Welch pushes oversight of Iraq funding

July 4, 2008
By DANIEL BARLOW Vermont Press Bureau

MONTPELIER ?Çö When U.S. Rep. Peter Welch had Blackwater Worldwide CEO Erik Prince on the hot seat before a congressional committee last year, he pushed the businessman to reveal his salary.

Prince, whose company has been accused of fraud and abuse in Iraq, said he didn't know, but quickly added a guess of "more than $1 million." Welch didn't believe him, noting that the company Prince owns had $1 billion in contracts with the federal government.

If Prince appears before a congressional committee again soon, that salary may be one piece of information now available to the public.

"He is the sole owner of the company and he won't tell us how much he makes," Welch said Tuesday by telephone. "I would guess that the war has been extremely profitable for Blackwater and other companies."

Attached to the $162 billion war bill signed by President Bush this week were two proposals added by Welch, a freshman Vermont Democrat, which brings more federal oversight to companies like Blackwater that receive taxpayer funds through federal government contracts.

The first would force companies that make more than 80 percent of their annual gross revenue from federal funds ?Çö as Blackwater does ?Çö to disclose the salaries and compensations for their top five officials.

Welch said that brings the reporting obligations of these entities and corporations more closely in line with publicly traded companies operating in the United States. He said Americans deserve to know how much top officials from companies that are receiving taxpayer money are making.

"This was a company with $700,000 in contracts in 2002 and has since exploded to $1 billion in the five years after the Iraq War," Welch explained. "Taxpayers have the right to know how much he personally was making just as shareholders have the right to know how much management at publicly traded companies are making."

Prince ?Çö at the height of controversy over the alleged killing of Iraqi civilians by Blackwater security personnel and accusations of financial fraud and waste ?Çö testified before the U.S. House Committee on Oversight and Government Reform in early October 2007.

Welch, a member of that committee, noted that Gen. David Petraeus, who oversees military activities in Iraq, makes about $180,000 a year to oversee about 160,000 troops in that country. For comparison, he asked Prince how much he makes for overseeing the company's estimated 860 employees in the country.

"I'll get back to you with the exact amount," Prince said. "I don't know."

Referencing earlier statements from the company that it makes about 10 percent profit off of its federal contracts, Welch estimated that Prince's company must have earned $100 million off of its $1 billion in contracts.

The second change Welch shepherded through Congress closes a loophole in federal fraud reporting requirements ?Çö a loophole that he says was placed there by the Bush administration as the U.S. Department of Justice was crafting new rules to crack down on fraud, waste and abuse in governmental contracts.

That loophole allowed contracts performed outside of the United States to be exempt from the new rules. Welch said he learned of the loophole in March of this year and again the House Oversight and Government Reform Committee held a hearing.

Welch said he has seen examples of fraud and abuse in contracts to rebuild Iraq during his most recent visit to the country, including pipes that were leaking raw sewage into rooms at a Baghdad police station.

"Putting this loophole in was completely inexcusable and indefensible," Welch said. "If these companies are ripping us off, taxpayers need to know that."

Ironically, Welch voted against the underlying bill to which his two proposals were attached. That bill supplies funding the wars in Iraq and Afghanistan until the end of the Bush presidency. Welch said voting against the bill was not a difficult decision to make.

He also expressed strong concern with recent reports that for the last two months, troop deaths in Afghanistan have outpaced troop deaths in Iraq. Welch said it is the result of the Bush administration moving its focus away from the terrorists in that country in favor of sustaining the war in Iraq.

"We've allowed the Taliban to regroup while we get bogged down in Iraq," he said.

Contact Daniel Barlow at Daniel.Barlow@rutlandherald.com.