Welcome back to the wonderfully dreadful world of waste and fraud.

Kicking off this whirlwind tour of war profiteers this week is the expansion of the Blackwater USA empire to Illinois. In addition to the 7,000-acre training facility in North Carolina, Blackwater is expanding with an 80-acre facility in Mount Carroll, Ill. Coming soon: A facility in southern California and a 25-acre camp in the Philippines. [Associated Press, 11/27]

The following day, a judge ruled that the wrongful death suit against the security company may go forward, ending nearly two years of litigation.

Superior Court Judge Donald Stephens' decision means the families of the murdered contractors can start pressing Blackwater Security Services for documents and testimony about what led to the massacre shown on televisions and in newspapers around the world.

The suit was filed by the families of the four slain Americans in Fallujah in March 2004. The bodies were burned and the charred bodies dragged through the streets, torn limb from limb, and strung up on what is now referred to as "Blackwater Bridge."

America's favorite romance novelist, Kenneth Starr, was hired by Blackwater in an effort to get the Supreme Court to hear the case. 

In the Los Angeles Times, the nominee to replace old man Rumsfeld as Secretary of Defense, Robert Gates, is reported to have ties to — who else — defense contractors.

Gates' ties include:

SAIC — briefly served on the board soon after leaving government in 1993; SAIC was under investigation by the Justice Department for, what else, "contract irregularities." (Go figure.) SAIC later settled for $2.5 million. Just four days ago, SAIC announced the signing a missile defense contract with NATO worth an estimated $95 million.

VoteHere — served on the advisory board; an electronic voting machine firm linked to SAIC, according to the LAT

TRW — served on the board; now part of Northrup Grumann

He also found himself on the board of Parker Drilling Company, and earned $52,000 last year and owns 12,000 shares worth over $100K.

Here's the part that you guys are going to love — because I know I did. Parker Drilling Co. refers to Halliburton as a "significant customer" leasing equipment, the L.A. Times reports. (And we all know how Halliburton is happy-go-lucky with the leased equipment…)

… often leasing equipment for international projects. Parker has partnered with Halliburton in a major drilling project in southern Mexico and in smaller efforts, such as a rig worker training program in Russia.

Gates also sits on the boards for Chili's and Macaroni Grill. Glad it wasn't Applebees. I love me some Applebees.

And on the final stop, Halliburton's delinquent son, KBR (takes after its parent company), settled a contract dispute with the U.S. Army from the last war (Kosovo). The settlement of $8 million, however, was relatively small in comparison to the $1 billion+ in overcharges during the Iraq War. And in just six years. Alright…

At that pace, American taxpayers should recoup from this war in the year 2756. Or, to put it in more favorable terms: 1,500 Friedman units.

And now back to dreaming about ponies.

Addendum: Caught this a couple hours before the post heads to the presses (via tubes). In The Guardian, Stuart Bowen Jr., the Republican lawyer set to be fired as Pentagon Inspector General Special Inspector General at the Pentagon in October '07, says corruption in Iraq "is the second insurgency, and I use that metaphor to underline the seriousness of this issue."

… "The deputy prime minister, Barham Saleh, told Sigir this summer that it threatens the state. That speaks for itself."

An example of how incompetence hinders the ability of U.S. forces to quell the 'first' insurgency.

Corruption is a "virtual pandemic" costing the country $4 billion a year. One example from the article below:

In the Hillah region a defence department contract employee and two lieutenant colonels were found to have steered $8m in contracts to a US contractor in return for bribes. The Pentagon contract employee, Robert Stein, pleaded guilty earlier this year, admitting he and his co-conspirators received more than $1m in cash, help with laundering the funds, jewellery, cars and sex with prostitutes. Stein also admitted that they simply stole $2m from the construction fund, accounting for the money with receipts from fictitious construction companies.

KBR racked up $53 million in overhead costs (administrative expenses) between the day of the contract signing in February 2004 and actually starting work on November 19. From 2004-2006, overhead totaled more than half of KBR's $300 million in costs, according to a SIGIR review. Ah yes, smell that conservatism?

A potentially far more serious problem has been the way the US government decided to give out reconstruction contracts. It split the economy into sectors and shared them out among nine big US corporations. In most cases the contracts were distributed without competition and on a cost-plus basis. In other words the contractors were guaranteed a profit margin calculated as a percentage of their costs, so the higher the costs, the higher the profits. In the rush to get work started the contracts were signed early in 2004. In many cases work did not get under way until the year was nearly over. In the months between, the contractors racked up huge bills on wages, hotel bills and restaurants.

According to a Sigir review published in October, Kellogg, Brown and Root (a subsidiary of Halliburton, Vice President Dick Cheney's former company) was awarded an oil industry repair contract in February 2004 but "direct project activity" did not begin until November 19. In that time KBR's overhead costs were nearly $53m. In fact more than half the company's $300m project costs from 2004-06 went on overheads, the audit found.

So much for that "we've got to just throw a sh!tload of money at them so we can get to work for the Iraqi people" nonsense back in 2003. 

And here's what the legislation signed by President Bush, which effectively disbands SIGIR next year, will deprive the American and Iraqi people. (The provision that dissolves SIGIR was reportedly sneaked into a defense appropriations authorization bill.]

Mr Bowen's inspectors are among the few US civilian officials who still venture beyond the fortified bounds of the Green Zone in Baghdad into the rest of Iraq, to see how $18bn of American taxpayers' money is being spent. Much of the money has been wasted. Sigir officials have referred 25 cases of fraud to the justice department for criminal investigation, four of which have led to convictions, and about 90 more are under investigation.  

Hopefully more will follow, ey Waxman? Eh? Eh?

The whole article is worth the read. I strongly recommend it. 

[Matt writes at SOTUblog.] 

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