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Political analysis and other daily rants on the state of the nation

Saturday | September 20, 2003

Billions for Iraq - Part II

By Meteor Blades

How much the U.S. ultimately spends on reconstruction projects in Iraq is a question of no small consequence since aspects of our country’s own infrastructure suffer gravely from what budget-makers call "deferred maintenance." However, another question comes to mind. Given how much taxpayer money is being dished out, how can we be certain the corporations that take on reconstruction projects are on the up and up?

This question arises because many of the corporations - some of them America's biggest - have run afoul of the law on numerous occasions. And there's far more than reconstructing Iraq that's at issue. There is the overall Defense budget, which is soaring independently of the extra $67 billion that Bush seeks for military operations in Iraq.

Don’t we need a strong defense? Absolutely. Wouldn’t we be crazy not to spend enough money to deter another 9/11? Without a doubt. But let’s argue at another time about the proper size of the Pentagon budget.

Almost half America’s military spending now flows to corporations, and some of the biggest defense contractors are crooks. Repeat offenders. Incorrigibles.

In this era of supposedly tough-on-crime politicians across the spectrum, shouldn't we have a “three strikes” law applied to these corporadoes?

It’s a simple approach. Get caught once or twice in fraud or other outlawry and we’ll give you another chance - just as we do street criminals. Get caught three times and you can explain to your shareholders how you came to be excluded from obtaining government contracts for, say, the next two decades. Felons can’t vote until they do their time. So why not prohibit felonious corporations from making campaign contributions, their version of voting?

Obviously, I’m dreaming. But shouldn’t we at least be able to count on Washington to enforce laws already on the books when it comes to the shenanigans of taxpayer-fueled contractors? Shouldn’t more of these crooks be incarcerated? Oops. Dreaming again.

Every year, hundreds of law-breaking corporations DO get chopped off the list of contractors with whom federal agencies can do business – that is, they are suspended or “debarred.” However, major corporations that gather the biggest hunk of such contracts rarely meet a similar fate. Says Steven Schooner, co-director of the Government Procurement Law Program at George Washington University Law School, "There is a regimen for enforcement, but it’s not true because we only debar or suspend irritating little firms who aren’t major players."

Those fine people at the Project On Government Oversight spent a year investigating the situation and published their results in May 2002. They recently updated their report.

"In 2002, nearly a third of government contract dollars went to the top ten contractors. Many of these companies are also on POGO's top ten misconduct list," says Danielle Brian, executive director of POGO. "Why does taxpayer money continue to flow to contractors who cannot keep a clean track record?"

Since contractors overall get 50% of the Pentagon’s budget, that means 10 corporations get around 16% of everything America spends on defense.

Of the 43 largest corporations doing business with the federal government, POGO discovered that only one – the aircraft division of General Electric - had ever been suspended from contracting. A penalty that lasted five whole days. In California, hundreds of men have been sentenced to 25 years or more because some penny-ante theft was their third felony. (Recently, Boeing’s rocket division became the second company to be temporarily suspended.)

Go here and plug in the name of a company to find penalties exacted against these 43 defense contractors.

Here’s Pogo’s updated list of the 13 worst offenders and the fines, penalties, restitution, settlements and cleanup costs they were forced to pay:

General Electric: 87 violations - $990 million
Lockheed Martin: 84 - $426.1 million
Boeing: 50 - $378.9 million
Northrop Grumman: 36 – $310.4 million
Raytheon: 31 – $156.6 million
United Technologies: 23 – $215.3 million
General Motors: 22 - $1 billion
Textron: 21 - $24.9 million
TRW: 19 - $389.5 million
Fluor: 19 – $70.0 million
British Nuclear Fuels: 18 - $76.4 million
AT&T: 14 - $16.1 million
Unisys: 12 - $182.2 million

Three of those companies – General Electric, Northrop, Unisys – are in the top 50 of Russell Mohkiber’s Top 100 list of worst corporate crooks. Moveon.org has an extensive piece on corporate corruption, including mentions of defense contractors.

The hoi oligoi feed us the line that pockets of bad behavior must be expected in multi-billion operations spread out across dozens of locales with tens of thousands of employees. Their true message: Let’s pretend repeated law-breaking has nothing to do with corporate culture at a particular company, especially those doing business with the government for decades, and whose higher echelons are peppered with retired generals and colonels.

In its last days, the Clinton Administration attempted to adopt specific criteria for agencies to follow in deciding whether to take action against companies or individuals. But, in a familiar-sounding story, business leaders complained and the Bush Administration scrapped the revised rule.

Ironically, in 1989, it was Bush’s father who, by Executive Order stiffened the suspension/debarment procedures by making them apply government-wide. If you’re a major player, however, you’re about as likely to get busted under this EO as a high school athlete is for violating curfew on prom night.

As Common Dreams points out:

Corporate criminals should not be given a special pass. Make them admit guilt. Impose tough sanctions. Publicize the cases.

If three strikes laws can be applied to pitiful thieves who steal pizzas and golf clubs, they surely are proper treatment for corporations who rip off billions in tax money allocated to defend us.

Posted September 20, 2003 06:39 PM | Comments (36)


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