“The Super Bowl of Disasters”: Profiting from Crisis in Post-Earthquake Haiti
As Americans were gearing up for last week’s Super Bowl championship, Haiti’s president Michel Martelly was on a plane to the World Economic Forum to recruit players interested in what one businessman dubbed “the Super Bowl of Disasters” – Haiti’s devastating 2010 earthquake. The Irish-owned cell phone company Digicel footed his trip there, and hosted a regional business tour complete with a gala ball before his return to a country still reeling from crisis conditions in housing, jobs, and basic rights.
Haiti’s status as prime-time jostling space for prospective investors is not new. Many a corporation, lobbyist, and consultant has seen Haiti’s losses as their gain, leveraging humanitarianism for profit. Plenty of the $1.1 billion in disaster aid has gone not to desperate Haitians but to inside-the-Beltway contractors. Often the very same corporations have wrested financial and political gain from the wars in Iraq and Afghanistan, the countries hit by the 2004 tsunami in the Indian Ocean, the Gulf Coast after Hurricane Katrina, New Orleans after the ensuing flood of 2005, and lots of other places. The same deals have been cut over Haiti in the past, too, particularly during periods of political instability.
The earthquake has provided a fresh wave of opportunity. In the first year after the earthquake, the US government awarded more than 1,500 contracts worth $267 million. All went to US firms except 20, worth $4.3 million, which went to Haitian businesses. Among the American corporations that received contracts, we’ve seen everything: many millions going to companies that had had previous contracts cancelled for bad practices, that had paid out as much as eight-figure settlements for violence happening under their watch, that had been investigated by Congress for gaming the system, or that had been the subject of federal reports accusing wastage of funds. We’ve seen corporate executives and members of Congress going through a revolving door and leveraging both sides for contracts. We’ve seen public funds given without any competition or transparency, quite a few to friends of the Clintons and other well-placed insiders.
Local labor and production, which are critical elements in economic recovery, have been trumped for American business profits. According to federal procurement data, among contracts which provide products (as opposed to services), 77% were for products manufactured in the US. They don’t list which, if any, of the remaining 23% involve any Haitian materials or labor.
Two months after the earthquake, companies gathered in a luxury hotel in Miami for a “Haiti Summit” to discuss post-earthquake contracting possibilities. The meeting was sponsored by the International Peace Operations Association (IPOA), but these were no peaceniks. Their members are predominantly private mercenary companies that enforce 'security' in war and disaster zones for the US government because, unlike elected entities, they can completely avoid public scrutiny and accountability. They included such companies as Triple Canopy, which took over Blackwater’s contract in Iraq. One of the corporate representatives at the Summit described the outlook: "Their infrastructure is pretty much destroyed, communications are destroyed, there’s a lot of opportunities there for companies, particularly US countries [sic] because of the close proximity.” The Summit was apparently worthwhile, as US government paid out more than $10 million to the industry for “guard services,” and almost $20,000 for riot shields and suits.
Below are a few examples of post-earthquake contracts and grants, selected to show just some of the problems at play. They offer a small glimpse into a much larger, secretive world of disaster deals. We’re grateful to our investigative journalist colleagues who, alongside us, have kept heavy on the scent of these corporations and brought buried information to light.
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“American corporations and their stakeholders must understand how helping Haiti over the long term also helps them," said the non-profit CHF International in its March 2010 board report. "By contributing to Haiti's reconstruction in a lasting, meaningful way, companies will be helping to build a new, more vibrant Caribbean market for their own goods and services.”
CHF’s involvement demonstrates how even non-profits can drive development that props up American business interests on the backs of poor Haitians. What CHF refers to as “helping Haiti” has meant using US tax dollars to underwrite textile sweatshops, making it easier and more profitable to score the cheapest source of labor in the hemisphere. In 2006, USAID gave CHF a $104 million, 4-year contract to help “existing industries to increase their capacity, efficiency and reach new markets,” primarily through the export textile industry. The money subsidized CHF’s creation of infrastructure such as roads around industrial areas and training of factory workers on skills such as “how to work in a formal work environment.” Bolstered by additional USAID funding, this project continued after the earthquake.
CHF’s post-earthquake USAID contract, for $20.9 million, went to clean-up projects, including cash-for-work. Cash-for-work meant camp residents engaging in hired-hand projects such as digging drainage ditches and clearing debris, for a period of a few weeks. The scheme has come under fire by camp residents and human rights groups, with even a USAID evaluation raising some serious critiques. The jobs are unpredictable, workers have said, and while the short duration can palliate personal crisis for the moment, the program quickly returns the worker’s family to its desperate state. Those hired are paid officially at the unlivable minimum daily wage of 200 gourdes, or US$5, though unofficially they often earn less. A Haiti Grassroots Watch exposé found, furthermore, that cash-for-work hiring is often based on corruption, with many workers having to pay a ‘kickback,’ negotiate sex (in the case of women) for a job, or affiliate with political parties or candidates. USAID also noted that cash-for-work programs it funded increased risks of “serious and avoidable” accidents on the job “by failing to develop and enforce consistent workplace safety rules and accident procedures.”
CHF’s projects, based on factory jobs and cash-for-work, have given neither livable incomes to employees nor offered development opportunities to the nation. Meanwhile, CHF has gained humanitarian clout and an influx of funding, and its garment industry partners sit happily with the perks.
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Using tried-and-true strategies of political manipulation, some corporations have been able to edge their way into post-earthquake contracts despite histories of fraud and corruption.
AshBritt Environmental, for instance, has a record of disaster response elsewhere that spells trouble for Haiti. The company had received $900 million in contracts for Hurricane Katrina clean-up, after hiring lobbyists formerly involved in state government. An MSNBC investigation later brought to light complaints by local contractors, a mayor, and local legislators that the company’s work was too slow, that it overcharged, and that it was not hiring local contractors. The extent of “layer cake” contracting was so extreme that in one case, AshBritt was paid $23 per cubic yard of debris removed but subcontracted through three middleman companies so that the company that actually removed the rubble received $3 per cubic yard.) Even a 2006 federal report accused the company of wasting money in this subcontractor layering after Katrina.
Given its experience, AshBritt wasted no time unleashing its skills in lobbying and political pressure to get in on the Haiti game. Early in 2010, the company paid $90,000 to a lobbying firm to pressure the government for Haiti contracts, according to disclosure records described in the press. In a prime instance of revolving door between public and private sectors, one of the lobbyists working on the case was the former chief of staff for Senator John Kerry. Kerry, in turn, was the senator who co-sponsored the legislation for Haiti relief funding.
With influential people circulating between the givers and receivers of funds, AshBritt was confident enough about future contracts that it spent an initial $25 million setting up for anticipated operations in Haiti with a soccer field-sized base camp and services to house future project managers. In July 2010, AshBritt won a $500,000 US government contract for debris removal, the first of what the company anticipated would be many contracts to come their way. Continuing the revolving door trend, another lobbyist for the firm was the former USAID Mission Director in Iraq, Lewis Lucke, who was paid $30,000 per month to help win contracts via a partnership venture AshBritt set up. Lucke claimed he “played an integral role” in obtaining three contracts for the company, including $10 million from the World Bank and about $10 million more from the Haitian government (one of the first major government contracts for debris removal). As of this writing, not even the company’s website contains an update on what work it has or has not completed in Haiti.
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Like AshBritt, CH2M Hill, a large engineering and construction firm, should have raised warning signals as a company to be hired on the taxpayer dollar. A government database that monitors federal contracts reveals a track record of corruption, listing nine instances of misconduct for the company since 1995. In one case, the company was paid $4.1 million for a contract in Iraq though no work was actually completed. On the Gulf Coast, a US government investigation of $45 million paid to CH2M and the three other companies in no-bid contracts for Katrina response was declared wasteful spending. CH2M was also accused in a congressional investigation in 1992 of misusing money during its cleanup of toxic waste sites in the U.S. More than two million dollars of this contract were allegedly used for “unallowable and questionable costs,” such as $11,379 for a Christmas party and $2750 for specialty chocolates. The company is listed in the top 50 of U.S.-based contractors and has been a major player in wartime contracting in Iraq and Afghanistan.
The track record was nothing that some strategic lobbying efforts couldn’t mitigate, however. The lobbyist who headed up CH2M Hill’s efforts to win contracts in Haiti was Larry LaRocco, a former congressman from Idaho who now runs his own lobbying firm. And unsurprisingly, the company spent half a million dollars in political contributions in 2010. Thus equipped with politicians in its pocket, CH2M was well-positioned to compete in the latest contract game. It received its first post-earthquake contract just days after the disaster, and was given a joint contract with KBR Global Service (itself notorious due to its Iraq and Afghanistan activities) for facilities operations support at the end of 2010.
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In the case of a few other contracts that we know to be operating in Haiti, we’ve spent hour after hour on the scent. We’ve scoured internet resources, news articles, and company websites to track companies we know received post-earthquake contracts in Haiti. Nothing. Not even a mention, sometimes, in the 100-plus-page 2010 annual reports.
What we have been unable to uncover is at least as alarming as what we have learned about some of the firms receiving millions from the US government, and what they have done with those millions. We wonder whether the US government has had any more knowledge or oversight of the corporate actions than have the corporation's investors. As for the American people, they have no way to know how their money has been spent or what has been done in their names. The lack of transparency has also given a green light to profiteers to neglect standards, quality, and honesty.
There is one group for whom the secrecy, foul play, taking of power that should never be taken, giving away of what should never be given away, matters most of all: Haitians, the ones whose country is being treated like a Monopoly game. They alone will have to live with the long-term outcome of what foreign companies build, demolish, restructure, or steal in their country.
[A list of references can be found here.]