The Naked Truth

Stopping the world’s spin.

Making a Killing

Companies that operate internationally may say that peace is conducive to prosperity, that people don’t go shopping in a war zone. But, according to journalist Thomas Friedman, “McDonald’s cannot flourish without McDonnell Douglas, the designer of the U.S. Air Force F-15.’s” While Iraq waits for fighter jets to make way for fast food chains, private armies police a fortified ‘green zone’ where corporations meet to seal the lucrative deals made possible because of the war. Transport, health, education and other services central to building a solid sustainable democracy are up for grabs to the highest bidder, predominantly businesses from countries who took part in the war.

NYSE

Most of the contract awarded to international companies operating within Iraq have been given on a ‘cost-plus’ basis, in its simplest form this means profits are calculated as a percentage of expenses. The more money a contractor spends on the contract, the more profit they make, leaving the contracts open to massive abuse.

The company that has profited most from the invasion of Iraq is U.S. vice president Dick Cheney’s former firm, Halliburton, now with contracts worth over $10 billion. The company is currently the subject of multiple criminal investigations into overcharging and kickbacks, much of which is related to their abuse of cost-plus contracts. Overcharging by the company has run from ordering specially embroidered towels to charging extortionate prices for petrol.

The demand for security services to protect foreign corporations operating in Iraq, and the growing trend for outsourcing of military services to private contractors, has provided a bonanza for private military companies, this has seen UK private security companies annual revenue increasefrom £200 million before the war to over £1.8 billion now. Unlike military personnel, civilian contractors are not subject to military justice. Yet one of the most controversial measures introduced by the occupying forces in Iraq was Order 17, which granted all foreign contractors immunity from Iraqi law. This is now been challenged by the Iraqi parliament following the Blackwater scandal .

Blackwater

A US government review of operations in Iraq concluded that approximately 35% of the interrogation personnel provided by private contractors were not properly trained, and that a lack of sufficient oversight resulted in contractors believing that the techniques used in the Abu Ghraib prison scandal were acceptable. While the US soldiers involved in the Abu Ghraib abuse were quickly court marshalled, civilian contractors implicated in the abuse have not yet been subject to any government prosecution.

Iraq is only the beginning of a worldwide corporate carve-up. Whether it’s diamonds in Sierra Leone, oil in Angola, copper in Papua New Guinea, gold, coltan and diamonds in the Democratic Republic of the Congo, or timber in Liberia, natural resources from conflict zones are being fed into international supply chains dominated by multinational corporations. The money the corporations spend is in turn fuelling the conflicts.

Multinationals operate in conflict zones alongside enormous poverty and suffering and do very nicely from it. Issues of human rights are largely ignored.

In Colombia, BP p.l.c. operates the country’s largest oil reserves in the war-torn region of Casanare. Media reports in the 1990s highlighted BP’s involvement with Colombian military units accused of human rights violations. More recently, human rights groups from around the world have interviewed hundreds of Colombians that had been involved in protests against BP and found many too scared to leave their homes.

In Palestine, Israel’s military forces use specially armoured bulldozers made by Caterpillar to demolish Palestinian homes and to build the Separation Wall declared illegal by the International Court of Justice. Jim Owens, Caterpillar’s CEO, reckons that his firm are “doing well by ‘doing good’ all around the world”. UN Special Rapporteur Jean Zeigler has called Caterpillar to account over the role played by their machines in the violation of Palestinians’ rights.

source: Jason Brown, cerebralblackhole.com

Update

British firms have also been operating in Iraq. After courting controversy in the Nineties, Tim Spicer – whose previous company, Sandline International, was accused of breaking a United Nations embargo by selling arms to Sierra Leone – has re-emerged as a powerful player with his latest venture, Aegis Defence Services. Aegis won a $293m Pentagon contract in 2004, which has since been extended, and employs more than 1,000 contractors in the country. Another British company, Global Strategies, which calls itself a “political and security risk-management company”, employs cheaper Fijian contractors for its Iraq operations. And another firm, ArmorGroup, chaired by the former British foreign secretary Sir Malcolm Rifkind, was getting half its revenues from Iraq. It carried out convoy protection at rates estimated at between $8,000 and $12,000 a day, and helped to guard polling stations during the country’s elections.

The connections between Halliburton and the Bush administration helped to generate $16 billion in contracts in Iraq and Afghanistan in the three years from the start of 2004 – nine times as much as any other company. Halliburton decided last year to spin off the division operating in Iraq. That business, KBR, has generated half its revenues there each year since the invasion, providing private security to the military and infrastructure projects and advising on the rebuilding of the country’s oil industry.

(via indepentent.co.uk)

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March 17, 2008 - Posted by | Profits | , , , , , , , , , , , , ,

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