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Investigate Booz Allen Hamilton, Not Edward Snowden

The firm that formerly employed both the director of national intelligence and the NSA whistleblower merits closer scrutiny

Military contractor Booz Allen Hamilton of McLean, Virginia, has shot into the news recently over two of its former employees: Edward Snowden, the whistleblower who has just revealed the extent of US global spying on electronic data of ordinary citizens around the world, and James Clapper, US director of national intelligence.

Booz Allen Hamilton headquarters in McLean, Virginia. (Photo: Michael Reynolds/EPA)Clapper has come out vocally to condemn Snowden as a traitor to the public interest and the country, yet a review of Booz Allen's own history suggests that the government should be investigating his former employer, rather than the whistleblower.

Clapper worked as vice-president at Booz Allen from 1997 to 1998, while Snowden did a three-month stint at their offices in Hawaii in spring 2013 as a low-level contract employee. Both worked on intelligence contracts, which are estimated to make up almost a quarter of the company's $5.86bn in annual income. This past weekend, Clapper condemned Snowden's leak about US government surveillance, telling NBC News's Andrea Mitchell:

"For me, it is literally – not figuratively – literally gut-wrenching to see this happen because of the huge, grave damage it does to our intelligence capabilities. This is someone who, for whatever reason, has chosen to violate a sacred trust for this country. I think we all feel profoundly offended by that."

The following day Snowden replied from a hotel in Hong Kong, in an interview with Glenn Greenwald of the Guardian:

"The government has granted itself power it is not entitled to. There is no public oversight. I realised that I was part of something that was doing far more harm than good."

Booz Allen reacted with anger in a press statement released hours later:

"News reports that this individual has claimed to have leaked classified information are shocking, and if accurate, this action represents a grave violation of the code of conduct and core values of our firm."

Core values? Let's examine Booz Allen Hamilton's track record.

In February 2012, the US air force suspended Booz Allen from seeking government contracts after it discovered that Joselito Meneses, a former deputy chief of information technology for the air force, had given Booz Allen a hard drive with confidential information about a competitor's contracting on the first day that he went to work for the company in San Antonio, Texas. US air force legal counsel concluded (pdf):

"Booz Allen did not uncover indications and signals of broader systemic ethical issues within the firm. These events caused the air force to have serious concerns regarding the responsibility of Booz Allen, specifically, its San Antonio office, including its business integrity and honesty, compliance with government contracting requirements, and the adequacy of its ethics program."

It should be noted that Booz Allen reacted swiftly to the government investigation of the conflict of interest. In April that year, the air force lifted the suspension – but only after Booz Allen had accepted responsibility for the incident and fired Meneses, as well as agreeing to pay the air force $65,000 and reinforce the firm's ethics policy.

Not everybody was convinced about the new regime. "Unethical behavior brought on by the revolving door created problems for Booz Allen, but now the revolving door may have come to the rescue," wrote Scott Amey of the Project on Government Oversight, noting that Meneses was not the only former air force officer who had subsequently become an executive in Booz Allen's San Antonio office.

"It couldn't hurt having [former AF people]. Booz is likely exhaling a sigh of relief as it has received billions of dollars in air force contracts over the years."

Booz Allen has also admitted to overbilling the National Aeronautics and Space Administration (Nasa) "employees at higher job categories than would have been justified by their experience, inflating their monthly hours and submitting excessive billing at their off-site rate." The company repaid the government $325,000 in May 2009 to settle the charges (pdf). Incidentally, both the Nasa and the air force incidents were brought to light by a company whistleblower who informed the government.

Nor was this the first time Booz Allen had been caught overbilling. In 2006, the company was one of four consulting firms that settled with the Justice Department for fiddling expenses on an industrial scale. Booz Allen's share of the $15m settlement of a lawsuit under the False Claims Act was more than $3.3m.

The incidents described above could be dismissed as aberrations. What is worthy of note, however, is that Ralph Shrader, the chairman, CEO and president of Booz Allen, came to the company in 1974 after working at two telecommunications companies – Western Union, where he was national director of advanced systems planning, and RCA, where he served in the company's government communications system division.

Today, those names may not ring a bell, but these two companies took part in a secret surveillance program known as Minaret in the 1970s when they agreed to hand over to the National Security Agency (NSA) all incoming and outgoing US telephone calls and telegrams. In an interview with the Financial Times in 1998, Shrader noted that the most relevant background for his new position of chief executive at Booz Allen was his experience working for telecommunications clients and doing classified military work for the US government.

Minaret and other such snooping programs led to an explosive series of congressional hearings in 1970s named the Senate select committee to study governmental operations with respect to intelligence activities, chaired by Frank Church of Idaho in 1975.

Should the latest revelations of massive government surveillance come before Congress again, it might be worth probing Shrader and his company – rather than shooting the messenger, Edward Snowden.

Finally, Congress would also do well to investigate Clapper, Booz Allen's other famous former employee, for possible perjury when he replied: "No, sir" to Senator Ron Wyden of Oregon in March, when asked:

"Does the NSA collect any type of data at all on millions or hundreds of millions of Americans?"

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