BBC News
Launch consoleBBC NEWS CHANNEL
Last Updated: Thursday, 20 December 2007, 12:31 GMT
'Invitation' to huge defence fraud
By Allan Urry
BBC World Service Global Account

Wars in Iraq and Afghanistan have helped push US military spending to record levels.

Stealth bomber
US defence spending has seen a huge rise since 9/11

But as the nation's defence budget soars, there has been a series of procurement and political scandals surrounding multi-billion dollar contracts.

There is mounting concern about the relationship between the Pentagon, the politicians setting the budgets and defence contractors - sometimes known as the iron triangle.

Congressman Henry Waxman, a Democrat, who chairs the powerful House Oversight and Government Reform Committee, argues for urgent reform.

"We need to restore transparency, efficiency and accountability to government contracting and nowhere is that more important than in defence."

His committee was shocked at the scale of the problems revealed through investigations into federal procurement, of which defence accounts for almost three quarters.

"When we have contracts let out and we are seeing so much money involved, the oversight has been discouraged and accountability undermined," he told the BBC.

Oversight committee

The oversight committee identified contracts worth a total of $762bn in which there were problems of mismanagement, poor value, and fraud.

"Some of the ways we are handling these contracts is almost an invitation for fraud and abuse," said Mr Waxman.

It is an invitation some politicians found hard to resist.

In a trial in California in October 2007 defence contractor Brent Wilkes was found guilty on all charges relating to corrupt practices with his local congressman, Randy "Duke" Cunningham, a Republican.

According to author Seth Hettana, Wilkes enjoyed $90m worth of defence contracts fixed by his pet congressman, some in exchange for sun and sleaze in Hawaii.

Randy "Duke" Cunningham
Congressman Randy Cunningham was jailed for corruption

"This was a lavish vacation that Wilkes threw for Cunningham at a $6,600 a night suite.

"The whole trip was an act of seduction, he instructed his nephew, his right hand man, to make some calls and find some girls.

"He even instructed his employees to lose to Cunningham at poker games. Whatever the congressman needed - a boat payment, a mortgage payment - whatever the issues were in his life, Wilkes would try to take care of it for him."

Cunningham is now in jail with Wilkes' sentence expected next month.

'Earmarking' under attack

The congressional device which enabled Cunningham to award contracts direct to his business friend is called earmarking.

Earmarking is legal under the US Constitution unless, like Cunningham, you receive bribes or other significant material benefits in direct return for awarding federal contracts.

Critics argue that earmarking can lead to individual politicians authorising federal money to be spent on businesses of their choosing, often with little public scrutiny and without competitive bidding.

As US defence spending has soared, so have earmarks, according to Winslow Wheeler, a former congressional staffer on Capitol Hill who handled earmark issues for Democrats and Republicans.

"It really started taking off after 9/11. In fiscal year 2001 it was about $2bn a year in the Defence Bill; it doubled in that very first year to $4bn. It went from there to $6bn to $8bn. Up to about $10bn for fiscal year 2007."

Prime cuts

This huge rise raises questions which go to the heart of the US political system itself, and what is called pork barrel politics - government spending intended to benefit a politician's constituents in return for their political support.

John Murtha
John Murtha has been criticised for Pork Barrel politics

The prime cuts of pork are found on Defence Appropriations - the same committee on which Randy Cunningham once sat.

Its chairman is now criticised for his heavy use of earmarks, although it is not suggested he has done anything illegal.

Democrat John P Murtha, who has represented a district in Pennsylvania in Congress for more than three decades, has risen to this key position in a committee overseeing half a trillion dollars spending this year.

According to Mr Wheeler, Mr Murtha "is a major porker.

"They have an event every year in Johnstown Pennsylvania - they call it the Murtha Fest, and lots of defence manufacturers come and display their goodies that they want Murtha's help on.

Spending probity

"He gets his popularity in his district from that, he gets his power from making sure the system distributes enough to the people that he wants it distributed to."

Figures from the US watchdog organisation Taxpayers for Common Sense, which analyses government spending, suggest Mr Murtha secured the highest value of earmarks of any congressman from next year's defence bill - $150m.

This watchdog calculates he sent $2bn of federal cash to his district in this way over the years.

Another non-profit watchdog group, Citizens for Responsibility and Ethics in Washington, also questions this arrangement's probity.

Crew's Melanie Sloan, a former assistant district attorney, said: "Mr Murtha brings tons of money into his campaigns all from defence manufacturers whom he earmarks for. So it's quite a quid pro quo relationship going on there which is very questionable although not illegal because this is the way the system works."

Arcane process

Mr Murtha would not be interviewed for Global Account but in a statement said he had been elected to congress 18 times because he understood the needs and concerns of his constituents and was effective at creating working partnerships between community leaders, businesses and the residents of the region.

Henry Waxman
We ought to go back to competition for the work to be done
Congressman Henry Waxman

But Congressman Henry Waxman believes it is time to rein in the long established but arcane political process of earmarking.

"There is no competition. In reality appropriators are naming the project. Sometimes it makes sense but more often than not, I think that these earmarks are unjustified and a real problem.

"We ought to go back to competition for the work to be done."

You can hear more about this on BBC World Service, Global Account, 2300 GMT Thursday 20 December.

US Congress passes Iraq funding
20 Dec 07 |  Americas
Congressman jailed over bribery
04 Mar 06 |  Americas
Democrats frustrated in Congress
20 Dec 07 |  Americas


The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


banner watch listen bbc sport Americas Africa Europe Middle East South Asia Asia Pacific