Iraq Detention Imams Work for $2 Billion Private Equity Fund
By Nick Mottern and Bill Rau
When Iraqi imams sit down with prisoners at a US detention center in Iraq to discuss Islam, they are working for a subsidiary of Global Innovation (GI) Partners LLP, a California- and London-based private equity firm that claims to have “$2 billion in capital under management”.
GI Partners sells, among other things: base maintenance for US military forces in Iraq; psychiatric care in the United Kingdom; in-room television and movies for hotels; wine; movie production studios and pubs. GI Partners also manages hundreds of millions of dollars for California and Oregon public employees pension funds and, according to the GI Partners website, pension funds in the Netherlands and the Middle East.
The imams join the GI Partners world when they go to work for Russian and East European Partnerships (REEP) Inc., the GI Partners subsidiary hired by the US military to run Islamic discussion, civics, and vocational programs in its Iraq detention centers. These centers now hold about 16,600 Iraqis and are under the command of Multi-National Force – Iraq’s Task Force 134 (MNF-I/TF-134).
REEP, which does business under the trade name Operational Support and Services (OSS), “advises DoD (Department of Defense) personnel on all local nationals (Imams and Social Workers) that may be hired to work in TF-134 programs,” according to a TF-134 spokesman.
As will be discussed in greater detail later, the work of the imams, which is shrouded in secrecy, appears to violate international principles protecting religious freedom. It is work that may be unwelcome news to GI Partners investors, such as public employee pension funds reeling from the economic downturn that is traceable in significant measure to the Iraq War.
“Will Not Be Disclosed”
The Islamic Discussion Program operated by REEP, IDP in military parlance, employs about 60 Iraqi imams, according to a TF-134 spokesman. In a command briefing paper, TF-134 describes the Iraqi religious leaders working in its facilities as “certified, trusted and moderate Islamic clerics” offering “detainees a broader understanding of Islam.”
The imams work in a “counter-insurgency” program that is apparently intended to undermine religious arguments that have provided underpinning for armed resistance to the US invasion and occupation of Iraq and to the US-Iraqi government. (See Truthout October 14, 2008.) The program seems to be similar to one run by the government of Saudi Arabia, described in the November 9, 2008 New York Times as intended to “deprogram Islamic extremists.”
While the US program is known in general terms, the heart of the program - its religious arguments, discussion outlines and methods of persuasion - is secret.
The TF-134 spokesperson denied a request for information on the salaries of REEP’s Iraqi employees and for copies of REEP’s religious discussion and educational curriculum or outlines, saying: “Issues regarding salary and materials used in the programs are proprietary and will not be disclosed, per contractual agreements with OSS.”
We attempted to interview REEP employees on the work of the imams, but they also declined to provide salary and curriculum information, citing contractual agreements that prevent the company from providing any information on the IDP or other activities without the permission of the US military. One REEP official said that a reason for the secrecy about REEP’s work in the detention centers is because the detention centers are confining “a lot of difficult, bad people” and information must be withheld “for our employees’ safety.”
Kristen Mary, Director of Investor Relations for GI Partners, asked about the REEP detention work, provided only excerpts of contract documents calling for non-disclosure and said: “We are bound by confidentiality agreements with the US government.”
The purposes of REEP’s military contracts are described in only the most general way in contract award announcements and listings. For example, a 2006 notice of a $41.2 million dollar contract to REEP says simply that it is for “bilingual bicultural advisor/subject matter expert services” in Iraq, a description of work that would include hiring of the imams. A federal official familiar with such Department of Defense contracts said that we would have to use Freedom of Information requests to view the actual contracts, and that we might wait a year or more for a response.
“REEPing” War Profits
REEP was founded in 1993 by Kenneth Fortune, Lawrence P. Costa and Alan G. Prince, according to its incorporation papers, apparently to provide for Russian language training for Westerners headed for Russia and Eastern Europe after the Soviet Union dissolved. Both Mr. Fortune and Mr. Costa had been members of the U.S. Special Forces. Mr. Costa went on to open Worldwide Languages Resources two years later. Calls to Mr. Fortune to learn about the origins of REEP and its work in Iraq have not been returned. Mr. Prince declined to discuss REEP’s work in Iraq in an initial call and has not returned follow-up calls.
REEP expanded to provide training in a number of languages for private and government entities, particularly the military, and, according to the REEP/OSS website, offers “intelligence support operations.” A REEP Inc. website announced in August 2008, for example: “Counter Intelligence Agents – Urgently needed. – There is a unique opportunity to serve the United States as an interrogator and Counter Intelligence Agent as part of a rebuilding effort in Iraq.” (This REEP website has been taken down since we asked a REEP official about the ad in August, and the REEP web address now transfers visitors to a combined REEP/OSS website.)
“OSS is military-centric,” says the REEP/OSS website. “OSS employs many military retirees, former military and military spouses form the Navy, Marine Corps, Air Force and Army.”
A REEP official declined to give specifics on the totality of the firm’s work in Iraq, saying only that it employs about 800 people there, Iraqis and Americans, whose work is concentrated in Camp Victory, which houses the MNF-I headquarters, and the Green Zone, which includes offices of the Iraqi government and the US and other embassies.
An employee at Worldwide Language Resources Inc., a competitor of REEP, said: “You will never get the complete picture of the contract work being done, only snapshots.”
Mr. Fortune received an award for “meritorious” service from Armed Forces Comptroller magazine in June 2004, for REEP’s work in preparing US forces for the invasion of Iraq:
“He successfully responded to a short-term solicitation to ensure that all deploying soldiers received cultural awareness training. Within two days, Mr. Fortune pulled together a quality team that began training despite minimal guidance. In short order, Mr. Fortune’s firm was providing thousands of hours of linguistic support simultaneously at Fort Drum, Fort Stewart, Fort Brag and Camp Blanding. Mr. Fortune and his company worked daily to provide quality training to soldiers deploying to a hostile environment. His efforts exemplify the true partnership between the military and contractor organizations. The government received an excellent value and the potential to save military and Iraqi civilian lives.”
According to GovernmentContractsWon.com, REEP was awarded $97.5 million in Defense Department contracts from 2000 to 2007. The sizes of the contracts have grown with the invasion of Iraq and the deepening of the war and the US occupation, rising from $1.7 million in 2001 to a one-year peak of $64.2 million in 2005, according to GovernmentContractsWon. The 2007 total is listed at $109,863.
REEP came into the GI Partners complex of companies when it was purchased in 2007 by Linc Facility Services (LFS), a subsidiary of The Linc Group (TLG), a privately-held company that concentrates on providing building maintenance and management services for major facilities such as commercial buildings, hospitals and airports.
From 2000 to the first quarter of 2008, according to FedSpending.org, TLG has received over $400 million from Pentagon facilities management and service contracts (not including any income from REEP). TLG anticipates grossing $600 million in 2008, according to SmartBusiness (sbnonline.com).
TLG’s Executive Vice President and Chief Operating Officer, and the firm’s apparent guide to Pentagon contracts, is retired Army Major General David Whaley, whose military duties included, according the TLG website:
“Assistant Chief of Staff for Installation Management, Headquarters, Department of the Army. In this assignment, he functioned essentially as the Army’s Real Estate or Property Manager developing and defending before Congress a $9 billion annual budget and was responsible for the operations and maintenance functions of all 264 Army installations worldwide representing 12.8 million acres, 169,000 buildings, 1.1 billion square feet of family housing, 70,000 miles of road, 13,700 miles of waterway, and 2,600 miles of railway. Additionally, he was responsible for the development and execution of the Army’s Outsourcing and Privatization Program, Base Realignment and Closure (“BRAC”) Programs, Environmental Restoration, Military Construction and Barracks renewal programs and the Army’s Residential Community Initiative.”
Tracy K. Price, CEO of TLG, has contributed $36,872 to Republican candidates and organizations since 2002, including support for the presidential efforts of Mitt Romney ($2,300), Rudy Giuliani ($4,600) and Mike Huckabee ($500), according to CampaignMoney.com
The purchase of REEP “increases Linc’s worldwide footprint and easily facilitates base operations and government business for Linc in the U.S., Europe, the Middle East, Africa, and the Far East,” said a press release announcing the REEP purchase.
The Linc Group became part of GI Partners in 2003 when GI Partners bought it out of the Enron Corporation bankruptcy, coming to the aid, according to press reports, of managers of Enron’s ServiceCo branch, led by Price, who wanted to save ServiceCo’s facilities maintenance business.
Table 1 shows the other holdings of GI Partners in addition to The Linc Group.
- Acentic – provides TV, film and inter-net to 235,000 hotel rooms throughout Europe, generating “predictable cash flows” from in-room movie rentals, hardware rental and installation and wholesaling the hardware.
- Cambian Group – provides care for people with special needs in the UK; runs 10 hospitals providing “intensive psychiatric rehabilitation”; provides residential care and training for youngsters with autism. “All our clients are currently funded by the UK Government.”
- Digital Realty Trust – buys and manages “technology-related real estate, primarily data centers” that generate $96.9 million a year in rental income.
- Duckhorn Wine Company – owns vineyards in northern California and produces wine under the labels: Duckhorn Vineyards, Goldeneye and Paraduxx.
- Orchid Pubs – manages 311 pubs, bars, pub-restaurants and bar restaurants in the UK.
- Park Resorts – operates 35 campgrounds in the UK.
- PC Helps – works with businesses to assist workers in resolving software problems.
- Sunset Gower Studios - provides facilities in California for television, advertising, movie and music productions.
- Telx Group – provides telecommunications networking.
- The Planet – provides computer servers for business.
- Yates Ltd. – operates 153 pubs and restaurants in the UK; including “London’s highest volume pub.”
Source: GI Partners
GI Partners has also created investment funds in which the following state pension programs participate; the value of their assets in the GI Partners funds is noted:
- California Public Employees Retirement System (CalPERS) - $1.2 billion.
- California State Teachers Retirement System (CalSTRS) - $ 289 million.
- Oregon Public Employees Retirement Fund (OPERF) - $ 99.9 million.
As noted earlier, GI Partners says it also manages investment funds for pension funds in the Netherlands and the Middle East.
Religion and International Law
The process of attempting to modify the religious thinking of detainees that is underway in the US detention system in Iraq appears to violate international law, specifically Article 18 of the International Covenant on Civil and Political Rights (ICCPR), which says:
“No one shall be subject to coercion which would impair his freedom to have or to adopt a religion or belief of his choice.”
TF-134 says, as noted in a previous detention article (Truthout October 14, 2008), that a number of detainees, having been taught in detention to read, often discern another, more moderate interpretation of Islam than what they have been given by resistance leaders.
The reality in the detention system is that, according to TF-134, participation in the Islamic Discussion Program and other courses is likely to help speed a prisoner’s release. Religious discussion with and “education” of a person who is a prisoner and whose resistance has a religious base can be described as a form of coercion.
The use of a private contractor for religious work in US detention facilities, says international human rights lawyer Karen Parker, provides the US government with a layer of protection against charges of human rights violations: “They try to hide behind yet another wall.”
“… A Very Small Percentage…”
We asked spokespeople for three public employee pension funds deriving income from GI Partners investment funds whether the work of REEP/OSS in US detention facilities in Iraq presents their funds with any ethical concerns.
Here is the response from CalPERS, which manages $239 billion in investments:
“For your article, you asked if the connection of GI Partners to OSS (operating programs for Iraqi detention facilities) might present any ethical concerns for CalPERS in doing business with GI Partners. We have forwarded your question to our real estate staff and to our partner. Here is our response:
“Our investment in the The Linc Group is in GI Partners Fund I, and CalPERS is the sole investor. Our partner is precluded by a contract with the U.S. government to disclose specifics with regards to the The Linc Group, but the company’s activities in Iraq focus on the operation of hospitals as well as training and education of the local Iraqi people in areas such as high school equivalency and more advanced subjects such as engineering and law. Many of the actual instructors are bilingual/bicultural Iraq ex-patriots holding advanced degrees. These operations are a very small percentage of the company’s overall activities, which focus on facilities management in the United States.”
A spokesperson for OPERF, which has $53.3 billion in assets, wrote:
“For the retirement fund, the sole statutory mandate is to invest the funds to achieve the highest possible return for the beneficiaries, subject to prudence and productivity standards.”
Oregon has a Sudan divestment law related to the conflict in Darfur, but the state “has not elected to place any other screens or considerations on investment,” the spokesperson said.
A spokesperson for the $162 billion CalPERS fund said with respect to the ethical question: “I really have nothing for you on that aspect.” Asked if that meant that the fund wished not to comment, he said, “I think you’re right on that.”
The spokespersons for all three state pension funds said that the GI Partners funds in which they participate have been profitable. A suggestion that any of these pension funds might review their investment in any profitable fund comes at a particularly unwelcome moment given the current economic environment.
CalPERS, for example, lost the value of 2.3 million shares in Lehman Brothers when the firm went bankrupt. These shares would have been worth about $102 million in May of 2008. The Los Angeles Times reported in July 2008 that CalPERS reported a loss of about 2.4% as of June 30, 2008 fiscal year and that CalSTRS reported a 3.7% loss to its $162 billion fund for that period. OPERF took a $124 million hit with the Lehman collapse, according to the Portland (OR) Business Journal. The OPERF total assets were valued at $53.3 billion in September 2008, down from $63.3 billion in December 2007, a spokesperson said.
The economic downturn that is threatening the pension funds can be traced in a significant measure to the Iraq War. Professor Joseph Stiglitz, Noble Laureate in economics, and public finance expert Linda Bilmes have pointed out in The Three Trillion Dollar War not only that the Iraq war is costing the US $16 billion a month but that the war has been a major factor in high oil prices that have drained away money from US consumers. In a Reuters article in March 2008 he said that in order to keep the US economy pumped up, the Federal Reserve injected more money into the system, “and the regulators looked the other way when very imprudent lending was going on.”
Now the marketplace may be passing judgment on the ethical wisdom of public and private investment in the US strategy to control Iraq.
Nick Mottern is director of Consumers for Peace. Bill Rau is a researcher in development issues based in Washington, DC and the author of “Feast to Famine: Official Cures and Grassroots Remedies to Africa’s Food Crisis”.