Woo vs. Harmon - Witness Paul Bremer

Chairman/CEO, Marsh Crisis Consulting Co., a Marsh & McLennan company; former Managing Director, Kissinger Associates; former presidential envoy to Iraq.

The Missing Billions: Ex-Iraq Occupation Chief Paul Bremer Questioned on Oversight, Spending of Iraqi Money

Three former Army officers and two civilians have been indicted for diverting $3.6 million in Iraq reconstruction money to a contractor in exchange for cash, luxury cars and jewelry. The announcement came one day after the House Committee on Oversight and Government Reform held a hearing about how billions of dollars set aside for the Iraq Reconstruction have gone missing. Corpwatch Managing editor Pratap Chatterjee attended the hearing. He joins us from Washington....

The Justice Department has indicted three former Army officers and two civilians. They are accused of diverting $3.6 million in Iraq reconstruction money to a contractor in exchange for cash, luxury cars and jewelry. The announcement came one day after the House Committee on Oversight and Government Reform held a hearing about how billions of dollars set aside for the Iraq Reconstruction have gone missing. The committee’s chair Henry Waxman questioned Paul Bremer, former Administrator of the Coalition Provisional Authority.

Rep. Henry Waxman, questioning Paul Bremer, former Administrator of the Coalition Provisional Authority.

Earlier in the hearing Paul Bremer admitted errors had been made during his time as Administrator of the Coalition Provisional Authority. Investigative journalist Pratap Chatterjee attended Tuesday’s hearing and joins us now from Washington, D.C....

AMY GOODMAN: As we continue on the issue of reconstruction, so-called, and private armies, we will continue with Jeremy Scahill, and we’ll also be joined by Pratap Chatterjee. Juan?

JUAN GONZALEZ: Yes. The Justice Department has indicted three former Army officers and two civilians. They are accused of diverting $3.6 million in Iraqi reconstruction money to a contractor in exchange for cash, luxury cars and jewelry. The announcement came one day after the House Committee on Oversight and Government Reform held a hearing about how billions of dollars set aside for the Iraq reconstruction have gone missing. The committee’s chair, Henry Waxman, questioned Paul Bremer, former Administrator of the Coalition Provisional Authority.

REP. HENRY WAXMAN: Little more than a year, $12 billion in US currency removed from the vaults of the Federal Reserve and flown into Iraq, this money, mainly $100 bills, were packed into bricks, and each brick was worth $400,000 each. And I think we have a picture of the bricks on the screen. They were assembled into large palettes containing over $60 million in cash and flown into Iraq. In December 2003, Ambassador Bremer and the Coalition Provision Authority asked for a shipment of $1.5 billion to be flown into Iraq, and a Federal Reserve official described this in an email as the largest payout of US currency in US history. But this didn’t remain the largest for very long, because in June, $2.4 billion was sent to Iraq, and this time the Federal Reserve official wrote, quote, “Just when you think you’ve seen it all, the CPA is ordering $2,401,600,000 in currency.”

Well, the question this committee is trying to answer is, what happened to the money? Was it spent responsibility? Was it misspent? Was it wasted? Did it go out to pay off corrupt officials? Or, worst of all, did some of this money get in the hands of the insurgents and those who are fighting us today in Iraq? Ambassador Bremer, are you concerned about the possibility that some of this money went to ghost employees—we don’t know where it went—and might be showing up in the hands of insurgents that are fighting US troops?

REP. HENRY WAXMAN: We don’t know whether there’s evidence of it, but we don’t—

REP. HENRY WAXMAN:—know whether the people who got the money were entitled to it or what they did with it.

PAUL BREMER: Well, as the inspector general pointed out, the problem of ghost employees was certainly there, and it was there even before the invasion. But I have no knowledge of monies being diverted. I would certainly be concerned if I thought they were.

REP. HENRY WAXMAN: Well, $12 billion is a lot of money. It could have been used for a lot of projects that American taxpayers ended up funding through appropriations. It seems to me inconceivable that we can’t explain what happened to it, but that seems to be the situation we’re in.

AMY GOODMAN: Congressmember Henry Waxman, questioning the former Iraq pro-consul Paul Bremer. Investigative journalist Pratap Chatterjee attended Tuesday’s hearing and joins us now from Washington, D.C. He’s managing editor of corpwatch.org and author of Iraq, Inc.: A Profitable Occupation. Can you talk about the significance of this hearing and what Paul Bremer said, Pratap?

PRATAP CHATTERJEE: Amy, this is a very important hearing. This hearing yesterday was the first what Henry Waxman promises will be two years of hearings. And they’re going to be looking into corruption, waste and abuse in Iraq, and also, for example, in border surveillance. Today’s hearing, he’s going to look at the money being spent on protecting the border ostensibly. What they were talking about yesterday and what Paul Bremer was on the stand to talk about was the $19.6 billion worth of Iraq’s money that the Coalition Provisional Authority spent in Iraq and squandered, much of it.

Dennis Kucinich at one point held up a piece of paper and said, “Mr. Bremer, what happened to this $500 million, which says, ‘For security, TBD,’ to be determined?” And, in fact, there were no answers, partly it’s because Bremer had not been briefed, and so he didn’t recognize the piece of paper, but I think what was more telling was the fact that he said, “I never read those minutes.” There were meetings twice a week of US officials, where they decided how to spend Iraq’s own oil money. And Paul Bremer, who ultimately was responsible for that, candidly admitted at the hearing yesterday that he didn’t know what happened to the money.

His assistant, David Oliver, was present. He was his budget chief. And there was a quote played back, where he was interviewed, where somebody asked him from the BBC if he knew what happened to the money, and he said, “Frankly, it’s not important.” And the interviewer said, “Billions of dollars worth of money, and you didn’t know where it went?” And so they said, “Well, you know, this wasn’t American money. Why should we care?” And really, there was—Paul Bremer had this sort of cocksure attitude that came across. The Democrats, unfortunately, didn’t have all their facts marshaled. They weren’t able to go after him in that sense, because they weren’t really involved in the detailed kind of questioning that Waxman has been good on so far.

JUAN GONZALEZ: And, Pratap, of course, they obviously haven’t been reading your CorpWatch, or they would know about questions to ask.

JUAN GONZALEZ: But I’d like to ask you also, you’ve been also tracking Halliburton consistently now for years. The reports about the Pentagon finally pulling money, because Halliburton had hired Blackwater, but hadn’t notified the government of it.

PRATAP CHATTERJEE: Juan, there was a very interesting moment, where Tina Ballard, who’s Assistant Secretary to the Army, said in yesterday’s hearing that they had withheld $19.6 million from Halliburton on Monday. And Waxman said, “Well, it looks like our hearing saved the government and the taxpayer $20 million, just by holding this hearing.”

The reason they withheld that money was because Halliburton had been using private security contractors in violation of their agreement with the Army, which said they would only use military security. So—and, in fact, Halliburton’s own lawyers—Waxman had a piece of paper, which showed that Halliburton’s own staff had said, “You can’t say”—I mean, the quote was, “A pig is a pig, even if it’s wearing lipstick. If we use a company that uses private security, and that’s a violation of our agreement, we’re going to lose our contract with the government.”

So what the Army did yesterday was it took back $20 million, because Halliburton had acted outside its agreement.

Now, that was a small amount of money, and, in fact, much larger sums of money have been questioned by military auditors. As much as $1.5 billion have been questioned. It’s not absolutely certain this money was stolen or wasted. It’s just that this money has been questioned. And, unfortunately, the Pentagon has seen fit to give them the money, because they basically say, “It’s the fog of war. We don’t know what happened to the money. Halliburton deserves the benefit of the doubt.”

The good news now is that Halliburton’s contract has been taken away from them. It’s going to be competitively bid. My question is, who is going to get the next contract, and are they going to do a better job? It’s very possible that Halliburton will get one part of the contract to supervise the people that they were once in charge of in the first place. That’s something that we’ll discover in the future, but there promises to be many more hearings by the Government Reform Committee looking into these very specific matters of what happened to the over $20 billion that has been spent on Halliburton in Iraq.

AMY GOODMAN: Pratap Chatterjee, I want to thank you very much for being with us, managing editor of corpwatch.org and author of Iraq, Inc.: A Profitable Occupation. Also, thanks to Jeremy Scahill, whose forthcoming book is coming out very soon, Blackwater: The Rise of the World’s Most Powerful Mercenary Army.

I was contacted by two people -- Paul Wolfowitz, who is deputy secretary of defense, and Scooter Libby, who was the vice president's chief of staff, both of whom I'd known for decades -- who asked if I would be interested in being considered to go over and run the Coalition Provisional Authority [CPA]. I said, "Well, I've got to talk to my wife," who managed to restrain her enthusiasm at this prospect, I have to say, but in the end agreed.…

I had two concerns which I raised in my early meetings before I went to Baghdad. The first was that I felt this was going to be a difficult and long, time-consuming job. I told the president that it would be more in the line of a marathon than a sprint, that this was going to be hard. Not that I knew that much about Iraq -- I didn't. But I'm a historian; I had studied postwar conflict, post-conflict situations, so I knew it was going to take time.

I needed to be sure that whatever responsibility I had was aligned with the authority. It's very important not to have a lot of responsibility and not enough authority. Those were my two main concerns.

Yes, I did. The most important conversation I had was at a one-on-one luncheon that he invited me to about 10 days before I went to Baghdad. I had not met the president before. He was very open, and we discussed quite a lot -- China and the Middle East and so forth. I found him very well informed. There was no detail missing.

But then we got to Iraq, and I basically said, "I'm going to need some help." He said, "How can I help you?" I said: "Two ways. Number one, we're going to need time to make this happen. It's going to be really tough." … And he said very clearly, "I'll give you whatever time you need. I'm not going to be dissuaded by the polls or by the pundits or by the election cycle," because this was, of course, in May of 2003, so about a year and a half before he would have been up for re-election. I said, "I need to be sure I have adequate authority to carry out the job you're giving me." … And he said: "Don't worry. I understand that. We'll fix that."

Well, I had been involved in the war on terrorism for more than 20 years, from my time in the State Department and from my former position as chairman of the bipartisan National Commission on Terrorism. I had served on the president's Homeland Security Advisory Council. I had been on a number of other commissions.

I was deeply concerned about terrorism and homeland security and felt that it was important that we had defeated Saddam Hussein who, as far as we knew, was [the head of] a state which supported terrorism. He had been so identified by administrations of both of our political parties, and I felt that the idea of bringing decent government to the Iraqi people was a good thing.

I came at it with a combination of basically a realistic view of the importance to American security … and a more general view that bringing democracy to countries in the Middle East, particularly an important country like Iraq, was in America's interest.

I thought it was going to be tough. It turned out to be a lot tougher job than I thought it was going to be.

In general, I was learning about what was the situation as it appeared before the war and as we expected it to be. Since I'm a historian, I was also at night trying to read more about the history of Mesopotamia and Iraq, because although I had lived in this region before -- I lived in Afghanistan for two years -- I had not lived in Iraq. Iraq was not that familiar to me, except in a general way of the history of Mesopotamia. … It was a bit of a kaleidoscope. There were only two and a half weeks there, so it was pretty intense.…

Did you wonder why the mission would reside, at least in some ways, in the Defense Department and not the State Department?

Not really. It seemed to me logical. The last time we had occupied a country was in Germany and Japan at the end of the Second World War. In both cases, the occupation was run by the War Department, as the Defense Department was then called.

In fact, there's a strong argument for [why] it is exactly the right place for this kind of a process to be, because this kind of a project, an occupation, involves very intense coordination between the political and military chain of command, if you will. In the American system, the only place, short of the president of the United States, where the civilian and military chain of command can come together is with the secretary of defense. If you put the coalition into the State Department, you are exacerbating what are already always difficulties of coordination.…

[Secretary of Defense Donald] Rumsfeld, when you talked to him before you go, does he have a road map, a plan? What does he articulate to you as the mission?

Well, they had done thinking about this in the Pentagon, obviously. They had papers which described, … for example, what should we do about senior Baath Party officials. They had papers and prepared documents on these kinds of things.

I was briefed as well by the military side, as I mentioned, on their plans and what they hoped to accomplish in terms of the American force levels in Iraq. I don't remember all the details, but there were certainly a lot of papers around; that's for sure.…

Much has been made, of course, of the fact that before the war, there was very little postwar planning -- or, it was an optimistic postwar planning.

The answer is somewhat complicated when one thinks about the prewar planning. The prewar planning was based on assumptions about the kinds of problems that the U.S. government expected to find in Iraq after liberation. The planning, as it turns out, was based on the wrong assumptions.…

In some ways, even more importantly, the information that we had about the state of the Iraqi economy was not good. The economy was in much worse shape than I had been led to believe. … Saddam had taken one of the richest countries in the Middle East and driven it into the ground over a period of 25 years. … I'm not even sure, if the assumptions on the planning had been better, [if] we would have still had a plan that would have helped us, because the fundamental situation of the economy was so much worse than we thought.

The direction that all of us followed was from the president, and his direction was quite clear: that we were going to try to set the Iraqis on a path to democratic government and help them rebuild their country.

Now, none of us at that time [knew] -- certainly I didn't know -- what that would entail. The general guidance I had from the president and others was, "Get over there and give us your recommendation."

Less than three weeks after I had been in Iraq, the president asked me to come to a meeting with him in Qatar in the Gulf, where I was already beginning to be able to give him a general sense of the situation, in particular how bad the economy was....

The problem, I think, that ORHA had was that they were asked to plan for contingencies that did not, in fact, eventuate at the end of the war. That's not their fault. The assumptions were that ORHA would face large-scale refugee movements, humanitarian disasters, sabotage on the oil wells. ORHA was set up to deal with those contingencies on the basis of those assumptions. That was the first problem.

The second problem that ORHA had was it did not get very much cooperation from the interagency framework back in Washington up until the war started, because until the war started, any agency in Washington could say: "Well, come back and talk to me when it becomes real. I don't want to get involved in all this planning." Even though ORHA had been established in January, it was not staffed adequately up to and during the war.

It seems to me those were two very difficult structural problems, and Gen. Garner did his best under extremely trying circumstances, to try to cope with the situation he found when he finally did get to Iraq. ...

Yes, it was important. About a week before I went to Baghdad, Jim Dobbins came to me with a draft study he had done of, I think, six or seven previous post-conflict situations, including Germany and Japan after the Second World War, and then the Balkans and Afghanistan, ... Somalia.

RAND had arrived at a metric on how many soldiers in relation to the population of the country you're going into -- what is the proper ratio to ensure that you get security? The long and the short of it was that their metric suggested that in Iraq, a country of some 27 million, we would need something like 450,000 to 500,000 coalition forces on the ground for security. At that time, we had about 200,000.

I respect RAND. I've worked with them for decades, so I didn't have any reason to question their methodology. The draft report suggested to me that we didn't have enough troops.

I took the summary of it and sent it up to Secretary Rumsfeld, and I said, "I think this is worth taking a look at." Again, I didn't know. All I had to go on was I knew how many troops we had; I knew we were planning to draw them down; and I had a study from RAND which suggested that not only should we not draw them down, but we may need more. I sent it to Rumsfeld, and I mentioned it to the president.

I don't know what Rumsfeld may have done with it. He probably shared it with the Joint Chiefs of Staff, would be my guess. That's the way he normally treated those kinds of documents. What they did with it, I don't know. They all along maintained that they had enough forces, at least to me. I never heard them ask for more troops, so they probably just said, "Well, that's a study of different countries, and it's different in Iraq."

Did you ever in NSC meetings, or either for or around the president or [then-National Security Adviser] Condi Rice, ask for more troops?

I did, a number of times, talk about the need for more troops. Now again, it's important to make a couple of points. First of all, I'm not a military expert, and I don't hold myself out to be a military expert. I'm a diplomat and a historian, so I gave one view.

The consistent view in all of the meetings I was in with all of the generals who were in Iraq, the generals who were in CENTCOM forward headquarters at Doha, [Qatar], in Tampa, [Fla.], at the NSC meetings, and all these meetings, the consistent view was they had enough troops. I never heard them ask for more troops.

If you're the secretary of defense or the president, you have this guy on the ground saying, "I think we need more troops"; you've got all these military experts saying, "We've got enough troops." ...

I just mentioned it to him at my farewell luncheon. He just said, "Well, we're trying to get more troops," as indeed they were. They were trying to broaden the coalition -- it wasn't a question necessarily of American troops. It could have been other countries'.

Paul Bremer was hired by an insurance company that had
hundreds of employees die in the world trade center,
to reap maximum profits for antiterrorist insurance

One is personal loss. The world’s largest insurance brokerage lost 295 employees who worked at the World Trade Center. “It was very painful for us, agonizing for loved ones and close friends,” Jeffrey W. Greenberg, Marsh’s chairman and chief executive, told employees at a memorial service in St. Patrick’s Cathedral in New York on Sept. 28.

But in the days after the attacks, even as the company was sorting out who was safe and who had perished, it quickly became clear that Sept. 11 presented a tremendous business opportunity for Marsh and other strong players in the industry.

Within days of the twin towers’ destruction, Mr. Greenberg and top lieutenants began planning to form a new subsidiary to sell insurance to corporate customers at sharply higher rates than were common before Sept. 11. Marsh also accelerated plans to launch a new consulting unit to capitalize on heightened corporate fears of terrorism. Vice Chairman Charles A. Davis says the company is merely meeting new marketplace demands. “There’s a financial reward for doing that,” he says.

Unlike airlines, which are reeling as travelers hesitate to fly, insurers have seen improved financial prospects since Sept. 11. Insurers expect to have to pay out $40 billion to $70 billion in claims related to the attacks. That sounds daunting, but in fact, it is manageable for an industry that collectively has $300 billion in capital.

Moreover, in response to Sept. 11, insurers are already raising prices by 100% or more on some lines of commercial and industrial insurance. ... For much of the 1990s, carriers had engaged in a price war, keeping premiums relatively low. The prospect of large payouts related to the attacks gave the industry grounds for demanding substantial increases....

Insurance stocks have jumped 7% since the attacks, outpacing the broader market, and the atmosphere in the industry is one of eager anticipation. Marsh set out to raise about $1 billion in outside money to capitalize in a new company. Investors volunteered six times that much, and dozens had to be turned away.

Amid these signs of robust health, however, the industry is stressing potential disaster as it pressures Congress for emergency aid. By the end of December, lawmakers are expected to approve legislation under which the government could have to pick up billions of dollars in claims related to future terror assaults in the U.S.

This federal backing would have tremendous financial value to insurers in the event of another disaster. And it would have an immediate impact, too, emboldening the industry to sell new terrorism coverage, for which it will charge higher premiums. Carriers collect their money now, while the government would help pay any claims later....

In the weeks after Sept. 11, newspapers carried numerous advertisements touting insurers’ intent to pay disaster claims promptly. Less well-known is how these companies plan to recoup much of the money they will be sending to policyholders....

The decade-long premium-price war had been ending before the attacks, as weaker insurers collapsed or retrenched and stronger ones began gradually to charge more. Now, faced with payouts related to Sept. 11, the healthier companies are demanding that their customers share the pain by paying higher premiums. Some insurance companies are so confident in this strategy that they are expanding operations. Since Sept. 11, at least seven insurers have sold additional shares of stock. An additional six, including Marsh, have formed new companies.

State Farm Mutual Automobile Insurance Co. and RenaissanceRe Holdings Ltd. are creating another one. Since Sept. 11, insurers have raised a total of about $4 billion in new capital, to which they are adding a modest amount of their own money....

Since the attacks, aviation underwriters have raised premiums for airlines by 200% to 400%, according to insurance brokers. At the same time, the underwriters are canceling parts of airlines’ coverage for liability to third parties other than passengers in future terrorist acts.

U.S. airlines don’t have to worry about these increases immediately. The airline-bailout bill Congress approved after Sept. 11 included provisions under which the federal government for six months will pay any increases in commercial insurance and cover airlines’ potential third-party liability for terrorism. In the not-too-distant future, though, the airlines could collectively face billions of dollars in additional annual premiums.

Led by giant AIG, insurers have offered airlines a new, more-expensive package to replace the rescinded terrorism coverage. The new price includes a $3.10-per-passenger surcharge. Lacking the backing of the U.S. government, numerous foreign airlines are buying the new coverage, which is expected to boost insurers’ revenue by a total of hundreds of millions of dollars a year....

Medium-sized and small corporate policyholders are also seeing premiums jump. One week after the attacks, Industrial Risk Insurers, a unit of General Electric Co.’s Employers Reinsurance unit, told textile manufacturer Johnston Industries Inc. that it wouldn’t renew Johnston’s property-insurance policies, which expired Oct. 31. Bill Henry, a vice president at the Columbus, Ga., company, says it wound up paying $1 million more to a European carrier for a year’s coverage ... a 150% increase. The limit of the new policy is only $350 million, or half of what Johnston previously received from the GE insurance unit....

While aggressively raising premiums, the insurance industry has been busy seeking relief in Washington. Ten days after the attacks, a delegation of chief executives, including AIG’s Maurice R. Greenberg, the father of Marsh’s Jeffrey Greenberg, descended on the capital to lobby President Bush and lawmakers.

The industry leaders sounded an alarm that reinsurance companies – which spread corporate risk by selling insurance policies to the insurance industry – were moving to cancel terrorism-related reinsurance coverage. The big primary carriers told the politicians they would eliminate almost all terrorism coverage unless the government stepped into the role of the reinsurers.

Without this coverage, many lenders would hesitate to finance everything from factories to new real estate development, the insurance executives warned their Washington hosts. Large area of the economy could grind to a halt.

The pitch worked. Congress in now expected to approve a mechanism that will guarantee that if there are huge future terrorism liabilities, taxpayers will help pay them....

“This is not a bailout,” says Democratic Sen. Christopher Dodd of Connecticut, home to several large carriers. Rather, the government is proposing to serve as a “backstop” to encourage underwriters to provide terrorism coverage, he says....

Marsh & McLennan see vast opportunity in this fast-changing environment. The company is primarily an insurance broker, not an underwriter. As a result, it has limited exposure to Sept. 11 property and liability claims. It took a $173 million charge for the third quarter, which ended Sept. 30, to cover costs related to the attacks. A big piece of that was for payments to families of its own injured and dead employees.

Marsh’s Mr. Greenberg knows well the dangers of appearing opportunistic in the wake of catastrophe. He gained this experience after Hurricane Andrew hit Florida in 1992, which until Sept. 11 was the industry’s costliest disaster. Then a vice president at his father’s AIG, the younger Mr. Greenberg wrote an internal memo saying that Andrew was “an opportunity to get price increases now.” After the memo was leaked to the media, Florida regulators imposed a moratorium on premium-rate increases.

This embarrassment didn’t stop Jeffrey Greenberg, now 50 years old, and his subordinates at Marsh from swiftly scouring the post-Sept. 11 business landscape for new opportunities.

The World Trade Center attacks were a devastating blow to the company, which has its headquarters in midtown Manhattan. About 1,900 Marsh employees worked in the twin towers. Within an hour of the attacks, the company had set up a phone bank to assemble information about the missing. Counseling sessions and memorial services were held daily for weeks.

From a business perspective, the disaster caused only modest disruption for Marsh, which has 57,000 employees worldwide. On the evening of Sept. 11, Mr. Davis, Marsh’s vice chairman and chief of its MMC Capital arm, sent a fax to Mr. Greenberg’s home that accounted for the unit’s employees – they were all safe – and suggested the formation of a new subsidiary that would underwrite corporate policies.

“We were absolutely thinking about the impact [of the attacks] and what the opportunities were in front of us,” says Mr. Davis, who came to Marsh from Goldman Sachs three years ago.

At a Sept. 18 meeting, 20 executives from Marsh’s operating companies discussed the new terrain in their industry. Participants noted the premium increases already being announced and cancellations of terrorism coverage. Policy-holder demand was as strong as ever, meaning prices could only rise.

There was strong support for Mr. Davis’s idea for a new company. It wouldn’t be the first time Marsh gave birth to an underwriter. In the mid-1980s, it launched Ace Ltd. and Excel Capital, now known as XL. Those moves came in response to some established insurers ceasing to write liability coverage in the wake of huge jury awards for asbestos-related illnesses and big judgments against corporate directors and officers. Both Ace and XL went on to become publicly traded. Marsh retains small stakes in them.

Marsh raised its initial fundraising plan for the new carrier by 50%, to $1.5 billion. But that still wasn’t enough to accommodate all of the investors lining up for a piece of the action. GE’s GE Asset Management unit and TIAA-CREF, the national teachers’ pension-fund manager, were among those allowed to buy stakes. Many others were turned away.

As the investor list was being winnowed, Mr. Greenberg was stirring another pot. He called L. Paul Bremer, a former U.S. ambassador at large for counterterrorism, who had joined Marsh a year earlier.

“Funny you should ask,” Mr. Bremer says he responded to Mr. Greenberg’s query about new business opportunities.

Mr. Bremer had been working on a plan for a crisis-consulting practice for several months. “It was clear to both of us that he should accelerate the introduction of that practice,” Mr. Greenberg says.

On Oct. 11, Marsh announced the formation of a new consulting unit, with Mr. Bremer at its head. Two weeks later, Marsh unveiled a partnership between its new unit and Versar Inc., a counterterrorism-service provider. The partnership will assess chemical and bioterrorism risks for corporate clients.

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In 2003, Blackwater landed its first truly high-profile contract: guarding civilian Administrator L. Paul Bremer in Iraq, at the cost of $21 million for 11 months. Since June 2004, Blackwater has been paid more than $320 million out of a $1 billion, five-year State Department budget for the Worldwide Personal Protective Service, which protects U.S. officials and some foreign officials in conflict zones.

In 2006, Blackwater won the remunerative contract to protect the U.S. embassy in Iraq, which is the largest American embassy in the world. It is estimated by the Pentagon and company representatives that there are 20,000 to 30,000 armed security contractors working in Iraq, and some estimates are as much as 100,000, though no official figures exist....

For work in Iraq, Blackwater has drawn contractors from their international pool of professionals, a database containing "21,000 former Special Forces troops, soldiers, and retired law enforcement agents," overall. For instance, Gary Jackson, the firm's president, has confirmed that Bosnians, Filipinos, and Chileans, "have been hired for tasks ranging from airport security to protecting Paul Bremer, the head of the Coalition Provisional Authority."

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