Government Executive - Authors - Peter H. Stone

Grand jury issues subpoena to former Interior chief

Peter H. Stone — Tue, 13 Oct 2009 00:00:00 -0400

A federal grand jury in Washington that is probing possible criminal conflicts of interest involving former Interior Secretary Gale Norton's official and private dealings in 2006 with Royal Dutch Shell has recently issued subpoenas to both Norton and Shell, according to two sources familiar with the investigation.

The grand jury subpoenas are part of a criminal investigation launched earlier this year by the Public Integrity Section at Justice into whether Norton may have broken a federal law in 2006 when the Interior Department granted three lucrative oil shale leases on federal lands in Colorado to Shell which later in the year hired her as general counsel for its unconventional fuels unit in the United States. The Colorado based unit focuses on exploration and production, including shale projects.

The Justice probe is focused primarily on whether Norton broke a law that bars government officials from negotiating future jobs with a company that stands to benefit from official actions.

Asked to comment on the grand jury subpoenas, a Shell spokesman said that the company is "aware of an investigation by the Department of Justice and we will cooperate with any lawful processes. We are unable to provide further comment on the investigation."

Norton did not return calls seeking comment. Herbert Fenster, an attorney with McKenna Long & Aldridge who has represented Norton in the past, also declined to comment.

The Justice probe, which was first reported last month by the Los Angeles Times, was launched after Justice received a criminal referral from the Interior Department's Inspector General which had conducted a lengthy investigation during the latter part of the Bush administration into Norton's dealings with Shell and decided that there was enough evidence of possible illegalities to warrant further inquiry. The IG's investigation entailed interviews with many Interior employees, according to the paper.

Shell was granted the leases by Interior in early 2006 based on an assessment by an interagency federal team and a few states. About two months later Norton resigned from Interior and stated that she had not yet arranged a job. In December 2006, Shell issued a release that Norton had been hired to be the general counsel for the U.S. at its unconventional fuels unit which handles shale oil projects. Norton joined the unit in January 2007.

The New York Times has also reported that investigators working on the federal inquiry have recently found new information that suggests Norton had talks with Shell about future job prospects while she was at Interior.

The DOJ inquiry is also examining whether Norton may have broken another federal statute involving "denial of honest services" which can be used by prosecutors if a government official's actions violate the public trust by, among other things, giving federal business to companies or individuals based on their personal ties to the official. The inquiry is looking at whether Shell, the only company to receive three of the lucrative leases in Colorado, received preferential treatment.

An analysis by Shell and the Rand Corp. has indicated that over the years needed to extract the oil, the leases could be worth hundreds of billions of dollars.

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Oversight body looks into complaints against State IG

Peter H. Stone — Mon, 22 Oct 2007 00:00:00 -0400

Ralph McNamara, who was a deputy assistant inspector general at State, was forced out of his job over the summer after raising concerns that Krongard had thwarted investigations into the safety of the new U.S. Embassy in Baghdad, which is still under construction. McNamara said in an interview that he met with the agents at FBI headquarters in September for about an hour and answered questions about Krongard.

A key committee of the President's Council on Integrity and Efficiency, the federal body responsible for monitoring the performance of inspectors general appointed by the president, asked the FBI to help with an initial review of complaints about Krongard, according to two sources familiar with the inquiry. The PCIE's integrity committee, comprising inspectors general from several agencies as well as a senior FBI official, opens inquiries into what it deems are serious complaints of impropriety about an IG's performance or conduct.

Inspectors general are supposed to serve as watchdogs to ferret out waste, fraud, and abuse. The PCIE is an advisory body and can recommend, but not mandate, disciplinary actions. It can also refer potential criminal matters to the Justice Department.

"What pushed me over the edge was the fact that we had folks from the State Department preparing to move into the embassy where there were a myriad of complaints," McNamara told National Journal. "The main allegation was that the contractors weren't doing what they were supposed to do and there was product substitution," meaning that potentially unsafe materials were being used for the embassy compound.

McNamara said he and other senior employees in the inspector general's office made several requests to Krongard to allow investigators to probe the complaints, "but they were all refused. No one was allowed to travel to Iraq to investigate."

The FBI's interview with McNamara signals new potential headaches for Krongard, who has been the subject of complaints by six other current and former staffers in the IG's office of impeding investigations into contract fraud and waste in Iraq and Afghanistan. Some of those aides have received protection from retaliation under the federal whistle-blower statute.

Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, has taken up the case against Krongard. In a 14-page letter to the IG dated September 18, Waxman charged that Krongard's "strong affinity" with senior officials at the State Department and "your partisan political ties have led you to halt investigations, censor reports, and refuse to cooperate with law enforcement agencies." He has also called Krongard's office "dysfunctional."

Waxman's letter stemmed from complaints by the former and current IG staff members, as well as e-mails exchanged by some top investigators in the office, that Krongard failed to investigate charges of fraud and waste involving as much as $3.6 billion in State Department contracts in Iraq and Afghanistan.

Soon after the letter was made public, Ron Militana and Brian Rubendall, both of whom are senior investigators in State's IG office, told Waxman that a Krongard aide warned them that they could be fired if they cooperated voluntarily with the congressman. Waxman's committee held hearings over the summer about waste and fraud in the Baghdad embassy project; Krongard testified before the panel in July. Waxman's aides say that he is planning to hold another hearing that will focus on complaints about the IG's performance.

On September 28, Waxman wrote a second letter to Krongard detailing the charges from Militana and Rubendall. That letter prompted Krongard to hire criminal defense lawyer Barbara Van Gelder of Morgan Lewis & Bockius to represent him in the Waxman probe.

"Anybody who gets a letter like that, if they are a cautious and prudent person, will hire their own counsel," Van Gelder said in an interview, pointing out that Waxman's letter suggested a potential criminal violation involving witness intimidation.

Asked about the complaints that Krongard impeded investigations, Van Gelder said, "We believe these allegations are imperfect recollections" that will ultimately be proved false.

A spokesman for Krongard has previously denied that the IG tried to interfere with probes of contractor fraud and indicated that Krongard looks forward to answering questions at an upcoming hearing. Krongard, a veteran corporate lawyer who previously was general counsel for Deloitte & Touche, assumed his State Department post in May 2005.

A central criticism of Krongard is that he was not vigilant in pursuing charges of shoddy workmanship in the embassy project, which was scheduled for completion this fall at a cost of about $600 million. The price tag has soared by $144 million, according to The Washington Post, and the embassy -- which will be the largest of all U.S. embassies -- is not expected to be finished until early next year.

Early this year, the Justice Department reportedly opened an investigation of the prime contractor on the project, First Kuwaiti General Trading and Contracting. According to a document cited by Waxman, Justice asked Krongard's office in January for help with the probe. A former American employee of the company told Waxman's committee in July that First Kuwaiti used forced labor on the project.

In response to those and other charges, First Kuwaiti has defended its work, saying it has a record of "constructing high-quality buildings -- an achievement competitors didn't think possible." First Kuwaiti has denied using forced labor.

Waxman's September 18 letter cited e-mails involving John DeDona, a former assistant inspector general who resigned from the IG's office in August, regarding complaints that Krongard told investigators not to work with Justice on the embassy probe. An investigator wrote in an e-mail to DeDona: "Wow, as we all know [not helping Justice] is not the normal and proper procedure."

DeDona forwarded the e-mail to Deputy Inspector General William Todd, adding, "I have always viewed myself as a loyal soldier, but hopefully you sense my frustration in my voice mail yesterday."

Todd replied: "I know you are very frustrated. John, you need to convey to the troops the truth, the IG told us both Tuesday to stand down on this and not assist. That needs to be the message." DeDona responded, "Unfortunately, under the current regime, the view within INV [the office of investigations] is to keep working the BS cases within the Beltway, and let us not rock the boat with other more-significant investigations."

Shortly after DeDona and McNamara left State in late summer, the IG's office finally opened a probe into the complaints about the embassy project.

Waxman's September 18 letter also referred to an internal e-mail suggesting that Krongard was instrumental in blocking investigators in his office from cooperating with a Justice Department-led inquiry into complaints that Blackwater USA was involved in arms smuggling in Iraq. Two former employees of the security contractor have pleaded guilty to arms smuggling in a North Carolina case and have been cooperating with Justice.

"We were told to immediately stop anything on Blackwater," DeDona said in an interview with National Journal. "I was concerned that this was going to be another case where we were going to be telling DOJ that we couldn't assist them." Separately, DeDona said that McNamara told him to expect a call from the PCIE as its probe into Krongard moves forward.

Waxman has also accused Krongard of improperly providing information to Kenneth Tomlinson, the former chair of the Broadcasting Board of Governors, which oversees the Voice of America. Tomlinson was under scrutiny in a probe by the State Department IG's office in 2006 involving his conduct.

According to McNamara, when Rep. Howard Berman, D-Calif., sent a letter to Krongard requesting that the IG start a probe of Tomlinson, Krongard forwarded the letter to Tomlinson. After investigators and a counsel in the IG's office voiced concerns about the propriety of that action, Krongard asked Tomlinson to return the letter, McNamara said. "Krongard didn't seem to understand the ramifications of his action," McNamara added in an interview.

Tomlinson resigned in January but said he did nothing improper. The IG's probe found, however, that he had run a "horse-racing operation" out of his office, used government resources to financially support his own horses, and improperly placed a friend on State's payroll.

Van Gelder dismissed the charges from Waxman and the whistle-blowers. "We think that the facts, when they do come out, will show that Mr. Krongard never held up or interfered with investigations."

Last month, Krongard said through a spokesman, "[The] allegations, as described to me and in certain media reports, are replete with inaccuracies, including those made by persons with their own agendas."

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After Gonzales, Justice seeks to regain trust of employees

Shane Harris, Peter H. Stone, Corine Hegland, and Edward T. Pound — Fri, 31 Aug 2007 00:00:00 -0400

Quiet and unassuming, Gonzales was a perfect fit for an administration that operates close to the vest and puts a premium on loyalty. After 9/11, he helped craft some of the White House's most controversial policies -- everything from harsh interrogation guidelines to expanded domestic surveillance to rules for military tribunals. This year, after the Democrats took control of Capitol Hill, Congress finally began looking for answers, and Gonzales often appeared as the man who had none or was confused about events. He specialized in "I have no recollection" and "I have no memory," when questioned by senators trying to learn whether several U.S. attorneys were fired for political reasons.

Those firings, along with contradictory testimony from other Justice Department officials on the issue, ultimately led to Gonzales's undoing. Internal department investigators now are reviewing events surrounding the dismissals and, separately, allegations of inappropriate political interference in department decisions.

Whatever the verdict on Gonzales, this much is clear: The next attorney general has a huge mess to clean up. Uppermost will be restoring credibility to a department dogged by allegations that partisan politics have subverted policies and hiring actions. Key senior leadership positions also remain unfilled, and career lawyers have been fuming over the turmoil.

"When you bring the Justice Department into low repute," says Philip Heymann, a Harvard law professor who served as head of Justice's Criminal Division in the Carter administration, "you sacrifice morale."

Mending fences on the Hill is another critical issue that needs close attention. But that won't be easy, as Democratic-led committees are conducting vigorous investigations.

The House Judiciary Committee voted in July to issue contempt citations for two of Bush's closest associates in the confrontation over the prosecutors' firings. That panel is also investigating whether the department, under Gonzales, engaged in selective prosecutions that were politically motivated. Last but not least are national security issues, including the domestic surveillance program and the knotty problem of what to do with prisoners captured in the war on terrorism.

The president has yet to nominate a replacement for Gonzales. Michael Chertoff, secretary of the Homeland Security Department, seemed initially to be the leading candidate, but his appointment is unlikely, officials say. Among others being mentioned are George Terwilliger, who served as deputy attorney general in the administration of George H.W. Bush; Theodore Olson, a former solicitor general in the Justice Department; and Laurence Silberman, a senior judge on the U.S. Court of Appeals for the District of Columbia. When Gonzales leaves on September 17, Solicitor General Paul Clement will serve as the acting attorney general.

The administration, says one senior government official, wants to move quickly. However, the official says, it must find a candidate who not only can fix the damage but also be "somebody the president is comfortable with."

When Gonzales's successor does finally sit down at the attorney general's desk, at the top of the To Do list will be these seven challenges.

Repair A Battered Department

No sooner had Gonzales announced his resignation than some career lawyers in the department breathed a collective sigh of relief. "He was a huge embarrassment," says one midlevel department attorney, complaining that Gonzales had misled Congress in testimony about the firings of the federal prosecutors. "He was too close to the president. You need somebody with independence."

The successor's job, current and former department officials say, is to restore relations with the U.S. attorneys' offices around the country and to improve morale within department headquarters. For that to happen, the president must nominate an attorney general who has immediate credibility inside the 110,000-person department and in Washington.

"Every attorney general has to have a bit of Thomas Becket in him," says Mark Corallo, who was the chief spokesman for Attorney General John Ashcroft, the immediate predecessor to Gonzales. "Your duty is not to the king. It is to the rule of law."

There's an additional problem: Other senior department officials have jumped ship recently, including the deputy attorney general and the associate attorney general, the department's No. 2 and No. 3 positions. Joseph diGenova, a prominent Republican and former U.S. attorney in Washington during the Reagan administration, thinks it will be difficult to fill some of the top jobs. "There's not that much time left" in Bush's second term, he says. "It is going to be pretty rough to get people to take jobs where they need to be confirmed, go through all of that, put their holdings in blind trusts and so forth." Moreover, nearly one-fourth, or 22, of the department's 94 district offices around the country are headed by acting or interim U.S. attorneys.

Dennis Boyd, the executive director of the National Association of Assistant United States Attorneys, which represents about one-third of the nation's 5,200 assistant attorneys, says that morale among department attorneys has eroded. One reason, he says, was that prosecutors worried their cases were being perceived, incorrectly, as politically motivated. Now that Gonzales is stepping down, Boyd says, his organization would like to see Congress shift its focus to law enforcement issues, such as better court security for prosecutors.

"We are hopeful now that Congress can get to the business it is supposed to be dealing with -- law enforcement legislation," Boyd says.

Reduce Political Interference

Arguably the biggest stain from the Gonzales era is the perception that conservative credentials and loyalty to the White House were key factors driving the department's policy and personnel decisions. Former department officials say that Gonzales's misguided and inept efforts to employ ideological litmus tests caused much of the damage.

Heymann says that the first move must be "straightening out the system for hiring and promoting career employees." The Justice Department "lost widespread support in the legal and judicial communities," he adds, because career positions were filled by people who held political views in lockstep with the White House. The next attorney general, Heymann says, should make a public announcement that the White House "will not be consulted or provide advice on decisions involving individual prosecutions."

Similarly, Joe Rich, who spent 36 years at Justice and was in charge of voting rights in the Civil Rights Division before he left in 2005, says that in "all the years prior to Bush the hiring of career lawyers had been very nonpolitical." Rich has testified that the situation deteriorated so badly that 20 of the division's 35 lawyers either quit or transferred to other jobs at Justice over the past two years because of the politicization.

More broadly, James Cole, a top prosecutor in the public integrity section from 1980 to 1992, stresses that Gonzales's successor should "bring in a cadre of people who have been, or had been, in the Department of Justice for a long time and know how the place works." Cole says that Justice has a long tradition of being a "pretty independent agency," and that the attorney general must make clear to department employees "their client is the American people and not the president."

Establish Credibility With The Public

When Gonzales testified before the Senate Judiciary Committee in July on the U.S. attorney firings, a clearly frustrated and angry Arlen Specter, R-Pa., the panel's ranking member, issued this blunt appraisal to the attorney general: "I do not find your testimony credible, candidly."

Confidence in the department among the American public is also at its nadir. Olson, the former solicitor general, would not talk about Gonzales's performance, but he stressed in an interview that "the American people have to have confidence that the department is being run fairly and evenhandedly."

Michael Bromwich, who was inspector general at Justice during the Clinton administration, says that restoring credibility is "a very tall order." Bringing in a "strong lawyer or policy maker, and preferably both," he says, would be a good start. The next attorney general should also be acceptable to both sides of the aisle in Congress and someone who can speak "knowledgeably" in public about the key challenges facing Justice, including law enforcement and combating terrorism.

Others suggest that clearing up the clouds hanging over the department would go a long way toward lifting Justice's standing with the public. Former department officials point out that it would be helpful for the department to finish its internal probe of the U.S. attorney firings as quickly as possible. That investigation, conducted jointly by the inspector general's office and the Office of Professional Responsibility, initially focused on how the department handled the firings. It has since broadened to look at questions related to political influence in hiring decisions and the veracity of Justice officials' congressional testimony. Heymann says that Justice's credibility would climb if the "processes, opinions, and standards" of the department were "made more transparent."

Patch Up Relations With Congress

This, too, will be a huge challenge for the next attorney general. Democrats have long memories (remember the Republican investigative assault on the Clinton administration), but some GOP lawmakers believe that accommodations can still be made. For starters, consulting with Congress and naming a new attorney general acceptable to both ends of Pennsylvania Avenue would be a major step forward, the thinking goes.

Sen. Charles Grassley, R-Iowa, a member of the Judiciary Committee, said in a statement: "While credibility with the Senate and even within the department won't just happen overnight, the prompt confirmation of a well-respected individual to be attorney general can certainly begin to restore that trust."

Separately, Judiciary Committee Chairman Patrick Leahy, D-Vt., has said it is crucial for President Bush to consult with Democratic and Republican leaders before he nominates a candidate. The White House appears to understand this. After Gonzales announced his resignation, White House Counsel Fred Fielding made courtesy calls to Sen. Charles Schumer, D-N.Y., and other members of the Judiciary panel, according to officials.

Democrats also say they want an attorney general who will answer their questions. House Judiciary Committee Chairman John Conyers, D-Mich., a strong critic of Gonzales, says that the new attorney general needs to be candid and cooperative. If that happens, Conyers said, "it wouldn't take more than four or five sentences for us to establish a relationship."

But given the history of conflict and the political benefits that might be realized by continuing investigations, it's likely that relations won't improve greatly, if at all, no matter who is named to fill the post. Democrats, now in the driver's seat, have launched a series of investigations into the Bush administration, and there is no indication that they plan to slow down any time soon.

Conyers, for one, made it quite clear that he isn't going to take his foot off the pedal. His says his panel will continue probing the White House role in the prosecutor firings, as well as other matters. In late July, Conyers's committee voted along party lines to issue contempt citations to Joshua Bolten, the White House chief of staff, and Harriet Miers, the former White House counsel. Both had refused to comply with subpoenas issued after President Bush declared that their testimony was covered by executive privilege.

The Senate Judiciary Committee, meanwhile, is also investigating the U.S. attorney dismissals and is expected to hold hearings on other controversial issues, including the government's surveillance activities in the wake of 9/11.

Fix Warrantless Eavesdropping

Before its August recess, Congress passed an amendment to the Foreign Intelligence Surveillance Act that allows the attorney general and the director of national intelligence to authorize clandestine monitoring of people "reasonably believed" to be located outside the United States. The law broadens the government's intelligence-gathering powers, and it effectively makes the attorney general the co-director of the National Security Agency's effort to track terrorists through the global telecommunications network without first obtaining warrants.

The law, known as the Protect America Act, comes up for renewal in February. It is essentially a compromise measure: Democrats were unwilling to give Gonzales the sole authority to approve warrantless wiretapping, and they insisted that the intelligence director be added to the mix. Director of National Intelligence Mike McConnell expended tremendous personal political capital to get the law passed. He told lawmakers that it was needed to comply with a court ruling that intelligence agencies couldn't intercept certain foreign-based communications without warrants. Democrats reluctantly agreed, earning the condemnation of liberal activists and opponents of the administration's surveillance efforts.

It will be up to McConnell and the new attorney general to keep the modified law in place or to develop a new regime that gives intelligence agencies the powers they say they need to quickly track suspect communications. The two officials also must assess the government's compliance with the law and make periodic reports to the House and Senate Intelligence committees.

For the new attorney general, the most significant issue will be this: He or she must demonstrate to the court that normally issues intelligence surveillance warrants how the government determines that a "target" is actually located outside the United States and thus is out of reach of the warrant process. In effect, the attorney general must not only keep the law alive but also personally guarantee that the government isn't violating it.

Before the summer recess, Democrats said they would quickly renew discussions over the FISA legislation. The prospect of confirmation hearings now adds an undeniable wrinkle to this complicated debate. The nominee's position on warrantless surveillance could be a litmus test for some senators, and key lawmakers have already made clear they want a nominee devoid of any whiff of Bush cronyism.

"The first loyalty of the next attorney general must be to the law, not the president," said Sen. Russell Feingold, D-Wis., a member of the Judiciary Committee and one of the staunchest opponents of the NSA's surveillance program.

Strengthen FBI Counter-Terrorism Operations

The White House has consistently emphasized the terrorist threat to the United States posed by the group Al Qaeda in Iraq, but it is the intelligence community's consensus that a resurgent Al Qaeda, based in Pakistan, is perhaps the most formidable enemy. The terrorist group "has protected or regenerated key elements of its homeland attack capability," to include a "safe haven" in Pakistan's federally administered tribal areas, according to a National Intelligence Estimate released in July. "Although we have discovered only a handful of individuals in the United States with ties to Qaeda senior leadership since 9/11, we judge that Al Qaeda will intensify its efforts to put operatives here," the estimate states.

The Justice Department and the FBI have been operating under that assumption for years and are ramping up their efforts to track suspected terrorists who are already in the United States. The new attorney general, in concert with the FBI director, will have to secure the necessary resources and fend off charges that the agencies are mounting domestic spying campaigns.

Specifically, the bureau wants more money and positions for domestic terrorist-tracking programs, including developing a center that would use advanced technology and so-called data-mining tools. The National Security Branch Analysis Center would conduct "bulk data analysis, pattern analysis, and trend analysis" in support of the FBI's intelligence and counter-terrorism efforts, according to the bureau's fiscal 2008 budget request.

The new center, as well as other domestic counter-terrorism initiatives at the FBI and Justice, will further stir lawmakers who are hostile to the administration's forays into domestic intelligence. The attorney general will have to be a credible and forceful proponent for increased efforts to hunt and capture terrorists, activities that, by their very nature, could undermine Americans' civil liberties and privacy.

As one of the chief legal architects of the administration's warrantless surveillance program, Gonzales served as a reminder to many that the White House had disregarded some of the basic checks and balances meant to keep the line between intelligence-gathering and law enforcement functions from blurring. The new attorney general will have to convince lawmakers that expanded domestic surveillance powers are not only necessary to prevent acts of terrorism but also will not turn law enforcement agencies into national secret police forces.

Modify Detainee Policy

Gonzales was a key architect of the legal house of cards holding prisoners in the war on terrorism. With both the Supreme Court and Congress preparing to once again attack its foundation, his successor will have a tough task in either riding out the coming tremors or putting detention on more stable ground.

In late June, the Supreme Court reversed itself and agreed to hear the case of Guantanamo detainees who are asking the Court for habeas corpus -- the right to stand before a judge and question their detention -- and for judicial answers about who can be held as an enemy combatant. The unprecedented change-of-mind left Court-watchers anticipating another setback for the Bush administration.

Clement, soon to be acting attorney general, may be able to mitigate the expected damage while waiting for a permanent successor. As solicitor general, it is Clement who argues the government's cases before the Supreme Court. "He recognizes the serious prospect of another rebuke coming from the Supreme Court," says Thomas Goldstein, head of Akin Gump Strauss Hauer & Feld's Supreme Court practice. As a caretaker attorney general, Clement won't be making radical changes. But he will be in a position to argue internally that if the administration and Congress could agree on a legislative framework granting detainees more rights, the administration would have a stronger hand in court.

In Congress, the debate over detainee rights will return to the floor in September when the Senate takes up the Defense authorization bill. The measure would give more rights to detainees, and proposed amendments would restore habeas corpus to them or close Guantanamo altogether. In addition, some members would like to revisit the CIA's interrogation practices for detainees. In July, Bush issued an executive order outlining how far CIA interrogation techniques can go; the administration says it complies with Geneva Conventions on prisoners. But the military's top uniformed lawyers have expressed concerns with the legal interpretations of the order. Two proposed bills would instead make the CIA comply with the military's guidelines on interrogation techniques.

Gonzales was a staunch opponent of reformers, including the secretaries of State and Defense, who want to close Guantanamo and find a new, diplomatically palatable solution for prisoners in the war on terrorism. His successor will have to decide whether to follow in his footsteps or find a new path.

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Inspectors general gain prominence with new Congress

Peter H. Stone — Mon, 14 May 2007 00:00:00 -0400

As the inspector general at the Justice Department, he fired a broadside on March 9 that blasted the FBI for "serious misuse" of national security letters, one of the Bush administration's most controversial anti-terrorism tools. Fine's 130-page report alleged that the bureau may be responsible for up to 3,000 cases of abuse of the national security letter's expedited subpoena process, through which agents can obtain, without prior court approval, bank, phone, and credit card records of individuals with suspected ties to terrorists.

FBI Director Robert Mueller was clearly chagrined by Fine's findings, but at a press conference the same day, Mueller called the report "excellent," accepted ultimate responsibility for the abuses, and promised to take corrective action.

Fine, who assumed his post in 2000 during the Clinton administration, has issued several reports during the Bush presidency that have skewered the FBI. He has fingered the bureau for repeated failures to track down Qaeda terrorists who were in the United States and who were involved in the September 11 attack, and he has documented the sizable and expensive software problems that have plagued the FBI's effort to modernize its computer systems.

"I'm sure there must be much frustration and gnashing of teeth over some of the issues he's looked at and the critical reports that he has issued," says Michael Bromwich, Fine's predecessor as Justice's IG who is now a lawyer in private practice at Fried, Frank, Harris, Shriver & Jacobson.

Fine says he isn't looking to be popular, but to be "tough and fair" with the department. "You're here to perform an independent and objective role," he says in an interview. "They're not always thrilled with our findings, but they appreciate our role."

Perhaps. Ever since 1978, when Congress passed legislation establishing inspector general positions at dozens of executive branch departments, the job of the nonpartisan watchdog has often been a thankless one, and sometimes controversial. Still, over the years, the number of IG positions has increased steadily: 62 inspectors general now serve at federal departments and agencies.

For decades, IGs have helped reduce waste, ferret out fraud, uncover mismanagement, and save money. But in an administration that gives oversight low priority, Fine and other aggressive IGs have played an especially significant role -- and have garnered attention for it.

Their efforts now dovetail in part with those of Democrats on Capitol Hill who have launched tough investigations and promise more in the final 18 months of the Bush administration. That means that Fine and his fellow inspectors general may play a larger role than usual in helping to define the president's legacy.

"I've seen a reinvigoration of IGs in the last few months," says Danielle Brian, executive director of the Project on Government Oversight, a nonprofit. "I think it's partly related to the turnover in Congress. Suddenly, there are more people interested in what they have to say. There's a new outlet for their work. IGs are now far more in demand and have a higher profile."

Earl Devaney, the inspector general at the Interior Department since 1999, agrees that "the change in Congress has resulted in a lot bigger interest in having oversight hearings." Devaney is another IG who has been a thorn in the side of his agency for several years. He has been involved for three years in the federal task force investigating the Jack Abramoff influence-peddling scandal, which recently secured a guilty plea from J. Steven Griles, the former No. 2 official at Interior.

Other IGs who have been in the spotlight include Stuart Bowen Jr., the special IG for Iraq reconstruction since 2004, whose office has identified billions in U.S. and Iraqi currencies lost to waste, fraud, and mismanagement in various projects, and John Higgins, the inspector general at the Education Department since 2002, who produced a blistering report on conflicts of interest among department officials involved with the Reading First program and has referred some cases to Justice for possible prosecution.

Last month, at the request of House Education and Labor Committee Chairman George Miller, D-Calif., Higgins opened a new conflict-of-interest probe involving Education Department officials and the $85 billion student-loan industry.

First Line of Defense

Some members of Congress say that the Bush administration has forced independent-minded IGs to leap over obstacles. "This administration has done a lot to halt oversight," Sen. Charles Grassley, R-Iowa, a longtime champion of vigorous inspectors general, says in an interview. "There has been a concerted effort to discourage oversight and not to cooperate."

Thus, some IGs have drawn scrutiny on Capitol Hill and elsewhere in recent years for supposedly dropping the ball on problems at their agencies, and for unethical behavior.

Janet Rehnquist, the daughter of late Supreme Court Chief Justice William Rehnquist, resigned as the inspector general at the Health and Human Services Department in 2003 after Grassley and others raised questions about whether she delayed audits to please members of Congress and whether she transferred or forced some senior people out of her office. A Government Accountability Office report that Grassley and two Democrats requested said that Rehnquist took actions that "damaged her credibility and ultimately created an atmosphere of anxiety and distrust within the [inspector general community]."

Last month, NASA Inspector General Richard Cobb became the subject of a highly critical report by the President's Council on Integrity and Efficiency, the interagency group that sets standards for government IGs and monitors their performance. A redacted version of the 1,000-page report, released by the House Science and Technology Committee, charged that Cobb turned to former NASA Administrator Sean O'Keefe for advice on probes and alerted him to various audits, including search warrants that the FBI planned to issue.

Cobb "created an appearance of a lack of independence," the report said, faulting NASA for not being tough enough in disciplining him. Disciplinary action "up to and including removal" of Cobb would be appropriate, the report stated.

Michael Griffin, the current NASA administrator, has urged lighter penalties and has defended Cobb in the wake of the report, and he wrote to the council that it had not found "actual conflicts of interest or actual lack of independence" affecting Cobb.

Clark Kent Ervin, the first IG at the Homeland Security Department, who was forced out in 2004, says he was pressured to go easy in his investigations. When he left, Ervin went public with accusations that then-Secretary Tom Ridge often chided him for being too critical and aggressive in his probes.

"There were a lot of tensions between Ridge and me," Ervin says in an interview. "He would say I was making a mountain out of a molehill."

One dustup between Ervin and Ridge involved a DHS program that aimed to stop potential terrorists from entering the United States by thoroughly checking the visas of visitors from certain countries. When Ervin flew to Saudi Arabia in 2004 to see how the program was operating, he says, he was floored that none of the DHS employees could speak Arabic. "Ridge's response was that it wasn't a big deal," Ervin recalls.

Most IGs and the members of Congress who follow their work acknowledge that the watchdog job is inherently difficult. "It's just like being a whistle-blower," Grassley says. "You're like a skunk at a picnic," albeit one that is "the first line of defense against the waste of taxpayer dollars."

Higgins at Education says in an interview, "If all the [Cabinet] secretaries had their druthers, there would be no IGs. They need to learn to use us to their benefit."

One of the key benefits is saving the government money, which was a large part of the rationale behind the 1978 legislation. Under the law, the president appoints and the Senate confirms 29 inspectors general who report to both their agency heads and to Congress. Agency heads appoint the other 33 IGs, who usually report either to them or to agency boards. In 2006, Congress appropriated $1.9 billion for all federal IG operations, up from $1.5 billion in 2002, according to the President's Council on Integrity and Efficiency.

According to the council, the IG recommendations in 2006 for management improvements throughout the federal bureaucracy could save the government as much as $9.9 billion. The council also calculated that the government saved an additional $6.8 billion by bringing civil and criminal cases, as well as through voluntary repayments in administrative cases.

Key Democrats say that those numbers could rise as oversight committees on the Hill take up issues that the inspectors general probed and analyzed, and as lawmakers request additional audits and investigations.

"IGs serve a very critical oversight function," says Rep. Henry Waxman, D-Calif., the chairman of the House Oversight and Government Reform Committee. Waxman notes, however, that IGs can be "an important resource [only] if they are independent and insulated from political pressures."

Complex Probes

Standing 5 feet, 9 inches, Glenn Fine may not look like someone who'd catch the eye of basketball scouts, but the Justice Department IG starred as a guard on his Harvard team and was a late-round draft pick of the San Antonio Spurs in 1979. Fine opted to forgo the offer and attend Oxford as a Rhodes scholar. He returned to Harvard to earn his law degree.

Since joining Justice in 1995 as a top aide to then-IG Bromwich, Fine has demonstrated skills as exceptional as those he once displayed on the hardwood courts. Bromwich recalls that Fine was hired to help run a new unit to handle "serious and complex investigations" and that over the years he has "built beautifully on that model."

Several of the biggest projects that Fine's office of 400 investigators, auditors, and analysts has taken on were highly complex probes of abuses and mismanagement within the department after the 2001 terrorist attacks.

One of its first major reports dealt with the treatment of 762 detainees being held on immigration charges in the weeks and months after the attacks. It documented, among other things, such abuses as the denial of the right to legal counsel, the lengthy detention of suspects against whom no charges had been filed, and the use of rigid policies that blocked immigration judges from issuing bond.

The report suggested some 20 reforms and drew a largely positive response. Justice officials "agreed with virtually every recommendation," Fine says.

More recently, Fine's blistering of the FBI over the national security letters was the subject of testimony on March 20 at the House Judiciary Committee. Fine testified that, according to FBI estimates, 600 of the approximately 3,000 violations might involve "cases of serious misconduct" and added that the bureau's documentation "significantly understates" just how widely the national security letters were used to obtain records on tens of thousands of Americans and foreign nationals. The FBI misconduct, Fine said, was due mostly to "mistakes, carelessness, confusion, sloppiness, lack of training, lack of adequate guidance, and lack of adequate oversight."

At Mueller's direction, the bureau moved quickly to take corrective steps, including creating a Web-based system to track the issuance of national security letters.

At present, Fine has a few investigations under way but no others that involve the high stakes and political sensitivity of the probe into Justice's much-criticized firings of eight U.S. attorneys last year. The IG's office is conducting that investigation in tandem with the department's Office of Professional Responsibility.

"We're going to take it wherever it leads," Fine says, and conduct it as "thoroughly and expeditiously" as possible. The offices will issue a report when they complete the investigation; and, he adds, if there is evidence of criminal misconduct, "we will refer the matter to a prosecutor."

Some Democrats and outside observers say that the IG should lead the investigation because OPR reports directly to Attorney General Alberto Gonzales, who, along with current and former top aides, is a subject of the probe. "Ultimately, control should reside with the IG because the IG is clearly more independent than any other entity in Justice, including OPR," Bromwich says.

Fine says he is proud of the positive reception his recommendations have received within the department. "We're not out to get the department," he says, "but to propose effective solutions that can be implemented."

Through a department spokesman, Assistant Attorney General for National Security Kenneth L. Wainstein said, "Glenn is a true professional. He conducts thorough investigations, he pulls no punches with his findings, and he always remains open to different perspectives on an issue -- all qualities of a fair and effective inspector general."

Although appreciative of the praise, Fine argues that his office's resources have not grown sufficiently to meet its mission. The total staff in the IG's office peaked in 1998 at 454; in 2006, it was just 401. "The money for oversight is not always the top priority."

Agency Frictions

Every bit as tenacious as his fellow IG at Justice, Earl Devaney of Interior is a burly man who spent more than 25 years as a senior official in the Secret Service and as head of criminal enforcement cases at the Environmental Protection Agency. In his eight years at Interior, he has earned a reputation for giving blunt testimony on the Hill and for issuing audits and reports on a range of ethical and management issues that he argues have damaged Interior's performance.

One big concern for Devaney has been a program devised in the 1990s to spur oil-industry exploration and drilling in the Gulf of Mexico. Interior exempted oil companies from paying royalties to the government, with a proviso that royalties were to resume if the price of oil rose above $36 dollars a barrel. But a drafting error in about 1,000 of the government leases from 1998 and 1999 omitted the language on the proviso.

At a series of Hill hearings that began last September, Devaney has testified that Interior officials hid the drafting error for almost five years, costing the government billions of dollars in lost revenues. Furthermore, he contradicted testimony of the director of the Minerals Management Services (the Interior unit that runs the royalty program), disagreeing with her on when she learned of the problem. The Government Accountability Office says that the government lost between $2 billion and $10 billion in royalties.

In December, a report by Devaney's office lambasted MMS for decreasing its use of detailed audits of its programs and for relying heavily on reviews that use company statements rather than sales records. Devaney also estimated that since 2000 the number of auditors at Interior had dropped 15 percent and the number of audits had declined 22 percent.

As part of the oil-royalty ruckus, Devaney is working with Justice on criminal and civil probes related to a federal "royalty in kind" program that allows oil companies to give oil directly to the government instead of making royalty payments.

But Devaney says that "most of the cases we've had have involved ethics issues." When he arrived at Interior, Devaney says, the ethics office was "in disrepair." In testimony last year before a House Oversight and Government Reform subcommittee, Devaney attacked what he charged was his department's lack of concern about ethics and its attitude toward his IG reports -- most of which were "disregarded by the department," while specific studies on procurement problems and other abuses involving audits were "vehemently challenged."

"Short of a crime, anything goes at the highest levels of the Department of Interior," he declared.

With regard to the Abramoff probe, Devaney says he has had as many as 12 Interior investigators and analysts working on the task force at any given time. "This is a case where leveraging of resources [among agencies] and leveraging of expertise has turned out to be a terrific thing," he says.

At a March 23 press conference to announce that Steven Griles, Interior's former No. 2 official, was pleading guilty to lying to the Senate Indian Affairs Committee about his ties to convicted lobbyist Abramoff when he appeared at a 2005 hearing, Devaney didn't mince his words: The IG said that Griles's guilty plea showed that "he was ready and willing to serve as Jack Abramoff's man inside Interior."

Devaney's staff remains heavily involved in different aspects of the probe, including Justice's ongoing scrutiny of Italia Federici, a conservative activist who had close personal ties to Griles that Abramoff exploited in his lobbying drives. Justice has notified Federici that she is a target of the probe.

Not surprisingly, Devaney's focus on Griles caused friction with former Interior Secretary Gale Norton, who is also a friend of Federici's and who, before becoming secretary, co-founded a group that Federici has headed. Devaney had been looking into ethical questions related to Griles, a former energy lobbyist, as far back as 2004, when the Abramoff probe was first heating up. Devaney famously referred to Griles in Hill testimony as a "train wreck waiting to happen," a reference to several conflicts of interest involving Griles, charges that Norton largely dismissed.

Devaney takes pride in the fact that ethics issues are now treated differently at Interior, and he gives credit to current Secretary Dirk Kempthorne, who has instituted basic ethics training for officials among other reforms.

The changed ethics climate was underscored in late April when Julie MacDonald, a deputy assistant secretary at Interior, resigned. MacDonald was the subject of a scathing report from the IG indicating that among other abuses she gave internal agency documents to industry lobbyists in violation of federal rules.

Devaney wishes he had a larger staff to oversee the 73,000 employees at Interior. Since 1999, his office has added just five new positions, raising its total to 253. And he sounds somewhat cynical about the challenges facing IGs. "If you want to be popular, the IG job is not the one to have," he says. "Every day someone is going to be mad at you. The trick is to come to work in the morning and not be a poodle or a Doberman pinscher, but to strike a balance."

Heartburn

Striking a balance seems to be a hallmark of the work of Stuart Bowen Jr., the special inspector general for Iraq reconstruction. A lawyer who worked for then-Texas Gov. George W. Bush and who did a stint at the White House counsel's office, Bowen has produced a series of hard-hitting reports since 2004 that have often painted a bleak picture of the reconstruction effort. He has sharply criticized inflated bills and mismanagement on the part of big private contractors in Iraq such as DynCorp International, Halliburton, and Parsons.

In late March, Bowen's shop criticized the Pentagon and other departments for their initial failure to anticipate the monumental amount of reconstruction that would be necessary after the overthrow of Saddam Hussein. It faulted the Defense Department and other agencies for not having a plan in place to restore basic services in Iraq and for not devising a coordinated system for reconstruction projects.

More recently, a 232-page quarterly audit from Bowen noted that while the administration had allocated virtually all of the nearly $21 billion that Congress appropriated for Iraq reconstruction and that more than half of the projects were completed, goals in such key areas as drinking water, education, electricity, and medical facilities had not been met, in part because of serious and persistent security problems.

What's more, Bowen's office has been involved in high-profile criminal and civil investigations. It has recovered about $10 million in fraud cases, while referring more than two dozen cases to Justice for possible prosecution.

Bowen's work has clearly caused some heartburn for the administration. Last year, House Republicans tucked into a conference report on a military authorization bill a provision to terminate Bowen's office in late 2007.

President Bush signed the bill, but Bowen's supporters on the Hill were able to reverse the move to shut the IG's office.

"When we put a spotlight on the termination provision, Congress rallied pretty quickly to change the law," Sen. Susan Collins, R-Maine, says in an interview. She added that Bowen's work has been "outstanding." His performance has also impressed Waxman, who initially was wary of the IG because of his long-standing ties to the White House. Waxman says that Bowen has "done a responsible job" under difficult circumstances.

Bowen himself has recently come under scrutiny by the President's Council on Integrity and Efficiency after a few former employees complained that they were told to do work on a book project on Iraq outside of their mandate and that the IG overestimated the savings his office achieved. Bowen's office declined to comment.

But Collins on May 3 issued a statement strongly supportive of Bowen, saying that his office has saved $25 in taxpayer dollars for every dollar that it had spent. Collins says she hopes that the council's inquiry is done promptly to "avoid any diversion from the special IG's important oversight work."

Assuring Independence

Both Democrats and Republicans say that it is important for the Hill to keep an eye out to protect inspectors general from pressure. "I've tried to do everything possible to strengthen the IG system and urge courage and independence on the part of individual inspectors general," Grassley says.

Ervin, the former IG at Homeland Security, recalled the criticism he received from Ridge during the 2004 presidential race when Democratic nominee John Kerry cited some of Ervin's reports. Ervin says in an interview that he was a friend of the president's and "I hoped he would be re-elected," but that "IGs can't time their reports to minimize political consequences to the administration that appoints them. If my job results in political perils for the president, so be it."

Other IGs have also felt pressure from higher-ups. Debra Ritt resigned as IG at the Smithsonian Institution in 2006 after launching an audit of the Smithsonian Business Ventures program. Ritt, who is now an assistant inspector general at the Small Business Administration, says she received an "unusual" call from then-Smithsonian Secretary Lawrence Small urging her to drop the audit.

She says she left mainly because of budget cuts and related factors, but she was dismayed that top officials "didn't understand the rights and authority of my office." Smithsonian officials were "uncomfortable with the frequency of my contacts with the oversight committees on the Hill," she says.

At Grassley's urging, the audit was expanded shortly before Ritt left to look into questions about excessive compensation for Small and other officials. Small resigned in late March after new revelations surfaced about what Grassley dubbed Small's "Dom Perignon lifestyle."

The ethics of some other IGs, however, have lately come into question. The president's council and two congressional committees are investigating the Commerce Department IG, Johnnie Frazier, for questionable travel expenses and possible impropriety involving a $150,000 contract awarded to a company with ties to an employee who left the IG's office.

To deal with problems at both ends of the spectrum, members of Congress are readying proposals that would ensure more protection and independence for good IGs, while developing procedures to remove bad ones. Rep. Jim Cooper, D-Tenn., introduced a bill that would ensure a statutory term of seven years, insulate budget-slashing reprisals, and set up clear criteria for removal. "IGs need to be professionalized," Cooper says in an interview. "They're too subject to politics. If you don't control your own budget you're just a puppet."

(Depending on how they were appointed, inspectors general can be removed from office either directly by the president or by an agency head. Congress is supposed to receive a written explanation for the removal.)

In the Senate, Collins has sponsored a contracting reform bill that includes provisions to upgrade the salaries of inspectors general and to bar the cash bonuses that some IGs now receive for their work. It would also update the development of electronic files in IG offices.

Regardless of the reform effort, IGs say their jobs will always involve a tricky mix of diplomacy and bluntness. Energy Department Inspector General Greg Friedman says, "You need to be someone who can navigate the challenges of dealing with both the executive branch and the legislative branch simultaneously. You have to be prepared to sometimes deliver bad news."

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Law, PR firms help contractors navigate reconstruction inquiries

Peter H. Stone — Thu, 08 Mar 2007 00:00:00 -0500

At a February 7 hearing of the House Oversight and Government Reform Committee, executives from some of the biggest companies in the construction, engineering, energy, and security contracting industries -- including Halliburton, KBR, Fluor, and Blackwater -- were pummeled with criticisms and questions about the projects they are running to rebuild Iraq's roads, hospitals, schools, and oil infrastructure.

Seated nearby in the hearing room was a small army of lawyers, lobbyists, and public-relations experts from such K Street powerhouses as Akin Gump Strauss Hauer & Feld, Crowell & Moring, Patton Boggs, Qorvis Communications, and Vinson & Elkins who were hired to help steer the companies through the minefield of the congressional investigative process.

A week later, the committee held a second hearing at which Stuart Bowen, the special inspector general for Iraq reconstruction; David Walker, the head of the Government Accountability Office; and a third government auditor estimated that $10 billion of the $57 billion in federal Iraq-related contracts they had scrutinized was either not documented or had been squandered through failed oversight, bloated expenses, and payments for work that was shoddy or never done.

It looks like the K Street litigators, spin-meisters, and other damage-control experts are going to be busy for a while.

"A lot of old hands were back on deck," said one lawyer, referring to the presence of several oversight and investigations specialists, such as attorneys Steve Ross of Akin Gump, who represents KBR, and Ron Liebman of Patton Boggs, who represents KBR's parent company, Halliburton.

"Historically, every time we have had government procurement problems, we've had an uptick in oversight and legislative activities," added Stan Brand, who represents Fluor.

Meanwhile, in San Diego on February 13, a federal grand jury indicted the former No. 3 official at the CIA, Kyle (Dusty) Foggo, and defense contractor Brent Wilkes on charges of conspiracy, fraud, and money laundering involving an Iraq contract. According to the indictment, Wilkes provided tens of thousands of dollars in lavish gifts -- including a Scotland vacation in August 2003 -- to his high school buddy Foggo, who, in turn, helped steer a contract worth $1.7 million to the Wilkes-run company Archer Logistics to supply bottled water to CIA operatives in Iraq.

The defendants, who pleaded not guilty, separately hired prominent K Street defense lawyers. Wilkes has tapped Nancy Luque of DLA Piper and Mark Geragos, who practices in California, while Foggo has retained Mark MacDougall of Akin Gump.

Some veteran lawyers say that the reconstruction mess was predictable. "We went in with no systems to do the contracting," including the proper oversight, Arnold & Porter lawyer Jeffrey Smith, a former CIA general counsel, told National Journal.

"The result is what you'd expect: chaos, confusion, and corruption," said Smith, who represented Paul Bremer, the former head of the Iraq Coalition Provisional Authority, when he testified last month before the House panel. "It was a kind of a perfect storm of inadequate planning, insufficient personnel, and extraordinary challenges that had not been anticipated. The tragedy is that so much of the money which could have done so much good went down so many dark holes."

The stakes are high for the private contractors and their lobbying, legal, and PR teams. For example, Bowen's recently completed 579-page audit contains strong allegations about Virginia-based DynCorp, which has a $1.8 billion contract from the State Department for police-related projects in Iraq.

One controversy centers on allegations that DynCorp spent about $4.2 million on 20 VIP trailers and an Olympic-size swimming pool that was requested by some Iraqi officials but that lacked the necessary authorization from the U.S. government. Further, a training camp for DynCorp workers built with the lion's share of the money from a $43.8 million contract had never been used.

Bowen's audit report also raised questions about some $36.4 million for armored vehicles, body armor, and other equipment that DynCorp billed to the government but that the State Department hasn't been able to adequately account for. According to the audit, DynCorp invoices were "frequently ambiguous and lacked the level of detail necessary to identify what was procured."

In 2005, State Department officials raised concerns about "potential fraud" in a DynCorp billing for 500 trailers that may not have been constructed, the audit said. Bowen's office has indicated that a probe into the billing is continuing.

A DynCorp spokesman has said that the company hasn't been contacted about the audit but that it has acted responsibly and would cooperate fully with any inquiry.

Meanwhile, DynCorp has hired PR shop Qorvis to help the company with its media image and to broaden the marketing of its contracting work into areas other than Iraq. Qorvis partner Don Goldberg said his firm is working with DynCorp on "messaging" and is helping to "position them in the government market."

Qorvis has teamed with Patton Boggs to help Halliburton navigate the congressional probes and handle media inquiries. The Houston oil-services giant has faced various allegations of mismanagement by its KBR unit, which received contracts valued at an estimated $25.7 billion for its work in Iraq, according to an analysis by the House committee. KBR's Iraq business has included two multibillion-dollar Pentagon contracts to supply services to U.S. troops and to rebuild the country's oil-services industry.

Halliburton started to spin off KBR last year, prompting the unit to recruit its own Washington influence team headed by Akin Gump and Prism Public Affairs. New headaches for KBR came at the February 7 hearing when a top Army official disclosed that $19.6 million in payments to the company were being withheld because a KBR subcontractor, ESS Support Services, hired private security guards in violation of the KBR contract. KBR has played down the problem, saying it disagrees with the Army and is planning to appeal the decision.

Bowen indicated in his report that his office has about 80 ongoing investigations into allegations of fraud and waste in reconstruction work and that some 20 cases have been referred to the Justice Department for prosecution.

Auditors estimated that one of every six dollars had been wasted or was unaccounted for in the State and Defense departments' contracts they had reviewed. "There is no accountability," a clearly frustrated Walker testified.

That may be changing with more scrutiny from the Hill, the widening criminal probes, and new legislation to expand oversight and impose tough penalties for wrongdoing. Sens. Byron Dorgan, D-N.D., and John Kerry, D-Mass., have introduced a bill that would stiffen protection for whistle-blowers, bar sole-source contracts, and impose fines of at least $1 million and a prison term of up to 20 years for war profiteering. The bill has more than 20 co-sponsors.

"This is probably the most significant case of waste, fraud, and abuse in this country's history," Dorgan said in an interview.

"I think we've only seen the tip of the iceberg" when it comes to wasteful spending on Iraq's rebuilding, said Rep. Henry Waxman, D-Calif., chairman of the House oversight panel. Waxman said he intends to reintroduce a bill he first offered last year that is aimed at boosting "transparency and competition in contracting."

To analysts of Iraq reconstruction, the problems seem humongous.

"The data show that we were more involved in the rebuilding of Iraq than any other nation in history," said Brookings Institution Senior Fellow Peter W. Singer, the author of Corporate Warriors: The Privatized Military Industry. "It also looks like we wasted or lost to corruption more [money] than any other nation before. This is not going to be a pretty episode in the history books."

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Probes take their toll on Iraq contractor

Peter H. Stone — Mon, 04 Oct 2004 00:00:00 -0400

But Halliburton got the new contract anyway. And ironically, the $1.2 billion contract was intended to quell a firestorm of criticism about an earlier Halliburton contract for Iraq -- the giant, no-bid deal that could have been worth up to $7 billion but was capped at $2.5 billion. The original contract, first made public in March 2003 on the eve of the war, was also for fixing Iraq's damaged oil industry. The second Halliburton contract, which did go through a competitive bidding process, was the larger of two that the Army Corps of Engineers awarded to replace the original sole-source contract.

Some outside analysts say it's unusual for a company facing government scrutiny to win a new contract. "In government contracting, we usually disqualify companies that are in the midst of multiple investigations," says P.W. Singer, a national security fellow at the Brookings Institution and the author of Corporate Warriors.

Other experts also voice dismay at Halliburton's securing new defense contracts in the wake of auditors' warnings. "When you keep finding problems, you're a damned fool to keep working with the same guy," concludes retired Army Maj. Gen. William Nash, now a senior fellow at the Council on Foreign Relations. "It seems to me that the Pentagon has been taken for a ride."

The dustup over Halliburton's Iraq oil infrastructure contracts underscores the embattled state of the company, which Vice President Cheney ran from 1995 to 2000. And, if anything, Halliburton's headaches have gotten worse lately. Halliburton has also come under scrutiny by the Justice Department, the Securities and Exchange Commission, and two foreign governments for some of the far-flung projects it undertook in Nigeria, Bosnia, and Iran back when Cheney was running the show. And with the election season under way, Sen. John Kerry's presidential campaign has been running ads that suggest linkages between Halliburton's Iraq business and its former CEO. Kerry has said that if elected, he will "stop companies like Halliburton from profiting at the expense of our troops and taxpayers."

In response to the drumbeat of criticism, Halliburton and the Bush-Cheney campaign have separately, and vehemently, denied that the government gave the company any special treatment. Both have countered that the attacks on the company and on Cheney's alleged ties to it are politically motivated. "Democrats are launching baseless attacks on Halliburton because they have no forward-looking agenda," said Steve Schmidt, a Bush-Cheney campaign spokesman. "This is an issue that has been exhaustively reported. Democratic attacks on the vice president are baseless and false."

For its part, Halliburton earlier this year launched an expensive television and print ad blitz defending its track record and noting that it has done government work for six decades, for both Republican and Democratic administrations.

But no one disputes that the Iraq war has plainly boosted Halliburton's revenues. In 2003, the company became the Army's No. 1 contractor, up from No. 19 the previous year. The company became the seventh-biggest Pentagon contractor overall last year, moving up from No. 22 in 2000. Halliburton's work in Iraq includes a wide-ranging contract, called a LogCAP, that it won through competitive bidding in 2001 to provide food, fuel, and other logistical services to troops worldwide. That contract -- most of which is for services in the Middle East -- and the oil infrastructure contract are estimated to be worth a total of $11 billion. Most of that work has gone to KBR, Halliburton's construction and engineering unit.

But along the way, Halliburton's image has been tarnished by company employees -- subsequently fired -- who allegedly took $6 million in kickbacks from a Kuwaiti subcontractor. Further, Halliburton whistle-blowers asserted at a hearing of the House Government Reform Committee this summer that the company had abandoned trucks each worth $85,000 because they lacked spare tires, and had charged the government $45 a case for soda. Halliburton executives flatly denied the accusations, which were made by former KBR truck drivers and a subcontracting manager.

Further fanning the fires, Pentagon auditors in August reported that the company hasn't provided enough details to substantiate $1.8 billion of its work in Iraq and Kuwait. "Three separate government auditors have found widespread systemic problems with regard to almost every aspect of Halliburton's work in Iraq," said Rep. Henry Waxman, D-Calif., ranking member of the House Government Reform Committee, who has emerged as the company's No. 1 nemesis in Congress.

Wendy Hall, a Halliburton spokesperson, challenges the bleak auditing assessments. She notes that earlier this month, the Defense Contract Management Agency issued an "approval letter" that deemed KBR's policies and practices "effective and efficient." Ironically, given KBR's recent military revenue growth, Halliburton announced recently that it was restructuring KBR to cut costs because of low profit margins and might put the unit up for sale or spin it off.

Critics have lately found additional ammunition in other federal investigations that focus in part on the years when Cheney was at Halliburton's helm. Halliburton is facing separate Justice Department and SEC probes into allegations that it participated with foreign corporate partners in a $180 million payment scheme in the late 1990s to build a $4 billion natural gas complex in Nigeria. French and Nigerian authorities are also probing the charges involving a complex system of payments to Nigerian officials to help the international consortium win the lucrative project.

Halliburton is cooperating with these inquiries. In June, the company took the unusual step of severing all ties with two prominent consultants linked to the scheme; one is Albert Stanley, who ran the company's KBR unit under Cheney when some of the payments were allegedly made. Halliburton said that Stanley had channeled $5 million into a Swiss bank account and personally enriched himself.

Halliburton's Hall wrote in an e-mail that the consultants were terminated because of "violations of Halliburton's ... codes of business conduct."

Meanwhile, the Justice Department is probing other charges of war profiteering by Halliburton in the Balkans during the period when Cheney was CEO, and is looking into Halliburton's work in Iran, where, for years, the company has used a loophole to evade U.S. prohibitions against doing business with Tehran.

Separately, the SEC this summer settled a probe into changes in Halliburton's accounting methods that occurred on Cheney's watch. The SEC alleged that the changes permitted the company to inflate its reported profits. As part of the settlement, the company made a payment of $7.5 million to the agency.

But it is Halliburton's work in Iraq and Cheney's former leading role at the company that, for now, are grabbing headlines.

Cheney's public statements about his relationship with the company have been challenged by critics as less than full disclosure. On Meet the Press, for example, Cheney said in 2003, "I have no financial interest in Halliburton of any kind and haven't had now for over three years."

But that assertion is undercut somewhat by the vice president's financial disclosure forms: Since early 2001, Cheney has yearly received deferred-compensation payments for his work for Halliburton in 1999. Cheney's deferred payments have ranged from a low of $147,579 in 2001 to a high of $178,437 in 2003.

Altogether he will have received five deferred-compensation payments, including one in January. Just before taking office in 2001, Cheney also received $1.5 million that was part of his 2000 compensation. He has options to purchase 400,000 shares of Halliburton stock; he has pledged to donate the proceeds from the sale of that Halliburton stock to charity.

A Cheney spokesman has stressed that these payments are not affected in any way by how well the company has done since Cheney has been in office. Cheney bought an insurance policy that guarantees the payments. Still, the nonpartisan Congressional Research Service indicated in response to questions from Sen. Frank Lautenberg, D-N.J., last year that officials' deferred salary and stock options could be considered "continuing financial interest" in a company.

Potentially more important to Halliburton's ongoing troubles is a recent Washington Post report that new information emerged from a House briefing this summer that seems to contradict a Pentagon claim that career civil servants were responsible for giving Halliburton its original, no-bid contract to repair Iraq's oil infrastructure. At the briefing, it was revealed that Michael Mobbs, a senior Pentagon political appointee, was instrumental in helping Halliburton's KBR subsidiary get a leg up in its effort to secure the huge contract.

Mobbs indicated at the closed briefing that he had pushed to award Halliburton the contract for a contingency study on Iraq's oil needs in the fall of 2002, before the war. That work put the company in a good position to gain the sole-source contract the following March. The study, called a task order, was justified by Mobbs under the company's separate LogCAP contract for providing logistical services worldwide. Still, an Army lawyer challenged Mobbs's view at the time, arguing that it was inappropriate to use the LogCAP contract because the Iraq study didn't fall "within its scope." A Government Accountability Office report later seconded this concern.

Further, The Post reported that in the fall of 2002, Cheney's chief of staff, Lewis Libby, attended a wide-ranging meeting with a group of national security deputies at which Mobbs said he intended to give the contingency study contract to KBR. Kevin Kellems, a spokesman for Cheney, has said that Libby didn't inform Cheney about Mobbs's decision to use KBR. Kellems has also stressed that "vice presidents don't do contracting."

Some outside analysts argue that the company and the Bush administration have at least indirectly created some of these problems. "When they complain about a political witch-hunt, they have only themselves to blame for opening the doors up, by not following the rules," says Singer. "The procurement system is set up to keep political interests out of the contract awarding process. But in this case, you had individuals from both the Office of the Secretary of Defense and Office of the Vice President who were linked to, either through knowledge of or influence over, the process -- and in either case it's inappropriate."

Waxman is also dissatisfied with the administration's explanations, and he has stepped up his calls for the vice president's office to provide a full accounting of any "contacts for contracts."

Halliburton rejects as "completely false" any suggestion that its work in Iraq has been influenced in any way by its former CEO. "We get our business based on the skills and abilities of our employees to deliver quality services to those who need them," said Halliburton's Hall.

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CIA Deaths

Peter H. Stone — Fri, 28 May 2004 00:00:00 -0400

The CIA has publicly identified four of those killed in the Afghan conflict -- two staffers and two contractors. The two staffers were Johnny (Mike) Spann and Helge Boes. Spann, 32, a former Marine Corps officer from Winfield, Ala., became the first U.S. fatality in the war when he died in November 2001 during the Mazar-i-Sharif prison uprising. Boes, also 32, was a Harvard Law School graduate who lived with his wife in Northern Virginia. He died in February 2003, when a grenade detonated prematurely.

The two civilian CIA contractors were killed in an ambush on October 25 while tracking terrorists near Shkin, Afghanistan. One of the dead was Christopher Glenn Mueller, 32, of San Diego, a former Navy SEAL. The other contractor was William (Chief) Carlson, 43, of Southern Pines, N.C., who had retired from the Army with a background in Special Operations.

At a May 21 memorial service that honored 83 CIA employees who have died in service over the years, CIA Director George Tenet hailed the sacrifices of the four men and noted that they died "fighting a pitiless enemy in a remote, rugged place."

The fifth death in the conflict, according to the former official, was a "detailee" to the agency from another branch of the government. An agency spokesperson declined to comment on that death.

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Former Medicare chief soldiers on in wake of ethics investigations

Peter H. Stone and Louis Jacobson — Fri, 09 Apr 2004 00:00:00 -0400

Scully is under investigation for threatening to fire Medicare's top actuary if the actuary revealed internal cost projections on the massive Medicare reform bill that were higher than the $400 billion that the Bush administration suggested the bill would cost. Critics also charge that at the same time Scully was negotiating with Congress over the details of the reform legislation, he was talking about a job with law and lobbying firms, some of whose health care clients stood to benefit from the bill. And Scully has been embarrassed by the publication of a series of intemperate e-mails he fired off to his critics when he was at the Medicare agency.

Yet none of this appears to have hampered Scully's ability to attract deep-pocketed clients. When he left the Health and Human Services Department, Scully inked deals with the law and lobbying firm Alston & Bird and the private equity-investment firm Welsh, Carson, Anderson & Stowe. In the past three months, according to sources, he has signed up such big-name clients as Abbott Laboratories, Caremark, US Oncology, the Alliance for Quality Nursing Home Care, and the American Association for Homecare.

By law, Scully may not approach HHS on behalf of clients until after a yearlong cooling-off period, but he may lobby Congress and other executive agencies on many matters right away, and he is free to provide "strategic advice" to clients. In addition, sources say, Scully has been tapped to join the boards of two medical companies that are Welsh, Carson clients: Ardent Health Services and Select Medical Corp.

Even by Washington standards, it's unusual for a prominent figure to be signing up so many clients at the same time he is taking a public beating. But various people who have followed Scully's career say they are not surprised that he has become a lightning rod. Scully is known for pushing the envelope to get what he wants and for surviving flaps that would have sidelined others.

"He's considered a cat with nine lives," said one health care lobbyist. "A lot of incidents have popped up, but he always gets through them with his boyish charm."

In a town of one-note partisans, sluggish bureaucrats, and cautious lawyers, Scully is anything but colorless. Friends and foes alike call him hard-edged but likable, whip-smart and meticulously prepared, but often overbearing. He is seen as a high achiever who often ignores convention. Several colleagues summed Scully up in one word: "operator."

"He charges pretty hard, and when he thinks he's right, the rules don't matter much," said one private-sector official who dealt with Scully at Medicare. "Usually he's right, but the approach he takes sometimes rankles people." A Democratic congressional aide who confesses to finding Scully "a genuinely nice person" nonetheless suggests that when Scully becomes convinced that he's doing the right thing, "protocol goes by the wayside."

The book on Scully is that he gets things done in spite of the bureaucracy and the criticism. The passage of last fall's reform bill stands as his most obvious accomplishment at Medicare's helm. He also pushed through initiatives to improve the program's responsiveness to beneficiaries. But the road to passing the Medicare law, experts say, demonstrated in microcosm Scully's penchant for coloring outside the lines. Examples from the latter part of his tenure include:

The HHS inspector general is investigating claims that Scully threatened to fire top actuary Richard Foster if Foster gave Congress his analysis showing that the Medicare reforms could cost the government as much as $551 billion over 10 years, considerably more than the administration's budgeted amount of $400 billion. In January, after President Bush had signed the bill, the administration announced the estimated cost of the overhaul was $534 billion over 10 years. Last month, Scully told The Washington Post that he had only joked to Foster about firing him. "They can investigate till the cows come home," he told the newspaper, "but I think I was right." Scully declined to comment for this story on the Foster situation or any other matter.
Scully has acknowledged that he entertained job offers while the Medicare bill was being hashed out -- some from potential employers whose clients could have been affected by provisions of the pending legislation. According to federal ethics rules, officials engaged in job negotiations must recuse themselves from "any official matter" involving a potential employer. But Scully sought and received a waiver from HHS that allowed him to continue his job talks without curtailing his official business. However, about a month after Scully's departure, White House Chief of Staff Andy Card declared that, from then on, only the White House would issue such waivers. Speculation about the sudden about-face immediately turned to Scully. Soon after, he told The Post, "If I'm partly the cause for this, I feel badly."
Scully's comments at a private dinner he attended in April 2002 have attracted the attention of Senate Finance Committee Chairman Charles Grassley, R-Iowa, who raised concerns in a letter to HHS Secretary Tommy Thompson and to officials at the Securities and Exchange Commission. At the dinner sponsored by Credit Suisse First Boston, Scully discussed the business prospects for a certain class of for-profit, specialty hospitals. On the next stock market trading day, one of those hospital companies, MedCath, saw its stock price tumble in trading that was nine times the normal volume. At Welsh, Carson, where Scully is now a senior adviser, the New York City investment firm's extensive health care portfolio includes a 28 percent stake in MedCath. Scully told The Post that he never mentioned any companies by name at the dinner and only discussed his general views on federal health care reimbursement policies. Thompson's office, which has said that Scully told HHS he did not make the statements in reference to MedCath, is preparing a response to Grassley. An SEC spokesman would neither confirm nor deny that the commission is looking into the matter.

Scully, 46, has a gold-plated resume. He started in Washington in 1980 as an aide to then-Sen. Slade Gorton, R-Wash. In 1985, he went to work for the law and lobbying firm Akin Gump Strauss Hauer & Feld, leaving in 1988 to join the Bush-Quayle presidential campaign. He served in the first Bush administration as associate director of the Office of Management and Budget for human resources, veterans, and labor, and he later rose to the job of deputy assistant to the president and counselor to the OMB director.

After George H.W. Bush lost re-election in 1992, Scully went to the law and lobbying firm Patton Boggs, and was then lured away to head the group now known as the Federation of American Hospitals, which represents more than 1,700 privately owned and managed hospitals. He remained there until May 2001, when he took the helm at the Centers for Medicare and Medicaid Services, which oversees $600 billion in annual spending.

Health policy experts say that Scully's upward climb was not a fluke. Michael Bromberg, who preceded Scully as head of the hospitals association, said the group started with a list of 20 candidates but Scully quickly became the obvious pick. "Several people who at the time had much higher visibility than him kept saying, 'Tom would be perfect,' " Bromberg said.

Scully is "tireless, working night and day," Bromberg said, "and in meetings, he doesn't care if you're a senator or a junior staffer." Karen Ignagni, the president of the trade group America's Health Insurance Plans, who has been both an adversary and ally to Scully, says, "He did his homework. He was definitely known as a problem solver."

Since joining Alston & Bird in January as a senior counsel, Scully has been a whirling dervish in signing up clients, sources say. Two health care lobbyists said that Scully has boasted to them that he's already landed new business worth about $3 million a year to the firm.

Alston & Bird "wants to grow the firm and its lobbying practice in a short timeframe, and Tom is someone who can help them do that," said one lobbyist. One of Scully's first moves was to bring on Colin Roskey, a former health care aide at the Senate Finance Committee, and sources say he's looking to hire other well-placed Hill aides.

As nicely as Scully has done on K Street, lobbyists who know him say that his long-term interest is his work with Welsh, Carson, where the dollars are potentially even bigger. Currently, Scully is dividing his time between Washington and Manhattan. "Tom will never leave Washington, but the deals will take him to New York more and more as time goes along," said one lobbyist. Friends say that Scully is using his regulatory and legislative expertise to advise the investment firm's clients on how to navigate the complexities of the new Medicare law.

On Capitol Hill, Democrats and even some Republicans are zeroing in on what they say were Scully's ethical lapses. They also want to know whether Scully was covering for the White House in trying to keep the lid on the potential costs of the Medicare reform measure, which critics say would not have squeaked through the House had the higher costs been known at the time. Rep. Henry Waxman, D-Calif., is one Democrat who charges that Scully's confrontation with Foster is a "very serious" matter and that any effort to withhold information from Congress on a pertinent legislative issue "may have criminal implications." He said that Democrats are not about to let the issue go away.

But some health policy specialists say that any characterization of Scully as a blindly loyal Bush partisan is too simplistic. On many issues, observers say, Scully had better relations with lawmakers in both parties than did his predecessors at Medicare. Scully is considered close to Sens. Jay Rockefeller IV, D-W.Va., and Max Baucus, D-Mont., insiders say, and his penchant for cooperating with Democrats occasionally riled the White House. "He loves deal-making," Bromberg said.

Scully is "one of the rare people in Washington who says what he thinks," said Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, a trade group that was deeply involved in the Medicare negotiations. "I think that's refreshing." One lobbyist who knows Scully well said, "Tom does not like strictures."

That maverick streak seems to have carried over somewhat to his relationship with Thompson, his boss at HHS. At a congressional hearing earlier this year, Thompson drew chuckles when he said, "I cannot speak for Tom Scully. Nobody speaks for Tom Scully, as everybody knows." It was Thompson who, in congressional testimony, pointed the finger at Scully, after the fact, as the person at HHS who had threatened Foster with dismissal.

"It was a love-hate thing" between Scully and Thompson when they worked together at the department, said one health care lobbyist. The two men -- both independent-minded -- respected each other and considered themselves friends, this source explained, but "friends fight, just like husbands and wives fight."

But some who know Scully characterize the situation as more serious than a family spat. "I think Scully feels that Thompson has thrown him under the train," said one pharmaceutical industry lobbyist.

Scully clearly revealed his hotheadedness in a stream of e-mails he sent during his tenure as Medicare administrator. The no-holds-barred missives found their way into The Post's In the Loop column, supplying scribe Al Kamen with dishy items that regularly painted Scully as a loose cannon.

In one e-mail, Scully blasted a University of Wisconsin researcher who was heading a Medicare-sponsored project to study nursing homes. "There is no entitlement to government contracts -- especially when you try to sandbag the agency you contract with," Scully wrote. Later, he fired off another message: "If you want to continue to yank my chain, I will continue to disconnect you from this agency." A General Accounting Office investigation concluded that Scully's actions "undermined the integrity" of the contracting system at the Centers for Medicare and Medicaid Services.

In yet another e-mail, Scully labeled an official with the Gallup Organization who had criticized the centers' contracting process a "weasel" and a "jerk." Scully sent a copy of the e-mail to an OMB aide and added, "I would like to investigate this idiot." That exchange drew a $5 million lawsuit by Gallup, charging Scully with intimidation. The suit is pending.

Some lobbyists agree with Merritt that Scully's forthrightness is endearing. Others aren't convinced. One calls Scully's habit of frank talk both "refreshing and weird." Some suggest that it loops back to egotism. A congressional aide remembers that when Scully took over the Medicare agency in 2001, he devised a contest to come up with a new name. The grand prize for the lucky winner was lunch with Scully.

When it came to his job search, Scully didn't go out of his way to keep matters secret, even though he was still running the Medicare and Medicaid programs. Over several months, the press widely publicized his talks with Alston & Bird, as well as with other firms, including Baker, Donelson, Bearman, Caldwell & Berkowitz; McDermott, Will & Emery; and Ropes & Gray. The reports prompted jokes on K Street about how much it would cost to hire him. Scully also was talking with investment firms about a consulting post.

As for the Foster contretemps, it seems likely to dog Scully as long as controversy persists over the new Medicare law. "I don't know anybody who wishes him ill," said a former colleague. "But I think the feeling on K Street is that, in general, he has made a bed of nails and then lain down on it." A friend of Scully's added: "Everything he did to make the agency more transparent and open to the public has been completely overshadowed" by the controversy over Foster.

Alston & Bird appears to be foursquare behind Scully. Thomas Boyd, head of the firm's legislative and public policy practice, asserted that Scully has "done nothing wrong, ethically or legally." He called Scully "one of the most transparent administrators" ever at Medicare, and cited that as "one of the reasons he was appealing to us."

Some experts argue that Scully has little to fear in the way of sanctions. "Legally, I don't know that there's a tremendous amount of exposure," said Stanley Brand, a lawyer who specializes in white-collar defense and government ethics. Added Brookings Institution senior fellow Stephen Hess, "In Washington, loyalty is the coin of the realm. By Washington standards, what would be his crime?"

Brand and others added that Scully's best strategy is to keep a low public profile. Perhaps that advice influenced Scully's decision not to appear when the House Ways and Means Committee asked him to testify at an April 1 hearing on the Foster matter.

But if the issue is kept alive in this highly partisan election year, things could turn sour for Scully's lobbying business. "It could be ruinous -- or it could be just a bump in the road," says one old friend.

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Iraq-al Qaeda links weak, say former Bush officials

Peter H. Stone — Fri, 08 Aug 2003 00:00:00 -0400

As criticism over the Bush administration's use of prewar intelligence on Iraq's weapons of mass destruction continues, a new wave of accusations seems ready to break-this time, over complaints that in its efforts to sell the war, the White House also hyped claims about the links between al Qaeda and Saddam Hussein's regime.

Three former Bush administration officials who worked on intelligence and national security issues have told National Journal that the prewar evidence tying al Qaeda to Iraq was tenuous, exaggerated, and often at odds with the conclusions of key intelligence agencies. The Bush alumni, as well as other intelligence veterans and some members of Congress, say they see parallels between how the administration painted the Qaeda connection to Iraq and the way that the White House often portrayed intelligence about weapons of mass destruction as being definitive or rock solid.

"Our conclusion was that Saddam would certainly not provide weapons of mass destruction or WMD knowledge to al Qaeda because they were mortal enemies," said Greg Thielmann, who worked at the State Department's Bureau of Intelligence and Research on weapons intelligence until last fall. "Saddam would have seen al Qaeda as a threat, and al Qaeda would have opposed Saddam as the kind of secular government they hated."

Other Bush veterans concur that the evidence linking Al Qaeda to Iraq was overblown.

"Anyone who followed al Qaeda for a living would not have considered Iraq to be in the top tier of countries to be worried about," said Roger Cressey, who left the administration last fall after working on counterterrorism issues at the National Security Council and as a top aide to cyberterrorism czar Richard Clarke. "I'd argue that Iraq would be in the third tier." By contrast, Cressey said, Iran would rate in "the top tier."

And Flynt Leverett, who worked on Middle East issues at the National Security Council until earlier this year and is now with the Brookings Institution's Saban Center for Middle East Policy, said that some administration officials pushed the intelligence envelope on the Qaeda connection. "After September 11, there was a concrete effort by policy makers, particularly in the Pentagon and the vice president's office, to come up with links between al Qaeda and Iraq."

Generally, these and other former intelligence officials who talked to National Journal felt that the United States needed to confront Saddam Hussein. But the analysts questioned the war's timing and wondered whether the attack should have come before the battle against al Qaeda was sufficiently far along.

In the reviews that the Senate and the House Intelligence panels are conducting into the accuracy of prewar intelligence, the claims on Iraq and al Qaeda are also a topic of inquiry. Republican leaders of those committees have generally defended the administration's prewar assessment of Qaeda-Iraq links. Democrats, however, have been skeptical.

"I have never believed that the prewar links between al Qaeda and Iraq were very strong," declared Rep. Jane Harman, D-Calif., the ranking Democrat on the House Permanent Select Committee on Intelligence, who voted in favor of the war last fall. "The evidence on the al Qaeda links was sketchy."

Her counterpart on the Senate Select Committee on Intelligence also sounded dubious about the administration's effort to link al Qaeda and Iraq. "I think the ties were always tenuous at best," said Sen. Jay Rockefeller IV, D-W.Va., who also voted for the war. "The evidence about the ties was not compelling." Rockefeller said that his panel has a staff group focusing on the question and that the panel may hold a hearing just on this issue in the fall.

In two periods during the run-up to the war against Iraq- in late September and early October of 2002, just before the vote in Congress, and then this year in the weeks before the war-administration heavyweights highlighted what they portrayed as significant ties between Iraq and al Qaeda. President Bush, Defense Secretary Donald Rumsfeld, Secretary of State Colin Powell, and National Security Adviser Condoleezza Rice all weighed in on this point, sometimes in a broad-brush way, sometimes with hints of tantalizing specifics.

Powell, in his major speech to the United Nations on February 5, cited the presence of Abu Musab al-Zarqawi, a Jordanian terrorist who was in Baghdad in May 2002 receiving medical treatment for wounds he received in Afghanistan. Powell referred to al-Zarqawi as "an associate and collaborator of Osama bin Laden and his al Qaeda lieutenants."

But several intelligence experts say that Powell overstated these ties. Al-Zarqawi "is at best seen as having linkages to al Qaeda, instead of being a card-carrying member," Cressey said. "There's no question that Zarqawi is a terrorist, but there are real questions about whether he's a member of al Qaeda," said Vince Cannistraro, a former head of counterterrorism operations at the CIA.

In his State of the Union address in January, Bush made the Qaeda-Iraq connection. "Evidence from intelligence sources, secret communications and statements by people now in custody," the president said, "reveal that Saddam Hussein aids and protects terrorists, including members of al Qaeda." Bush darkly added, "Secretly and without fingerprints, [Saddam] could provide one of his hidden weapons to terrorists or help them develop their own."

In perhaps the boldest assertion before the war, Defense Secretary Rumsfeld on September 27 stated that the administration had several "bullet-proof" sentences in intelligence reports about ties between Iraq under Saddam and al Qaeda. "We have what we consider to be very reliable reporting of senior-level contacts going back a decade," Rumsfeld said.

Bush echoed Rumsfeld's remarks in his major address in Cincinnati on October 7, asserting as well that al Qaeda and Iraq had "high-level contacts that go back a decade." He also stated that "we've learned" that Iraqis trained Qaeda members in "bomb making and poisons and deadly gases." And Bush posited that Iraq "could decide on any given day to provide a biological or chemical weapon to a terrorist group or individual terrorists."

But even as the president made these comments, the key classified National Intelligence Estimate on Iraq making the rounds in the Bush administration presented a more nuanced and less alarmist view. For instance, according to a recent Washington Post account, Bush didn't mention a key conclusion of the intelligence report: that although high-level contacts between al Qaeda and Iraq had taken place in the early 1990s when bin Laden was based in Sudan, these contacts had not been followed by any significant ties between Al Qaeda and the Iraqi government. Similarly, intelligence sources have said that the claim that Bush made about Iraq training Qaeda members in bomb making or poison gas use had not been fully verified.

"There wasn't the kind of link between Iraq and al Qaeda that people wanted," said one Bush administration alum. The CIA, he added, had "some measure of intellectual responsibility and didn't come up with a case."

Moreover, the president failed to mention the report's conclusion that the prevailing view in the intelligence community was much more guarded about the prospect of Saddam's transferring weapons of mass destruction to terrorists. In fact, CIA Director George J. Tenet wrote to Sen. Bob Graham, D-Fla., who was then the chairman of the Senate Intelligence panel, that only if a U.S. attack against Iraq seemed imminent or inevitable might Saddam "decide that the extreme step of assisting Islamist terrorists in conducting a WMD attack against the U.S. would be his last chance to exact vengeance.... "

Ken Pollack, a former CIA analyst and Iraq expert who is now director of research at the Saban Center at Brookings, said he also believed before the war that it was "extremely unlikely" that Saddam would have turned over weapons of mass destruction to al Qaeda. Furthermore, Pollack has since concluded that there's a "much stronger" argument to be made that "the administration exaggerated its case for war in terms of the al Qaeda issue than on the WMD issue."

Bush particularly irked intelligence analysts when he landed on an aircraft carrier right after Baghdad fell and proclaimed that the U.S. had just "removed an ally of al Qaeda." Thielmann, the former State Department analyst, calls the statement "an outrageous distortion" and a "shameless falsehood."

Bush, when specifically asked at his news conference on July 30 whether the links between Iraq and al Qaeda were exaggerated and whether he now had more definitive evidence pointing to them, gave a long answer justifying the war on other grounds. But on the links between al Qaeda and Iraq, he said only that David Kay, the former U.N. weapons inspector now in Iraq looking for evidence of weapons of mass destruction, was also going through piles of documents to look for such links. "It's going to take time for us to gather the evidence and analyze the mounds of evidence, literally the miles of documents that we have uncovered," Bush said.

Some critics argue that by linking al Qaeda and Iraq, the administration has not only misled the public about Iraq but about the real and continuing danger from al Qaeda.

The Bush administration "created a powerful impression for the American public that al Qaeda and Iraq were joined," said Dan Benjamin, a senior fellow at the Center for Strategic and International Studies and the co-author of "The Age of Sacred Terror." Benjamin added, "People don't understand that al Qaeda is a global insurgency distinct from states, and is eager to topple some states."

Other former intelligence officials are also dismayed by Deputy Defense Secretary Paul Wolfowitz's recent statement that the fight against Iraq is the "central battle" in the Bush administration's war on terrorism. "The idea that the battle in Iraq is the central battle in the war on terrorism flies in the face of reality and all that we know about al Qaeda, Hezbollah, and other globally active terrorists," Leverett said.

Looking ahead, some critics worry that the Iraq war could ultimately help al Qaeda more than hurt it. "A lot of people who could have been very helpful working on al Qaeda were working on Iraq," Graham, a presidential candidate, said. "We shifted intelligence assets as well as military and intelligence people to Iraq."

Other Democrats concur. "The war enormously deepened the pool of eager recruits for al Qaeda," Rockefeller said. "I think that al Qaeda was, is, and always will be a greater threat than Iraq."

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Lobbyists hustle for reconstruction business in Baghdad

Peter H. Stone — Thu, 07 Aug 2003 00:00:00 -0400

Mike Baker, a former covert operations officer for the CIA, is preparing for a trip to Baghdad. Baker will be going to the Iraqi capital in late August not to run black-bag jobs, but to pitch the services of Diligence, his intelligence and security-consulting firm. Diligence is allied with lobbyist Ed Rogers and former Federal Emergency Management Agency Director Joe Allbaugh in an effort to land contracts and do deals in Baghdad.

Rogers, vice chairman of the prominent K Street firm of Barbour Griffith & Rogers, and Allbaugh, who was national campaign manager for Bush-Cheney 2000, hooked up to create New Bridge Strategies. The two partners in New Bridge, a consultancy that's helping big construction and telecom companies land business deals in Iraq, are getting ready to open an office in Baghdad.

While American forces hunt for Saddam Hussein and continue the deadly work of patrolling the war-torn country, Washington players with political connections are chasing the money in Iraq. New Bridge, for example, is marketing Baker's security firm-which offers everything from bodyguards to advice on business risks-to U.S. and foreign companies that are beating down doors for a share of the lucrative reconstruction deals.

"Our approach is to have a presence on the ground, staffed by Iraqis and Americans, to pursue ventures on behalf of clients," says Rogers, vice chairman of New Bridge. Allbaugh, who is chaiman of New Bridge, Rogers, and their associates see enough promise that they may also deploy their own venture capital in reconstruction projects.

A small army of consultants and lobbyists has mobilized to gain leverage in postwar Iraq, a country with vast oil reserves and almost equally vast reconstruction needs. With the Coalition Provisional Authority led by L. Paul Bremer stepping up efforts to rebuild Iraq's infrastructure, Washington firms are continuously patrolling for new business opportunities.

Consider BKSH & Associates, the firm run by well-known GOP strategist Charlie Black. Over the past four years, BKSH has been boosting the interests of the Iraqi National Congress, whose leader, Ahmed Chalabi, was a key anti-Saddam opponent and now sits on the newly formed Iraqi Governing Council. Besides helping the INC-which has enjoyed extensive backing from the Pentagon but is quite controversial at the State Department and the CIA-BKSH has started to help open doors for such U.S. companies as AT&T, Cummins Engine, and Fluor that are seeking business in Iraq.

"Due to our past representation of the INC," says Black, "we know and have worked with a lot of people who will be in the provisional government. We have a number of clients who are interested in doing business in Iraq." Black adds that his firm is "strongly considering" opening an office in Baghdad.

Other Washington lobbyists and consultants are also eyeing opportunities for themselves and their clients. The law firm of Akin Gump Strauss Hauer & Feld recently signed up retired U.S. Gen. Anthony Zinni as a senior international adviser. Zinni, who was a special envoy to the Middle East for the Bush administration, will help some two dozen Akin Gump partners who are trolling for business in Iraq on behalf of multinational clients.

And in an interesting twist, some prominent Iraqi families that are interested in winning contracts from the U.S. government have contacted the Livingston Group, run by former House Appropriations Committee Chairman Bob Livingston, R-La., for help with American officials. Moreover, foreign companies in countries that were U.S. allies in the war are also pressing for Iraq work, including Shaheen Business Group, a Jordanian conglomerate that has hired Qorvis Communications, and a Ukrainian pipeline company that's getting help from former national security adviser Robert "Bud" McFarland.

All the deal-making, lobbying, and jockeying has only just begun. Official estimates on rebuilding Iraq don't exist, but the authoritative Council on Foreign Relations has projected reconstruction costs of $20 billion a year for several years.

Dozens of contracts have already been awarded to American and foreign firms. Several have gone to companies famous for their ties to Washington power brokers. One of the biggest winners was Bechtel, the international construction giant. In April, it landed a contract from the U.S. Agency for International Development valued at up to $680 million to help rebuild roads, power systems, water and sanitation facilities, and other parts of Iraq's damaged infrastructure.

Bechtel spokesman Howard Menaker says that so far, the company has handed out 49 subcontracts, 18 of them to Iraqi enterprises. "We're trying to let as much subcontracting work as possible to Iraqi firms," Menaker says.

The Pentagon has recently awarded more-specialized contracts to American firms that have expertise in defense and security work. Three such firms-Vinnell, Dyncorp, and Kroll- respectively have landed contracts to help form and train post-Saddam military, police, and paramilitary forces. Outside analysts say that all three firms are well wired in Washington.

"All these companies have very good connections and are filled with former government and military officials," notes P.W. Singer, a military analyst at the Brookings Institution and the author of Corporate Warriors, a new book that discusses the Pentagon's growing reliance on the private sector.

Currently, U.S. and foreign corporations are eyeing major contracts pending with American agencies. The Army Corps of Engineers, for instance, is soliciting bids that are due by the middle of August for two major oil-industry reconstruction projects that may be worth as much as $500 million each. The Corps decided to seek the bids after controversy flared up earlier this year over the decision to award a no-bid contract to KBR; KBR is a subsidiary of Texas-based Halliburton, the oil- services company that was headed for several years by Dick Cheney before he ran for vice president.

Further, several American and foreign telecom companies are hoping to land a mobile-telephone contract estimated to be worth tens of millions of dollars pending with the Coalition Provisional Authority.

Consultants see plenty more business on the horizon. Allbaugh says that the huge Bechtel contract "is a drop in the bucket for what will be needed for reconstruction of the country." The "potential is unlimited because of the country's needs," he adds. "We want to help not only Iraqis, but American companies and our government."

In June, Allbaugh and Rogers spent several days in Kuwait exploring business opportunities and recruiting some Americans and Iraqis to work with them. When Rogers and Baker travel to Baghdad later in August, they plan to take along several clients, including representatives of one telecom firm that's interested in the mobile-phone contract. New Bridge is also representing a large construction firm based in Cyprus that's expected to bid for the oil contract.

In the security area, New Bridge thinks it has found a winner in its partnership with Baker's firm, Diligence. That's because all the companies that are going into Iraq today must have their own guards to protect company personnel. Security concerns, says Allbaugh, are a "major component" for all companies operating in Iraq. "We have people with the expertise to fill that void."

Riva Levinson, a managing director at BKSH who has handled much of the media work promoting the INC in recent years, stresses that to be successful in Iraq, American firms must find local partners.

"The single most important thing that a U.S. company can do is to find Iraqi commercial partners," says Levinson, who was in Iraq for a couple of weeks in May helping the INC and expects to return in the fall. Levinson plans to act as a broker who can introduce clients to potential Iraqi partners. BKSH has already been helping its client Fluor, which plans to bid on at least one of the contracts to repair Iraq's oil infrastructure.

Meanwhile, Akin Gump is pursuing a different strategy. The firm, under the leadership of George Salem, pulled together a team of partners from its diverse energy, telecom, and international business practices-including some from its Saudi affiliate-to pursue opportunities in Iraq. Akin Gump partner Mark Medish, who was in the Treasury Department in the Clinton administration and served on the National Security Council, is helping Liberty Mobile Holdings. This small Delaware firm is seeking authorization from the Defense Department or the Coalition Provisional Authority to use the radio spectrum in Iraq to develop a wireless system. And Akin Gump partners, led by Sukhan Kim, are representing Korean firm Hyundai Construction, which is claiming about $1 billion for previous work that it did in Iraq under Saddam.

Akin Gump's new consultant, Zinni, is also expected to attract business. "Zinni can help corporate clients understand what the risks and opportunities are in Iraq and can help them design strategies to participate in economic reconstruction," Medish says.

Another K Street firm chasing Iraq business, the Livingston Group, garnered publicity earlier this year when it brought on Mohammed Odeh al-Rehaief, an Iraqi lawyer who helped in the rescue of U.S. Army Pvt. Jessica Lynch. Since al-Rehaief joined the firm as an associate, several wealthy Iraqis have contacted the Livingston Group about how to land business from U.S. authorities.

"We've been contacted by prominent families in Iraq who've asked for our help with U.S. contracts," says lobbyist Jim Pruitt of the Livingston Group, which also represents British and Chinese firms that are looking for Iraq deals in the areas of health care and electric power generation. "We're talking to them about partnerships with U.S. firms. We've not closed any deals yet, because we have enormous due-diligence challenges with regard to potential clients."

Despite these and other hurdles, the allure of Iraq deals should keep the Livingston Group and many other Washington hands busy for a long time to come.

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Intelligence questions

Peter H. Stone — Tue, 10 Jun 2003 00:00:00 -0400

You can't call it "WMDgate" yet, but the chorus of criticism aimed at the Bush administration for overselling, or misleading, the public and lawmakers about the existence and threat of Saddam Hussein's weapons of mass destruction is climbing rapidly up the decibel meter.

Six weeks after the war, the search for biological and chemical weapons in Iraq is still fruitless. Members of Congress, foreign governments, the media, and, perhaps most ominously, a growing number of intelligence insiders are questioning the accuracy of pre-war intelligence on Iraq's weapons and whether it was hyped to build support for going to war.

The adjectives used to describe key parts of the administration's intelligence-some of them uttered on the record and some of them without attribution-are getting stronger and stronger with each passing day. They range from "spurious" and "intellectually dishonest," to "fraudulent" and "completely unscrupulous."

Vince Cannistraro, a 27-year veteran of the CIA who left in 1991, is one of several former agency officials who say that the administration's intelligence on Iraq's unconventional weapons capabilities now looks way off base. "It was at least incorrect and at the worst fraudulent," says Cannistraro. "The real story is the politicization of intelligence."

Other agency alumni hold similar views. "I don't like the fact that the U.S. government exaggerated that Saddam's alleged weapons of mass destruction were an imminent threat against U.S. forces or allies in the region," says Robert Baer, a 21-year CIA operative in the Middle East who retired in 1997. "People died. As an American, I'm mad, and I want to know why we're there."

Members of Congress, too, are asking, "Where are the WMD?" The Senate Select Committee on Intelligence this week began examining the issue at its weekly briefings on intelligence. Sen. Jay Rockefeller IV, D-W.Va., the ranking Democrat on the committee, says he's "still inclined to believe that some weapons of mass destruction will be found in Iraq," but he has "grave misgivings" about the administration's pre-war claims. "We'll continue to press and probe and try to get people who know the information," Rockefeller added. In addition, the Senate Intelligence and Armed Services panels are expected to work together on reviews of CIA documents relating to Iraq's weapons of mass destruction, and could launch a broader joint investigation later this year.

Meanwhile, in a May 22 letter, Reps. Porter Goss, R-Fla., and Jane Harman, D-Calif., the chairman and ranking Democrat respectively on the House Permanent Select Committee on Intelligence, asked CIA Director George J. Tenet some tough questions. The House committee, the letter said, is "interested in learning, in detail, how the intelligence picture regarding Iraqi weapons of mass destruction was developed," and it asked for answers by July 1. The letter also pressed Tenet to explain "how the CIA's analysis of Iraq's linkages to terrorist groups, such as Al Qaeda, was derived."

Now some Republicans are accusing the Democrats of making partisan hay out of the situation. Goss, for instance, told National Journal, "There's no question that partisan politics has crept into the debate.... This is largely a media event so far." But Goss, a former CIA official himself, said the administration's intelligence product warranted a committee review, which will likely lead to hearings later this year.

The administration is starting to mount a defense, albeit with conflicting messages and some backtracking from its broader pre-war claims. On his recent European trip, President Bush went on Polish television and declared that two mobile trailers found in Iraq, which contained fermenters capable of making biological weapons, proved the administration's case. "We found the weapons of mass destruction," he said. "We found biological laboratories."

Moreover, in a highly unusual move, Tenet in a written statement defended intelligence on Iraq, saying that the "integrity of our process was maintained throughout, and any suggestion to the contrary is simply wrong." The CIA had earlier announced that it had started a review to analyze how its pre-war assessments of the Iraqi threat measured up against what was being discovered after the war.

Tenet's statement came in response to a memo written to Bush, and posted on some Internet sites, by a group of retired CIA and State analysts known as Veteran Intelligence Professionals for Sanity. The memo declared that there was "growing mistrust and cynicism" among professionals about the intelligence that the administration's top officials, including Bush, cited to justify the war against Iraq.

These concerns certainly weren't allayed when Paul Wolfowitz, the deputy Defense secretary, told Vanity Fair last month that although there were three fundamental worries about Iraq's regime-its support for terrorism, criminal treatment of its own citizens, and weapons of mass destruction-"the truth is that for reasons that have a lot to do with the U.S. government bureaucracy, we settled on the one issue that everyone could agree on, which was weapons of mass destruction, as the core reason" for the war.

Indeed, senior administration officials hammered that theme home constantly in the months preceding the war. Last August 26, for instance, Vice President Dick Cheney, addressing a Veterans of Foreign Wars convention, flatly declared, "There is no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt that he is amassing them to use against our friends, against our allies, and against us."

Further, Secretary of State Colin L. Powell in his February 5 presentation to the United Nations stated, "We know that Saddam Hussein is determined to keep his weapons of mass destruction, he's determined to make more." And last October, Wolfowitz said that Saddam "will not easily give up those horrible weapons that he has worked so hard and paid such a high price to develop and retain."

For many critics, the primary problem with the pre-war assessments of the Iraqi threat was that the administration slighted more-conservative and more-nuanced intelligence reports on Iraq from the CIA, while relying too heavily on more-aggressive and more-pessimistic intelligence provided by a small and secretive unit that the Pentagon set up in late 2001 called the Office of Special Plans. The real mission of OSP, critics allege, was to amass intelligence to help administration hard-liners make their case that the threat posed by Iraq was imminent.

Cannistraro, along with other former CIA officials, charges that the OSP "incorporated a lot of debatable intelligence, and it was not coordinated with the intelligence community." Other intelligence veterans also point out that the Pentagon unit relied a great deal on the Iraqi National Congress and its leader Ahmed Chalabi, who were far from impeccable sources. "Chalabi never provided the CIA anything that could be corroborated," Baer says. "Chalabi had an agenda-he wanted to go back. You can take his information, but you need to caveat it."

Other former intelligence hands say that the caveats didn't happen because of pressures to reach certain conclusions. Larry C. Johnson, who did stints in counterterrorism at both the CIA and the State Department, says he's been told by people still in intelligence that what "they're experiencing now is the worst political pressure" they've ever faced. "Anyone who attempted to challenge or rebut OSP was accused of rocking the boat." Johnson adds that the OSP analysts "came in with an agenda that they were predisposed to believe."

Ken Pollack, a former CIA analyst who is research director at the Brookings Institution's Saban Center for Middle East Policy, says, "One of the lessons to take away from the Iraq experience is that defectors are often biased and willing to tell the United States what they think we want to hear." The Pentagon and its special unit, he continues, "fought constantly with the CIA. They beat the crap out of the agency and their own analysis. It was a war of attrition, and they ground the agency down."

The real issue, Pollack concludes, "isn't over-reliance on defectors or opposition groups, but that some officials in the administration seem to have run with defector reports and opposition-group claims that other intelligence analysts believe were spurious or of dubious accuracy."

In developing good intelligence, intelligence veterans and others say that competition among agencies can be useful, but poses risks.

"Competition is good, up to a point," Rep. Goss says. But "I'm very much opposed to competition going to the point of obfuscation. This is a race that has to be run freely; you can't trip your opponent in the next lane."

That's what some CIA veterans now say happened in the Bush administration's effort to build its case against Iraq. Particularly troubling to former analysts are the British intelligence reports cited by Bush in this year's State of the Union speech on Iraq's supposed efforts to buy uranium from the Republic of Niger for a nuclear weapons program. The documents, according to the International Atomic Energy Agency, are now considered forgeries, and the Senate Select Committee on Intelligence has asked inspectors general at the CIA and the State Department to investigate.

Looking back, weapons experts are skeptical of America's pre-war intelligence on Iraq. "I think it's increasingly unlikely that Iraq was the imminent threat which was at the heart of the administration's case for pre-emptive action," says Jonathan Tucker, a senior fellow at the U.S. Institute of Peace and the author of Scourge: The Once and Future Threat of Smallpox. "The administration gave the impression that those weapons were deployed and ready to use."

Veteran intelligence operatives fear that the growing doubts about the administration's pre-war intelligence will harm U.S. credibility, especially in the conflict that everyone acknowledges is a direct threat to Americans-the war against terrorism.

"How good other countries believe our intelligence was about Iraq will color how they view our intelligence on other issues," Pollack warns. "If they believe our intelligence on Iraq was greatly exaggerated, either intentionally or unintentionally, then they're likely to be even harder to persuade next time around."

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Bush officials make the leap to lobbying firms

Peter H. Stone — Wed, 28 May 2003 00:00:00 -0400

It's little wonder, then, that when Kirk Blalock, the Bush administration's first point man for the business community in the public liaison shop, left last fall to join the firm of Fierce & Isakowitz, his phone started ringing. Several corporate groups, including the Business Roundtable, the Tax Relief Coalition, and the American Insurance Association, quickly retained him and the firm for help on such weighty matters as tax cuts and asbestos-litigation reform.

Blalock had worked with dozens of business lobbyists during President Bush's successful tax-cut effort in 2001, and he spent untold hours strategizing with senior presidential adviser Karl Rove. The experience and knowledge he gained as a White House insider are invaluable to his clients. Two of them-the roundtable and the coalition-have been paying Blalock to lobby for them in the mammoth battle over President Bush's tax-cut plan.

Blalock says he serves as a go-between and handles "strategy and information flow" for his clients with both the administration and congressional leaders. "All my clients support the administration," he said, but added that business has been dead-set against the new levies-called "pay-fors"-that the Senate included in its tax bill to offset some of the cuts.

Dirk Van Dongen, co-chair of the Tax Relief Coalition, praised Blalock for his "ability to think beyond the immediate moment and connect sometimes seemingly unrelated dots in the midst of a fast lobbying battle." Fellow lobbyist Ed Gillespie of Quinn Gillespie said, "Kirk knows how the White House people think and what they're likely to be for and against."

Inside knowledge of not only the White House but also the departments and agencies is always a big plus on a Washington resume. "Because you're carrying the portfolio of the president, you get phenomenal exposure," said a longtime K Street lobbyist, referring to the White House lobbying operation. In these jobs, he added, even younger staffers might talk to CEOs on behalf of the president. "The good ones and the smart ones get a lot of mileage out of this."

Not surprisingly, Blalock is one of at least 15 in the administration who recently jumped from being a government official to becoming a K Street hired gun. Many are representing clients on the hot-button issues of the moment: taxes, prescription drugs for seniors, homeland security, accounting rules, energy programs, and more. Some of the Bush alums are running the Washington offices of Fortune 100 corporations, while others are working at K Street's powerhouse firms.

The most well known is Nicholas Calio, a former head of legislative affairs at the White House who now runs Citigroup's Washington office. At around the time Calio left, six of his aides at the White House also moved into lobbying jobs: Christine Ciccone, who is now the No. 2 Washington lobbyist for Honeywell; Brian Conklin, now at Washington Council Ernst & Young; Jack Howard, now president of Wexler & Walker Public Policy Associates; Dirksen Lehman, who moved to Clark & Weinstock; Nelson Litterst, who took a job at the C2 Group; and Heather Wingate, who works for Calio at Citigroup.

Other executive branch heavy hitters who made the jump include Nancy Dorn, who was No. 2 to Mitch Daniels at the Office of Management and Budget and is now in charge of state, federal, and international government affairs for General Electric; Anne Phelps, who was one of two principal White House health policy advisers and now lobbies for Washington Council Ernst & Young; and Robert Wood, who was chief of staff to Health and Human Services Secretary Tommy G. Thompson and is set to join the lobbying firm of Barbour Griffith & Rogers. Meanwhile, at least four of Secretary Tom Ridge's former aides at the Department of Homeland Security are now lobbying on homeland-security matters.

Among the Bush alumni, more than half have worked on K Street before. Calio, for example, was earning some $1 million a year as a co-owner of the lobby shop O'Brien Calio when he went into the administration in 2001. Calio's post at Citigroup, say lobbyists who know him, is clearly a step up financially. At Citigroup, he runs government affairs in the U.S. and abroad and was awarded a seat on the company's prestigious management committee.

Another former K Street inhabitant, who worked at the now-defunct firm of Hooper, Hooper, Owen & Gould, is Dorn at General Electric. She also worked briefly on international issues for House Speaker Dennis Hastert, R-Ill., before joining the Bush administration, first as an adviser to Vice President Cheney and then at OMB. Dorn, who started at GE within the past month, says she's spending a lot of time learning about the company's array of business interests. "It was a nice fit," she said, "going from an agency with as broad as reach as OMB to a company as diverse as GE."

Lehman, who worked on K Street before his stint as a Senate lobbyist under Calio at the White House, is returning to the private sector with more political savvy and contacts. He is spending most of his time focusing on key Senate committees and helping such clients as the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization formulate strategy. He received a few offers, but chose Clark & Weinstock because "they were looking for someone who was strong in the Senate on health care. It was the right fit."

Younger ones among the former administration officials have moved into the lobbying business for the first time after getting married and having their first child. These freshman lobbyists are discovering synergies between their previous careers and their new ones.

At Washington Council, Phelps spends three to four days each week focusing heavily on health care issues. It's no wonder. Besides being one of two key health policy advisers in the White House, she also served for four years as the top health care adviser to Sen. Bill Frist, R-Tenn., now the majority leader. To date, Phelps has done a mix of consulting and lobbying for such longtime clients of the firm as Aetna and Baxter Healthcare, and has visited with her old boss, Frist.

Phelps has also teamed up with Brian Conklin and some senior lobbyists in efforts to solicit new clients. "Their presence here has been warmly received," said veteran firm partner Bruce Gates, adding that Phelps and Conklin were an "integral part" of recent client pitches. Their efforts have brought in about six new clients, including a business coalition that is pushing for an extension of key provisions in the Fair Credit Reporting Act.

Another newly minted lobbyist is Wood, the former chief of staff to Thompson at HHS. At Barbour Griffith & Rogers, the all-Republican lobbying powerhouse, Wood will be in charge of the firm's growing state lobbying practice as well as working on pharmaceutical and health care issues. At the White House, Wood worked closely with key aides on health policy, including former White House health policy guru Mark McClellan, who is now commissioner at the Food and Drug Administration.

"People often forget the magnitude of the administrative and policy decisions made at the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health," he said. The lobbying firm's drug clients include GlaxoSmithKline and Bristol-Myers Squibb.

When he joins Barbour Griffith on June 1, Wood will be barred for one year from lobbying HHS or its divisions on specific matters that he worked on in the government. But he could lobby for pharmaceutical and health care clients on industry-wide legislative or regulatory issues.

Under government ethics rules, lobbyists must restrict their activities and contacts during such "cooling-off periods," depending on their former government positions. For instance, Calio, who was an assistant to the president, is under a one-year ban on lobbying White House officials and government agencies. Jack Howard, a deputy assistant to the president, is also under a one-year ban on lobbying White House officials, but is free to lobby the agencies. The other five former aides to Calio were all special assistants to the president, as were Blalock and Phelps, and are not under any restrictions.

Each federal agency has its own rules that apply to its former officials. All former administration officials face a lifetime ban on lobbying on specific matters-such as a lawsuit or a procurement issue-in which they were personally and substantially involved while in the government.

The lobbyists are attacking their new jobs with gusto. Wood said, "As an advocate, I'll be using political and policy skills" acquired through years of working for Thompson, both in Washington and before that in Wisconsin, where Thompson was governor.

"At the White House, I worked on 20 issues at once," said Blalock, whose resume includes stints in the 1990s lobbying for Philip Morris and working at the Republican National Committee for then-Chairman Haley Barbour.

Perhaps most impressive to his business clients is that Blalock soaked up knowledge from, and has rubbed shoulders with, political strategist Rove. "I got to sit back and watch and learn from Karl," he said. "It was an invaluable experience."

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Big firms hustle for postwar contracts

Peter H. Stone — Fri, 11 Apr 2003 00:00:00 -0400

That's one reason the three law and lobbying firms where O'Neil, Reeder, and Garrett work expect to advise and open doors for their American and foreign clients so they can capitalize on the highly lucrative reconstruction contracts that lie ahead for postwar Iraq.

"Iraq is going to be Afghanistan on steroids as far as nation building is concerned," said Garrett, the defense/security adviser at Patton Boggs, a former Marine colonel, and a decorated combat veteran from Vietnam, the first Gulf War, and Somalia. "There are a lot of opportunities emerging in a full range of sectors," he said. Patton Boggs's clients include a British logistics firm that has helped distribute humanitarian aid in Afghanistan.

Others on K Street share Garrett's view, but many lawyers and lobbyists also say that as the rebuilding funds start to come on line from the U.S. government, the process for chasing them down is mired in confusion.

"We're trying to figure out what the rules of the road are because this is a fast-evolving situation, like the war itself," said O'Neil, a partner at Preston Gates Ellis & Rouvelas Meeds and a former general counsel at the CIA. Preston Gates represents Foster Wheeler, a large U.S. construction company. "The problem that companies face is the uncertainty of what will follow the immediate reconstruction," O'Neil said.

In the scramble to gain an edge, many international giants from Britain, France, Kuwait, South Korea, and elsewhere are vying along with American firms for the big postwar projects to rebuild roads, bridges, energy and telecom systems, and other parts of Iraq's infrastructure. The stakes are high: The Council on Foreign Relations has estimated that the cost of rebuilding Iraq could be as much as $20 billion a year for several years.

To the dismay of foreign firms, particularly among our British allies, most of the early infrastructure and humanitarian relief contracts being awarded by the U.S. Agency for International Development, the Pentagon, and other government entities have been reserved for big American companies.

AID's $600 million contract to rebuild Iraq's roads, bridges, and port facilities is the largest one pending. The contract, which should be awarded soon, will name a lead contractor from among a group of large American firms that includes Bechtel, Fluor, the Louis Berger Group, and Parsons. Each has handled mammoth reconstruction work in the past. Still other U.S. corporations are in the running for sizable chunks of subcontractor work, including Kellogg Brown & Root, a unit of Texas energy giant Halliburton, which Dick Cheney headed for five years before he ran for vice president.

Altogether, AID may hand out as much as $2.4 billion-which the Bush administration requested from Congress last week-to cover eight separate projects, including the major infrastructure contract as well as humanitarian relief. For instance, the agency is looking to award a contract of about $100 million to a large financial services firm to help restructure Iraq's financial system. AID has already awarded a small, $4.8 million contract to Stevedoring Services of America, a Seattle firm that will manage the Iraqi port of Umm Qasr.

Meanwhile, the Army Corps of Engineers is studying bids from about a dozen firms looking to land pieces of a $500 million infrastructure project for the Persian Gulf region, including Iraq. The Army Corps has already tapped KBR to take the lead in putting out fires in Iraq's southern oil fields. And according to Pentagon sources, KBR also recently won a contract from the Defense Threat Reduction Agency to oversee a group of companies and specialists that will handle and dispose of any weapons of mass destruction found in Iraq. Since 2001, KBR has done similar work in Kazakhstan and Russia for the Defense Threat Reduction Agency.

On top of these projects, the United Nations' Oil for Food program for Iraq is expected to dispense about $8 billion this year to foreign and American companies for a variety of humanitarian relief efforts and limited infrastructure projects. Hoping to level the playing field for their home-based companies, some foreign governments are angling to expand the U.N.'s role in overseeing funding for postwar reconstruction efforts.

Some outside analysts and scholars are sympathetic to the concerns of foreign governments and say that the Bush administration's restrictive rules favoring American companies could backfire.

"One of the best ways to get a broad coalition of international backing, which is the next stage at the U.N., is to share Iraq's reconstruction with other countries," said James Thurber, a professor of government at American University.

Critics have also raised concerns that some of the U.S. contracts, including the biggest AID project, are being handed out under emergency rules that curb the normal open-bidding process. In seeking bids for its prime contract, AID invited only the handful of major construction companies that have worked on similar overseas efforts in the past. Some skeptics have also noted that the AID contract is a potential bonanza for companies, because it is set up as a cost-plus-fee deal that reimburses the contractor for its bills while guaranteeing a set profit.

Further, experts on postwar reconstruction such as John Dower, a professor of history at Massachusetts Institute of Technology, say that the current process of contracting reconstruction work to large private companies is sending the wrong message to Iraqis and to the rest of the world. "There seems to be enormous pressure coming from special-interest groups that would be interpreted by much of the world as profiteering," said Dower, author of the book Embracing Defeat: Japan in the Wake of World War II. "This will certainly complicate the process of so-called `nation building' and `democratization.' This is something that didn't take place in occupied Japan."

Nonetheless, because of the potential financial rewards, companies have been busy hiring K Street firms to help seal some deals.

Take Patton Boggs, where partners David Dunn, Timothy Mills, and Garrett are helping clients ferret out postwar reconstruction funding. Mills, for example, is advising one of his clients-a British logistics company that helped distribute post-conflict humanitarian aid in Kosovo and Afghanistan-on subcontracting opportunities with both AID and the U.N.

"The governmental decisions on contracting and subcontracting are moving targets that are very difficult for businesses to keep up with, much less hit," said Mills, who served as a command judge advocate of an Army Reserve headquarters.

Further, Dunn and Garrett are working for a large Kuwaiti company that would like to get a piece of the postwar projects. Dunn argues that companies in the region bring a lot to the table. "It's a mistake to ignore the advantages that can be provided by a local company," he said, because they have "advantages in terms of logistics, local business practices, warehousing, and freight-forwarding."

Garrett, meanwhile, is wooing a large Texas company that makes chain-link fences that's eyeing business in Iraq. And Patton Boggs lawyers are also talking to Turkish companies that hope to provide humanitarian assistance and civil engineering services in Iraq.

Reeder, a former Army undersecretary, is finalizing a deal over at Greenberg Traurig to represent the Patriotic Union of Kurdistan, one of the two major political parties among the Kurdish people. The group is looking for legal and lobbying expertise in Washington to ensure that the postwar reconstruction program addresses Kurdish aspirations.

Reeder and the firm have useful contacts in Washington, too. When he was Army undersecretary in 1993, Reeder got to know Lt. Gen. Jay Garner and has maintained professional ties with him since Garner's retirement. Garner has been tapped by the Bush administration to run the new Office of Reconstruction and Humanitarian Assistance, which means he will be overseeing the initial occupation and reconstruction of Iraq once the war ends.

Meanwhile, at Preston Gates, O'Neil has been working with his partner, Tim Peckinpaugh, for client Foster Wheeler and other U.S. and foreign firms that want a shot at reconstruction work. Foster Wheeler, which worked on rehabilitating power systems in Kuwait after the first Gulf War, is interested in doing similar work in Iraq when funding sources are established.

"They're trying to figure out who will be administering mid- and long-term funding for Iraq's reconstruction," O'Neil said. "They will be arguing that things can't be run under truncated bidding procedures that aren't open to all qualified bidders."

Still another K Street giant that's interested in Iraq opportunities for its clients is Akin, Gump, Strauss Hauer & Feld. Akin Gump partner George Salem is working with several other partners in the firm to help current and prospective energy and telecom clients from Kuwait, Saudi Arabia, Russia, and the U.S. "We're trying to figure out what are the sources of funds that might be available for our various clients," said Salem.

Moreover, Sukhan Kim, another Akin Gump partner who's long represented Hyundai Engineering & Construction in the United States, recently flew to South Korea to meet with Hyundai's CEO about the company's interest in Iraq. Kim noted that Hyundai, which worked on projects in Iraq during the 1990s, is owed about $1 billion by the government of Saddam Hussein. Hyundai Construction wanted to talk to Kim about whether Akin Gump might help the South Korean company recover the debt and land new work in postwar Iraq.

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Homeland security becomes a target for lobbyists

Sydney J. Freedberg Jr., Peter H. Stone, and Siobhan Gorman — Fri, 13 Dec 2002 00:00:00 -0500

New, amorphous, and far-reaching, homeland security is a possible target for every special interest in Washington-particularly those scavenging for federal dollars or trying to duck costly new regulations.

The first taste of this intense lobbying came last month, when the Senate's homeland security bill nearly collapsed at the last minute under the weight of special-interest add-ons-financial breaks for everyone from pharmaceutical companies to Texas A&M University.

The new Homeland Security Department will have a budget of nearly $37 billion and 170,000 employees from 22 different agencies. The big challenge for the department, and for Congress, will be to harness what threatens to become a lobbying free-for-all.

Without careful congressional monitoring, says Frank Hoffman, who was a top aide to the Hart-Rudman Commission on terrorism, "I'm afraid the special interests will win every single time. If all the special interests get what they want, [the department] will turn out to be a placebo. There won't be any real safety, because there will be so many exceptions and so many holes."

Families of September 11

Celebrating its first anniversary this month, Families of September 11, which represents about 1,200 relatives of people killed in the September 11 attacks, has become an influential force in all things dealing with homeland security. "We have a certain standing on the issues that we wouldn't have if we hadn't lost loved ones in the attacks," says the group's treasurer, Stephen Push.

The families plan to be involved in many areas, starting with investigations of past intelligence failures to help prevent future ones. The group's most recent victory was to persuade the White House to support the proposal for an independent commission to investigate intelligence and other government missteps that preceded the September 11 attacks.

"The kind of adverse publicity we could generate for the White House if they didn't appoint the commission or they continued to fight it was pretty substantial," Push said. As the Homeland Security Department springs to life, the families will work to make sure that its component parts are functioning properly and are sufficiently funded.

Push, the group's main face in Washington, quit his job as a public-relations consultant to commit himself full-time to his cause. Families of September 11 quickly made contacts at the White House and with congressional leadership, and its members appear regularly with lawmakers at press conferences. Push's late wife, Lisa Raines, died on the plane that crashed into the Pentagon; she had been the top lobbyist for Genzyme. Of his newfound lobbying skills, Push said, "I think I absorbed a little by osmosis."

American Association of Port Authorities

The American Association of Port Authorities, which represents 85 major U.S. ports, was instrumental in shaping the port-security legislation that Congress enacted at the end of its fall session. The AAPA pushed hard for a bill that provided for significant local involvement in port security, a flexible regulatory approach for different ports, and federal financing to help ports enhance security. The association has strong ties to members of Congress from states with major ports, such as Florida, Louisiana, Mississippi, and Washington, and it was part of a large coalition with the National Association of Manufacturers that fought a measure sponsored by Sen. Ernest F. Hollings, D-S.C. Hollings's bill would have imposed a user fee on all cargo and passengers entering and exiting U.S. ports, and could have raised $700 million annually. After intense lobbying-including help from former Rep. Bob Livingston, R-La., who works for the Port of New Orleans-the user fees were dropped.

To date, only about $92 million has been provided in federal grants to ports for security improvements, less than a fifth of what airlines have received. The association, which estimates that $2.2 billion is needed to beef up port security, intends to push for more federal funding next year and will oppose any new attempts to impose user fees. "If the user fee comes up again, that will be a big issue for us," says Susan Turner, a top lobbyist with the association.

The AAPA is not one of K Street's giants. Its budget is a very modest-if not smallish-$1.8 million per year. The association has five registered in-house lobbyists and no outside ones, although New Orleans and some of the other larger ports employ outside lobbyists such as Livingston.

American Federation of Government Employees

As Congress fled town for the holidays, you could almost hear American Federation of Government Employees National President Bobby Harnage reminding Republicans, in his best Arnold Schwarzenegger voice, "I'll be back." Perhaps the most vocal group in the debate over the department, the federation ultimately got next to nothing of what it wanted in worker protections, but it's unlikely to walk away from the fight. "The unions are going to be back loud and clear," predicted one Senate Democratic aide. The federation is part of the AFL-CIO and represents 600,000 federal and D.C. government workers.

With a high-stakes election in 2004, unions will have leverage with Democrats and probably with moderate Republicans on Capitol Hill, but the question is whether they'll have any influence with the White House. One federation official said that the initial strategy would be to try to work with the administration.

On the federation's homeland security wish list: no pay cuts for those employees pulled into the new department; no staff reductions; clear lines of authority that avoid the potential for favoritism; and a "meaningful" way to appeal disciplinary actions. Should the White House be unwilling to listen to the federation's agenda, its members will "try to make sure everybody knows on Capitol Hill." That effort could take the form of either quiet pressure on key senators or new legislation. The federation has a $36 million annual budget and a staff of 217, of whom 100 are in the group's Washington headquarters.

The American Chemistry Council

The American Chemistry Council, whose members account for 95 percent of the chemical production in the United States, has been a key player in opposing Senate legislation that would give the Environmental Protection Agency the lead role in regulating security at chemical plants. In fighting the bill this year, the council helped build an ad hoc lobbying coalition that included such K Street goliaths as the American Petroleum Institute and the American Farm Bureau Federation. The bill, sponsored by Sen. Jon Corzine, D-N.J., would have given the EPA the authority to require thousands of chemical facilities with large quantities of hazardous material on site to do vulnerability studies about security risks, and to adopt plans to minimize them.

The council argued that it preferred voluntary steps, and that the new Department of Homeland Security, and not the EPA, is the right regulatory agency. "Homeland security should not be confused with environmental protection, both of which we take seriously," says John Connelly, who is in charge of security issues for the council.

The council's lobbying achieved a split decision: Corzine's measure was unanimously voted out of the Environment and Public Works Committee, but it wasn't included in the final homeland security bill. Corzine intends to push for it again next year. Moreover, Tom Ridge, the newly nominated secretary of Homeland Security, has indicated he favors legislation that would require 15,000 of the nation's higher-risk chemical facilities to do vulnerability studies and take steps to reduce security risks.

National Emergency Management Association

For state and local officials, the stakes in the homeland security game are high. The players are many: governors and mayors, fire chiefs and sheriffs, public works and public health workers. The double whammy of recession and post-9/11 needs has left all of them strapped for cash. All want a big share of, and have urgent and often conflicting needs for, the promised $3.5 billion in federal aid in the still-stalled 2003 budget. And all have their own advocates in Washington.

There are two groups of groups. The most powerful, such as the National Governors Association, represent senior elected officials across a wide range of issues, of which homeland security is just one. The most focused, such as the International Association of Fire Chiefs, represent particular professions for whom homeland security has become all-consuming since 9/11. But one group bridges this divide, combining clout with focus: the obscure but strategically positioned National Emergency Management Association. The association represents the top emergency officials in each state's government; their job is to plan and coordinate disaster response.

With a staff of less than half a dozen and a budget of less than $500,000, the association is no giant. But as an arm of the Council of State Governments (which has more than 150 staff and an $8.2 million budget), the association is part of the powerful "Big Seven" groups representing top state and local officials. At the same time, as emergency managers-coordinators and planners with small budgetary needs of their own-NEMA's members can act as honest brokers among specialists by helping to argue for more federal money for the agencies that need it, whether they be public health, public works, firefighters, law enforcement, or the National Guard.

Unisys

Everyone is selling high-tech to defend the homeland. Almost nobody is buying. With a new Cabinet department barely created and the 2003 budget still in limbo, real money and actual contracts are scarce. The big exception is the Transportation Security Administration, which in August let a contract to build from scratch the yearling agency's information systems at 429 airports. If the TSA exercises all the options, it will be a seven-year, $1 billion project. The winner is a team of more than 30 companies led by Unisys.

A 16-year-old company with roots in a 19th-century typewriter manufacturer, Unisys had 38,900 employees and revenues of $6 billion in 2001. It has two registered lobbyists in Washington and one outside firm on retainer. In March 2001, National Journal's Government Executive ranked Unisys only 11th in the federal IT marketplace. So winning this contract is something of a vindication for the company, which had wanted to recast itself from a mere maker of hardware to an "integrator" of complex packages of systems and services.

The contract gets Unisys in on the ground floor of the nascent Homeland Security Department. Unisys's managing principal for the project, Tom Conaway, meets every Friday afternoon with the TSA's chief information officer-and because the TSA is so new, said Conaway, "we have to invent the processes as we go along." Unisys is not only wiring homeland security, it is helping write the rules for years to come.

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Commerce Department

Peter H. Stone, Neil Munro, and Louis Jacobson — Thu, 28 Jun 2001 00:00:00 -0400

Established: 1913
Address: 14th St. and Constitution Ave. NW, Washington, DC 20230
Phone: 202-482-2000
2001 Budget:: $5.2 billion
Employment:: 38,774
Web Site: www.doc.gov
Functions: The Commerce Department promotes economic development and technological advancement. The department encourages exports and foreign tourism; regulates trade; monitors oceans and the weather; oversees regional economic development, measurement, and products standards, patents, and trademarks; administers the census; and performs economic analysis and telecommunications research and development.

Donald L. Evans
Secretary
202-482-2112
Evans is a Texas oilman who has seen both boom and bust. Since November, he's clearly been enjoying a boom, but the Senate power shift may send things downward for him. Evans, however, has great resources to draw upon. He is one of Bush's earliest Texas friends, and one of his most trusted advisers. As governor, Bush appointed Evans to the Board of Regents of the University of Texas system. And as the chief fundraiser for Bush's presidential campaign, Evans raised more than $120 million. Also, Democrats back his use of the Commerce Department to promote economic growth, and he won easy confirmation in the Senate. Evans is clearly good at making friends; he won warm praise from Al Gore's campaign manager, William Daley, even before his Senate confirmation. Evans's job puts him at the nexus of politics and business. Daley said, "There's nothing wrong with mixing the two," adding that Evans will go out of his way to avoid improprieties "because he is an honorable man and has to protect the President." Evans, 54, can also tap his years of top management experience. He'll need it to direct the many missions of the department, including promoting exports, developing technology, overseeing patents, and supporting small and minority-owned businesses. Evans was born in Houston and received a bachelor's degree in mechanical engineering and an MBA, both from the University of Texas. He then moved to the Texas oilfields, quickly rising by age 33 to head Tom Brown Inc., an energy firm whose fortunes have tracked the boom-and-bust oil economy over the past 20 years. Evans was chairman and CEO when Bush tapped him for the Cabinet.

Samuel W. Bodman
Deputy Secretary (designate)
202-482-8376
Bodman-like his immediate boss, Commerce Secretary Evans-is an oilman in an oil-rich Administration. Thanks to his career path, however, Bodman has spent most of the past three decades in the Northeast. Until his appointment at Commerce, Bodman, 62, was chairman and chief executive officer of Boston-based Cabot Corp., a $1.5 billion, publicly traded chemical company that is the world's biggest producer of the industrial pigment known as carbon black. It was during this time that he got to know Evans and other oil executives. Before his 14-year stint at Cabot, Bodman spent 16 years at Fidelity Investments, eventually serving as president of the mutual fund giant's parent company, FMR Corp. Upon his appointment, Bodman-once an informal adviser to former Gov. William Weld, R-Mass.-told The Boston Globe that he has maintained a "good relationship" with Evans over the years. Bodman, who was born in Chicago, earned his bachelor's degree from Cornell University and his Ph.D. from the Massachusetts Institute of Technology. Bodman has no specific statutory duties; the deputy secretary often handles tasks delegated by the Secretary.

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Defense Department

Thu, 28 Jun 2001 00:00:00 -0400

Established: 1947
Address: The Pentagon, Washington, DC 20301
Phone: 703-545-6700
2001 Budget:: $315.6 billion
Employment:: 3,423,000 (703,000 civilians, 1,350,000 selected reserves, 1,370,000 active military)
Web Site: www.defenselink.mil Functions: The Defense Department coordinates and supervises all agencies and functions of the government related directly to national security and military affairs. The department trains and maintains armed forces; procures weapons; supports overseas deployments; provides disaster relief; performs humanitarian missions; and conducts peacekeeping operations.

Donald Rumsfeld
Secretary
703-692-7100
On his second tour as Defense Secretary, Rumsfeld has taken on an uphill fight to make good on President Bush's promise to revolutionize the American military. He spent his early months in office getting updated on what has happened to the defense establishment and world threats since he left the same Pentagon office on January 20, 1977. The still-wiry 68-year-old, who is a former wrestler, has an ambitious agenda that ranges from missile defense to financial reforms for the $315 billion-a-year war-making department. But the outlook for success-given congressional, military, and industry resistance-is for slow rather than rapid change. Born in Chicago, Rumsfeld grew up in its Winnetka neighborhood until World War II, when his father's naval career caused the family to move four times to different regions of the country. After graduating from Princeton University in 1954 and serving three years as a Navy aviator, he went to Washington to work for Rep. David Dennison, R-Ohio, at the start of a long and varied political career that took him to Congress and the White House before he arrived at the Pentagon. His high-profile political jobs included being an Illinois Congressman from 1962-69, and serving as White House chief of staff for President Ford, 1974-75. His first Pentagon tour, lasting from 1975-77, was cut short when Ford lost the election. Rumsfeld also made a name for himself, and millions of dollars, in the corporate world, including serving as CEO and then as chairman of G.D. Searle & Co., 1977-85, and the same two top positions with General Instrument Corp., 1990-93. Before returning to government, he split his time between residences in Taos, N.M., and Chicago.

Paul Wolfowitz
Deputy Secretary
703-692-7150
When the Bush Administration sent a small team of high-level officials overseas to try to persuade skeptics in Europe and Russia to embrace a ballistic missile defense system, it came as no surprise that Paul Wolfowitz was leading the mission. Known as a tough and effective negotiator, Wolfowitz, 57, owns one of the most extensive resumes in foreign affairs and national security inside the U.S. government, and he has a reputation as one of the smartest men in the Washington policy-making community. He is also known for holding deeply conservative-some would say hard-line-convictions that are a comfortable fit in Bush's inner circle. Before becoming Rumsfeld's deputy, Wolfowitz spent seven years as dean of the Johns Hopkins School of Advanced International Studies in Washington. "I think Wolfowitz's greatest strength is his unusual breadth of knowledge and experience, and a mathematician's ability to quickly analyze complex problems and offer solutions and perspectives that others might not have thought of," said Steve Szabo, acting dean of SAIS. "He also has the inner cool of a scientist. He never blows up." Before his tenure at SAIS, Wolfowitz served in the key position of undersecretary of Defense for policy, where he helped organize the Desert Storm campaign under then-Defense Secretary Dick Cheney. Wolfowitz has also served in the State Department as assistant secretary of State for East Asian and Pacific affairs and as U.S. ambassador to Indonesia. Raised in New York, he has a bachelor's degree in mathematics from Cornell University and a doctorate in political science from the University of Chicago.

Edward C. "Pete" Aldridge Jr.
Undersecretary for Acquisition, Technology and Logistics
703-695-2381
The standard by which the Pentagon's "acquisition czar" is judged is quite simple: Put the best weapons and equipment in the hands of every soldier, sailor, airman, and Marine, and do so at the least possible cost. It's a daunting task, indeed, one that requires Baryshnikov-like balance between the ideal and the possible-and a juggling act to keep the handful of remaining defense contractors afloat. But Aldridge, 62, is well prepared. The Houston native has extensive experience in government and the aerospace industry, 17 and 23 years respectively. In the Ford Administration, during Rumsfeld's first stint as Defense Secretary, Aldridge was the Pentagon's director of program analysis and evaluation-essentially, the official second-guesser on whether a weapon was ready for purchase. During the Reagan years, as Air Force undersecretary and later secretary, Aldridge was known as a champion of space programs. After leaving the Pentagon in 1988, he served as president of McDonnell Douglas Electronic Systems Co., and most recently as CEO at the Aerospace Corp. Aldridge received an undergraduate degree in physics from Texas A&M University and a master's in engineering from the Georgia Institute of Technology.

Dov S. Zakheim
Undersecretary, Comptroller
703-695-3237
As the chief financial officer for the largest department and the largest budget in the federal government, Zakheim will have direct influence over programs and policies that are worth hundreds of billions of dollars and affect tens of thousands of lives on a daily basis. According to people who know him, Zakheim is well suited to the pressures of that position, both by experience and by temperament. As a former deputy Defense undersecretary for planning and resources during the Reagan Administration, for instance, Zakheim earned a reputation as a troubleshooter willing to tackle tough problems. One of the toughest for Zakheim-an American Orthodox Jew-was leading the Pentagon's campaign to kill Israel's Lavi fighter jet program, which was being funded largely with U.S. military aid. After leaving the Pentagon, Zakheim served on then-Defense Secretary William Cohen's task force on defense reform, and on a Defense Science Board task force looking at the impact of Pentagon acquisition policies on the arms industry. Zakheim also held the job of chief executive officer of SPC International, a defense technology firm. A native of Brooklyn, N.Y., Zakheim, 52, earned a bachelor's degree in government from Columbia University and a doctorate in economics and politics from Oxford University.

David S.C. Chu
Undersecretary for Personnel and Readiness
703-695-5254
Chu began mastering military math 30 years ago, when the young Yale economics graduate served as a logistics officer in Vietnam. He is best-known, however, as an Osprey hunter: As a Pentagon analyst in the 1980s, he repeatedly criticized the Navy-Marine Corps V-22 Osprey aircraft program, which then-Defense Secretary Dick Cheney ultimately tried to cancel on Chu's advice. To this day, some Marines curse Chu's name. But his archadversary during the fight over the tilt-rotor Osprey, Reagan Navy Secretary John Lehman, told National Journal: "I had a lot of respect for David.... We often disagreed, [but] I never found David Chu to be biased or pursuing his own agenda." The Osprey battle shows Chu's long association with the Reagan-Bush-Bush team, as well as his analytic intelligence and honesty, and his willingness to step on toes. Some military personnel activists fear that their cherished but costly benefits will face the same cost-efficiency calculus that Chu unleashed on the Osprey. A holder of four degrees from Yale, Chu, 57, grew up in Mount Vernon, N.Y. He has for most of his career alternated between government and the influential RAND think tank, where he most recently headed all Army-related research.

Michael W. Wynne
Deputy Undersecretary (designate) for Acquisition and Technology
703-697-7021
Wynne is not exactly a rocket scientist. For a Bush Administration enamored of Big Business veterans and bent on a massive missile defense program, however, he may be something even better: a rocket executive. And he's been tried by fire. A longtime manager at defense giant General Dynamics, Wynne moved from its tank-making branch in 1991 to take over the troubled space systems division, maker of the venerable Atlas rocket of the 1960s. For the next six years, Wynne held the helm steady through layoffs, relocations, pay freezes, botched launches of both military and commercial satellites, the division's sale to Martin Marietta, Martin's subsequent merger with Lockheed, and the amalgamation of the Atlas program with Lockheed's Titan rocket program. The company competed fiercely during the 1990s with European, Chinese, and Russian launchers-while still negotiating a landmark deal to bring Russia's superior rocket technology to America. In 1997, Wynne went back to General Dynamics but left in 1999 for Ixata Group, an Internet firm in San Diego serving the hotel and travel industries. A Florida native, Wynne, 56, is an Air Force veteran with degrees from West Point, the Air Force Institute of Technology, and the University of Colorado.

Diane K. Morales
Deputy Undersecretary (designate) for Logistics and Material Readiness
703-697-1368
Morales has been here before. As the Pentagon's logistics chief during and after the Persian Gulf War, she oversaw reforms in military supply management and the use of civilian airliners from the Civil Reserve Fleet to help transport troops. But in the 10 years since, her old office has dramatically expanded its responsibilities, and her old position has swollen from a deputy assistant secretary slot to a Senate-confirmable deputy undersecretary job. Some logistics experts fear that Morales, 54, lacks the recent experience and the inclination for radical reform that's required to slap the military's pork-choked system into shape. But Morales did spend the Clinton years as head of a logistics consulting company, DMS Inc. "She's very aggressive, she's very sharp," said one former associate. "She has enough of the technical skills to be able to sort the wheat from the chaff, [and] she certainly has the political connections to make it work." A Texas native and University of Texas graduate, Morales served the Reagan and first Bush Administrations in a variety of posts-at OMB, Interior, and the now-defunct Civil Aeronautics Board. Those jobs gave her strong ties to the Bush-Cheney-Rumsfeld team. In the worth-noting category: She started out as a buyer for the lavish department store, Nieman-Marcus.

Air Force

James G. Roche
Secretary of the Air Force
703-697-7376
Roche may not be of the President's party-he's a Democrat-but he'll still fit in at the new corporate-style Pentagon. The 61-year-old native of Brooklyn, N.Y., held top management jobs with defense contractor Northrop Grumman for 17 years, most recently serving as the company's electronics division president in the Baltimore area. As part of the Pentagon's corporate makeover, and in contrast to past Administrations, service secretaries in Rumsfeld's Pentagon will be given more clout in weapons-buying decisions. This new role is potentially sticky for Roche, who may have to make tough calls involving products manufactured by his former employer. At his confirmation hearing, he said he would avoid any conflicts of interest, but he does support buying Northrop Grumman products, such as more B-2 stealth bombers. Before joining Northrop Grumman, Roche served 23 years in the Navy; he retired as a captain in 1983. He earned an undergraduate degree from the Illinois Institute of Technology, a degree from the Naval Postgraduate School, and an MBA from the Harvard University School of Business. Roche also saves room for some fun; he likes boating and fast cars. His Ferrari, of course, is red.

Gen. Michael E. Ryan
Air Force Chief of Staff
703-697-9225
Ryan, 58, was tapped to head the Air Force in October 1997, following the abrupt retirement of Gen. Ronald Fogleman. A no-nonsense leader who can surprise colleagues with a sharp sense of humor, Ryan is the first military chief of staff to serve in a post also held by his father. (Gen. Jack Ryan was Air Force chief of staff from 1969-73.) Michael Ryan, a 36-year Air Force veteran, holds some of the military's highest honors, including the Distinguished Flying Cross and the Legion of Merit with two oak leaf clusters. He flew more than 100 combat missions over North Vietnam in his F-4, and he has logged 4,000 total flight hours, including some in French-made Mirage jets during a stint as an exchange officer in Australia. From 1994-96, he was commander of Allied Air Forces in Southern Europe. He gained attention there for directing NATO air operations over Bosnia, including air strikes on Serb forces in 1995 that helped bring about the Dayton peace accords. Ryan holds a B.S. from the Air Force Academy and an MBA from Auburn University. Bush will name a new Air Force chief later this year. Army

Thomas E. White
Secretary of the Army
703-695-3211
Seldom has the Army had such a hard-charging, experienced forme r soldier as its civilian overseer. A 1967 graduate of the U.S. Military Academy, White knows the Army and the Pentagon inside out from his 27-year career in uniform. He commanded soldiers in the field, including two tours in Vietnam, and led the 11th Cavalry Regiment in Germany from 1986-88. And he served as executive assistant to Gen. Colin L. Powell when Powell was Chairman of the Joint Chiefs of Staff. In 1990, a brigadier general on the fast track, White surprised colleagues by quitting the Army to join private industry. Most recently, he was vice chairman of Enron Energy Services. A Detroit native, White has a master's degree from the Naval Postgraduate School. Now 57, White will be in position to champion reforms that Gen. Eric K. Shinseki, Army chief of staff, has had a hard time selling and financing. White is an activist, not a quiet administrator, and he will shake up the Army bureaucracy not only by pushing transformation, but also by insisting on more-businesslike practices, such as subcontracting to private industry much of the work currently done in-house.

Gen. Eric K. Shinseki
Army Chief of Staff
703-695-2077
Will the Bush Administration reduce the size of the Army to free up money for buying new super-weapons, perhaps the Air Force's F-22 fighter or a national missile defense system? That is the question that challenges the low-key Shinseki, a native of Hawaii's beautiful Kauai Island and the Army's first Asian-American chief of staff, as he tries to transform the Army into a lighter, more nimble service. With 480,000 men and women on Army active duty, critics contend that the service is too large and too wedded to its heavy armor to meet the different threats of the 21st century. Shinseki, 58, has drawn a blueprint to change this, but has not received the extra billions of dollars needed for the transformation. But Shinseki has stamina. A West Point graduate, he survived two tours in Vietnam, was wounded each time, and went on to a distinguished career in the armored branch. He also found time to earn a master's degree in English literature from Duke University. Shinseki commanded the peacekeeping force in Bosnia. He has two years remaining in his term.

Navy

Gordon England
Secretary of the Navy
703-695-3131
England has never served in uniform, but in a Pentagon where a corporate outlook is in vogue, he has the perfect qualifications. The 63-year-old Baltimore native has spent the bulk of his career as an executive at General Dynamics Corp., a defense contractor that makes everything from Navy submarines and destroyers to Army grenades and tanks. England's specialty, however, is aviation. After starting his career with Honeywell Corp. in the 1960s as an engineer on the Gemini space program, England joined GD in 1966 as an aviation engineer. He eventually rose to head the company's aircraft division in Fort Worth, Texas. England then joined Lockheed-later to become Lockheed Martin-when that company bought the fighter jet operation from GD. He retired from Lockheed Martin in 1995, but returned to GD in 1997 to serve as an executive vice president. His supporters say he is not simply a bottom-line, corporate type, but a high-energy leader with exceptional people skills. Critics contend that his years of industry experience will make it difficult for him to cancel or critique weapons that he marketed as an executive. England holds a bachelor's degree in electrical engineering from the University of Maryland, and an MBA from Texas Christian University.

Gen. James L. Jones Jr.
Marine Corps Commandant
703-614-2500
In 57-year-old Jones, the Corps has not only a fully certified warrior with mud on his boots, but also an operative wise in the ways of Washington. His most recent post before being tapped to be the No. 1 Marine in July 1999 was as senior military assistant to Defense Secretary William S. Cohen, a post that gave him firsthand knowledge of global problems as he traveled worldwide with the Secretary. But Jones has had lots of international experience. Although born in Kansas City, Mo., he grew up in France, where his father (also a former Marine) sold International Harvester machines. He took his college degree from the Georgetown University School of Foreign Service and then went to Vietnam as a Marine, earning his Silver Star as commander of an under-strength rifle company that waged a heroic 12-hour battle against North Vietnamese forces at Khe Sanh. Jones's biggest challenge at this midway point in his four-year term is to restore the credibility of the Corps in regard to its new prized troop carrier, the V-22 Osprey tilt-rotor aircraft, which has been plagued by a series of crashes.

Adm. Vern Clark
Chief of Naval Operations
703-695-5664
A ship driver who has commanded destroyers and frigates as well as the entire Atlantic Fleet, Clark is known for his businesslike leadership style and calm demeanor. He took the Navy's helm in July 2000, and in the three years remaining in his term, the Navy will have to overcome chronic funding shortages and a modernization crisis. At its current buying rate, for instance, the Navy cannot replace retiring ships fast enough, and its fleet will shrink from roughly 300 ships to just 220 in 15 years. How Clark steers his service through those troubled waters will largely define his legacy as CNO. Not that Clark lacks experience with daunting management challenges. As the commander of the USS Carl Vinson aircraft carrier battle group, for instance, he deployed to the Persian Gulf and later served as deputy commander of Joint Task Force Southwest Asia, which oversees all U.S. troops in the Middle East. He also directed the Joint Staff's crisis action team during the Persian Gulf War. Born in Sioux City, Iowa, and raised in Nebraska, Missouri, and Illinois, Clark, 56, graduated from Evangel College. He later earned an MBA from the University of Arkansas.

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State Department

Thu, 28 Jun 2001 00:00:00 -0400

Established: 1789
Address: 2201 C St. NW, Washington, DC 20520
Phone: 202-647-4000
2001 Budget:: $8 billion
Employment:: 19,522
Web Site: www.state.gov
Functions: The State Department is responsible for the making and execution of American foreign policy. The department conveys U.S. foreign policy to foreign governments and to international organizations; manages the foreign affairs budget and other foreign affairs resources; negotiates treaties; assists U.S. businesses in the international marketplace; and protects and assists U.S. citizens living or traveling abroad.

Colin L. Powell
Secretary
202-647-5291
A favorite parlor game in Washington is handicapping whether Powell will eventually win an internal power struggle against the hard-liners among the Administration's foreign affairs and national security team. Signs of those tensions have been evident in Republican criticisms of Powell's plan for new "smart sanctions" against Iraq and in the distinctly different tones that Powell and Defense Secretary Donald Rumsfeld struck when dealing with China earlier this year after the downing of a U.S. Navy surveillance plane. "Colin Powell has had the most consistent voice and message among the Bush team, but he's had his knuckles cracked a couple of times," said Brent Scowcroft, former national security adviser for the elder Bush. Scowcroft, who has worked closely with Powell, Cheney, and National Security Adviser Condoleezza Rice, credits Powell for winning a badly needed increase in the State Department budget: "I think Powell was quick to note the decay in the State Department, and he has spent a lot of time restoring morale." With a compelling life story-a son of Jamaican immigrants rises up from New York City slums to become the highest military officer in the land-Powell, 64, should never be counted out. He grew up in the South Bronx and graduated from City College of New York, and he later took an MBA at George Washington University. In a 35-year Army career, Powell earned four stars, many medals, and the top job as Chairman of the Joint Chiefs of Staff. Before joining the Bush Administration, Powell was chairman of America's Promise, a nonprofit group dedicated to mentoring the nation's youth.

Richard Armitage
Deputy Secretary
202-647-9640
The No. 2 at State is a man Colin Powell has called a "friend of the heart," and is one of the true characters of Washington. Armitage, 56, is a fireplug of a figure who served three tours in Vietnam as a riverine warrior and is known to cuss like the ex-sailor that he is. He and Powell first met in the early 1980s as members of the staff of Defense Secretary Caspar Weinberger, and they have remained close ever since. Certainly Armitage's tenacity and troubleshooting skills will serve him well as deputy secretary. After graduating from the Naval Academy and serving six years in the Navy, he shed the uniform for a civilian suit in the 1970s, but he served in Saigon in the office of the U.S. defense attache. There, he helped to organize the removal of naval personnel and assets before the city fell to Communist forces. He then went to another trouble spot-Iran under the shah-before moving to Washington to act as administrative assistant to Sen. Bob Dole, R-Kan. In the 1980s, he served as deputy assistant secretary of Defense for East Asia and Pacific affairs and assistant secretary of Defense for international security affairs. In the early 1990s, Armitage directed U.S. assistance to the newly independent states of the former Soviet Union. Before joining the Bush Administration, Armitage was president of his consulting firm in Virginia, Armitage Associates. He grew up in Georgia.

Grant S. Green Jr.
Undersecretary for Management
202-647-1500
Green, 63, brings 22 years of valuable experience in the U.S. Army to the thankless task of managing the far-flung State Department bureaucracy. The job is a particular challenge because of the independent, professional nature of the diplomatic corps and because of geography: Just try managing people and real estate spread across 178 embassies and consulates in 130 countries. It is Green, for example, who will be responsible for completing the security upgrades at U.S. embassies in the wake of terrorist attacks during the previous Administration. He prepped for this job as assistant secretary of Defense in the Reagan Administration, where he was in charge of all Army personnel matters. Before that assignment, he made the trains run on time as executive secretary of the National Security Council. In the private sector, Green was chairman and president of GMD Solutions, Inc., a consulting firm, and held senior management positions with Sears World Trade. Born in Washington state, Green grew up all over the country, as his father, too, was in the military. He graduated from the University of Arkansas and has a graduate degree from George Washington University.

David G. Carpenter
Assistant Secretary for Diplomatic Security
202-647-6290
When Carpenter was first sworn into his job on August 11, 1998, it was just four days after the bombings of the U.S. embassies in East Africa-hardly an easy time to start work. Little wonder that Carpenter, 54, who spent 26 years in the Secret Service before joining State, has been busily overseeing a big intensification of security at U.S. embassies and consulates worldwide. And Colin Powell has asked him to stay on. In his three years on the job, Carpenter boasts, "we've roughly increased [security] personnel about 50 percent," noting that some of the increase was made possible by a special $1.6 billion supplemental appropriation in 1998. Carpenter's office, which has a yearly budget of $600,000, manages not only all of State's security programs, but also the protection of classified national security information that's produced and stored in government facilities. Carpenter knows the protection game: At Secret Service, he was special agent in charge of the office responsible for protecting the President. A native of Denver, Carpenter has a B.A. in personnel management from Oklahoma State University.

Ruth A. Davis
Director General of the Foreign Service and Director of Human Resources
202-647-9898
During a U.S. Foreign Service career dating back to 1969, Davis has held posts in Africa, Asia, and Europe, and the experience should give her ample perspective for her new job. Davis will handle all the human resource and personnel issues for the State Department's 36,000 employees in the United States and abroad. Davis is also responsible for all hiring and promoting in both the Foreign Service and Civil Service divisions at State. Soft-spoken yet possessing a sense of humor, Davis is also serious about expanding State's resources. "For a long time at State, we've been plagued with a deficient number of employees," she says, adding that if the requested budget increases are met, there will be more hiring. A native of Atlanta, Davis graduated from Spelman College and earned a master's degree from the School of Social Work at the University of California (Berkeley). Most recently, Davis, 58, served from 1997-2001 as director of the Foreign Service Institute. Davis was also ambassador to Benin from 1992-95 and consul general in Barcelona, Spain, from 1987-91.

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Politicos hustle for ambassadorships

Peter H. Stone — Mon, 26 Feb 2001 00:00:00 -0500

Would-be ambassadors include a former Senator, a co-chair of the Bush inaugural committee that raised a record $35 million, and an ex-chairman of the Republican National Committee.

The Bush administration has a bevy of contenders to choose from: big donors, fund-raisers, well-connected politicos, and friends of President Bush and his associates. Behind the scenes, several wanna-be ambassadors are maneuvering to let the Administration know that they're ready to go if the right offer comes along.

"You've got a ton of people out seeking ambassadorships, lobbying for them, and doing the normal self-promotional things that you do to get them," said Charles Black, a well-known GOP operative and name partner at Black, Kelly, Scruggs & Healey.

Historically, when it comes to picking coveted foreign assignments, Presidents treat big donors and fund-raisers well. Both President Clinton and Bush's father tapped about 10 of their top donors and money harvesters for overseas posts.

So far, the current Bush administration has nominated only Massachusetts Gov. Paul Cellucci. He was selected to become ambassador to Canada.

A White House spokeswoman says that the administration expects to make about 50 political ambassadorial appointments. "We're looking for people with high ethical standards," she said, "who are good communicators and who don't think about an appointment as if it was a reward, but as an opportunity to serve enthusiastically."

According to sources, several potential candidates have had preliminary discussions with the Bush administration about specific countries. Most of the candidates, as well as the people involved in the selection process, are reluctant to talk and are concerned that press leaks would displease the Bush White House.

Nonetheless, there's plenty of buzz among GOP operatives, fund-raisers, and lobbyists about who is likely to be tapped.

Mercer Reynolds, a wealthy Cincinnati businessman who was a co-chairman of the Bush inaugural committee and co-chairman of Bush's Ohio fund-raising drive, was mentioned by sources as a prime candidate to be ambassador to Switzerland.

Reynolds, a founder of the investment firm Reynolds, DeWitt & Co., got to know Bush in the early 1980s through the oil business: A Reynolds, DeWitt property merged with Bush's firm. Later, Reynolds teamed up with Bush as an investor in the Texas Rangers baseball team.

One prominent GOP insider on the candidate list is former Sen. Dan Coats, R-Ind., a lobbyist with Verner, Liipfert, Bernhard, McPherson and Hand. Coats is in the running to be ambassador to Germany. He was almost picked to be Defense Secretary; he is considered a strong candidate for the ambassadorship, in part, sources said, because the White House may want to soothe his feelings (and those of several conservative allies) about the way he was dropped from consideration at the Pentagon.

Another big-name GOP prospect is Jim Nicholson, the recently retired chairman of the Republican National Committee. He oversaw the RNC's record-breaking haul of campaign cash in the past election cycle, when the committee's "soft-money" receipts increased to more than $160 million, a jump of almost 50 percent over the previous cycle. A devout Catholic, Nicholson is under serious consideration to be ambassador to the Vatican, according to sources. If the Vatican post goes to another person, the sources said, Nicholson could be tapped for Australia.

London has always been a choice ambassadorial assignment, and this year it seems that the Bush Administration is leaning toward Will Farish, a fund-raiser from Kentucky. Farish, a well-known horse breeder, has hosted the queen of England at his farm, and she reciprocated by inviting Farish and his wife to Windsor Castle. Farish has also escorted both George W. and his dad to the Kentucky Derby.

Another top posting is Italy, which this year has several contenders vying to enjoy Mediterranean vistas. Sources named three top candidates: Charles Gargano, a former ambassador to Trinidad and Tobago and a prominent New York fund-raiser with ties to Gov. George E. Pataki; Lou Noto, the former chairman of Mobil Corp.; and Washington fund-raiser and lobbyist Peter Terpeluk.

Of course, not everyone can have first choice. Consider Mel Sembler, a GOP money harvester from Florida who was finance chair at the RNC during the past election. Sembler, a former ambassador to Australia, is the leading candidate to run the Export-Import Bank in Washington. Sources said that Sembler might have had his heart set on foreign turf again.

Other big donors and fund-raisers whose names are being bandied about include Nancy Brinker of Dallas, who is a friend of President Bush and was an early top fund-raiser for him; Julie Finley, a prominent Washington soft-money donor and fund-raiser for the RNC; and Howard Leach of San Francisco, who is also a major soft-money donor to the RNC.

Campaign finance reformers blast the selection process as unfair. "One of the results of the soft-money system is the rewarding of huge donors with ambassadorships," says Fred Wertheimer, the president of Democracy 21. Wertheimer said that since Bush ran on "restoring honor and integrity" to the White House, it will be interesting to see how the President handles ambassadorial appointments.

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Cohen, aides to form consulting firm

Peter H. Stone — Wed, 17 Jan 2001 00:00:00 -0500

Bush pledges Pentagon review; builds transition team

Peter H. Stone, Keith Koffler, and April Fulton — Wed, 20 Dec 2000 00:00:00 -0500

Fleischer also said that about 600 people, including Bush-Cheney issue specialists, congressional aides and others, would be named to advisory committees that will provide ideas and suggestions about legislation the incoming administration will propose.

The advisory committees will provide "input" to the policy coordination groups, which will draft legislative proposals and advise incoming Cabinet secretaries.

Bush will nominate Don Evans as Commerce secretary Wednesday, turning to his campaign chairman and longtime friend to fill one of his first Cabinet posts, a Republican official told the Associated Press. Evans, 54, is chief executive of Tom Brown Inc., a Midland, Texas, oil and gas company. He was instrumental in helping Bush raise a record $100 million for his presidential race.

Bush's transition team has tapped some additional Capitol Hill and K Street veterans to help keep Congress informed and involved in the new administration's talent search and policy development.

In addition to transition legislative affairs director David Gribbin and Ziad Ojakli, a former aide to the late Sen. Paul Coverdell, R-Ga., the team now includes Candi Wolff, who used to be a top aide at the Senate Republican Policy Committee. She will help Ojakli with Senate efforts.

Nelson Litterst, a lobbyist with the National Federation of Independent Business, and Kim McKernan, a lobbyist with O'Brien Calio, are helping with House transition work.

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E-gov companies lobby agencies

Peter H. Stone — Mon, 03 Jul 2000 00:00:00 -0400

By Peter Stone, National Journal

Electronic-government companies are trying to strike it rich on the Internet with a deceptively simple game plan: Put government services online, just one click away from the public. They're competing for contracts to provide digital government services-from automobile registration renewals to tax collection.

Some e-government companies have turned to well connected K Street heavyweights for help in getting local, state, and federal agencies to purchase their Internet services. The companies have tried to gain instant credibility by recruiting prominent politicians-turned-lobbyists, such as former Republican National Committee Chairman Haley Barbour and former Texas Gov. Ann W. Richards, a Democrat, to serve on their various boards.

The financial stakes are high for the e-government businesses. Spending on e-government services by local, state, and federal agencies is projected to quadruple from $1.5 billion in 2000 to $6.2 billion in 2005. And there's plenty of room for growth after that. Fewer than 1 percent of government services are online.

Some Internet analysts estimate that the value of government services on the Internet conducted by business, individuals, and governments could reach $2.2 trillion. "There's not a government agency out there that couldn't benefit from e-government services," says Andres Irlando, the vice president for government relations at New York City-based govWorks.com.

Consider Link2Gov Corp., a five-year-old Nashville, Tenn., company whose Washington office is headed by Everette James, a former deputy assistant secretary at the Commerce Department. Earlier this year, Link2Gov retained the Washington law firm of Verner, Liipfert, Bernhard, McPherson and Hand, which was given an option to acquire an equity stake in the company.

Verner, Liipfert lawyers have introduced Link2Gov executives to the political establishment in many states and are providing the Internet firm with political and commercial intelligence. To help drum up business, former Gov. Richards, one of Verner, Liipfert's so-called rock stars, joined Link2Gov's board of directors and received stock in the company.

Former Tennessee Gov. Lamar Alexander, a Republican, is a board member and a shareholder as well. Link2Gov also has an outside team of 24 state and local lobbyists and is developing a partnership with accounting firm giant KPMG International to expand its state government business. The company has signed 30 contracts with state and local agencies in 10 states. They include contracts with health boards in Texas to handle license renewals for health professionals online and another with the Department of Motor Vehicles in the District of Columbia to handle online renewals of vehicle registrations.

A leading rival, ezgov.com, which is based in Atlanta, has retained Barbour Griffith & Rogers for help landing government clients. Haley Barbour, the lobbying firm's superstar, sits on ezgov.com's advisory board. "We've used Barbour and other consultants and lobbyists to facilitate introductions with mayors, county executives, governors, and chief information officers," said Edward Trimble, the company's president. Because the decision to offer services online is typically "made at the top of government agencies," Trimble added, "it's very helpful to have strong introductions."

Former Sen. Sam Nunn, D-Ga., and Charles H. Dolan Jr., the former executive director of the Democratic Governors' Association, who's now a senior vice president with Ketchum, a Washington public relations firm, are also on the advisory board. For extra clout, ezgov.com has added to its board of directors former Govs. Mario M. Cuomo of New York and Zell Miller of Georgia, both Democrats, and former Rep. Jack Kemp, R-N.Y. All three have small equity interests in the company.

Ezgov.com's firepower appears to be paying off. Launched in 1999, the company has already signed contracts with 20 state and local agencies. Its Internet assignments include handling the annual renewals of securities for Georgia's secretary of state; the processing of speeding tickets for Cobb County, Ga.; and the compiling of tax assessments for Riverside County, Calif. Another 30 contracts are in the final stages of negotiations. Ezgov.com, with an eye to winning federal agency contracts, signed a strategic partnership with IBM Corp. in early June.

Meanwhile, govWorks.com, another strong player in the e-government field, has hired the Washington law and lobbying firm of Patton Boggs to boost its state business and to help win federal and international contracts. "They are helping states and agencies reduce the red tape for citizens regarding all types of municipal services," explained Michael A. Brown, a Patton Boggs lobbyist who is the son of the late Commerce Secretary Ronald H. Brown. "I'm assisting the company with introductions in the U.S. and internationally and helping them develop a strategic plan."

So far, govWorks.com has focused on state and local governments. It has landed contracts in Augusta, Ga., Groton, Conn., Pasadena, Calif., and Rochester, N.Y. But government relations chief Irlando said that Patton Boggs is helping the company develop a game plan for expanding into the federal marketplace. GovWorks.com has also tapped former Rep. Bill Paxon, R-N.Y., now a senior adviser at Akin, Gump, Strauss, Hauer & Feld, and former Reagan White House Chief of Staff Kenneth M. Duberstein, the president of the Duberstein Group, to serve on its advisory board. Former Sen. Alan K. Simpson, R-Wyo., and former Energy Secretary Federico Pena are board members. Each owns a small equity interest in the company.

Because the Internet is a global phenomenon, govWorks.com has started to solicit business abroad. Colombia recently chose the company to offer some government services online. Patton Boggs' Brown adds that his mission includes signing up government clients in Africa, Asia, the Caribbean, and South America.

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White House weighs impeachment prospect

Peter H. Stone and Keith Koffler — Fri, 11 Dec 1998 00:00:00 -0500

The White House today continued to portray an administration focused on policy issues and a president only tangentially concerned with the prospect of his own impeachment, even as some Democratic strategists inside and beyond the White House gates suggest Clinton should become more involved.

White House Press Secretary Joe Lockhart indicated the President's schedule today had precluded him from viewing any of the Judiciary Committee proceedings, and he argued it would be "tragic" if the impeachment debate distracted Clinton and his aides from the work they were "sent here to do."

During a White House appearance with Central American leaders, the President declined to comment on impeachment. And Clinton has continued to avoid buttonholing members. Lockhart denied reports that Clinton has spoken on the phone with undecided moderates, adding that he had no knowledge of any conversations so far between Clinton and moderates about impeachment. But Lockhart would not rule out that some personal lobbying by Clinton could occur.

The prospect of a further statement of regret by Clinton remains under discussion at the White House, but Lockhart indicated a decision on the matter has not been made.

One White House official noted that if a new apology is offered, Clinton may wait until relatively soon before the House floor vote in order to narrow the window for criticism should some find Clinton's contrition inadequate. The White House believes pressure on GOP moderates from Republican leaders may not be as effective as the vote nears, according to one White House source.

Lockhart also said White House Chief of Staff John Podesta met with House Speaker-designate Bob Livingston, R-La., Thursday to request that a censure motion be allowed on the floor next week. But Lockhart declined to reveal Livingston's response.

Meanwhile, some Democrats are exploring a variety of ways to persuade Livingston to allow a censure vote on the floor.

According to a House source, at least one member has talked to former Sen. J. Bennett Johnston, D-La., now president of a Washington lobbying firm, about whether he would be willing to serve as a White House intermediary with Livingston on behalf of a censure proposal. Johnston responded affirmatively, according to the source, who said the member has since talked to the White House about Johnston's offer to help out. Johnston could not be reached for comment today.

A White House aide declined to comment on this option, but indicated there were a number of back channel efforts under way. Johnston has maintained good relations with the new speaker and hosted a fundraiser for Livingston's PAC, BOBSPAC, at Johnston's office last summer. Johnston's firm also represents a few Louisiana companies-including Avondale Industries Inc., where Livingston and his mother once worked-with very close ties to Livingston.

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