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Sunday, December 26, 2010 2:35 PM

Militarization of the Economy; Retired Generals "Advise" the Pentagon as Paid Consultants of Defense Contractors

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It's widely known that retired military officers frequently move into private industry at the end of their military careers. However, few realize these "generals-for-rent" are often hired back as a pentagon consultants. The potential for fraud is massive. Direct industry representatives get inside information about military programs and budgets. Then in a massive conflict of interest scheme, former generals get paid by both the Pentagon and the defense contractor.

Please consider the Pentagon to the private sector by Bryan Bender at Boston.Com.

An hour after the official ceremony marking the end of his 35-year career in the Air Force, General Gregory “Speedy’’ Martin returned to his quarters to swap his dress uniform for golf attire. He was ready for his first tee time as a retired four-star general.

But almost as soon as he closed the door that day in 2005 his phone rang. It was an executive at Northrop Grumman, asking if he was interested in working for the manufacturer of the B-2 stealth bomber as a paid consultant. A few weeks later, Martin received another call. This time it was the Pentagon, asking him to join a top-secret Air Force panel studying the future of stealth aircraft technology.

He said yes to both offers.

a Globe review has found, such apparent conflicts are a routine fact of life at the lucrative nexus between the defense procurement system, which spends hundreds of billions of dollars a year, and the industry that feasts on those riches. And almost nothing is ever done about it.

The Globe analyzed the career paths of 750 of the highest ranking generals and admirals who retired during the last two decades and found that, for most, moving into what many in Washington call the “rent-a-general’’ business is all but irresistible.

In some years, the move from general staff to industry is a virtual clean sweep. Thirty-four out of 39 three- and four-star generals and admirals who retired in 2007 are now working in defense roles — nearly 90 percent.

Among the Globe findings:

Dozens of retired generals employed by defense firms maintain Pentagon advisory roles, giving them unparalleled levels of influence and access to inside information on Department of Defense procurement plans.

The generals are, in many cases, recruited for private sector roles well before they retire, raising questions about their independence and judgment while still in uniform. The Pentagon is aware and even supports this practice.

When a general-turned-businessman arrives at the Pentagon, he is often treated with extraordinary deference — as if still in uniform — which can greatly increase his effectiveness as a rainmaker for industry. The military even has name for it — the “bobblehead effect."

The generals who navigate these ethical minefields said they are capable of managing potential conflicts without oversight, because of their own integrity.

“You have to have a firewall in your head," said industry consultant and former Vice Admiral Justin D. McCarthy.

But a number of retired generals contacted by the Globe said they are uncomfortable with the laxity of the system and refuse to use their Pentagon contacts to win private clients.

Navy Admiral William J. Fallon said he turned down consulting offers after learning that defense industry clients were seeking “tactical" information from inside the Pentagon. Said Fallon: “I didn’t want to be a walking Rolodex."

Retired Army General Wesley K. Clark, who now works as a lobbyist and investment banker for companies seeking alternative energy contracts, believes the growing hunger among private equity firms and Wall Street investors to enlist retired generals is a consequence of a broader phenomenon: the increasing importance of the military to America’s industrial base.

“It is the militarization of the economy," Clark said in a recent interview.
Here is a video from the article.

Bender's article is an excellent eight-page read. Please give it a closer look.

President Obama could easily put a stop to this fraud if he wanted to. So could have President Bush before him. So could Congress.

Yet nothing happens and we keep wasting more on more money on programs we do not need. For more details, please see Why the United States of America is Broke

Mike "Mish" Shedlock
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