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Published: Thursday, 3/1/2007

Profit upon profit

WHEN definitive histories of the wars in Afghanistan and Iraq are written, one of the most intriguing chapters is bound to be the extent to which the conflicts have been prosecuted with heavy support from private military contractors who cashed in handsomely - and excessively.

While the Pentagon has at least 138,000 uniformed personnel in Iraq, with more on the way, there are also some 100,000 civilian contractors, half of them providing quasi-military security services for the government.

These security personnel mostly operate in the background, but not always. In 2004, four men employed by one of the major contractors, Blackwater USA, were ambushed and killed, and two of the bodies were strung up on a bridge at Fallujah.

The incident received wide attention, and was used as a rallying cry. The top U.S. official in Iraq cited the killings as "dramatic examples of the ongoing struggle between human dignity and barbarism."

Three years later, investigation of the contractors' role is providing some dramatic examples of war profiteering involving Blackwater and KBR, subsidiary of Vice President Dick Cheney's old corporate home, Halliburton.

As reported by the Norfolk Virginian-Pilot, Pentagon auditors are looking at improprieties in a "four-tiered chain" of security contractors, with Blackwater at the bottom and KBR at the top.

Blackwater billed the next firm up the chain $2.3 million, the newspaper reported. "Now the Pentagon has calculated that by the time KBR got around to billing the government, the tab to the taxpayers had reached $19.6 million. The government is moving to take that money back, charging it was improperly spent."

That's but one example. An audit two years ago of another Blackwater contract, this one with the State Department, determined that the firm was double-billing for services, and improperly including profit in its overhead costs. The result, the audit said, was "a duplication of profit, but also a pyramiding of profit because, in effect, Blackwater is applying profit to profit."

Critics of the use of private security contractors call them mercenaries, who operate in a shadowy realm of no-bid contracts and lax control by the Pentagon.

To us, the arrangement is the perfect recipe for profiteering, always a concern in any war but never more so than in the seemingly endless conflict in Iraq.

Investigators should not be blind to political connections that may have greased these contracts. In addition to the vice president's well-known ties to Halliburton, the founder of Blackwater, Erik Prince, has been a major Republican campaign contributor. Originally from Holland, Mich., he is the brother of Betsy DeVos, former Michigan GOP chairman, whose husband, Dick, was the unsuccessful candidate for governor last fall.

All in all, the private contracting maze that suffuses America's current foreign conflicts should keep auditors busy for years. The public deserves to know who's unduly profiting from these wars.



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