Posted on 14-6-2004

Commando Wins Iraq Contract
by Pratap Chatterjee, Special to CorpWatch, June 9th, 2004

Occupation authorities in Iraq have awarded a $293 million contract
effectively creating the world's largest private army to a company headed
by Lieutenant Colonel Tim Spicer, a former officer with the Scots Guard,
an elite regiment of the British military, who has been investigated for
illegally smuggling arms and planning military offensives to support
mining, oil, and gas operations around the world. On May 25, the Army
Transportation command awarded Spicer's company, Aegis Defense Services,
the contract to coordinate all the security for Iraqi reconstruction
projects.

"I am pleased to confirm that we've been awarded a contract to assist the
Project Management Office (PMO) in Iraq by the United States Department of
Defense," said Spicer, who started Aegis just over a year ago on Picadilly
in London, only a short walk from Buckingham Palace. "The contract
involves coordination of security support for reconstruction contractors
and for the protection of PMO personnel."

Under the "cost-plus" contract, the military will cover all of the
company's expenses, plus a pre-determined percentage of whatever they
spend, which critics say is a license to over-bill. The company has also
been asked to provide 75 close protection teams--comprised of eight men
each--for the high-level staff of companies that are running the oil and
gas fields, electricity, and water services in Iraq.

More on Mercenaries

Give War a Chance: the Life and Times of Tim Spicer

Ex-SAS Men Cash in on Iraq Bonanza

>From Embassy Hero to Racing Disgrace

Major Gary Tallman, a spokesperson for the U.S. Army, explained that the
contract was to create an "integrator" or coordination hub for the
security operation for every single reconstruction contractor and
sub-contractor. "Their job is to disseminate information and provide
guidance and coordination throughout the four regions of Iraq."

In Iraq, there are currently several dozen groups that provide private
security to both the military and the private sector, with more than
20,000 employees altogether. The companies include Erinys, a South African
business, that has more than 15,000 local employees charged with guarding
the oil pipelines; Control Risks Group, a British company that provides
security to Bechtel and Halliburton; and North Carolina-based Blackwater
Consulting, which provides everything from back-up helicopters to
bodyguards for Paul Bremer, the American ambassador in charge of the
occupation.

Private security companies have been asking the military for help in
coordinating work for several months. In April, following the killing of
several private security contractors in Baghdad, Falluja, and Kut, the
companies started to pool information on an ad-hoc basis. At the time,
Nick Edmunds, Iraq coordinator for the Hart Group, which provides security
to media and engineering groups in Iraq, told The Washington Post, "There
is absolutely a growing cooperation along unofficial lines. We try to give
each other warnings about things we hear are about to happen."

But this newest military contract in Iraq is different. Aegis has no
history in this business, Spicer has a debatable track record with his
previous company called Sandline, and there's speculation that the
contract was given for political reasons.

Wanted: A Few Good Men for Very Good Salaries

Rumors of lucrative new jobs with Spicer have been circulating for a
couple of months. In late March, Britain's Lieutenant Colonel Alan Browne,
who is in charge of finding jobs for members of the Royal Signals regiment
in Blandford Camp, Dorset, posted ads offering Aegis positions in Iraq for
qualified radio technicians at the salary of $110,000 a year, three times
higher than most other jobs offered at the regimental resettlement office.
The contract also provides a generous 100 days vacation per year.

"Our men can repair anything from a radio to a satellite phone, but the
pay here in the UK is just 25,000 pounds ($46,000)," said Browne. "I
posted the job to the guys and now it's up to them to go get the jobs."

Also in late March jobs were posted at the Adjutant General's Corps in
Worthy Down, Winchester, for clerks to maintain "clerical and
administrative support for a headquarters-type environment similar to a
military brigade/divisional headquarters with many of the same divisions
of responsibility." Salaries offered for candidates with senior
non-commissioned officer qualifications were $129,000, and salaries for
junior non-commissioned officer were $110,000.

Tallman says that seven companies bid for the coordination contract.
According to other CorpWatch sources, three of the bidders were Dyncorp, a
Virginia based company that is in charge of training the Iraqi police;
Military Professionals Resources Incorporated (MPRI), which was working on
training the Iraqi army; and a joint venture between Control Risks Group,
Erinys, and Olive Security, three of the largest providers of private
security in Iraq.

Industry insiders speculate that Aegis won the contract because of growing
anger in Britain that UK-based companies have not been awarded large
contracts in the reconstruction of Iraq, despite the leading role that the
Tony Blair's government has played in the "coalition of the willing." The
only other British bid for the contract, the Control Risks joint venture,
was disqualified because one of the partners was under investigation for
undisclosed reasons at the time the bids were evaluated.

Because of the politics in the decision, some groups are questioning the
contracting process. "It's not evident why they they would run a
rent-a-cop contract through an Army transportation division in Virginia
except that maybe the staff there are more experienced and can write a
professional contract that can withstand a bid protest better than the
Heritage foundation interns that run contracting in Baghdad," said John
Pike, a spokesman for the military watchdog group Globalsecurity.org. For
the first 12 months, all payments in Iraq were evaluated by a group of six
men and women in their 20s who were hired on the basis of job resumes they
posted at the right-wing foundation's website.

Tallman defended the Army system. "It is inherently decentralized for
efficiency and to make sure the process is impartial," he said. "The
Defense Contract Audit Agency still retains oversight but this way no one
office can control all the contracts. Also, we can issue contracts in
fairly short order by taking advantage of the best placed office to do the
job."

Questionable Track Record

Analysts like Peter Singer, author of Corporate Warriors: The Rise of the
Privatized Military Industry and a fellow at the Brookings Institution, a
liberal think tank in Washington, D.C., say that the news took them by
surprise. " It's like a blast from the past, like I took a leap back into
the time-machine to the late '90s," said Singer. "To be honest, though, I
am doubtful that the folks awarding the contract had any sense of Spicer's
spicier history."

But not everyone agrees with this assessment of Spicer's work. In Sierra
Leone, Spicer's efforts have been heralded by the private military
industry as the "work of angels." In 1998, Sandline was contracted to sell
30 tons of arms to the forces of Ahmad Tejan Kabbah, the former leader of
Sierra Leone, in contravention of a UN arms embargo but in apparent
cooperation with Craig Murray, a junior staffer at the British Foreign
Office.

Doug Brooks, the president of International Peace Operations Association
(IPOA), a non-profit advocacy group for private military companies
including Sandline, says the company's assistance in Sierra Leone saved
the lives of thousands of civilians. "Sandline was remarkably effective,"
Brooks said. "Their goal of restoring the democratically elected
government was achieved. They maintained a low profile but played a
critical role in the success."

Nonetheless, Sandline's Sierra Leone project provoked a furor and multiple
government investigations in Britain when it was discovered that the
contract violated the United Nations embargo on providing arms to either
side in the military conflict. Spicer maintains that he was unaware that
the scheme was illegal and the government eventually agreed to draw up new
rules on arms trafficking and the conduct of private military companies in
Britain.

Spicer's work in Papua New Guinea, another public relations fiasco, was
not even a military success. The eastern half of the South Pacific island
of New Guinea, Papua New Guinea (PNG), was a British and German colony and
then an Australian protectorate until 1975. That year, both PNG and the
outlying island of Bougainville, some 500 miles northeast of the capital,
Port Moresby, declared independence. PNG quickly took over Bougainville,
where an Australian company, CRA (now part of Rio Tinto, the world's
largest mining company), had begun to mine copper in 1972.

In 1989, local landowners shut down the Bougainville copper mine to
protest the environmental destruction it caused and to demand
independence. In February 1997, the PNG government, which had received
about 44 percent of its revenue from the mine, paid Sandline International
$36 million to rout the Bougainvilleans.

The very next month, PNG Prime Minister Julius Chan sacked the military
commander, Brigadier General Jerry Singarok, for denouncing the contract
with Sandline and arguing that the money would be better spent on his own
troops, who were desperately underpaid and ill-equipped. Riots ensued
after soldiers loyal to Singarok led protests that included at least 2,000
civilians. The soldiers arrested and deported a number of the Sandline
contractors.

Less than a month later, dressed in crumpled jeans, Spicer was led into a
Papua New Guinea court. His suitcase, bulging with $400,000 in cash, was
produced as evidence of his contract with the disgraced government. At the
hearings, Spicer revealed that one aspect of the project (code-named
"Operation Oyster") was to wage a psychological campaign against the
Bougainvilleans with the help of Russian style attack helicopters (see
related article on Spicer for more on Sandline).

Spicer's lawyers worked overtime to get the charges reduced and eventually
dismissed but Chan was forced to resign from his job.

Building Aegis

In 2000, Spicer left Sandline's offices in Chelsea to set up another
company, Strategic Consulting International (SCI) in Knightsbridge, where
he offered advice to governments and shipping companies on the threat from
international terrorism. He eventually changed the name of this company to
Trident Maritime and moved offices once again, to his current location in
Picadilly.

At first things didn't go too well. Spicer had Sara Pearson, his
publicist, register SCI at her office, which got them into hot water when
the media discovered that the shareholdings and directorships were
incorrectly registered and that no accounts had been filed. "It was a
shock to discover we hadn't properly organized [our company records],"
Pearson later told Duncan Campbell, a British investigative journalist.

Likewise, Trident's original business plan was drawn up for Spicer by a
group of students at the University of Maryland, who were named as
vice-presidents of the company, in exchange for an agreement to allow them
to submit the plan for a college competition, which they subsequently
lost.

After these initial management problems, Spicer slowly created a more
respectable image. He won a contract from insurers Lloyds of London to
engage in a security audit of the Sri Lankan defence system, after the
Tamil Tiger rebel group practically destroyed the international airport in
July 2001. After giving the government a clean bill of health, Spicer
started to get more work in the shipping industry.

In 2002, Spicer was approached by Per Christiansen, a Norwegian shipping
expert who was director of Hudson Maritime, a 16-year-old company that did
emergency response to crises like the Exxon Valdez oil spill. New
Jersey-based Hudson had just won a contract from the Department of
Homeland Security to review security at ports around the country.

"Some people in the insurance business in London gave me Spicer's name,"
recalled Christiansen. "I knew he had a rather colorful reputation but he
knows the sharp end of security, so we set up a joint venture together."

Spicer brought with him an old friend who had fought beside him in the
Falklands War, Mark Bullough, who had spent the past decade in India, Hong
Kong, Malaysia, and Singapore, working for Jardine Fleming, a Hong
Kong-based investment bank.

"I can recall Mark and me liberating a bottle of champagne and drinking it
by the sea wall and then getting into a slight confrontation with a staff
officer," Spicer wrote in his autobiography, recalling the day after the
British routed the Argentine army in the Falklands in 1982.

After the Falklands War, Bullough had left the British Army to work in
banking. He ran an office for Jardine Fleming in Bombay for five years,
where the government had just opened up the financial markets on Dalal
Street (the Indian equivalent of Wall Street) to foreign banks. Even in
the financial business, Bullough maintained his reputation for being
unorthodox. Traders in Bombay were astonished to see the head of this
distinguished international bank arrive for work on a motorbike.

Bullough brought with him another well-respected researcher from the
banking business, Dominic Armstrong, who had worked for him at Jardine.
"It's fantastic energy working with Spicer--he's a tremendous doer,"
Armstrong said. "Of course, he does have his reputation, but frankly I
find all that irritating. We are a very commercial and diverse enterprise
today working in many different sectors from the food business to marine
security."

With the Hudson Trident venture off to a flying start, Spicer and Bullough
established Aegis, a more secretive business, based in the same building
with the same phone numbers, to provide private military support services.
A fourth man, Jeffrey Day, who bankrolled the operation, joined them as
chief financial officer.

To beef up the security side of matters, the four Aegis partners hired
Major General Jeremy Phipps, another ex-SAS man who was once well known
for leading a daring rescue of hostages at the Iranian embassy in London
in 1980. He was later disgraced for his failure to stamp out corruption at
London's prestigious Jockey Club, to which many members of the Royal
family belong and by which Phipps was employed (for more on Phipps, see
>From Embassy Hero to Racing Disgrace).

To counter any negative publicity, they brought in a high-level public
relations consultant Sara Pearson, who had helped Spicer on both the Papua
New Guinea and Sierra Leone scandals. Pearson has her own press outfit
called the SPA Way, which works for up-market British retail and food
stores. Her other clients include dental clinics, fresh breath companies
and hair stylists.

Previously, Pearson had hired a ghost writer to help remake Spicer's image
for the new millennium after the two disastrous Sandline events. Spicer's
1999 autobiography, An Unorthodox Soldier, presented him as the "modern,
legitimate version of the new mercenaries." (for more on Spicer, see Give
War a Chance: the Life and Times of Tim Spicer
)

Today, Singer says that the new contract raises many questions about what
kind of background check and vetting of firms and contracted employees are
occurring at the Pentagon. "It's not only good policy, but a basic rule of
good business, but not clear that it is always happening with Iraq
contracting," he said.

Pratap Chatterjee is Program Director/ Managing Editor of CorpWatch