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Number 2 At CIA Was CFO Of ArmorGroup,NA

Distingushed Marines, Former Employees Of ArmorGroup, ChargeCompany Lied To State Deparment To Get Embassy Contract

Say They Were Fired When They Complained To Executives

Embassy Guard Procured Counterfeit Boots, Jackets and Gloves From Wife's Company

The private security firm at the center of the US Embassy scandal in Afghanistan has had to defend itself against a growing number of abuse and corruption allegations over the past several months, including a 30 million dollar lawsuit by two former US Marines.

James Sauer and Peter Martino, a pair of former US Marines with distinguished records, were employed by ArmorGroup,North America, a private security firm that won the contract to provide security at the US Embassy in Kabul in April of 2007. Sauer and Martino claim, in a lawsuit filed in US District Court, that the company lied to the State Department in its bid to secure and maintain the lucrative 187 million dollar embassy contract. The marines say ArmorGroup made false representations to the State Department concerning its ability to provide security for the Kabul embassy. They also charge that they were fired in retaliation for lodging numerous complaints with ArmorGroup executives.

From the federal complaint:

"Soon after beginning their employment, Plaintiffs discovered that Defendants had materially misrepresented AGNA's capabilities in winning the contract award and lacked the means, facilities, and expertise to perform as warranted. Plaintiffs repeatedly reported their concerns to Defendants, who acknowledged that AGNA had underbid the contract in order to secure it, and who directed them to "make do" and put a "good face" on the situation to ensure that a profit would be made on the contract and that shareholders would be satisfied. Defendants also ignored concerns that the DoS could pull the contract if AGNA failed to comply with its terms, blithely noting that DoS contracting officers understood, post-Blackwater, that their fates were tied to ArmorGroup's, thus making them reluctant to take adverse action against AGNA."

"After strongly objecting to the business practices of AGI and AGNA (hereinafter collectively referred to as "ArmorGroup Defendants") of putting profit over the security standards necessary to protect the U.S. Embassy and its personnel, Plaintiffs were terminated from their employment on June 13, 2007, the day after conveying their concerns to Defendant O'Connell, and thereafter to responsible personnel at the U.S. Embassy, including via a writing that detailed the numerous ways in which AGNA "has no regard for the security of the United States Embassy, and is interested in only their stocks."

In addition to the action in federal court, Congress has also accused the Mclean, Va.-based firm, whose parent company is based in Great Britain, of corrupt practices.  In June, Democratic Senator Claire McKaskill, chair of the Senate Subcommittee on Contracting Oversight held a hearing into ArmorGroup's five-year embassy contract. Among the allegations -- an employee of ArmorGroup bought counterfeit boots, jackets and gloves from his wife's company, leading the Missouri senator to ask, "Do we have criminals working for us?"

The panel also heard that guards were often away from their posts -- sometimes for hours at a time and that ArmorGroup failed to provide an adequate number of guards, hired guards that did not speak sufficient English and did not properly train them in weapons and ammunition.  ArmorGroup has received at least two memos from the State Department in recent months warning that it did not have the appropriate number of medical technicians on hand and that the company did not have any plans for a "mass casualty incident."

In February, 2008, ArmorGroup Senior VP, James Schmitt testified before the Senate Committee on Homeland Security and layed-out his thoughts on the use of private security firms overseas and assured the Senate panel that the company has a stellar reputation:

"In the case of ArmorGroup, we have long established formal corporate program to ensure that company employees act at all times within the relevant international and local legal and humanitarian frameworks including an employee Code of Conduct, a stringent ethics policy, and an ethics review board."

To complicate matters, ArmorGroup,NA was purchased by Wackenhut Services Inc.earlier this year. In testimony before the Senate Homeland Security and Governmental Affairs Committee's contracting oversight panel just this past June, VP Samuel Brinkley proclaimed:

"We are proud to say that we now have addressed each weakness and deficiency in the performance on the Kabul Embassy Contract – and that today AGNA is in full compliance with the staffing and other major requirements of the Contract."

Brinkley's explanation of the Wackenhut takeover of ArmorGroup, NA shows just how complicated all this is:

Our company, Wackenhut Services, Inc. ("WSI"), came to own ArmorGroup North America, Inc. ("AGNA") – the contractor on the Kabul Embassy Contract. The events that led to our owning AGNA are circuitous. In May 2008, our parent, G4S plc ("G4S"), purchased the parent of AGNA, ArmorGroup International plc ("ArmorGroup") in a friendly takeover on the London Stock Exchange. G4S purchased ArmorGroup for the purpose of acquiring ArmorGroup’s profitable operations in otherparts of the world – not for any reason having to do with AGNA. AGNA was a troubledpart of the broader ArmorGroup enterprise that came along with the acquisition of ArmorGroup.

Problems with ArmorGroup go back to the Bush administration.  The company has been doing business in Afghanistan since 2002.  At an interesting intersection of the CIA and ArmorGroup stands Stepen Kappes.  Kappes is currently the deputy director of the CIA and was said to have been a strong candidate for the top post which ended-up going to Leon Panetta.  Kappes had served at the CIA for 25 years when he resigned from the agency in November, 2004. Following his resignation he took a position as Chief Financial Officer at ArmorGroup. He left ArmorGroup in June 2006 and was sworn-in a month later as deputy director at the intelligence agency.  The 187 million dollar contract for embassy security in Kabul was awarded to ArmorGroup on April 2, 2007, ten months after Kappes left ArmorGroup and 9 months into his tenure as number two at the CIA.

While private security firms, most notably Blackwater, have come under fire for their practices in Iraq and Afghanistan, and as intensified scrutiny has been focused on the issue, ArmorGroup is set apart from the others in one major respect.  It is not an American Company.  It's based in Scotland and has a subsidiary in McLean, Va. -- ArmorGroup, North America.

Attorney Richard Condit is co-counsel for the two US Marines suing ArmorGroup and he draws attention to the fact that ArmorGroup is a foreign entity:

"This latest development shows the murkiness involved with outsourcing security detail to companies whose parent organizations are based overseas. ArmorGroup North America appears to have been taking orders from the headquarters in Britain. Americans should be outraged to know, first, that foreign companies have been charged with protecting our government workers, and second, that the foreign company dropped the ball."

It has been suggested that the trouble with ArmorGroup may start with its CEO.  His background is unusual in that he has no experience in security.  Dave Seaton says himself, "I would never have guessed that I would have been in this industry," Seaton was an accountant at the oil services giant Sclumberger Dowell where he got to travel to places like Russia, Europe and Africa, and found he liked it. After 12 years at Schlumberger, Seaton moved-on to The Stuffed Shirt Company, a firm that makes shirts that don't wrinkle, where he was director.  Next was ArmorGroup and the head of a company that now holds tens of millions of dollars in security contracts in Afghanistan and Iraq.

"POGO is pleased that the State Department has finally taken decisive steps to bring the Kabul security guard scandal under control. We remain very concerned, however, with certain elements of this action. POGO has no solid information of the identities of those reported to have been removed. We have been told people are being fired for simply being in the photographs. We do know a number of those were unwilling participants. We also want to hear that the supervisors who were responsible for this debacle are being held fully accountable and not simply allowed to resign and go to another contractor."

It will be interesting as the pressure from POGO mounts and the federal lawsuit proceeds.  Dave Seaton may be thinking of going back to perfectly-pressed shirts.


Originally posted to actuality on Sun Sep 06, 2009 at 11:59 AM PDT.

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