The Multinational Monitor

May/June 2004 - VOLUME 25 - NUMBERS 5 & 6

D i s s e c t i n g  B u s h

The Patronage System

The cronyism involved in the Iraq reconstruction contracts goes much deeper than big contractors like Halliburton and Bechtel (the number two Iraq reconstruction contractor, Bechtel has big contracts to repair schools, hospitals and the electricity grid).

News reports describe a "patronage system" comprised of an extensive network of Bush family, friends and crony consultants many of whom are tied to the Bush/Cheney 2000 and 2004 campaigns:

  • In 2003, a few of Bush's closest political allies created New Bridge Strategies to help corporations "evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war." New Bridge shares its Washington, D.C. offices with Barbour, Griffith & Rogers the high-powered Republican lobbying firm founded by Haley Barbour, former head of the Republican National Committee and current governor of Mississippi. The firm's CEO is Joe Allbaugh, the Bush/Cheney 2000 national campaign manager (and subsequent head of FEMA), Ed Rogers (a top aide to Bush Sr.) and Lanny Griffith (who held several top advisory positions under Bush senior, and is also a 2004 Pioneer).
  • Neil Bush has been involved in the Iraq contract gravy train through his association with John Howland and Jamal Daniel of New Bridge Strategies. The President's brother has written letters to push businesses established by Howland and Daniel, including Crest Investment Corporation, which in turn employs Bush as co-chair. Bush receives $60,000 a year from Crest for working an average of three or four hours a week, according to the Financial Times.
  • Former Representative Bob Livingston, R-Louisiana, now runs a lobbying firm that represents well-placed Iraqi families seeking to form business alliances with U.S. and foreign companies interested in setting up operations in the country.
  • Top GOP Strategist Charlie Black's consulting business clients include Fluor (big public works contracts), Cummins Engine and AT&T. Black is chair of BKSH, an affiliate of global PR giant Burson-Marsteller, which was also a big backer of Ahmed Chalabi before the war.
  • In 2003, Coalition Provisional Authority chief Paul Bremer issued a decree that Iraq's 200 state-owned companies would be privatized and that foreign owners would be allowed to expatriate 100 percent of the profits. This looting of Iraq's state-owned businesses disguised as "private-sector development" was slowed down by worker protests and skepticism among wary investors concerned about the strength of the insurgency. Thomas Foley a former Citigroup banker assigned by the CPA to oversee the privatization process, returned to Greenwich, Connecticut in early 2004, where he is the state co-chair for the Bush/Cheney reelection campaign.
  • Three weeks after construction and engineering firm Washington Group was awarded a contract to rebuild water projects in Iraq, 31 company employees gave $27,750 to Bush. By the end of April 2004, CEO Stephen Hanks had become a Bush campaign "Pioneer" (raised over $100,000).

Washington Group spokesperson Jack Hermann was unconcerned about any appearance of impropriety. "You either participate in the system or you don't," Hermann told a Bloomberg reporter. "People can draw ulterior motives. We understand the baggage that comes with that."

  • In its drive to develop a "competitive private sector" in Iraq, the Agency for International Development (AID) allowed BearingPoint to help write the specifications for a $240 million contract which in effect knocked its competitors out of the running, according to AID's inspector general. BearingPoint, formerly KPMG Consulting, and its employees have given more than $117,000 to the 2000 and 2004 Bush election campaigns. In 2003, an $80 million BearingPoint contract in Florida was withdrawn after critics complained about the company's close ties to Governor Jeb Bush.
  • In February, the Los Angeles Times reported that First Lady Laura Bush was working with National Security Council staff to push the construction of a high-end hospital in Baghdad by a Texas-based charity. Representative Jim Kolbe, R-Arizona, who heads the House Appropriations Subcommittee on Foreign Operations, raised significant doubts about the need for the high-tech hospital when the country suffered from a significant lack of basic healthcare. C.C.