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  Bush Relatives Keep Cashing In With Military Contracts
By Margie Burns |  May 15, 2006   (page 2/3)

DRS spokesperson Patricia Williamson said in response to e-mailed questions to her about the president's uncle that William Bush's presence on the ESSI board was "absolutely not" a factor in the acquisition of the company.

According to DRS, Bear Stearns, the brokerage company "served as financial advisor to DRS on the transaction. Merrill Lynch & Co., Inc. also served as financial advisor to DRS for the purpose of rendering a fairness opinion. Lehman Brothers Inc. served as financial advisor to ESSI on the transaction."

All three companies—Bear Stearns, Merrill Lynch, and Lehman Brothers—are linked to the Bush team personally and financially. Among other connections, the president's brother Marvin P. Bush once worked at the brokerage then called Shearson Lehman; Merrill Lynch incorporated the former G.H. Walker firm, founded by the president's grandfather George Herbert Walker; and Bear Stearns chairman and CEO James Cayne was a Bush "Pioneer," raising over $100,000 for the 2004 Bush campaign. According to Texans for Public Justice, a public-interest group, "Bear Stearns's threats to move to New Jersey in the 1990s netted $105 million in tax breaks and other corporate welfare from New York City. In 1997 Mayor Rudolph Giuliani's administration awarded $75 million of this welfare to Bear, which in 2003 hired Giuliani to launch a new investment fund of companies that sell anti-terrorism products." Hiring these firms to monitor a merger of defense contractors would seem to resemble hiring an escort service to chaperone a fraternity party.

A company spokesman told the press that the sale moved DRS from "the Standard & Poor's Small-Cap 600 Index to the Standard & Poor's Mid-Cap 400 Index." The company predicts that "approximately $2.9 billion in annual revenues [are] expected for fiscal 2007."

Among the products DRS has offered are the so-called Chem-Bio Protective Shelters, purchased by the U.S. Army on going into Iraq but proven to be unneeded once the troops invaded, there being no caches of WMDs around. The company continued to receive contracts for these chem-bio shelters, as well as for various chemical decontamination products, through the entire period of the unsuccessful search for biological and chemical weapons in Iraq.

The company has also received multiple contracts from the armed services for its mobile field power generators. The generators are designed to go wherever needed to provide electrical power in locations where it would otherwise not be available. In July 2001, the company announced that it had received a U.S. Army contract worth up to $175 million for tactical quiet generator sets, stating that "bids were solicited on Dec. 19, 2000." Thus the ink was barely dry on Mr. Justice Scalia's opinion letting Team Bush into the White House when these bids for quiet generators were solicited. Evidently someone in the Pentagon foresaw that there would be a demand for them.

According to a company representative for the division of DRS that produces mobile generators, DRS has not sent any generators to Baghdad, even though there's a power shortage. Generators were also not deployed in the great blackout of 2003 in the U.S. or sent to the Gulf Coast after Hurricane Katrina hit in 2005. When asked about why the company had not donated any mobile power generators during these calamities, DRS's Patricia Williamson responded: "DRS is a defense contractor and as such, is requested by the government via formal contracts to build a specified number of units. . . . If the government requests the company to build spares, it will, if that is part of a contract's requirements. . . . DRS cannot decide on its own to deliver government property elsewhere."

AIR FORCE ALERT—Assuming that the mobile generators work, the question arises as to why they would not be deployed by government agencies in any large-scale disaster affecting power supply. But the question also arises as to whether they really do work. Both the Air Force and the Army awarded contracts to Engineered Support Systems for supplying some mobile generators to them, but in November 2004, the Air Force issued a stop-work order on the contracts because of reliability issues with the generators.

For several months, ESSI did not make public this Air Force stop-work order, which was eventually lifted. In the meantime, in January 2005, William H.T. Bush received about $450,000 for selling some of his stock in ESSI. As the Los Angeles Times reported in an item not covered by the press in the nation's capital, several insiders sold stock in the months before the stop-work order was disclosed, the president's uncle among them. When ESSI finally announced the existence of the stop-work order, in June 2005, its stock dropped 11 percent. The SEC informed ESSI in September 2005, while its proposed sale to DRS was moving forward, that it was broadening its investigation of the company to include the stop-work order and the interim stock sales.

ESSI continued to receive contracts. The stop-work order was lifted in October 2005. On October 11, 2005, it announced that it had been awarded another $24.5 million contract to supply Chem-Bio Protective Shelters to the Army, and a $3 million contract for heating and air-conditioning upgrades for reserve intelligence units, including installing uninterruptible power supplies.


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