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[OPIRG-EVENTS] Mercenary, Inc.?

April 26, 2001

Mercenary, Inc.?
By Ken Silverstein

Ed Soyster is a retired three-star general and the former director of the
super-secret Defense Intelligence Agency, but in his conservative brown
business suit, he looks more like Willy Loman than James Bond. It's a
chilly Tuesday morning in February, and Soyster has just greeted me at the
door of Military Professional Resources, Inc. (MPRI), a rapidly growing
firm based in Alexandria, VA, for which he is the spokesperson.

MPRI's headquarters - located in a five-story office building next to a
Best Western motel off the George Washington Parkway - appears as
nondescript as Soyster. The reception-area coffee table is covered with
old issues of Vanity Fair, CondeNast Traveler, Food & Wine and other
standard fare. The firm's name and corporate logo, a golden sword, are
embossed on the front door. Aside from the vaguely martial insignia,
nothing otherwise distinguishes MPRI from the thousands of beltway bandit
firms that ring Greater Washington.

Given the nature of its business, MPRI's low profile probably is not a
coincidence. Despite this bland facade, MPRI has emerged as the leading
player in a controversial field that critics call "Mercenary, Inc."
Defenders prefer the more innocuous "military service provider," arguing
that these 21st-century exporters of war strategy are a far cry from the
soldiers of fortune of the past. The firm's mission is to discreetly train
foreign armies - often ones with atrocious human rights records - that are
allied with the United States. The industry, though still in its infancy,
is booming. So much so that last year MPRI was bought, on undisclosed
terms, by L-3 Communications [ticker: LLL], a nearly $3-billion per year
New York-based company that manufactures high-tech goods, primarily for
the Pentagon.

MPRI's corporate ranks are filled with dozens of retired officers. In
fact, outside of the Pentagon, which is conveniently located just 10
minutes away, there are few places where you'll find such a gathering of
high-powered military men. As we head back to his office, Soyster points
out the office of MPRI's president, retired General Carl Vuono, U.S. Army
chief of staff during the Gulf War, and introduces me to another retired
general, Ron Griffiths, an executive vice president and a former Army vice
chief of staff. Though he's not in on the day I arrive, Vuono's reputation
precedes him: He's a meat-and-potatoes military man and former combat arms
officer who commanded two battalions in Vietnam.

To hear it from Soyster, MPRI sells a product that's utterly conventional.
In fact, he jokes during my brief tour of the office, the parent firm L-3
is a publicly traded corporation, "so anyone with a 401(k) retirement plan
is probably an investor in our company." Of course, most companies don't
go looking for business in countries rife with war and conflict.

During the past few years, MPRI has worked with a group of countries that
sounds like a casting call for next year's edition of Fielding's The
World's Most Dangerous Places: Bosnia, Colombia, Equatorial Guinea and

The incentive to join up with MPRI, industry watchers say, is money.
Though the firm does not disclose the pay of its top officers, analysts
say they expect all ranks make more than their U.S. military equivalents.
But Soyster resists the notion that MPRI employees are rolling in cash -
he says a colonel actually makes less if he teaches an ROTC course for
MPRI than he made before retiring, but could make more than his U.S. Army
counterparts if he is posted overseas for the firm. In any case, Soyster
says, there's not much incentive for servicemen and women to quit and join
MPRI, since the bump in pay is not dramatic, and because, like any
contracting business, the work can be uncertain.

The Pentagon and the CIA have long used private contractors for a variety
of tasks, from building base infrastructure to assisting with covert
operations. But today's scenario differs greatly from past practice. MPRI
and other private military companies (PMCs) are not CIA cutouts but huge
corporations with diverse interests. Their work is implemented not by
CIA-trained foreign locals, but by high-ranking U.S. military officers
fresh out of the armed forces.

Driving the proliferation of PMCs are the huge cutbacks in the number of
U.S. armed forces personnel following the end of the Cold War. Between
1985 - the height of the Reagan-era military buildup - and 1999, troop
levels have fallen by an average of 30 percent, thereby stretching the
Pentagon's ability to carry out certain tasks. "Private companies augment
our ability to provide foreign training," explains retired Lieutenant
General Larry Skibbie, now at the National Defense Industrial Association.
"We'll see more and more of this as we continue to cut back on our
uniformed forces."

Indeed, PMCs are effectively an arm of foreign policy. Before offering
military assistance to foreign governments, PMCs must apply for a license
from the State Department's Office of Defense Trade Controls, which
oversees the emerging field. "License requests are very carefully
reviewed," says an official at SAIC, a San Diego-based firm (with 14,000
employees in Greater Washington and 41,000 worldwide) that dabbles in PMC
work. "Even when you're just at the talking stage, there is a very high
level of scrutiny." SAIC, by the way, also spawned a historically
significant technology company: Network Solutions, the firm that once held
exclusive rights to Internet domain name registration.

Critics charge that the use of private military contractors allows the
United States to pursue its geopolitical interests without deploying its
own army, this being especially useful in cases where training is provided
to regimes with dubious human rights records. And if a contractor's
employee gets killed overseas, it doesn't provoke nearly as much political
uproar as does the death of an American soldier. "It's foreign policy by
proxy," Dan Nelson, a professor at the George C. Marshall European Center
for Security Studies in Garmisch, Germany, and a former visiting scholar
at the U.S. Department of State and the Department of Defense, says of the
use of PMCs. "Corporate entities are used to perform tasks that the
government, for budgetary reasons or political sensitivities, cannot carry

Multinational corporations, particularly those operating in countries
where governments exert little control over their territory, are also
turning to private contractors for help. In Africa, a number of U.S. and
European PMCs stand guard at mining sites, oil fields and other economic
installations. (Unlike some PMCs, MPRI does not perform guard duty for
corporate clients, but only works for governments). "Companies need to
protect their assets and shareholder value," says Michael Grunberg, an
official with Sandline, a prominent British PMC. "It's like posting a
guard at the bank."

There are just a few dozen American PMCs, and few of those dominate the
business. In Saudi Arabia, a subsidiary of TRW called Vinnell trains the
National Guard, which is deemed to be more reliable than the army and
protects the royal family and strategic facilities such as oil
installations. Vinnell has about 1,000 employees in Saudi Arabia - many of
them U.S. Army Special Forces veterans - who are based at five National
Guard sites. During the Gulf War, Vinnell employees were deployed along
with Saudi units and got bonus pay for hazardous duty.

AirScan, a firm based in Titusville, FL, works for the Pentagon, the Air
Force and a variety of multinational corporations. The company's
promotional literature says that its "experienced crews, effective
systems, and complete integration with ground forces" allow AirScan to
"accurately direct ground personnel to the threat [and provide]
observation and communication required for successful security
operations." AirScan has worked for Chevron in Angola, where it served
with the local military in seeking to protect the oil company's operations
against a guerrilla threat. More recently, AirScan surfaced in Colombia,
where it helps the army and Occidental Petroleum protect pipelines from
leftist guerrillas who have been fighting the government there for nearly
four decades.

DynCorp, a company based in Reston, VA, with annual revenues that top $1
billion, does business with a host of government agencies and has
interests that range from environmental cleanup and information technology
to the more murky areas of national security. In Colombia, the company
works under contract with the State Department in providing pilots,
trainers and maintenance workers for the Colombian government's vast
aerial eradication program to destroy drug crops. PMCs aren't supposed to
be engaged in combat - but in late February, several DynCorp workers flew
into the middle of a firefight, landing their helicopter to rescue the
crew of a police chopper brought down by leftist guerrillas.

DynCorp is also involved on the frontlines of various other Latin American
drug wars. In the early 1990s, the State Department hired the company for
the ostensible purpose of maintaining helicopters then on loan to Peruvian
police. In 1992, three DynCorp employees died when one of those
helicopters was hit by fire from Shining Path guerrillas while flying over
a major coca-growing region. Two of the casualties turned out to be former
covert-ops specialists, including Robert Hitchman, a former Marine Corps
fighter pilot who worked for Air America (the CIA's airline and covert
operations front in Indochina during the 1960s). Another of DynCorp's
near- casualties, though in a far different context, was CEO Dan
Bannister. He was scheduled to be on the 1996 military flight in the
Balkans that crashed and killed all aboard, including then- Commerce
Secretary Ron Brown, but decided at the last minute to skip it. "I am the
luckiest man alive," Bannister said in press accounts after the crash.

In business terms, MPRI has shot up through the ranks. When retired
General Vernon Lewis founded the firm in 1988, MPRI had just three
full-time employees. Its payroll climbed to 40 in 1992 and 850 today, plus
a database of some 12,000 retired military personnel who can be called
upon to handle contract work. Revenues have also soared, from $4 million
in 1995 to $70 million last year.

It was that sort of growth that led L-3 Communications - founded in 1997
as a spin-off of 10 electronics manufacturing divisions of Lockheed Martin
- to swoop in and purchase MPRI. L-3 hasn't done so badly, either: Its
tripled in size since its founding, and the company's stock price has
roughly doubled during the past 12 months. The deal was unusual in that
L-3 primarily sells hardware, including flight recorders, control systems
for satellites and the controlled momentum gyroscope that keeps the
International Space Station in its orbit, whereas MPRI sells services.

(Founder Vernon Lewis stepped down as CEO two years ago and became
chairman of the board. When L-3 bought the company, the MPRI board was
phased out, and Lewis has had no role with the firm since.
He was, of course, a shareholder at the time L-3 purchased the company.)

Frank Lanza, L-3's chairman and CEO, believes privatization of military
services will continue to expand and sees MPRI as a hot property with
"competitive advantages" that no other training business can match. "It's
a well-managed company with double-digit profit margins," he says in a
phone conversation from his New York office. Lanza acknowledges MPRI's
military training programs are controversial and says that's made him view
its overseas ventures with caution. "They can't go anywhere without
government approval, but there could still be negative public opinion," he
says. "We're sensitive to that and watching it very closely so we don't
get involved in a situation by accident."

Lanza's upbeat assessment is shared by industry-watcher Deborah Avant, a
professor of political science and international affairs at George
Washington University who is working on a book about PMCs. "Technically,
MPRI has competitors, but it's got a unique mix of personnel and
connections," she says. "They pretty much have a corner on their piece of
the market."

During its early years, MPRI maintained a cool, if not downright
suspicious, relationship with the press. There are still some areas that
Soyster prefers not to discuss, but the firm has become increasingly
accessible to the media. Indeed, given some of the things I've written
about MPRI in the past - "mercenary" is one of the more polite
appellations I've used to describe the company - Soyster's very consent to
an interview was somewhat unexpected. The company makes every effort to be
seen as just another business entity - its website www.mpri.com is filled
with lingo that could be pulled off almost any corporate site. It's just
that this site's "job opportunities" section includes headings like:
"Kuwait - Infantry."

As he explains in his office (Soyster apologizes that he can't give me a
full slideshow presentation in the nearby conference room, as it is being
used to host the new ambassador to Nigeria, a company client), MPRI has
three distinct divisions. The National Group, headed by retired Lieutenant
General Jerry Bates, develops curriculum for the Pentagon's War Colleges,
tests new military equipment and trains troops to use it, and runs ROTC
programs at more than 200 universities. Joe Wolfinger, a former deputy
director of the FBI, runs the Alexandria Group, which was introduced last
year. It handles training for law enforcement agencies, offers seminars in
leader development, and conducts background investigations for government
and corporate clients. The International Group, headed by former General
Crosbie Saint, who commanded the U.S. Army in Europe between 1988 and
1992, handles foreign training programs. Though it generates just 40
percent of MPRI's revenues, the International Group has attracted by far
the most public scrutiny.

Soyster vehemently objects to the description of MPRI as a "mercenary"
firm, saying that the work of the International Group is restricted to
training, education on the military's role in a democracy, leader
development and strategic planning. "We've all carried guns and used them,
but we don't do so for MPRI," he states emphatically, adding that company
employees on assignment overseas dress in business suits, not military
uniforms. MPRI has even turned down contracts - for example, guarding
overseas embassies - which would require its staff to carry weapons, for
fear of bad publicity. "The scenario we're afraid of is that a situation
gets out of hand and one of our guys has to shoot someone," he tells me as
he fingers the black gemstone on his 1957 class ring from West Point. "You
just know that it's not gonna be the head of the group who gets shot, but
a 21-year-old pregnant woman. It's not worth the risk."

With his straight-shooting bonhomie, Soyster is easy to like. He's great
fun to shoot the breeze with - after all, he's led an interesting career
and has the stories to back it up.

That's probably a key reason why he's the go-to guy to tell the firm's
story. Soyster says MPRI got its first big overseas contract in 1994, when
Croatia hired the firm to advise its military forces. The company
dispatched a team to Zagreb that arrived during a period of particularly
intense fighting between Croat and Serb forces. "The Croatians saw their
future with the West, not the East," says Soyster, who says MPRI's role
was limited to classroom instruction on tactics and did not include
training in battlefield tactics. "They wanted to join NATO's Partnership
for Peace program, and we helped them achieve that."

Yet just months after MPRI's arrival, Croatia's army - which until MPRI
came on the scene had been viewed as bumbling and inept - launched a
series of bloody and highly successful offensives against Serb forces.

Most important was Operation Lightning Storm, the assault on the Krajina
region during which Serbian villages were sacked and burned, hundreds of
civilians were killed and some 170,000 people were driven from their
homes. Soyster says that MPRI, like the U.S. government, knew the attack
on the Krajina would take place and that perhaps half a dozen officers who
graduated from its training seminars took part in the operation.

Otherwise, he insists, the company played no role in the Krajina campaign.
"It's impossible, no matter how good you are, to turn around an army in a
few months," he says. "But it's a great myth. It's good for our business."

MPRI's contract with Croatia has been renewed several times, and it still
has a team in Zagreb today, though its presence there no longer attracts
much attention. The firm is also at work in neighboring Bosnia, which
picked MPRI to train its new armed forces after winning independence from
the former Yugoslavia in 1996. As part of that program - which is overseen
by the U.S. government but paid for by Saudi Arabia, Kuwait, Brunei and
Malaysia - MPRI has designed a combat-training center, set up the Ministry
of Defense, and helped establish an army that Soyster says is designed to
handle defensive tasks. At the program's peak, MPRI had 230 former
officers in Bosnia. "We had about 30 colonels over there, five divisions'
worth," Soyster boasts. "The U.S. Army can't send those kind of numbers."

MPRI is also expanding in Africa, where it is helping implement the
Pentagon's African Crisis Response Initiative (ACRI), a program designed
to strengthen U.S. ties to African nations and create an indigenous
"peace- keeping" force on the continent. Seven nations are participating
in ACRI - Benin, Ghana, the Ivory Coast, Malawi, Mali, Senegal and Uganda
- with MPRI's role being to provide leadership training. None of those
nations has a stellar human rights record.

Elsewhere in Africa, MPRI has a $7-million contract with the U.S. Agency
for International Development (USAID) to instruct the Nigerian military,
which ruled the country for almost 15 years before turning power over to
civilians in 1999. MPRI is also training the new Coast Guard in Equatorial
Guinea, which recently uncovered huge offshore oil deposits. That country
is headed by a government that the conservative human rights group Freedom
House rates, along with countries like Burma, North Korea and Iraq, as
having one of the world's worst records on political and civil liberties.

Soyster traveled to Equatorial Guinea last year to kick off MPRI's work
and has met on five occasions with the president of the country, Teodoro
Obiang Nguema Mbasogo.

On other continents, MPRI's clients have ranged from the benign - such as
Sweden, where the armed forces were briefed on the Gulf War - to the
questionable. In Colombia, for example, MPRI helped the Ministry of
Defense, in Soyster's words, "reorganize and orient itself toward
counter-drug operations" on a contract paid for by the Pentagon. Soyster
concedes that MPRI's clients frequently aren't poster children for
political freedom, but he says that's exactly the point of working with
them. "There's no point in training the Queen's Islanders," he says. "To
control human rights violations you need a well-trained, efficient army.
Wringing your hands is not going to solve the problem."

He walks over to a bookshelf and pulls out a three-ring binder with
seminar materials that the company has used to instruct African military
officers. "Let us all be clear on this point," reads a section of text he
points to. "The establishment and maintenance of civilian control and
oversight of the military form the foundation upon which the stability of
democracy is built." Looking up from the page, Soyster says that he and
his colleagues at MPRI have devoted 30 years of their lives to a system in
which the military is subordinate to elected leadership. "That guy over
there on the wall" - here he points to a picture of former General Douglas
McArthur that accompanies a framed newspaper story from the 1950s - "had a
problem with President Truman. As you may recall, the president won." But
not all of the firm's clients have learned the lesson: In the Ivory Coast,
the military seized power less than a week after MPRI concluded its
instruction, though no one suggests there was a link between the
coursework and the coup.

For better or for worse, PMCs are here to stay. According to Soyster, MPRI
has potential deals brewing across the globe, from Poland in Europe to
Argentina in South America to Bahrain in the Middle East. "You're probably
not gonna hear people say they're going to MPRI-ize their country the way
you Hoover your apartment in England," he says while walking me back to
the front door and heading out to an appointment, "but we are developing a
pretty good brand name."

Copyright 2001 Business Forward

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