Post-9/11

The attacks of September 11, 2001, transformed American government in ways that created extraordinary new opportunities for corruption. Hundreds of billions of dollars flowed into defense, intelligence, and homeland security with minimal oversight. The urgency of the "War on Terror" was used to justify no-bid contracts, warrantless surveillance, and the suppression of dissent. And in Congress, a super-lobbyist named Jack Abramoff was running a corruption machine that would eventually ensnare a dozen officials in one of the largest bribery scandals in American legislative history.

The post-9/11 era demonstrated that wartime is always the enemy of accountability. The Iraq War alone generated an estimated $60 billion in waste and fraud, according to the Commission on Wartime Contracting. Companies with political connections received billions in no-bid contracts while soldiers in the field lacked adequate body armor. Meanwhile, the NSA was conducting warrantless surveillance on American citizens in a program that would not be revealed until 2005; a direct echo of the Cold War-era abuses documented in Chapter 8.

But the era's corruption was not limited to wartime. In Congress, a new breed of corruption flourished; more brazen, more transactional, and more openly contemptuous of ethics rules than anything seen since the Gilded Age. A congressman literally wrote out a bribe menu on official stationery. Another kept $90,000 in cash in his freezer wrapped in aluminum foil. The post-Watergate illusion that institutional reforms could permanently constrain corruption was thoroughly shattered.

Jack Abramoff: The Super-Lobbyist

Jack Abramoff was the most consequential corrupt lobbyist in modern American history; not because he invented influence peddling, but because he industrialized it. Operating through his lobbying firm and a network of front organizations, Abramoff ran a machine that combined campaign contributions, luxury trips, meals, sports tickets, and the promise of future employment into a systematic apparatus for purchasing legislative outcomes.

Abramoff's most egregious conduct involved his representation of Native American tribal gaming interests. Between 2001 and 2004, Abramoff and his partner Michael Scanlon bilked six tribes out of approximately $85 million in lobbying and public relations fees. In internal emails, Abramoff referred to his tribal clients as "monkeys" and "troglodytes" while extracting enormous fees for work that was often duplicative or unnecessary; and in some cases involved secretly lobbying against the very clients who were paying him, so that he could then be hired to fix the problem he had created.

On January 3, 2006, Abramoff pleaded guilty to three felony counts: conspiracy, fraud, and tax evasion. He agreed to cooperate with federal investigators. His cooperation led to the conviction or guilty plea of approximately 20 individuals, including Representative Bob Ney (R-OH), Deputy Interior Secretary J. Steven Griles, White House procurement official David Safavian, and several congressional staffers. Abramoff was sentenced to four years in federal prison (later reduced to three years and ten months) and ordered to pay $21 million in restitution.

Duke Cunningham: The Bribe Menu

Randall Harold "Duke" Cunningham, a Republican congressman from California's 50th district and a decorated Vietnam War fighter ace, set a record that no member of Congress would want: the largest dollar amount of bribes accepted by a sitting member of Congress in documented history. Between 2000 and 2005, Cunningham accepted at least $2.4 million in bribes from defense contractors, including a $1.675 million house purchased by contractor Mitchell Wade at an inflated price, a $140,000 condominium in Washington, a Rolls-Royce, antique furniture, Persian rugs, jewelry, and a 42-foot yacht named the "Duke-Stir."

What made the Cunningham case uniquely brazen was the "bribe menu." Investigators discovered that Cunningham had written out, on official congressional stationery, a price list for his services: for the first $16 million in defense contracts a briber steered through Cunningham's position on the House Appropriations Subcommittee on Defense, the price was $140,000; for each additional million, the price was $50,000. The menu was handwritten, explicit, and left no doubt about the nature of the transactions.

On November 28, 2005, Cunningham pleaded guilty to conspiracy to commit bribery, mail fraud, wire fraud, and tax evasion. In a tearful press conference outside the courthouse, he said, "I can't undo what I have done, but I can atone." He was sentenced on March 3, 2006, to eight years and four months in federal prison, the longest sentence ever given to a member of Congress for bribery at that time. He served his full sentence and was released in 2013.

William Jefferson: $90,000 in the Freezer

On August 3, 2005, FBI agents executing a search warrant at the home of Representative William J. Jefferson (D-LA) discovered $90,000 in cash in his freezer, wrapped in aluminum foil and stuffed inside frozen food containers. The bills were part of a $100,000 payment that had been recorded as part of an FBI sting operation. Jefferson had been caught on videotape accepting the money from an FBI informant in exchange for using his official position to promote business deals in Africa.

Jefferson was indicted on June 4, 2007, on 16 counts of racketeering, soliciting bribes, money laundering, and obstruction of justice. He was accused of soliciting and receiving over $500,000 in bribes from various businesses seeking his help in securing business deals in Nigeria, Ghana, Cameroon, and other African countries. On August 5, 2009, he was convicted on 11 of 16 counts, including bribery, racketeering, and money laundering. He was sentenced to 13 years in federal prison, the longest sentence ever for a congressman at that time. His conviction was later partially vacated on appeal, and he was resentenced to approximately the same term.

Bob Ney and Tom DeLay

Bob Ney (R-OH)

Representative Bob Ney pleaded guilty on October 13, 2006, to conspiracy and making false statements in connection with the Abramoff scandal. Ney had accepted gifts including an all-expenses-paid trip to Scotland to play golf at St. Andrews, luxury box tickets, meals, and campaign contributions from Abramoff in exchange for inserting favorable language into legislation and performing other official acts. He was sentenced to 30 months in federal prison.

Tom DeLay

Tom DeLay, the powerful House Majority Leader from Texas known as "The Hammer" for his aggressive enforcement of party discipline, was indicted on September 28, 2005, by a Texas grand jury on charges of conspiracy and money laundering related to the 2002 Texas redistricting campaign. Prosecutors alleged that DeLay's political action committee, Texans for a Republican Majority (TRMPAC), had illegally funneled $190,000 in corporate contributions to Republican candidates for the Texas legislature through the Republican National State Elections Committee; a laundering scheme designed to circumvent Texas's ban on corporate contributions to state candidates.

DeLay resigned from Congress on June 9, 2006. On November 24, 2010, he was convicted of money laundering and conspiracy to commit money laundering, and sentenced to three years in prison. However, on September 19, 2013, the Texas Third Court of Appeals overturned the convictions, ruling that the evidence was legally insufficient to support the money laundering charge. The Texas Court of Criminal Appeals upheld the acquittal in 2014.

Iraq War Contracting Fraud

The Iraq War (2003–2011) generated the largest wave of wartime contract fraud since World War II. The Commission on Wartime Contracting in Iraq and Afghanistan, established by Congress in 2008, concluded in its 2011 final report that between $31 billion and $60 billion had been lost to waste and fraud in Iraq and Afghanistan combined.

Halliburton/KBR

The most controversial contracts went to Halliburton and its former subsidiary Kellogg, Brown and Root (KBR). Vice President Dick Cheney had served as Halliburton's CEO from 1995 to 2000, and the company received over $39.5 billion in government contracts during the Iraq War era, many of them no-bid or limited-competition awards under the LOGCAP (Logistics Civil Augmentation Program) contract.

Documented problems included:

• A $7 billion no-bid contract for oil field reconstruction awarded in March 2003 before the invasion began.
• KBR charged the Army $45 per case for soda that cost $15, and billed for 42,000 meals per day at a facility that served only 14,000.
• In 2009, KBR agreed to pay $579 million to settle fraud allegations related to inflated costs in Iraq.
• Twelve KBR employees died from electrocutions in improperly wired showers at U.S. military bases in Iraq between 2003 and 2008.

Warrantless Surveillance

On December 16, 2005, the New York Times published a story revealing that the National Security Agency had been conducting warrantless electronic surveillance of American citizens since shortly after September 11, 2001, under a program authorized by President George W. Bush. The program, code-named STELLAR WIND, intercepted phone calls and emails between the United States and overseas where one party was suspected of links to terrorist organizations; but without the court orders required by the Foreign Intelligence Surveillance Act.

The program's existence had been known to a handful of senior administration officials and congressional leaders, but it was never submitted for FISA Court approval as the law required. When the Times learned of the program in 2004, the Bush administration successfully pressured the paper to delay publication for more than a year on national security grounds. After the program was disclosed, Congress retroactively legalized key aspects of it through the Protect America Act (2007) and the FISA Amendments Act (2008), which also provided retroactive immunity to telecommunications companies that had cooperated with the warrantless surveillance.

Hurricane Katrina Contract Fraud

Hurricane Katrina, which devastated the Gulf Coast on August 29, 2005, triggered an emergency spending response of approximately $120 billion in federal funds. The urgency of disaster relief, combined with the suspension of normal contracting rules, created rampant fraud. The Government Accountability Office identified at least $2 billion in improper and potentially fraudulent payments. FEMA paid for thousands of mobile homes that were never occupied, reimbursed hotel stays for people who were not displaced, and awarded no-bid contracts to politically connected firms that then subcontracted the work at a fraction of the price, skimming the difference.

By 2013, the DOJ had charged more than 1,300 individuals with Katrina-related fraud, resulting in convictions totaling hundreds of millions of dollars in restitution. The pattern of disaster fraud would repeat after every subsequent major natural disaster.

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