bash in Austin, Texas, when he was re-elected governor. Today the polls show that George W. Bush currently has a better than even chance of winning the November presidential elections and moving from Austin to Washington DC.

If he does, it is very likely Ken Lay will be on hand when Bush is inaugurated as the next president of the United States, hoping that in return for generously supporting his campaign, Bush will be equally generous in his support for Enron's businesses at home and abroad in the future.

Craig McDonald, director of Texans for Public Justice, says that the relationship is bound to pay off. "Those two have a mutual self-interest in being buddies. Bush has always delivered on Ken Lay's political pitches. Enron depends upon government policies to enhance their bottom line in lots of ways. The company relies upon this kind of access to government," he recently told an Associated Press reporter. It is people from the Uru Moratas of Bolivia to the school children of Deer Park and Spring, Texas, who will ultimately pay the price through the continued destruction of their communities and environment.

This story was made possible by the Corporate Watch Fund for Investigative Journalism.

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