Joseph M. Allbaugh
Last Updated: July 16, 2008
Starting out as an GOP "go-fer", Allbaugh rose to "go-to" guy for George W.Bush's campaign contributors, then along with Karl Rove and Karen Hughes, completed George W. Bush's "Iron Triangle" of political advisors. In 2001, he was named head of the Federal Emergency Management Agency ( FEMA). Soon after, Allbaugh started making really serious money.
In 2003, just before leaving office, Allbaugh arranged an extraordinary, but little known boon for a Friend Of George (FOG). He delivered a sole source $146 million contract for the nation's emergency water supply, the first of its kind, to a Georgia family firm named Lipsey, with no emergency water delivery experience and only 14 employees. The Lipsey family however, is also the nation's 2nd largest gun wholesaler, a major GOP fundraiser, and head of both the Congressional Sportsmen's Foundation and the National Association of Sporting Goods Wholesalers.
When Hurricane Katrina hit two years later, at New Orleans' Convention Center alone, nearly twenty thousand people went without water for up to four days, followed by conflicting official explanations. A Congressional committee found that Lipsey had overcharged the government at least $8 million for the work. Businessman Allbaugh also found fortune in Katrina's aftermath. As partner in a Washington total access lobby firm, he helped funnel contracts worth hundreds of millions to clients such as Halliburton, and, suddenly converted GOP benefactor The Shaw Group construction company. The big money flowed however, as it still does, from Iraq war contracting.
Allbaugh started his career in the Oklahoma GOP. Early on he was also lobbyist for a neighbor's startup company. The neighbor's name was Michael Brown, later Allbaugh's replacement as FEMA director. Perhaps as portend of things to come, Brown's startup company, despite young Allbaugh's lobbying efforts, failed. Allbaugh himself faced lawsuits alleging financial misconduct in the '80s. In'88 he was given a job with notorious billionaire Jackson Stephens, who helped bailout George W's failed oil companies.
Returning to his political climbing career, Allbaugh rose to be Oklahoma's Deputy Secretary of Transportation, while managing several federal and state GOP campaigns. Early in 1994, Bush hired Allbaugh to work on his Texas gubernatorial campaign. Allbaugh then became Gov. Bush's Chief of Staff.
In 1998, he was centerstage in the Texas "funeralgate" scandal. Eliza May, director of the state's Funeral Services Commission, charged he pressured her to drop a license investigation into SCI, the world's largest funeral company, and major Bush contributor. Instead, she fined the company $450,000, and was soon fired. May sued for wrongful discharge, and eventually won a settlement.
In 2000 Allbaugh became the Bush-Cheney national campaign director. Cheney and Allbaugh reportedly grew so close that, after the election, Cheney sold his opulent Washington townhouse to Allbaugh, for just $690,000. That same year, Bush appointed Allbaugh director of FEMA. During his tenure, Allbaugh slashed the professional staff, and turned over much of FEMA's work to private contractors
The year before Allbaugh took over FEMA, his wife, Diane, lobbied on behalf of several disaster-relief companies.. Four years earlier in Texas, Diane's lobbying sparked a scandal when she got $250,000 in contracts just months after her husband became the Governor Bush's Chief of Staff. This time, the year before 911, Diane's lobbying for disaster relief companies went unnoticed.
When Allbaugh stepped down from FEMA in '03, he installed former neighbor Michael Brown, ("Brownie, you're doin' a heck of a job") as Director. Allbough had hired Brown as FEMA general counsel in '01.
Absent from Brown's resume was that he'd just been fired from his last job, commissioner of the International Arabian Horse Association. He'd reportedly tried to pay off an Association attorney who'd been looking into certain of Brown's transactions. In 2005 Brown was forced to resign another post, this time as FEMA Director, following his clueless performance during the Hurricane Katrina disaster.
Private citizen Allbaugh's disaster relief involvement was quite profitable. He'd opened a second lobbying firm with his wife. Called the Allbaugh Group, it focused on getting US Government contracts. Kellogg Brown & Root (KBR), a subsidiary of Halliburton, hired the firm, as did construction conglomerate The Shaw Group. Shaw landed two Katrina contracts of up to $100 million each to rebuild housing and levees in the Gulf Coast. KBR was hired to repair Gulf Coast naval facilities and provide facilities for FEMA workers in New Orleans. It also landed Katrina contracts to pump floodwater and build a temporary morgue.
Looking back, those successes, and much larger ones to follow, seem predestined. Allbaugh had also become a partner of Mississippi Governor Haley Barbour (former head of the GOP) in an interlocking group of firms headed by Bush White House alumni, cadre and family. In 2003, Allbaugh and Barbour opened a lobbying firm called New Bridge Strategies, funded by the BGR group, named for Barbour and former President HW Bush assistants Lanny Griffiths and Ed Rodgers. BGR had also delivered many $100s of millions in Katrina contracts for its clients, including $568 million for Florida firm Ash-Britt, one of Jeb Bush's big fans.
Allbaugh is Board Chairman of New Bridge Strategies. Its CEO is Jamal Daniel, a longtime benefactor of President Bush's oft-scandalized brother Neil. Neil himself is listed as a Consultant to New Bridge Strategies. Jamal Daniel, whose father was a founder of the Syrian Baath Party, also co-chairs other companies with brother Neil, including Crest Investments, Ignite and Silvermat. New Bridge Strategies's website trumpets is ability to secure contracts in Iraq.
The firm is also a principal shareholder in military contractor Diligence LLC, with Allbough as its Deputy Chairman. Diligence's mideast subsidiary is owned by Mohammed Al-Sagar, chairman of the Kuwait Parliament's foreign relations committee. Diligence, much like Blackwater, provides security for corporate executives and companies in Iraq. Even more so than Blackwater, Diligenc's Board and officers are comprised of former CIA and State Dept officials. New Bridge Strategies and Diligence share staff and office space in the Barbour Griffith & Rodgers' offices.
In 2004, Allbaugh teamed up with Andrew Lundquist, former director of Vice President Cheney's energy policy task force and a Republican staff director for the Senate Energy and Natural Resources Committee, to form a third group called Blackwell Fairbanks. The firm's first client was Lockheed Martin. In 2007 Allbaugh was Senior Advisor to the Rudy Giuliani presidential campaign.
* Washington Monthly, Sept 1, 2005: www.washingtonmonthly.com/archives/individual/2005_09/007023.php
* “K Street: Allbaugh Is Just Making a Living,” The National Journal,” 7/3/04.
* “Muckraker Katrina,” The Texas Observer, 10/7/2005.
* “Texas Monthly Talks; Joe Allbaugh,” Texas Monthly, 8/1/06.
* “Joe Allbaugh: Big Man on Campaign,” The Washington Post, 1999.
* “Who Is Joe Allbaugh?” Slate, 11/1/00.
* “Joe Allbaugh, Disaster Pimp" Slate, 9/7/05.
* “Firms with Bush-Cheney ties clinching Katrina deals,” Reuters, 9/10/05.
* “The Funeral Scandal Time Line,” Salon, 8/20/99.
* “Lobbyists Set Sights On Money-Making Opportunities in Iraq,” Washington Post, 10/2/03.
November 19, 2007Rudy Giuliani adds war/disaster profiteer Joe Allbaugh to campaign staff
The former head of FEMA who gave America "Brownie" and helped disembody the agency will be senior advisor on homeland security issues On October 30, Joseph Allbaugh was named Senior Advisor to Rudy Giuliani's presidential campaign. According to a Giuliani campaign press release, Allbaugh "will advise the campaign on general strategy and homeland security."
"Rudy Giuliani is the only candidate who will keep America on offense in the Terrorists' War on Us," the press release quoted Allbaugh as saying. "The leadership he showed after 9/11 was an inspiration not only to New Yorkers but to the country. He knows what it takes to keep America safe, and as President, he will ensure that our country never goes back on defense in this war."
Giuliani said that the two of them had "worked closely together in the aftermath of 9/11 to ensure that everything possible was being done to help victims and their families. He has significant experience in emergency management and I will look to him for sound advice and expertise."
The Politico reported that "The endorsement is valuable ... because it gives the former New York mayor additional entrée to the Bush-Cheney organization. Allbaugh was one-third of the 'Iron Triangle' of Allbaugh, Karl Rove and Karen Hughes, the powers-that-be in the president's original Austin-based presidential campaign."Both Giuliani and Allbaugh are disaster profiteers.
"Giuliani himself has parlayed his own fame in connection with 9/11 into lucrative consulting deals with his own private security firm," Sheldon Rampton, Research director with the Center for Media and Democracy told Media Transparency in an e-mail exchange. In addition, media reports have pegged his earnings from speeches about the threat of terrorism at more than $10 million.
In May of this year the Washington Post reported that over a five year period starting in early 2002 Giuliani Partners (website) "earned more than $100 million, according to a knowledgeable source, who spoke on the condition of anonymity because the firm's financial information is private. And that success helped transform ... [him] from a moderately well-off public servant into a globe-trotting consultant whose net worth is estimated to be in the tens of millions of dollars."
The Washington Post pointed out that Giuliani chose as his partners longtime associates, including a former police commissioner later convicted of corruption, a former FBI executive who admitted taking artifacts from Ground Zero and a former Roman Catholic priest accused of covering up sexual abuse in the church."
"Given that Giuliani's private company has a history of hiring people with questionable character and serving shady clients, it's not surprising that he would hire a profiteer like Allbaugh to advise him on homeland security," Rampton noted.
"Allbaugh has shown proficiency at private deal-making, but there's no evidence that he knows how to serve the public good. There's certainly no evidence that his time at FEMA prepared the agency to respond effectively to subsequent disasters like Hurricane Katrina, although Allbaugh and his clients evidently made quite a bit of money from it."
Over the past few years, Allbaugh's enterprises have raked in money from both the war in Iraq and Hurricane Katrina. The last we heard about Allbaugh he was heading down to the post-Hurricane Katrina Gulf Coast. However, he wasn't going to help the victims of the hurricane - he was there to drum up business for his corporate clients.
Allbaugh, George W. Bush's longtime Texas pal and the campaign manager of his 2000 presidential campaign, is probably best known for being the man who gave the American people "Brownie" -- Michael Brown, the former head of the International Arabian Horse Association (IAHA) -- a breeders' and horse-show organization based in Colorado -- who Allbaugh brought into Federal Emergency Management Agency (FEMA), and who later succeeded him as head of the agency. Brown's disastrous tenure at FEMA is only one of the FEMA-wrecking projects on Allbaugh's resume.
After his appointment as FEMA chief, Allbaugh, who had no previous experience in emergency management, took a Rumsfeldian approach to the agency, setting about to make it leaner and meaner, all the while putting privatization front and center.
In September 2004, Jon Elliston reported in the Independent Weekly that Allbaugh had ominously testified before Congress in May 2001 that "Many are concerned that federal disaster assistance may have evolved into both an oversized entitlement program and a disincentive to effective state and local risk management. Expectations of when the federal government should be involved and the degree of involvement may have ballooned beyond what is an appropriate level."
According to Elliston's report titled "A Disaster Waiting to Happen," "As a result [of Allbaugh's efforts], says a disaster program administrator who insists on anonymity, 'We have to compete for our jobs--we have to prove that we can do it cheaper than a contractor.' And when it comes to handling disasters, the FEMA employee stresses, cheaper is not necessarily better, and the new outsourcing requirements sometimes slow the agency's operations."
William Waugh, a disaster expert at Georgia State University who has written training programs for FEMA, told Elliston that the "consultant culture" was not a positive development. "It's part of a widespread problem of government contracting out capabilities," Waugh said. "Pretty soon governments can't do things because they've given up those capabilities to the private sector. And private corporations don't necessarily maintain those capabilities."
By the time Allbaugh handed in his resignation in December 2002, FEMA was well on its way to becoming part of the newly created gargantuan Department of Homeland Security (DHS). Elliston reported that "Analysts in and out of government warned against subsuming the emergency agency's vital functions in a new super-department. 'There are concerns of FEMA losing its identity as an agency that is quick to respond to all hazards and disasters,' the agency's inspector general noted in a memo to Allbaugh.
Congress' Government Accountability Office judged the merger to be a 'high-risk' endeavor for FEMA, and the Brookings Institution, a leading Washington centrist think-tank, cautioned in a report that such a move could hobble the agency's natural disaster programs. 'While a merged FEMA might become highly adept at preparing for and responding to terrorism, it would likely become less effective in performing its current mission in case of natural disasters as time, effort and attention are inevitably diverted to other tasks within the larger organization.'"
Albaugh's college friend Michael Brown, who served as FEMA's general counsel, was named head of the agency which had become part of the DHS's Emergency and Response Directorate. "When the reorganization took effect on March 1, 2003," Elliston reported, "Brown assured skeptics that under the new arrangement, the country would be served by 'FEMA on steroids' -- a faster, more effective disaster agency."
A 2004 article in the Journal of Homeland Security and Emergency Management pointed out that "Allbaugh brought about several internal, though questionably effective, reorganizations of FEMA. The Bush-Allbaugh FEMA diminished the Clinton administration's organizational emphasis on disaster mitigation."
Elliston noted that after Allbaugh left the agency in March 2003, he was expected to again play a major role in the Bush-Cheney re-election campaign in 2004. Instead "he set about creating a string of lobbying firms, including New Bridge Strategies [where he became Chairman and Director], which helps U.S. companies win reconstruction contracts in Iraq. [In the summer of 2004] he started [Blackwell Fairbanks, LLC], another consulting company with Andrew Lundquist, the former director of Vice President Dick Cheney's secretive energy policy task force. The firm's first client was Lockheed Martin, one of the country's largest defense contractors."
Early on, the website of New Bridge Strategies maintained that "The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C., and on the ground in Iraq."
Two plus years later, in early September 2005, shortly after Hurricane Katrina devastated the Gulf Coast and New Orleans, Joe Allbaugh's boots hit the ground in Louisiana; this time as a private citizen. No longer representing the government, Allbaugh was there for one thing and one thing only: to drum up business for corporate clients of The Allbaugh Company, LLC (website
) -- a firm he co-founded with his wife, Diane -- which advises companies how to get in on lucrative disaster relief projects.
Based in Washington, D.C. with offices in Austin, Texas and Oklahoma City, Oklahoma, The Allbaugh Company's website points out that it "is uniquely able to create new opportunities and expand competitive advantage." In a report dated September 1, 2005 and titled "Joe Allbaugh, Disaster Pimp," Slate's Timothy Noah pointed out that Allbaugh is "a lobbyist and a consultant who's been cashing in on his close ties to President Bush since 2003."
"Now." Noah wrote, "Allbaugh is the man to see if you want a contract in Iraq, or a piece of the action on homeland security, or, apparently, a shot at rebuilding New Orleans. 'I don't buy the 'revolving door' argument," Allbaugh told the National Journal [in 2004.] 'This is America. We all have a right to make a living.'"
"If Joe Allbaugh's advice is the basis for Giulani's approach to national security, I think we can expect that a Giuliani presidency would see further erosion of the government's ability to actually respond to disasters, coupled with more profiteering and ineffectual posturing when disasters happen," the Center for Media and Democracy's Sheldon Rampton pointed out.
(no photo available, post if you can find one)Last Updated: March 18, 2008
Jamal Daniel, a Syrian-American millionaire whose parents are said to have been involved in the founding of the Ba’ath Party, is a business partner of Neil Bush, the son of former President George H.W. Bush and brother to President George W. Bush. Together Bush and Daniel have profited from Hurricane Katrina and the war in Iraq.
Daniel and Bush began working together in the early 1990s, according to the Financial Times. Daniel and Bush were co-chairman of a firm called Crest Investment Corp., which paid Bush $15,000 every three months. The San Francisco Chronicle says having Bush’s name as a reference helped Crest win a no-bid contract with Texas to build a liquid natural gas (LNG) storage facility worth $400 million. The contract promises to continue to yield $2 million a year.
Early in their partnership, Daniel paid for Bush to take his family to Disneyland Paris shortly after the Silverado Savings and Loan scandal. (As director of Silverado, Bush approved large loans to two former business partners that were never repaid. When Silverado collapsed under the weight of similar defaulted loans and other profligate business practices, Bush paid a $50,000 court settlement. The federal government bailed out Silverado shareholders at a cost of more than $1 billion.) Several years later, Daniel paid $380,000 for a Kennebunkport cottage near the Bush compound for Neil Bush.
In return, Neil Bush has written letters to Middle East investors, including the president of Yemen, extolling the virtues of Daniel’s companies. Together, Bush and Daniel founded New Bridge Strategies in May 2003, to help companies secure contracts in Iraq. New Bridge’s director was Joseph Allbaugh, who ran George W. Bush’s presidential campaign and a former head of the Federal Emergency Management Agency. Edward M. Rogers and Lanny Griffith have served on its board – both men were assistants to George H.W. Bush, and, with Mississippi Governor Haley Barbour, are principals in the lobbying firm Barbour, Griffith and Rogers.
New Bridge shares the address and several board members with Diligence, LLC, a company founded by past members of the CIA and Britain’s intelligence agency, MI-5. Barbour, Griffith and Rogers (BGR) provided some initial funding for Diligence. Both New Bridge and Diligence are located in BGR’s Washington office building. Diligence runs a subsidiary (Diligence Middle East) that is 40 percent owned by Mohammed Al-Saqar, chairman of the foreign relations committee of the Kuwaiti Parliament.
According to the Financial Times, New Bridge persuaded Al-Saqar to invest in a Diligence business that will provide security in Iraq. In return, New Bridge got a stake in the Iraq security firm.
Diligence’s work includes “payroll protection and delivery around the country, personnel and facilities security, due diligence on potential Iraqi business partners and companies, screening of local potential hires, vetting, training and management of security personnel for guard work and close protection services, and the provision of daily intelligence briefs.”
Daniel and Bush are now partnering in an educational software company called Ignite. The Financial Times reports that Daniel boasts of being a founder of the company, and that he has helped Bush raise money for it. The Washington Post reported that Bush had raised at least $23 million for Ignite.
Ignite reaped a windfall in the aftermath of Hurricane Katrina. Bush’s mother Barbara Bush donated an undisclosed sum of money to the Bush-Clinton Katrina Fund (started by her husband and former President Bill Clinton), with the caveat that the money be spent to buy Ignite. Eight Texas schools that took in children evacuated after the hurricane later received Ignite software,
In November 2007, the Inspector General for the U.S. Department of Education said he would investigate whether federal funds were misused to buy Ignite software for schools in three states.
* sfgate.com/cgi-bin/article.cgi?file=/c/a/2004/11/07/MNG3Q9ME2V1.DTL< /a>
* Bush’s Brother’s Firm Faces Inquiry Over Purchases, New York Times, November 7, 2007: www.nytimes.com/2007/11/07/washington/07neil.html?_r=1&oref=slog
* Financial Times had several articles:
“Consultant on Iraq contracts employed president’s brother NEIL BUSH,” November 28, 2003, THOMAS CATAN and STEPHEN FIDLER
“Businessmen used link to Neil Bush,” December 12, 2003, THOMAS CATAN and STEPHEN FIDLER
“A company hoping to help win contracts for the rebuilding of Iraq links controversial business associates of Neil Bush, brother of the US president, to some Republican heavy hitters,” December 12, 2003 Friday, THOMAS CATAN And STEPHEN FIDLER
Last Updated: October 13, 2008
Mississippi Governor Haley Barbour doesn’t have to worry about re-election for his livelihood. Where there is money to be made from government influence peddling, Barbour is marquee bankable. An operative in Mississippi’s GOP since the mid ‘70s, Barbour moved up to the Reagan/Bush White House as Director of Political Affairs. Just before the ’92 election, he began calling in his chips by setting up a GOP powered lobby firm, Barbour Griffith & Rodgers (BGR).
Packed with influential insiders, and financed by big time favor-buying companies, its fortune was assured. Fortune magazine soon named BGR the nation’s second most powerful lobby firm. When George W took office in 2001, its rank moved up to #1. Barbour’s other name partners in BGR are Lanny Griffith and Ed Rodgers, both top officials of George Sr’s administration.
Barbour’s expertise at political skullduggery was already well established. From 1994 to1996, as Chairman of the Republican National Committee, he solicited hundreds of thousands of dollars from Hong Kong businessman Ambrous Tung Young for a GOP group Barbour created, called the National Policy Forum. He applied to the IRS for tax-exempt status, claiming it was a nonpartisan group, which could legally accept foreign contributions.
Before receiving a response, Barbour then used Young’s money as collateral for a $2.1 million bank loan. The same day it received the loan, Barbour’s “nonpartisan” group gave $1.6 million to Barbour’s Republican National Committee. Most of it went to various state GOP groups before the IRS rejected the nonpartisan claim. Since becoming Governor of Mississippi in 2003, Barbour has had no compunction granting questionable State contracts to former and current BGR clients. As with Dick Cheney and Halliburton, Barbour merely placed his corporate assets in trust while in public office.
Actually the mega-bucks for Barbour’s firm, which also started flowing in ‘03, came from a far greater source. It was the Federal Government’s spending on the Iraq War, which had just begun. BGR put together three other companies – Crest Investments, New Bridge Strategies and Diligence Inc. under one roof (both office space and politically super-powered principals).
* Crest Investments had two co-founders - Neil Bush, President George W’s often caught but never incarcerated brother, and fellow fortunate son Jamal Daniel, whose father reportedly founded the Baath Party in Syria. The two have been close for decades. Daniel was a major contributor to George Sr’s campaigns, and when Neil remarried in 2004, Daniel held the wedding reception at his home. As a gift Daniel gave Neil a $400,000 cottage near the Bush family summer home in Maine.
With no experience in natural gas, Neil and Jamal were given a no-bid contract in Texas to build and run a $400 million liquefied natural gas storage plant. The plant provides annual payments of $2 million to Crest Investments. Jamal Daniel is also a Director of New Bridge Strategies, another company created by Barbour under the BGR umbrella. This one’s co -founder is Joseph Allbaugh, George W Bush’s 2000 Presidential campaign manager, then FEMA Director. Brother Neil Bush is listed as a Consultant.
*New Bridge Strategies website in’03 trumpeted its insider ability to deliver Iraq War contracts within weeks of the US invasion. It proclaimed: “The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in the United States and on the ground in Iraq." BGR also provided equity funding for Diligence LLC, a military contractor under its own roof.
*Diligence LLC, with Allbaugh listed as Vice Chairman, is a private force much like Blackwater, with contracts to provide security for corporate executives in Iraq. A Diligence subsidiary is owned by Mohammed Al-Sagar, Chairman of the Kuwaiti parliament’s foreign relations committee. Richard Burt, Assistant Secretary of State and Ambassador to Germany under George Bush Sr, is Chairman of Diligence LLC and a Director of BGR
In 2005, a certain ill wind did BGR and affiliates lots of good, domestically. Two years earlier, when Barbour’s partner Joseph Allbaugh moved over from FEMA, he’d arranged for his long-time associate, Michael Brown (“Doin’ a heckova job Brownie”), to take over as Director. When Katrina hit, for this group it was a perfect storm of profit.
Allbaugh and his wife Diane also own the Allbaugh Group, which was hired by Kellogg Brown & Root (KBR), a Halliburton subsidiary, and the Shaw Environmental Group to lobby Governor Barbour for Katrina contracts. AshBritt, a Florida (and major Jeb Bush contributor) BGR client, was given a $580 million contract to do Katrina cleanup.
The wife of Barbour’s nephew, Rosemary Barbour, was one of the biggest Mississippi-based winners of Katrina contracts. Her company, Alacatec LLC, picked up nearly $300 million in contracts from the Federal Emergency Management Agency or the General Services Administration, the bulk of it for trailer maintenance. The FBI began an investigation in 2007.
While in office, Governor Barbour’s also voted to favor tobacco interests, proposing to cut a children’s anti-smoking program and veto legislation that would increase Mississippians cigarette tax while eliminating the state’s grocery tax. Lorillard Tobacco is one of BGR’s most lucrative clients, paying it $2.4 million from 1998-2005. Lorillard is also a client of Capitol Resources LLC, the Mississippi lobbying firm where Barbour's two nephews, Henry and Austin Barbour, work.
Barbour also directly controlled the management of GOP Marketplace, the consulting firm central to the 2002 New Hampshire Senate election scandal. GOP Marketplace was accused of jamming a Democrat phone bank being used for get out the vote efforts. Former New Hampshire Republican Committee Executive Director Chuck McGee, former president of GOP Marketplace, Allen Raymond, and the former New England chairman of President Bush’s re-election campaign, James Tobin, were convicted for the plot.
Barbour was the largest contributor to former Army/CIA officer Mike Battles’ 2002 run for Congress in Rhode Island. The FEC fined Battles for "misstatement of financial activities." After losing the election, Battles founded Iraq security contractor Custer Battles, which, within months was awarded $100 million (much of it in cash) from the Coalition Provisional Authority.
An Army inspector general, Col. Richard Ballard, reported as early as November 2003 that Custer Battles was utterly incompetent. In the fall of 2004, Air Force Deputy General Counsel Steven Shaw accused Custer Battles of creating sham companies to steal $millions. In 2005, former employees accused the company of systematically defrauding the Coalition Provisional Authority of tens of millions of dollars. In March 2006, a Virginia federal jury found Custer Battles guilty of defrauding the United States. The verdict was overturned on appeal, when the court decided that the contract was with the Coalition Provisional Authority in Iraq, which was not under the jurisdiction of U.S. fraud laws.
* “US Contractor Found Guilty of $3 Million Fraud in Iraq,” The New York Times, 3/10/06.
* “Follow the money,” Newsweek, 4/4/05.
* “Former FEMA chief Allbaugh in the middle,” The Hill,
* “Blind Oversight and Custer Battles,” Mother Jones, 2/25/05.
* “Governor's Relative Is Big Contract Winner,” New York Times, 12/7/05.
* Barbour Had Controlling Interest in Phone Jamming Firm
,” TPM Muckraker, 3/3/06.
* “Gov. Barbour’s Proposal Would Destroy One of Nation’s Best Tobacco Prevention Programs,Help Big Tobacco At the Expense of Mississippi’s Kids,” press statement Campaign for Tobacco-Free Kids, 2/16/06.
* “Despite Barbour claims, Coast recovery still lagging,” The Clarion-Ledger, 8/25/06.
* “Using a Lobbyist's Pull From the Governor's Seat,” New York Times, 2/21/06.
* “Firm hired ex-Corps head before winning deal,” The Hill, 10/25/05.
* “Campaign finance key player Haley Barbour,” Washington Post, 3/4/98.
Last Updated: May 11, 2008
In the notorious tradition of presidential brothers like Billy Carter and Roger Clinton, Neil Bush has made a career of his family connections. Trading on the Bush name, he’s partnered with everyone from Syrian-American millionaire Jamal Daniel to the Chinese government. And he’s reaping perks that go beyond millions of dollars: his business associates buy him Kennebunkport cottages, Asian prostitutes, and trips to Disneyland.
Neil Bush, 51, is the third of the five children of former President George H.W. Bush. He went to Tulane University, getting his MBA in 1979. In 1982 Neil and two Colorado geologists founded an oil exploration company, called JNB Exploration, paid for by Bill Walters and Ken Good, Denver real estate barons and Bush family friends. Five years later, the company had drilled 26 wells in four states and found no oil.
In 1985, Bush joined the board of Silverado Savings and Loan, which had already lent millions to his investors Walters and Good. Bush lent his partners another $141 million. They, in turn, revinested some of that into JNB. Even though the company was losing money, Bush’s salary doubled. Walters and Good never repaid their loans, and in 1988 Silverado collapsed, costing the taxpayers $1.3 billion to bail it out. Within two years, more than 1,000 savings and loans would also fail because of similar conflicted insider transactions. The federal government paid $124 billion to bail out investors in the failed banks. Good and Walters later declared bankruptcy.
While many were indicted and convicted for the variety of felonies that triggered the savings and loan crisis, the Federal Office of Thrift Supervision merely reprimanded Bush, saying that his double dealing with Silverado and JNB amounted to “multiple conflicts of interest.” Bush claimed he was innocent but before the House Banking Committee in 1990, he admitted that some of his deals seemed “a little fishy.” Bush paid a $50,000 as part of a federal lawsuit against Silverado. Another Bush family friend, ex-congressman and bank lobbyist Thomas “Lud” Ashley, paid Neil’s legal bills.
Bush then started Apex Energy, a methane gas exploration company. He paid himself a salary of $160,000, invested $3,000 of his own money and got $2.3 million in investment capital from his father’s friend Louis Marx. The company never found any gas and went bankrupt. A later investigation by the House Small Business Committee questioned the $3,000 to $2.3 million investment ratio as “a very high leveraging of funds,” but ultimately said it could find nothing illegal about Apex.
For the last several years, Bush’s main business interest has been Ignite!, an educational software company he co-founded in 1999 with $23 million from U.S. and foreign investors. In 2002, Ignite! laid off 35 employees – half of its staff – and outsourced production to Mexico’s Grupo Carso Telecom, Ignite! pays Bush $180,000 annually.
One of Ignite’s investors was Jamal Daniel, a Syrian-American millionaire whose parents helped found the Ba’ath party. Daniel is a close Bush associate, who paid for Bush’s family to go to Disneyland in the midst of the Silverado scandel. Later Daniel bough Bush a $380,000 cottage for his family near the Bush family vacation compound in Kennebunkport, Maine.
Daniel founded Crest Investments, which Bush co-chairs and is paid $60,000 annually for his “consulting services.” With no experience in liquefied natural gas, Crest won a contract in Texas to build and run $400 million liquefied natural gas storage plant. The plant will result in annual payments of $2 million to Crest.
In 2003, Daniel and Mississippi Gov. Haley Barbour opened New Bridge Strategies, a firm dedicated to helping its clients get contracts in Iraq. It is chaired by Joseph Allbaugh, director of the Federal Emergency Management Agency under President George W. Bush. Allbaugh and his wife, Diane, also own the Allbaugh Group, which has been hired by Kellogg Brown & Root (KBR), a subsidiary of Halliburton, and the Shaw Environmental Group ID, to lobby Barbour for Hurricane Katrina contracts.
New Bridges invested in Diligence, LLC, a subsidiary of which (called Diligence Middle East, LLC) is owned by Mohammed Al-Sagar, chairman of the foreign relations committee of the Kuwaiti Parliament. Diligence has a contact to provide security for corporate executives and companies in Iraq. All three companies work together, sharing staff and office space in Barbour Griffith & Rodgers, a top lobbying firm founded by Haley Barbour.
In 2002 Bush signed a consulting contract with the fledgling Grace Semiconductor, a Shanghai-based company owned by Jiang Mianheng (the son of former Chinese president Jiang Zemin) and Taiwanese millionaire Winston Wong. His contractual duties consisted attending board meetings and discussing “business strategies.” Bush, who has admitted having no background in semiconductors, was paid $2 million in company stock over five years plus $10,000 for every board meeting he attends.
Critics have speculated that Bush’s true role at Grace would be to persuade his brother to relax restrictions on the Chinese semiconductor industry. Under international treaty, the United States limits high-tech exports to China, including semiconductor technology, to prevent it from being weaponized by the Chinese military. In a 2005 hearing, the Commerce Department raised security concerns about China’s semiconductor technology being applied to military weaponry or systems.
The same year, Bush emailed his wife requesting a divorce. He was having an affair with Maria Andrews, a volunteer helping his mother and ex-wife of a Houston-oil executive. The messy divorce proceedings were sprayed across front pages: including his dalliances with Asian hookers. When asked if they were prostitutes, Bush claimed not to know if the women were hookers, saying they just “appeared” at his hotel room door. In March 2004, Bush and Andrews married at Daniel’s home.
* The Relatively Charmed Life of Neil Bush, Washington Post, December 28, 2003: www.washingtonpost.com/ac2/wp-dyn/A35297-2003Dec27?language=printer
* Neil Bush’s Business Dealings, Financial Times, December 12, 2003: www.corpwatch.org/article.php?id=9433
* Cast Away, Texas Monthly, May 1, 2004: www.texasmonthly.com/preview/2004-05-01/feature
* Neil Bush: No Saving Grace, Business Week, December 8, 2003: www.businessweek.com/technology/content/dec2003/tc2003128_9007_tc058
* U.S.- China Economic and Security Review Commission Hearing: www.bis.doc.gov/news/2005/USChinaReview.htm
* Ignite Turns to Mexican Company, Austin Business Journal, October 25, 2002: www.bizjournals.com/austin/stories/2002/10/28/story3.html