ARMORGROUP SCANDAL

EXPOSING FRAUD, WASTE AND ABUSE IN WAR ZONES

Investigative Techniques Mayuri SaxenaSummer 2011

Setting the Scene War on Terror Afghanistan: According to CNN,

228 Deaths of American and Coalition troops in 2007 alone

In 2007, Department of State (DoS) contracts ArmorGroup North America (AGNA) -subsidiary of ArmorGroup International (UK Based) - to protect US Embassy in Kabul

Wackenhut

Investigative Techniques Informants - Whistleblowers

- Peter Martino - James Sauer

- John Gorman - James Gordon

- Terry Pearson - et al. (written accounts)

- Project on Government Oversight (Danielle Brian)

Photographs/Video Evidence

Commission on Wartime Contracting (CWC)Commissioners: - Christopher Shays - Michael Thibault- Clark Ervin - Grant Green- Robert Henke - Katherine Schinasi - Charles Tiefer - Dov Zakheim

“Lord of the Flies”

Nudity, drunken behavior Hazing activities Use of Gov’t Vehicles to transport Alcohol Abuse of Locals Brothel visits – against Trafficking in Victims

Protection Act Substandard vehicles High turnover of staff – 90% turnover within

6 months

Poor living conditions for guards Understaffed, Empty posts Reduced Wages 14 hour days, Strikes Use of non-English speaking Gurkha

guards (Nepalese) to maximize profit Guards without clearances or with prior

records of criminal activity Purchasing of counterfeit goods from

Logistics Manager’s wife Mission Snack Pack

It Takes Two…

State Department equally liable by letting conduct continue without effective action

After issuing Cure Notice highlighting 14 non-compliance issues, and a Show Cure, threatening termination because of guard shortage (POGO), DoS still renews in 2009 contract despite of 2 years of complaints

Senate Committee on Homeland Security & Governmental Affairs

InvestigationSub Committee on Contract Oversight Hearing –

June 2009

Chairwoman - Senator Claire McCaskill Testimonies from DoS, William Moser – Deputy

Assistant Secretary for Logistics Management, and Wackenhut, Samuel Brinkley- VP of Homeland and International Security Services

Systematic pattern of empty posts

Commission on Wartime Contracting Independent, Bipartisan 8 Member Commission to study compliance

issues in war time contracts, specifically in Iraq and Afghanistan

Mandated by Congress Authorized to hold hearings and forward

violations to Attorney General September 2009 – Commission Hearing -

Testimonies from DoS (Amb. Patrick Kennedy), POGO (Danielle Brian), Whistleblower (Terry Pearson), Wackenhut (Samuel Brinkley), et al.

Questions in Bidding Process

Should the Government award security contracts to the lowest bidder for war zones?

- ArmorGroup underbid to win the contract

- Contractor could be grade ‘A’ and little more expensive but because second contractor with grade ‘C’ is cheaper, DoS required to hire second because they

both passed minimum standards

Should Contractors be allowed to provide Security services in war zones at all? Private-Military co-management option?

-Blackwater Incident

-ArmorGroup Scandal

-Low morale

-Profit > Security culture

-Effect on Local population

Commission Members

Copyright © 2011 Commission on Wartime Contracting

Department of State

Copyright © 2011 Commission on Wartime Contracting

POGO & Whistleblower

Copyright © 2011 Commission on Wartime Contracting

Wackenhut

Copyright © 2011 Commission on Wartime Contracting

Aftermath AGNA settles with Whistleblowers for unlawful

termination 14 security guards and Logistics Manager fired for

misconduct Replacement of AGNA management staff DoS prohibits Alcohol consumption – “guns and

alcohol don’t mix” (CWC) 2010 - AGNA’s contract terminated by DoS July 2011 – AGNA pays $7.5 M settlement (CBS) Final Commission Report – Expected July 2011

What’s Next for State? DoS to contract 5,405 projects ($15B) for DoD

transfer in Iraq; Diplomatic Security to hire extra 200 personnel to oversee contractors (CWC)

June 2011 Commission on Wartime Contracting Hearing -Recommendation IG to examine DoS, DoD, and USAID

“It is a long road; it is a marathon. I mean, I think we have already crested heartbreak hill, and we have only so far to go. The time remains is short. Anything can go wrong. And I am sure that something will go wrong.” – Amb. Patrick Kennedy, June 2011 CWC Hearing

Thank You

Q&A