Contractors in Haiti, Readying to Profit from Disaster?

February 16, 2010

*This post has been edited slightly for accuracy.

With the Inter-American Development Bank saying that the reconstruction of Haiti could cost upwards of $14 billion, and with billions in aid already coming in to Haiti, it is vitally important to keep a close eye on where that money is being spent.

The Federal Procurement Data System – Next Generation, has set up a function where you can track contracts awarded for Haiti related work. The list, however, is not exhaustive; there is a message on the site saying that the list only “represents a portion of the work that has been awarded to date.”  For instance the US Agency for International Development lists only two contracts totaling just under $150,000. USAID, however, says that through the Office of Transition Initiatives they have already given $20 million to three companies: Chemonics, Internews, and Development Alternatives Inc. The reality may be that these companies have received even more money than that though. The Miami Herald reported on February 8 that:

The U.S. Agency for International Development has given two assignments for Haiti-related work to two beltway firms involved in international development: Washington, D.C.-based Chemonics International and Bethesda, Md.-based Development Alternatives Inc.

The emergency work assignments, which are worth $50 million each, are likely the first of many the agency will hand out to private firms to help Haiti get on its feet after the devastating quake Jan. 12.

The article also notes that these were non-competitive contracts. Chemonics was a subsidiary of ERLY Industries, whch was also the parent company of Comet Rice. According to a Washington Office on Haiti report, as reported by Food First:

RCH began operations in September 1992 when former World Bank official and post 1991 coup leader Marc Bazin’s regime signed a nine year development aid contract with RCH. RCH’s corporate parent is Comet Rice. Comet Rice has been the largest importer of rice in Haiti for many years. The flood of its imported “Miami rice” in the 1980s, much of it supported by U.S. tax dollars through various AID and USDA programs, drove thousands of small scale Haitian rice farmers out of business. Corn and other grain production also declined due to the importer’s marketing techniques.

Development Alternatives Inc., in coordination with the USAID Office of Transition Initiatives, has been involved in shady political activities in various countries where the US was opposing democratically elected governments.

Shortly after the earthquake, investigative journalist Jeremy Scahill wrote for The Nation about defense contractors heading to Haiti. He made the following observation:

The Orwellian-named mercenary trade group International Peace Operations Association didn’t waste much time in offering the “services” of its member companies to swoop down on Haiti for some old-fashioned “humanitarian assistance” in the form of disaster profiteering. Within hours of the massive earthquake in Haiti, the IPOA created a special webpage for prospective clients, saying: “In the wake of the tragic events in Haiti, a number of IPOA’s member companies are available and prepared to provide a wide variety of critical relief services to the earthquake’s victims.”

While some of the companies specialize in rapid housing construction, emergency relief shelters and transportation, others are private security companies that operate in Iraq and Afghanistan, such as Triple Canopy, the company that took over Blackwater’s massive State Department contract in Iraq. For years, Blackwater played a major role in IPOA until it left the group following the 2007 Nisour Square massacre.

Many members of the IPOA have already secured work in Haiti. HART Security is in Haiti “supporting clients from the fields of media, consultancy and medical.” Agility Logistics teamed up with the International Medical Corps last year and is currently working in Haiti. Agility Logistics was indicted in November by a U.S. grand jury in Atlanta for overcharging the US Army $60 million on supply contracts. Reuters reports that:

The six counts of the indictment charge PWC with crimes against the United States including: conspiracy to defraud, committing major fraud, making false statements, making false, fictitious or fraudulent claims and wire fraud.

Agility said in November that it had been suspended, but not debarred, from new U.S. government contracts pending the outcome of the indictment.

Another member of IPOA that is apparently active in Haiti is the Canadian company SkyLink Aviation. SkyLink has been involved in controversy before as well. In a series of reports on the UN Task Force charged with investigating fraud and abuse in peacekeeping operations, the Washington Post made several revelations. In 2006 the Washington Post reported that:

Peacekeepers, for example, spent $10.4 million to lease a helicopter for use in East Timor that could have been secured for $1.6 million

While the article says the names of companies were not released, in 2007 the Post reported that:

[Andrew] Toh is the target of a lengthy investigation into whether he improperly helped two Peruvian generals and a Canadian company, Skylink Aviation, secure a multimillion-dollar contract to lease two MI-26 Peruvian government helicopters for the U.N. mission in East Timor. The task force has been unable to prove that Toh accepted bribes, but it says it cannot close the case until it gets access to Skylink’s Swiss bank account used in the helicopter deal.

The Post also reported that $65 million “or more was spent for fuel that was not needed for missions in Sudan and Haiti,” and that “it identified SkyLink Aviation Inc., a Canadian firm, as the company that supplied fuel to the U.N. mission in Sudan.”

Another contractor that has secured work in Haiti is Fluor, which “is currently working with the Army to optimize the response approach.” Fluor is active in the Middle East, but was also active in relief efforts for Hurricane Katrina. USA Today reported in 2005 that:

Federal court records show Fluor agreed to pay $3.2 million in 1997 to settle allegations that its FD Services division padded repair bills for cleaning up U.S. Navy bases in South Carolina after the 1989 strike of Hurricane Hugo. Fluor also agreed to pay $8.5 million in 2001 to settle allegations that it billed the government for work done for other clients, court records show.

Of course, none of this is evidence of current wrong-doing. However in times of crisis contracts and companies with checkered pasts will inevitably slip through the cracks.  Only a watchful eye will prevent possible widespread abuse and fraud.

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