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WEB EXTRA!
May 8, 2001
Amid mounting pressure from its investors, local Internet consulting firm Etensity today laid off 58 employees, 23 percent of its total workforce, and announced that it was phasing out so-called "New Economy" perks that the company had been using to attract web developers in a tight labor market.
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Cover Story

Mercenary, Inc.?

If You Ran a Third World Country and Your Military Needed Help, Who Would You Call? The U.S. Army? The UN? Try MPRI, an Alexandria, VA-Based Firm in the Vanguard of the Military Service Provider Movement. It's Big Business - And It Just May Be at the Cutting Edge of U.S. Foreign Policy.

by Ken Silverstein - PHOTOGRAPHS BY WELTON DOBY III

Ed Soyster is a retired three-star general and the former director of the super-secret Defense Intelligence Agency, but in his conservative brown business suit, he looks more like Willy Loman than James Bond. It's a chilly Tuesday morning in February, and Soyster has just greeted me at the door of Military Professional Resources, Inc. (MPRI), a rapidly growing firm based in Alexandria, VA, for which he is the spokesperson.

MPRI's headquarters - located in a five-story office building next to a Best Western motel off the George Washington Parkway - appears as nondescript as Soyster. The reception-area coffee table is covered with old issues of Vanity Fair, Condé Nast Traveler, Food & Wine and other standard fare. The firm's name and corporate logo, a golden sword, are embossed on the front door. Aside from the vaguely martial insignia, nothing otherwise distinguishes MPRI from the thousands of beltway bandit firms that ring Greater Washington.

Given the nature of its business, MPRI's low profile probably is not a coincidence. Despite this bland façade, MPRI has emerged as the leading player in a controversial field that critics call "Mercenary, Inc." Defenders prefer the more innocuous "military service provider," arguing that these 21st-century exporters of war strategy are a far cry from the soldiers of fortune of the past. The firm's mission is to discreetly train foreign armies - often ones with atrocious human rights records - that are allied with the United States. The industry, though still in its infancy, is booming. So much so that last year MPRI was bought, on undisclosed terms, by L-3 Communications [ticker: LLL], a nearly $3-billion per year New York-based company that manufactures high-tech goods, primarily for the Pentagon.

MPRI's corporate ranks are filled with dozens of retired officers. In fact, outside of the Pentagon, which is conveniently located just 10 minutes away, there are few places where you'll find such a gathering of high-powered military men. As we head back to his office, Soyster points out the office of MPRI's president, retired General Carl Vuono, U.S. Army chief of staff during the Gulf War, and introduces me to another retired general, Ron Griffiths, an executive vice president and a former Army vice chief of staff. Though he's not in on the day I arrive, Vuono's reputation precedes him: He's a meat-and-potatoes military man and former combat arms officer who commanded two battalions in Vietnam.

To hear it from Soyster, MPRI sells a product that's utterly conventional. In fact, he jokes during my brief tour of the office, the parent firm L-3 is a publicly traded corporation, "so anyone with a 401(k) retirement plan is probably an investor in our company." Of course, most companies don't go looking for business in countries rife with war and conflict. During the past few years, MPRI has worked with a group of countries that sounds like a casting call for next year's edition of Fielding's The World's Most Dangerous Places: Bosnia, Colombia, Equatorial Guinea and Nigeria.

The incentive to join up with MPRI, industry watchers say, is money. Though the firm does not disclose the pay of its top officers, analysts say they expect all ranks make more than their U.S. military equivalents. But Soyster resists the notion that MPRI employees are rolling in cash - he says a colonel actually makes less if he teaches an ROTC course for MPRI than he made before retiring, but could make more than his U.S. Army counterparts if he is posted overseas for the firm. In any case, Soyster says, there's not much incentive for servicemen and women to quit and join MPRI, since the bump in pay is not dramatic, and because, like any contracting business, the work can be uncertain.

"We had about 30 COLONELS over there, five divisions' worth. The U.S. Army can't send those kind of NUMBERS."
MPRI'S ED SOYSTER

The Pentagon and the CIA have long used private contractors for a variety of tasks, from building base infrastructure to assisting with covert operations. But today's scenario differs greatly from past practice. MPRI and other private military companies (PMCs) are not CIA cutouts but huge corporations with diverse interests. Their work is implemented not by CIA-trained foreign locals, but by high-ranking U.S. military officers fresh out of the armed forces.

Driving the proliferation of PMCs are the huge cutbacks in the number of U.S. armed forces personnel following the end of the Cold War. Between 1985 - the height of the Reagan-era military buildup - and 1999, troop levels have fallen by an average of 30 percent, thereby stretching the Pentagon's ability to carry out certain tasks. "Private companies augment our ability to provide foreign training," explains retired Lieutenant General Larry Skibbie, now at the National Defense Industrial Association. "We'll see more and more of this as we continue to cut back on our uniformed forces."

Indeed, PMCs are effectively an arm of foreign policy. Before offering military assistance to foreign governments, PMCs must apply for a license from the State Department's Office of Defense Trade Controls, which oversees the emerging field. "License requests are very carefully reviewed," says an official at SAIC, a San Diego-based firm (with 14,000 employees in Greater Washington and 41,000 worldwide) that dabbles in PMC work. "Even when you're just at the talking stage, there is a very high level of scrutiny." SAIC, by the way, also spawned a historically significant technology company: Network Solutions, the firm that once held exclusive rights to Internet domain name registration.

Critics charge that the use of private military contractors allows the United States to pursue its geopolitical interests without deploying its own army, this being especially useful in cases where training is provided to regimes with dubious human rights records. And if a contractor's employee gets killed overseas, it doesn't provoke nearly as much political uproar as does the death of an American soldier. "It's foreign policy by proxy," Dan Nelson, a professor at the George C. Marshall European Center for Security Studies in Garmisch, Germany, and a former visiting scholar at the U.S. Department of State and the Department of Defense, says of the use of PMCs. "Corporate entities are used to perform tasks that the government, for budgetary reasons or political sensitivities, cannot carry out."

Multinational corporations, particularly those operating in countries where governments exert little control over their territory, are also turning to private contractors for help. In Africa, a number of U.S. and European PMCs stand guard at mining sites, oil fields and other economic installations. (Unlike some PMCs, MPRI does not perform guard duty for corporate clients, but only works for governments). "Companies need to protect their assets and shareholder value," says Michael Grunberg, an official with Sandline, a prominent British PMC. "It's like posting a guard at the bank."

There are just a few dozen American PMCs, and few of those dominate the business. In Saudi Arabia, a subsidiary of TRW called Vinnell trains the National Guard, which is deemed to be more reliable than the army and protects the royal family and strategic facilities such as oil installations. Vinnell has about 1,000 employees in Saudi Arabia - many of them U.S. Army Special Forces veterans - who are based at five National Guard sites. During the Gulf War, Vinnell employees were deployed along with Saudi units and got bonus pay for hazardous duty.

AirScan, a firm based in Titusville, FL, works for the Pentagon, the Air Force and a variety of multinational corporations. The company's promotional literature says that its "experienced crews, effective systems, and complete integration with ground forces" allow AirScan to "accurately direct ground personnel to the threat [and provide] observation and communication required for successful security operations." AirScan has worked for Chevron in Angola, where it served with the local military in seeking to protect the oil company's operations against a guerrilla threat. More recently, AirScan surfaced in Colombia, where it helps the army and Occidental Petroleum protect pipelines from leftist guerrillas who have been fighting the government there for nearly four decades.

DynCorp, a company based in Reston, VA, with annual revenues that top $1 billion, does business with a host of government agencies and has interests that range from environmental cleanup and information technology to the more murky areas of national security. In Colombia, the company works under contract with the State Department in providing pilots, trainers and maintenance workers for the Colombian government's vast aerial eradication program to destroy drug crops. PMCs aren't supposed to be engaged in combat - but in late February, several DynCorp workers flew into the middle of a firefight, landing their helicopter to rescue the crew of a police chopper brought down by leftist guerrillas.

DynCorp is also involved on the frontlines of various other Latin American drug wars. In the early 1990s, the State Department hired the company for the ostensible purpose of maintaining helicopters then on loan to Peruvian police. In 1992, three DynCorp employees died when one of those helicopters was hit by fire from Shining Path guerrillas while flying over a major coca-growing region. Two of the casualties turned out to be former covert-ops specialists, including Robert Hitchman, a former Marine Corps fighter pilot who worked for Air America (the CIA's airline and covert operations front in Indochina during the 1960s). Another of DynCorp's near- casualties, though in a far different context, was CEO Dan Bannister. He was scheduled to be on the 1996 military flight in the Balkans that crashed and killed all aboard, including then- Commerce Secretary Ron Brown, but decided at the last minute to skip it. "I am the luckiest man alive," Bannister said in press accounts after the crash.

"There's no point in training the QUEEN'S Islanders. To control human rights violations you need a well-trained, efficient ARMY."
MPRI'S ED SOYSTER

In business terms, MPRI has shot up through the ranks. When retired General Vernon Lewis founded the firm in 1988, MPRI had just three full-time employees. Its payroll climbed to 40 in 1992 and 850 today, plus a database of some 12,000 retired military personnel who can be called upon to handle contract work. Revenues have also soared, from $4 million in 1995 to $70 million last year.

It was that sort of growth that led L-3 Communications - founded in 1997 as a spin-off of 10 electronics manufacturing divisions of Lockheed Martin - to swoop in and purchase MPRI. L-3 hasn't done so badly, either: Its tripled in size since its founding, and the company's stock price has roughly doubled during the past 12 months. The deal was unusual in that L-3 primarily sells hardware, including flight recorders, control systems for satellites and the controlled momentum gyroscope that keeps the International Space Station in its orbit, whereas MPRI sells services. (Founder Vernon Lewis stepped down as CEO two years ago and became chairman of the board. When L-3 bought the company, the MPRI board was phased out, and Lewis has had no role with the firm since. He was, of course, a shareholder at the time L-3 purchased the company.)

Frank Lanza, L-3's chairman and CEO, believes privatization of military services will continue to expand and sees MPRI as a hot property with "competitive advantages" that no other training business can match. "It's a well-managed company with double-digit profit margins," he says in a phone conversation from his New York office. Lanza acknowledges MPRI's military training programs are controversial and says that's made him view its overseas ventures with caution. "They can't go anywhere without government approval, but there could still be negative public opinion," he says. "We're sensitive to that and watching it very closely so we don't get involved in a situation by accident."

Lanza's upbeat assessment is shared by industry-watcher Deborah Avant, a professor of political science and international affairs at George Washington University who is working on a book about PMCs. "Technically, MPRI has competitors, but it's got a unique mix of personnel and connections," she says. "They pretty much have a corner on their piece of the market."

During its early years, MPRI maintained a cool, if not downright suspicious, relationship with the press. There are still some areas that Soyster prefers not to discuss, but the firm has become increasingly accessible to the media. Indeed, given some of the things I've written about MPRI in the past - "mercenary" is one of the more polite appellations I've used to describe the company - Soyster's very consent to an interview was somewhat unexpected. The company makes every effort to be seen as just another business entity - its website www.mpri.com is filled with lingo that could be pulled off almost any corporate site. It's just that this site's "job opportunities" section includes headings like: "Kuwait - Infantry."

As he explains in his office (Soyster apologizes that he can't give me a full slideshow presentation in the nearby conference room, as it is being used to host the new ambassador to Nigeria, a company client), MPRI has three distinct divisions. The National Group, headed by retired Lieutenant General Jerry Bates, develops curriculum for the Pentagon's War Colleges, tests new military equipment and trains troops to use it, and runs ROTC programs at more than 200 universities. Joe Wolfinger, a former deputy director of the FBI, runs the Alexandria Group, which was introduced last year. It handles training for law enforcement agencies, offers seminars in leader development, and conducts background investigations for government and corporate clients. The International Group, headed by former General Crosbie Saint, who commanded the U.S. Army in Europe between 1988 and 1992, handles foreign training programs. Though it generates just 40 percent of MPRI's revenues, the International Group has attracted by far the most public scrutiny.

"You just know that it's not gonna be the HEAD of the group who gets SHOT, but a 21-year-old pregnant woman."
MPRI'S ED SOYSTER

Soyster vehemently objects to the description of MPRI as a "mercenary" firm, saying that the work of the International Group is restricted to training, education on the military's role in a democracy, leader development and strategic planning. "We've all carried guns and used them, but we don't do so for MPRI," he states emphatically, adding that company employees on assignment overseas dress in business suits, not military uniforms. MPRI has even turned down contracts - for example, guarding overseas embassies - which would require its staff to carry weapons, for fear of bad publicity. "The scenario we're afraid of is that a situation gets out of hand and one of our guys has to shoot someone," he tells me as he fingers the black gemstone on his 1957 class ring from West Point. "You just know that it's not gonna be the head of the group who gets shot, but a 21-year-old pregnant woman. It's not worth the risk."

With his straight-shooting bonhomie, Soyster is easy to like. He's great fun to shoot the breeze with - after all, he's led an interesting career and has the stories to back it up. That's probably a key reason why he's the go-to guy to tell the firm's story. Soyster says MPRI got its first big overseas contract in 1994, when Croatia hired the firm to advise its military forces. The company dispatched a team to Zagreb that arrived during a period of particularly intense fighting between Croat and Serb forces. "The Croatians saw their future with the West, not the East," says Soyster, who says MPRI's role was limited to classroom instruction on tactics and did not include training in battlefield tactics. "They wanted to join NATO's Partnership for Peace program, and we helped them achieve that."

Yet just months after MPRI's arrival, Croatia's army - which until MPRI came on the scene had been viewed as bumbling and inept - launched a series of bloody and highly successful offensives against Serb forces. Most important was Operation Lightning Storm, the assault on the Krajina region during which Serbian villages were sacked and burned, hundreds of civilians were killed and some 170,000 people were driven from their homes. Soyster says that MPRI, like the U.S. government, knew the attack on the Krajina would take place and that perhaps half a dozen officers who graduated from its training seminars took part in the operation. Otherwise, he insists, the company played no role in the Krajina campaign. "It's impossible, no matter how good you are, to turn around an army in a few months," he says. "But it's a great myth. It's good for our business."

MPRI's contract with Croatia has been renewed several times, and it still has a team in Zagreb today, though its presence there no longer attracts much attention. The firm is also at work in neighboring Bosnia, which picked MPRI to train its new armed forces after winning independence from the former Yugoslavia in 1996. As part of that program - which is overseen by the U.S. government but paid for by Saudi Arabia, Kuwait, Brunei and Malaysia - MPRI has designed a combat-training center, set up the Ministry of Defense, and helped establish an army that Soyster says is designed to handle defensive tasks. At the program's peak, MPRI had 230 former officers in Bosnia. "We had about 30 colonels over there, five divisions' worth," Soyster boasts. "The U.S. Army can't send those kind of numbers."

MPRI is also expanding in Africa, where it is helping implement the Pentagon's African Crisis Response Initiative (ACRI), a program designed to strengthen U.S. ties to African nations and create an indigenous "peace- keeping" force on the continent. Seven nations are participating in ACRI - Benin, Ghana, the Ivory Coast, Malawi, Mali, Senegal and Uganda - with MPRI's role being to provide leadership training. None of those nations has a stellar human rights record.

Elsewhere in Africa, MPRI has a $7-million contract with the U.S. Agency for International Development (USAID) to instruct the Nigerian military, which ruled the country for almost 15 years before turning power over to civilians in 1999. MPRI is also training the new Coast Guard in Equatorial Guinea, which recently uncovered huge offshore oil deposits. That country is headed by a government that the conservative human rights group Freedom House rates, along with countries like Burma, North Korea and Iraq, as having one of the world's worst records on political and civil liberties. Soyster traveled to Equatorial Guinea last year to kick off MPRI's work and has met on five occasions with the president of the country, Teodoro Obiang Nguema Mbasogo.

On other continents, MPRI's clients have ranged from the benign - such as Sweden, where the armed forces were briefed on the Gulf War - to the questionable. In Colombia, for example, MPRI helped the Ministry of Defense, in Soyster's words, "reorganize and orient itself toward counter-drug operations" on a contract paid for by the Pentagon. Soyster concedes that MPRI's clients frequently aren't poster children for political freedom, but he says that's exactly the point of working with them. "There's no point in training the Queen's Islanders," he says. "To control human rights violations you need a well-trained, efficient army. Wringing your hands is not going to solve the problem."

He walks over to a bookshelf and pulls out a three-ring binder with seminar materials that the company has used to instruct African military officers. "Let us all be clear on this point," reads a section of text he points to. "The establishment and maintenance of civilian control and oversight of the military form the foundation upon which the stability of democracy is built." Looking up from the page, Soyster says that he and his colleagues at MPRI have devoted 30 years of their lives to a system in which the military is subordinate to elected leadership. "That guy over there on the wall" - here he points to a picture of former General Douglas McArthur that accompanies a framed newspaper story from the 1950s - "had a problem with President Truman. As you may recall, the president won." But not all of the firm's clients have learned the lesson: In the Ivory Coast, the military seized power less than a week after MPRI concluded its instruction, though no one suggests there was a link between the coursework and the coup.

For better or for worse, PMCs are here to stay. According to Soyster, MPRI has potential deals brewing across the globe, from Poland in Europe to Argentina in South America to Bahrain in the Middle East. "You're probably not gonna hear people say they're going to MPRI-ize their country the way you Hoover your apartment in England," he says while walking me back to the front door and heading out to an appointment, "but we are developing a pretty good brand name."

JOB START DATE: O/A 1 June 2001

POSITION LOCATION: Kuwait

JOB REFERENCE NUMBER: I73

CATEGORY OF POSITION: Trainer/Advisor

TITLE OF POSITION: Special Forces

DESCRIPTION OF POSITION: MPRI has been selected to assist in the design and development of a comprehensive plan to upgrade the military and its administrative and technical systems. MPRI will begin the design and development of a comprehensive plan by employing a combined Host Nation/MPRI team to conduct an assessment and review. This will result in completion of an Action Plan within ninety days of the contract start date. Following approval by the Host Nation, the combined team will immediately begin execution of the Action Plan. The implementation of the Action Plan and the establishment of institutions and processes are planned for a three-year program. The Comprehensive Plan is a cooperative effort and is designed to yield early results and establishment of long-term institutions and sustainment processes.

POSITION CRITERIA: Retired Army LTC or COL (CMF 18A Special Forces) with following command/experience-SF battalion-level command preferred; Delta, Ranger Bn or Regt.

SALARY RANGE: Competitive

BENEFITS: Housing, Employee and family health and dental coverage, 401(k) with employer match, liberal holiday, vacation, and sick leave allowance, worker's compensation coverage, disability coverage.

CLEARANCE REQUIREMENTS: No Requirement

POINT OF CONTACT: Arnie Laidig, Recruiting and Staffing Manager
Tel: (800) 779-6940
Email: alaidig@mpri.com