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Pentagon keeps ties to embattled contractor

Jul. 5, 2012 - 04:15PM   |   Last Updated: Jul. 5, 2012 - 04:15PM  |  
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WASHINGTON The Pentagon has retained its top propaganda contractor in Afghanistan for $60 million over the next year even as the company remains under criminal investigation by the military's inspector general and its co-owner has been suspended from receiving military contracts.

The military has maintained its ties to Leonie because the company has satisfactorily completed its tasks in Afghanistan, and military leaders there have requested that their services be retained, said Lt. Col. James Gregory, a Pentagon spokesman. The contract will be open for competition in one year, if military leaders decide they need more information operations programs.

"Leonie continues to work in support of this task order, and will continue to provide professional services support as required," Leonie spokesman Gar Smith said.

The co-owner of Leonie Industries, Camille Chidiac, still has his 49 percent share of the company and receives payments from the company despite his pledge in May to sell his stake, Smith said.

The Pentagon suspended Chidiac from receiving contracts after he admitted he was responsible for a misinformation campaign against two USA Today journalists who wrote about the company and the military's information operations programs, according to an Army letter to him obtained by the newspaper.

Retaining a company under criminal investigation shows how dependent the military has become on contractors, and how difficult it is to get rid of them, said Scott Amey, a lawyer with the government watchdog group, the Project on Government Oversight.

"We often hear that it is impossible to fire a government employee, but it also looks like it is impossible to part ways with a federal contractor," Amey said.

The lawyer for Camille Chidiac did not respond to requests for comment.

USA Today revealed in February that the owners of Leonie Industries had owed more than $4 million in back taxes to the federal government. That debt was settled in March, federal records show. The company has received at least $120 million in Pentagon contracts since 2009. The newspaper also found that spending on information operations programs peaked in 2009 at $580 million, and that the military had difficulty in measuring its effects.

The Pentagon's decision to exercise a one-year option with Leonie comes as Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, has begun an "informal review" of information operations.

Other investigations into the Pentagon's information operations programs, Leonie and the company's ownership continue:

The Government Accountability Office, the investigative arm of Congress, is auditing information operations throughout the military and in the">National Security Agency,">State Department and the CIA. Auditors are focusing on spending and results.

Rep. Hank Johnson, a Georgia Democrat on the Armed Services Committee, has called on Defense Secretary Leon Panetta to investigate if Leonie had misrepresented its finances while bidding for contracts and to examine the campaign against the newspaper.

The Pentagon Inspector General's criminal investigative service is investigating taxes paid by Chidiac and his sister, Rema Dupont, who owns 51 percent of the company. Investigators are looking into the treatment of the company's Afghan employees.

Contributing: Gregory Korte

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