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How private firms cashed in on 9/11

world Updated: Sep 07, 2011 01:15 IST

Charles Smith always enjoyed visiting US troops aboard. Though a civilian, he had worked for the army for decades, helping to run logistical operations from the Rock Island arsenal near Davenport, Iowa.

He helped keep troops supplied, and on trips to Iraq made a point of sitting down with soldiers in mess halls. “I would always ask them: what are we doing for you?” he said.

Smith eventually got oversight of a multi-billion-dollar contract the military had struck with private firm KBR, then part of the Halliburton empire, to supply US soldiers in Iraq. But, by 2004, he noticed problems: KBR could not account for a staggering $1bn (£620m) of spending.

So he took a stand. He made sure a letter was hand-delivered to KBR officials, telling them that some future payments would be blocked. Smith said, one KBR official reacted by saying: “This is going to get turned around.”

A few days later, Smith was abruptly transferred. The payments he suspended were resumed. “The emphasis had shifted. It was not about the troops. It was all about taking care of KBR,” he said. Eventually, Smith left the army. When he told his story to the New York Times, the paper ran an editorial. “In the annals of Iraq war profiteering, put Charles Smith down as one of the casualties,” it wrote.

What Smith had blundered into is one of the most disturbing developments of the post-9/11 world: the growth of a national security industrial complex that melds together government and big business and is fuelled by an unstoppable flow of money. It takes many forms. In the military, it has seen the explosive growth of the contracting industry with firms such as Xe, formerly known as Blackwater, or DynCorp increasingly doing the jobs of professional soldiers.

In the world of intelligence, private contractors are hired to do the jobs of US’s spies. A shadowy world of domestic security has grown up, milking billions from the government and establishing a presence in every state. From border fences that don’t work to dubious airport scanners, spending has been lavished on security projects as lobbyists cash in on behalf of corporate clients. “The creation of this whole industry is a disaster. But no one is talking about it," said John Mueller, a professor at Ohio State University and author of Overblown: How Politicians and the Terrorism Industry Inflate National Security Threats and Why We Believe Them.