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Volume 3,  Number 15              May 18 - 24, 2003            Quezon City, Philippines

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Bush Ally Set to Profit From the War on Terror

By Antony Barnett and Solomon Hughes
The Observer

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James Woolsey, former CIA boss and influential adviser to President George Bush, is a director of a US firm aiming to make millions of dollars from the 'war on terror', The Observer can reveal.

Woolsey, one of the most high-profile hawks in the war against Iraq and a key member of the Pentagon's Defence Policy Board, is a director of the Washington-based private equity firm Paladin Capital. The company was set up three months after the terrorist attacks on New York and sees the events and aftermath of September 11 as a business opportunity which 'offer[s] substantial promise for homeland security investment'.

The first priority of Paladin was 'to invest in companies with immediate solutions designed to prevent harmful attacks, defend against attacks, cope with the aftermath of attack or disaster and recover from terrorist attacks and other threats to homeland security'.

Paladin, which is expected to have raised $300 million from investors by the end of this year, calculates that in the next few years the US government will spend $60 billion on anti-terrorism that woul not have been spent before September 11, and that corporations will spend twice that amount to ensure their security and continuity in case of attack.

The involvement of one of the most prominent hawks in Washington with a company standing to cash in on the fear of potential terror attacks will raise eyebrows in some quarters.

In 2001 US Defence Secretary Paul Wolfowitz sent Woolsey to Europe, where he argued the case for links existing between Saddam Hussein and al-Qaeda. He was one of the main proponents of the theory that the anthrax letter attacks in America were supported by Iraq's former dictator.

More recently Woolsey told CNN about Saddam's attempts to produce a genetically modified strain of anthrax. He told the US broadcaster: 'I would be more worried over the mid to long term about biological weapons, because the chemical gear, we're - I think we're pretty well equipped to deal with. But there have been stories that Saddam has been working on genetically modifying some of these biological agents, making anthrax resistant to vaccines or antibiotics.'

Little evidence was provided for the Iraq link to the anthrax attacks and the FBI is now investigating a lone US scientist whom it believes was responsible. But Woolsey's assertions added to a political atmosphere in which spending on equipment designed to protect individuals and firms from terror was predicted to mushroom.

One of Paladin's first investments was $10.5m in AgION Technologies, a firm devising anti-germ technology that it hopes will 'be the leader in the fight against bacterial attacks initiated by terrorists on unsuspecting civilian and military personnel'.

Woolsey is not alone among the members of the Pentagon's highly influential Defence Policy Board to profit from America's war on terror.

The American watchdog, the Centre for Public Integrity, showed that nine of the board's members have ties to defence contractors that won more than $76bn in defence contracts in 2001 and 2002. Woolsey's fellow neo-conservative, Richard Perle, had to resign his chairmanship of the board because of conflicts of interest, although he remains a board member.

The hawks and their money

DICK CHENEY, Vice President

Cheney once ran oil industry giant Halliburton whose subsidiary, Kellogg Brown & Root, has won lucrative contracts in post-Saddam Iraq. The Defence Department gave KBR exclusive rights to a $90m contract to cater for the Americans who are working on rebuilding Iraq. KBR also won a lucrative contract to repair Iraq's oilfields.

DONALD RUMSFELD, Defence Secretary

Rumsfeld was a non-executive director of European engineering giant ABB when it won a L125m contract for two light water reactors to North Korea - a country he now regards as part of the 'axis of evil'. Rumsfeld earnt $190,000 (L118,000) a year before he joined the Bush administration.


An influential member of the Pentagon's Defence Policy Board, Perle is managing partner of venture capital company Trireme, which invests in companies dealing in products of value to homeland security. It sent a letter to Saudi arms dealer Adnan Kashoggi arguing that fear of terrorism would boost demand in Europe, Saudi Arabia and Singapore.

GEORGE SHULTZ, ex-Secretary of State

Shultz is on the board of directors of the Bechtel Group, the largest contractor in the US and one of the favourites to land lucrative contracts in the rebuilding of Iraq. Shultz is chairman of the the advisory board of the Committee for the Liberation of Iraq, a fiercely pro-war group with close ties to the White House.

May 11, 2003


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