Fraudster Ahmed Chalabi's Lobby
By Aram Roston
May 11, 2008.
No one could have guessed, back in 2000, what would come of Chalabi's efforts in Washington.
With the invasion of Iraq still three years in the future, Ahmad Chalabi would step into the lobby of the modern granite office building at 1801 K Street in Washington--the heart of the nation's lobbying corridor. He would walk past the security guard and ride the elevator up to the ninth floor. The ride was, in some sense, one small vertical leg of Chalabi's journey back to Iraq. This particular way point was the office belonging to Black, Kelly, Scruggs & Healey (BKSH), one of the most powerful lobbying firms in the United States, owned by public relations powerhouse Burson-Marsteller.
No one could have guessed, back in 2000, what would come of Chalabi's efforts in Washington. Few people knew who "neoconservatives" were, and even those who did could not have grasped their remarkable affection for and loyalty to Chalabi, a shrewd Iraqi Arab from a family of Shiite bankers. No one could have predicted that Chalabi's group, the Iraqi National Congress (INC), would go on to push false stories about terror and weapons of mass destruction with such great success as the group campaigned against Saddam Hussein's quite sadistic regime. Nor, certainly, was it possible to foresee that the massive propaganda campaign run by Chalabi to encourage the United States to invade Iraq would be fully paid for with US taxpayer funds.
One thing people did know, even in 2000, was that Ahmad Chalabi, whose thickly accented English seemed only to enhance his charisma, had lots and lots of friends on Capitol Hill. Congress had passed the Iraq Liberation Act in 1998, written largely to achieve Chalabi's vision for toppling Saddam. And every year Congress was earmarking money for him. But he had opponents, too, in the government: American diplomats who were skeptical of him, despite his charm and his claims of inside knowledge about Iraq. These Americans knew all about his murky past: a bank embezzlement conviction in absentia in the Kingdom of Jordan years earlier. They knew that the Central Intelligence Agency considered him a phony and a liability and, after working with him for years, had cut all ties with him.
So it is important, when considering Chalabi's relationship with BKSH, to ponder that this elite firm was hired in part as a result of a feud in the American government. It was in the late 1990s, when Congress was earmarking funds for Chalabi's INC and charging the State Department with spending all the cash, that State enlisted BKSH's services. The State Department diplomats, under veteran Frank Ricciardone, were among the skeptics on the subject of Ahmad Chalabi and were concerned about the accounting challenges posed by their obligation to dole out the earmarked funds. They figured that through BKSH, they could funnel support to the INC while complying with Congressional intentions and normal accounting procedures, and moreover that an American firm could be controlled and monitored and would have the expertise in PR and organizing that was necessary. They put a contract out for bid; PR giant Burson-Marsteller won the award and quickly handed the work over to its subsidiary BKSH.
BKSH was the lobbying vehicle of the legendary Republican insider Charles Black Jr., one of "America's foremost Republican political strategists," according to BKSH. Black, a former adviser to Presidents Ronald Reagan and George H.W. Bush, is now a senior adviser to GOP presidential candidate John McCain, who was himself an early Chalabi backer with ties to the Iraqi going all the way back to 1991. BKSH, which represented major defense contractors, governments and international corporations, was perfectly situated to leverage its expertise on behalf of the Iraqi National Congress. In an interview, Charles Black explained that his firm received $200,000 to $300,000 per year from the US government "to promote the INC." Black, in his pleasant Texas drawl, says the firm did "standard kinds of public relations and public affairs, setting up seminars, helping them get speeches covered by the press, press conferences." Black said he believes his company can take a lot of pride in a strong campaign. "The whole thing was very successful. The INC became not only well-known, but I think the message got out there strongly."
Most of BKSH's work for Chalabi was handled by Riva Levinson, a longtime Capitol Hill lobbyist who quickly became passionate about Chalabi's cause. "Riva would spend her weekend thinking about, How can I get press coverage for the INC next week?" Black explained, "and then come in on Monday morning and schedule a speech or call reporters to get a speech covered or get Chalabi or the other leaders out to get the message out." Levinson even spoke out overtly as the INC's spokeswoman, giving interviews on its behalf.
The State Department's efforts to control Chalabi through Burson-Marsteller ultimately backfired. In the course of his power struggle with his State Department patrons over who would control the Iraqi opposition and the stream of American funding, Chalabi would frequently criticize both US policy and his Iraqi competitors. The government would complain to BKSH. "We'd tell him.... And he'd say, 'Fine,' and go say the same thing over again," said Black. "Basically the US government couldn't make Chalabi do anything he didn't want to do." So while US taxpayers paid for BKSH's services, the company, from all appearances, worked for Ahmad Chalabi.
Normally, before campaigning on behalf of a foreign interest (which, after all, was what Chalabi was), the agent would register under the Justice Department's Foreign Agents Registration Act. That's required whenever someone represents a foreign interest in a "political or quasi-political" way.Examples include groups that at times had been allied with Chalabi, like Jalal Talabani's Patriotic Union of Kurdistan and Masoud Barzani's Kurdish Democratic Party. But since BKSH was paid by taxpayer funds through the State Department, it never registered as a foreign agent. Since it was not technically a "lobbyist" for Chalabi, even though that is exactly how it was functioning, it never registered on Capitol Hill either, which would be the norm for a lobbyist. Although the transaction was not classified or secret, journalists, legislators and the American public weren't told about it.
The last week of October 2003 had been particularly gory in Baghdad. Rockets tore into the Al-Rashid Hotel, where Paul Wolfowitz lay sleeping on a rare visit. Terrorists destroyed the International Red Cross compound, and then, on Wednesday, October 29, a land mine gutted a US Army Abrams tank outside Baghdad, killing two soldiers. That was the day BKSH and the Iraqi National Congress were honored for their work in the run-up to the war.
The black-tie award ceremony took place far from the violence in Iraq, in London, where more than 1,000 of the public relations industry elite assembled in a ballroom at the luxurious Grosvenor House Hotel. PR Week hosted the event, its annual awards dinner for public relations companies. Burson-Marsteller, whose subsidiary BKSH had carried out the work, was named the winner in the public affairs category. The "Awards Supplement" of PR Week called BKSH's work a "solid, disciplined campaign that is totally deserving of this award." "Of particular importance," said the citation, "was positioning INC founder Dr. Ahmad Chalabi and other Iraqi opposition spokespeople as authoritative political leaders." BKSH "compiled intelligence reports, defector briefings, conferences and seminars.... The PR team also ran a contact-building programme, focusing on the European Union, Downing Street, the Foreign Office and MPs in the UK, matched to a US programme aimed at the White House, the Senate, Congress and the Pentagon."
The awards description does not mention that the fund- ing came entirely from the US government, let alone that many of the campaign's claims turned out to be erroneous. But by the time BKSH won the award, the State Department's funding for the program had stopped, with the American troops surging through the desert. That did not mean that BKSH's Iraq work would end. Instead, having eased Chalabi's path to Baghdad, BKSH would now use its ties to Chalabi to get into the business of Iraqi reconstruction.
The business elite was eager for a seat at the table. Corporate executives flocked to conferences, corporations set up divisions to work on developing business in Iraq, consultancies thrived and newsletters proliferated to detail legal niceties and dispense advice. BKSH was going to get in on the ground floor of the industry. Charles Black said it was a busy time. "After the overthrow of Saddam Hussein a lot of US companies, some of our long-term clients as well as some people who weren't our clients, came to us and were looking to do business in Iraq," he explained. The problem, he said, was that BKSH was not "going to be over there. We didn't have an office over there or have full-time personnel."
But the Chalabi operation did. Margaret Bartel, an accountant who had been hired by the State Department to sort out the INC's books and stayed on to become a key member of the organization's staff, was taking in Defense Intelligence Agency funds and delivering them to Chalabi's intelligence operation. Zaab Sethna, Chalabi's press aide, was also in Iraq. As Black explains it, "Peg was there and Zaab was there, so we just referred business to them." Bartel and BKSH reached an agreement: in exchange for a referral fee, BKSH would send clients to Bartel's consulting company, which would set them up with contacts, influence, housing, security and everything else they would need to get themselves started on Iraqi reconstruction. In the gold rush of 1849, they say, it was not the miners who got rich but the operators who sold the picks and the shovels and the wagons and the denim. So it was in Iraq, with the likes of Bartel, the INC and BKSH. The American businessmen would be the miners taking their chances, and the PR operatives and INC loyalists were selling the picks and shovels.
In essence, all that was required was a small adjustment in their previous efforts. BKSH and Chalabi simply pivoted their operation. They realized that with Chalabi on the ground, they could sell access to him using the same sophisticated lobbying regime they already had in place. He had the sort of influence that corporate executives could use in their search for contracts.
One of the businessmen who signed up for the Iraq package was Albert Huddleston, an old BKSH customer. "Albert is a longtime client," Black explained. Huddleston, a Texas oilman and staunch supporter of George W. Bush, was a Bush "Minor League Pioneer" in the 2000 election, raising close to $100,000. In the 2004 election he contributed $100,000 to the Swift Boat Veterans for Truth, the group that targeted Senator John Kerry's campaign by publicizing discredited allegations about his military service. Huddleston's daughter even worked in the White House for First Lady Laura Bush.
Huddleston's interest in Iraq was logical and straightforward: he wanted oil deals, and his company, Hyperion Resources, wanted to be in a good position when the oil valves finally opened. So it was only natural that BKSH would refer him to the Chalabi allies who were offering to help American businessmen. "He was definitely interested in Iraq," Black recalled, "and we definitely hooked him up with that organization." The veterans of the PR and lobbying efforts of the INC went to work for Huddleston. They had focused for years on human rights, democracy and freedom. Now that the regime of Saddam Hussein was gone, they were dedicating more and more time to oil and business.
Over time, Sethna became indispensable in these efforts. "Whatever Albert wanted," recalled one associate, "it was Zaab's mission to go get it done." In the years after the Iraq invasion, Huddleston did his best to forge ties in Iraq. What he found at first was that there was no legitimate government to deal with under the occupation. Paul Bremer had no authority to negotiate oil deals, because occupying powers can't legally make decisions about a country's natural resources. And later, after Bremer left Iraq, the Iraqi government couldn't pass an oil law to regulate the industry. Nabeel Musawi, a former close Chalabi associate who later became a member of the temporary National Assembly, remembers Chalabi, Sethna, Bartel and their guest Huddleston coming to dinner to petition for help. They wanted to see if Musawi could set up a meeting between Huddleston and the oil minister. Musawi says he wanted to help but had to shrug them off because the oil minister was out of town.
Chalabi was well aware of Huddleston's connections to the Bush White House, and he fawned over the Texan, taking him out and offering him gifts. Chalabi presented him with a lavish crystal sculpture of an Iraqi reed house, which had to be shipped back to Texas. But for Huddleston, the pre-war promise of rosy prospects for American oilmen like himself was turning out to be an illusion. Chalabi and others had talked about Iraq's oil and the gushers to come, but despite all the oil under Iraq's desert, it was unobtainable. Deals made during the occupation would be shredded later. Huddleston never did make his huge oil strike in Iraq, despite the money he paid to Chalabi's people there.
Then there is the matter of how much money the American government itself spent on the services of Chalabi and his INC. One former member of the INC put it at about $90 million, but a safer and more conservative estimate of the total American taxpayer subsidy to Chalabi and his organization is $59 million over the course of eleven years. This includes an estimated $20 million from the CIA secret budget in the early 1990s (although it may be far more); add to this $33 million from the State Department in the years leading up to the war in Iraq and $6 million from the Defense Intelligence Agency starting in 2002.
Chalabi's fortunes have fluctuated wildly since the war. By mid-2006 it appeared that he had lost any prominent political role in Iraq, although he held on to his title as chairman of the de-Baathification commission. A new Iraqi government had finally taken shape, presumably a permanent one, and Chalabi seemed unsteady as he scrambled for new allies.
He began to make a public comeback, however, in the fall of 2007. One day in late October, dressed in one of his dark suits, he climbed into a US Army Black Hawk helicopter in Baghdad. As the rotors of the helicopter thumped, Chalabi was surrounded by American military men. His host was Gen. David Petraeus, commander of the multinational force in Iraq.
It had been only thirteen months since a majority of the members of the Senate Intelligence Committee had found that Chalabi's INC had "attempted to influence United States policy on Iraq" before the US invasion "by providing false information."
But Chalabi had survived, and he was soaring over the capital of Iraq in an American helicopter. The new Iraqi government had appointed him to a committee to oversee Baghdad's municipal "services." The hope was that Chalabi, with his organizational skills and his charm, could cut his way through the Iraqi government's red tape and spur on the efforts of the beleaguered Health, Electricity, Communications and Transportation ministries. And the Americans, once again, thought they had found a man they could work with.