Former Bushies and the Spoils of War

It is useful to be provided with details of how crony capitalism works and profits from disasters like the Iraq war.

FROM THE MAGAZINE

Spoils of War
Bush cronies are cashing in on terror. And so can you!
By Jebediah Reed



BARREL FEVER The 40mm mobile weapons prototype from Metal Storm is capable of shooting one million rounds per minuteAccording to at least one top analyst who tracks homeland security stocks, it's an ideal time to invest in companies that seem to have sprung from the pages of a Philip K. Dick novel. There are outfits that develop systems for secretly reading an entire nation's e-mail or biometrics scanners that can recognize every face on a busy street. Then there are purveyors of unmanned spy blimps and robotic death machines. But how's a typical 401K owner supposed to pick the winners?

In this age of outsourcing, 70 percent of the nation's estimated $48 billion intelligence budget goes straight into the pockets of private contactors—and an ample portion of the $58 billion earmarked for homeland security is also up for grabs. For creepy little firms in the defense sector, the road to profitability is paved with government contracts. But landing those coveted deals is often dependent on having friends in those high places where procurement decisions are made.

Lately, we've noticed a stream of former Bush Administration officials and insiders signing on as directors at obscure companies that compete for contracts at their old agencies. Where other observers might see revolving-door corruption, or perhaps an orgy of military industrial profiteering, we see a tantalizing investment opportunity. Just because this crew, which includes George Tenet, Paul Bremer, and Richard Perle, monumentally bungled their duties to the American tax payer doesn't mean they aren't capable of feathering their own nests—and yours.



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GEORGE TENET


LET'S PLAY A GAME The weaponized Talon robot from QinetiQThe ex-CIA director who called Iraqi WMDs a "slam dunk" has joined the British military tech firm QinetiQ (meant to connote James Bond's gadget genius, Q) which offers quirky products like exploding ink, bullet-firing robots, and a submersible device to detect terrorist scuba divers. Of course, that's in addition to a line of no-nonsense weaponry like "dense metal kinetic energy penetrators" and "electromagnetic and electrothermal chemical guns." This gig is just the latest in string that has landed Tenet $2.3 million in salary and stock since his retirement in 2004.
PROGNOSIS: A skeptical UK government audit called QinetiQ's profits "excessive." So what's their point?
TICKER: QQ (London)
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FROM THE MAGAZINE

Spoils of War
(continued)



L. PAUL BREMER

WRAPPER'S DELIGHT BlastGard's anti-ballistic bubble-wrap
Given a Medal of Freedom despite letting $9 billion in cash go missing in Iraq and steering the country into an anarchic civil war, he's now signed on at BlastGard, makers of pricey anti-ballistic bubble-wrap. In exchange for options on 100,000 shares of stock, Bremer has promised to "[get] this technology introduced to key decision makers."
PROGNOSIS: What with a nearly endless supply of master IED makers now plying their trade in his former fiefdom (heckuva job, Bremer!), the market for "blast mitigation solutions" is certain to blow up worldwide.
TICKER: BLGA
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RICHARD PERLE

The Prince of Darkness presided over the Pentagon's Defense Policy Board until a March 2003 article in the New Yorker exposed some truly stunning conflicts of interest. It seems that Perle had carefully positioned himself to get rich (well, richer) off the same war he was busily promoting. His most notable shenanigan was a secret lunch to shake loose $100 million from Saudi investors for Trimere Partners, his defense industry venture capital fund. But Perle also had—and has—a post at Autonomy Corp, which designs eavesdropping and data mining software. The company has boasted about having more than 30 U.S. "intelligence-related and classified organizations" as customers.
PROGNOSIS: Investment banks like Goldman Sachs and Citigroup have given the company a "buy" rating after its continued success in racking up new big-ticket government contracts.
TICKER: AU (London)



06/06/07
File Under: L. Paul Bremer, Richard Perle