Foot Soldiers of the New World Order: The Rise of the Corporate Military

by Simon Sheppard

New Left Review March/April 1998

Mercenaries are outlawed under Article 47 of the Geneva Convention. In December 1994 the United Nations General Assembly adopted Resolution 49/1150 urging all nations 'to take the necessary steps and to exercise the utmost vigilance against the menace posed by the activities of mercenaries'. The UN International Convention Against the Recruitment, Use, Financing and Training of Mercenaries has been signed or ratified by twenty-one countries. Yet the opportunities for mercenary contracts are now at a level unprecedented in modern times. In the uncertain political environment of the post-Cold War world in which countless military specialists have been released onto the free market, the professional soldier of fortune has again become a key player in the business of death. The modern condottieri are not the lawless guns for hire who turned the Congo into a free for-all thirty-five years ago. Men like Mike Hoare, Jacques Schramme, and Bob Denard have been phased out in favour of new corporate identities which are, in effect, the logical extension of a borderless global business environment.

The mercenary organization which was the first to take advantage of the opportunities available in post-Cold War Africa came to public attention in the South Pacific recently when its first venture outside its home continent collapsed. Executive Outcomes (EO) is one of more than eighteen firms, including international oil, gold and diamond mining ventures, a chartered accountancy practice, an airline, foreign security services, and offshore financial management services, managed from a modern, glass-fronted building at 535 King's Road, London, known as Plaza 107. The mirror site in South Africa is the Strategic Resources Corporation Ltd. (SRC), based in Lynnwood, Pretoria. EO was sub-contracted by Sandline International of the Plaza I 07 /SRC group to provide aircraft, equipment and training to the Papua New Guinea Defence Force (PNGDF) on 31 January I997. EO arrived in early February and began conducting training sessions at the Urimo base near Wewak in East Sepik province.

Then PNG Prime Minister Sir Julius Chan's argument for hiring foreign professionals was simple; his own military has failed over the past eight years to put down the secessionist Bougainville Revolutionary Army (BRA). In June 1996 the PNG government had ordered an offensive: Operation High Speed 2. It was a complete failure. In September that year eleven PNGDF troops were killed and five captured in a skirmish at Kangu Beach. On 13 October Bougainville interim government premier Theodore Miriung was assassinated. A subsequent PNG colonial inquiry implicated the PNGDF and pro-PNGDF guerrillas in his death.

In defending the Sandline contract Chan stated, 'We ... have requested the Australians support us in providing the necessary specialist training and equipment ... They have consistently declined and therefore I had no choice but to go to the private sector'. According to Noel Levi, the head of the PNG Prime Minister's Department and chairman of the National Security Advisory Committee, two offers of private military assistance, one from Australia and one from Russia, were rejected before the Sandline proposal was taken up. The fee for the EO services was set at us$36 million. The 125-strong EO team would be employed for an initial period of three months or until the BRA was defeated.

We shall look at the military and commercial aspects of this operation in more detail below. Briefly, however, before offensive operations could commence, PNGDF Army chief Brigadier-General Jerry Singirok refused to cooperate, and called for the resignation of the Prime Minister. The ensuing power struggle brought the country to the brink of civil war and did indeed culminate in the Prime Minister's resignation. Meanwhile, the EO special forces, temporarily detained by the defence forces they were supposed to train, slipped quietly out of the country. Sandline director Tim Spicer was detained on guns charges to guarantee his participation in a commission of inquiry investigating the affair. As a reflection of the professionalism now inherent in the contract military business, the press conference held upon Spicer's return to the UK was organized by PR agency Sara Pearson Associates.

EO's Apartheid Roots

This setback in EO fortunes is likely to be temporary. Their services are always in demand. The glossy EO brochure advertises that it I provides a highly professional and confidential military advisory service to legitimate governments'. It promises 'sound strategic and tactical advice' and the most professional training packages available to armed forces'. These packages include basic and advanced battle handling, sniper training, clandestine warfare, armoured warfare, and combat air patrol. Most of EO's approximately one thousand soldiers (70 per cent of whom are black) are veterans of South Africa's four elite apartheid-era counterinsurgency special forces: 32 'Buffalo' Battalion; the Reconnaissance Commandos ('Reccies'); the Parachute Brigade ('Parabats'); and the paramilitary 'Koevoet' ('Crowbar'). Their assignment was the destabilization of the apartheid regime's southern African enemies.

The 32 Battalion, comprised mainly of Portuguese-speaking Angolans, became South Africa's most highly decorated combat unit since the Second World War. Eeben Barlow, the director of EO until July this year, was second-in-command of the 32 Battalion. He chose the paladin, the chessboard knight once featured in the old television series Have Gun, Will Travel, as the company logo when he set up EO in 1989.

EO does not maintain a standing force but places key personnel on retainers and leases its non-essential employees to other companies in the Plaza I07/SRC group during periods of inactivity. The standard EO contract is for one year. Salaries range from US$2,700 to us$13,ooo a month (the latter for its approximately eighteen pilots). EO provides life insurance. Eighteen Eo employees were killed during operations in Angola; two died in an ambush in Sierra Leone.

EO in Angola and Sierra Leone

EO was registered in the UK in September 1993 by Simon Mann, a former troop commander in 22 SAS specializing in intelligence and South African director of Ibis Air, and Tony Buckingham, an SAS veteran and chief executive of Heritage Oil and Gas. The Heritage Oil and Gas board of directors includes former Liberal Party leader David Steel, and Andrew Gifford of GJW Government Relations, an influential parliamentary lobbyist. The company, originally British, now registered in the Bahamas, is associated with a Canadian oil corporation, Ranger Oil. Both companies had drilling interests in Angola, a country that since the mid 1970s was torn by civil war between the Marxist MPLA government and UNITA rebels who were covertly assisted by the South African special forces.

One of the centres of the oil industry in Angola is the town of Soyo, which was under the control Of UNITA forces in the early 1990s. In January I993 Mann and Buckingham commissioned EO to seize the town. A force of fewer than one hundred men, led by Laffras Luitingh, a former major in 5 Reconnaissance Commando, succeeded in March that year, but UNITA quickly recaptured the town after EO pulled out. The Angolan government then asked Ranger and Heritage to hire a larger force in exchange for oil concessions. Ranger allocated us$30 million for the operation and placed the contract with Mann and Buckingham.

They commissioned an EO team of five-hundred men which performed so effectively that EO commenced the 'restructuring and retraining' of the entire Angolan army in August I993. The contract with the Angolan government was initially for one year. That was extended for a further year and then on a month-by-month basis for a final four months. During that period EO is widely credited with crippling UNITA, its former ally, forcing the rebels to the bargaining table, and being responsible for the cease-fire signed in November I994. EO officially left Angola in January i996, having earned in excess of US$ 100 million through its services. Many members stayed, moving to SRC partner security firms such as Saracen Angola.

The next operation was in Sierra Leone, where the rapacious and corrupt military junta of Valentine Strasser was under siege from the bloodthirsty and anarchic Revolutionary United Front of Foday Sankoh. EO deployed its first I 70 men in Sierra Leone in May 1995. The force came equipped with two MI17s and an MI24 Hind helicopter gunship, two Boeing 727 transports and an Andover casualty-evacuation aircraft. The foreign professionals turned the war around completely. In March of 1996 the Sierra Leonian people in their first election for 2 8 years voted in Ahmed Tejan Kabbah, a career United Nations bureaucrat, as president; Strasser's junta retired into exile; and in May Sankoh sued for a cease-fire. The importance of the EO presence for stability in the country was graphically illustrated when, less than six months after EO withdrew from Sierra Leone in February this year, the military seized power in another coup.

EO performed some public relations work in Sierra Leone, such as ferrying the local football team to the African All Nations Cup in Johannesburg. But their real interests were strictly commercial. The fee for EO services included US$15 million and, of greater long term significance, a stake in the coveted Kono region diamond mines, which produce an estimated US$250 million of diamonds a year.

The Diamond Dogs

This commercial enterprise has given EO its nickname; 'the diamond dogs of war'. A recent United Nations report noted that once a firm like EO is able to establish security in an area 'it apparently begins to exploit the concessions it has received by setting up a number of associates and affiliates' which engage in 'legitimate' businesses. Such firms thus acquire 'a significant, if not hegemonic, presence in the economic life of the country in which it is operating'.

One of the Plaza 107 group firms is Branch Energy (BE), an English corporation which registered in the Isle of Man, a tax haven, in April 1994. EO is a major shareholder in BE, with 6o per cent of BE Angola, 40 per cent Of BE Uganda, and 40 per cent Of BE Sierra Leone. In June 1996 BE merged with Carson Gold, controlled by Canadian mining magnate Robert Friedland, to form Diamond Works Inc. This company, which has prospecting rights in Congo, Namibia, Botswana and Senegal, and is now the second largest concession holder in Angolait, was recently awarded the Alto Kwanza diamond exploration concession in Bie Province, covering an area of more than 18,ooo sq. km. In July 1996 the Sierra Leone government awarded the company a twenty-five-year lease to the Koidu diamond fields in the Kono region 'liberated' by EO. Diamond Works has contracted Lifeguard, another SRC subsidiary, at us$6o,ooo a month to protect its diamond fields in Sierra Leone.

Another line of analysis suggests that the prime mover in the employment of EO in Sierra Leone came from the South African mining house Gencor. In 1996 Gencor sold its controlling interest in the Australian company Cudgen RZ to another Australian firm, Renison Goldfields Consolidated (RGC). A subsidiary of RGC, Consolidated Rutile Ltd., in partnership with the us firm Nord Resources Group, controls half of Sierra Rutile Ltd, which with an annual production worth US$200 Million a year is the largest rutile mine in the world. The mine was the regional headquarters for Eo during their operations in West Africa and when they withdrew Sierra Rutile Ltd. took out a contract with Lifeguard.

Commercial Interests in Papua New Guinea

Mining interests were what attracted mercenary interest in PNG. The key to winning the war in Bougainville is control of the Panguna copper mine on the island, the third largest copper mine in the world. Until May 1989 Panguna was operated by Australian mining firm RTZ-CRA through its 53.6 per cent stake in Bougainville Copper Ltd. It was forced to close the mine after repeated sabotage of its operations. In May 1990 the BRA announced the unilateral declaration of independence of Bougainville. PNG could not afford to let the source of one third of its foreign exchange slip away and a small scale but vicious war broke out.

The shadowy corporate interests Of EO were responsible for turning Brigadier-General Singirok against the employment of mercenaries in Bougainville, an arrangement which he had participated in from the beginning. On 7 April 1996 Singirok and then PNG defence minister Mathias Ijape met with Tony Buckingham at the Cairns Hilton to initiate the negotiations. With Buckingham was Tim Spicer, director of Sandline International, a man with impeccable credentials for the planning and execution of a military operation; a captain in the Scots Guards during the Falklands War; assistant to General Sir Peter de la Billiere, British commander during the Gulf War; spokesman for General Sir Michael Rose, UN forces chief in Bosnia. Singirok met with Spicer again the following month in London where Spicer presented him with the proposed Sandline solution to the Bougainville situation. Singirok's travel expenses were being met at this time through an account set up by international arms and military hardware firm j&s Franklin, which has an extensive franchise throughout Africa, eastern Europe and Asia.

In a letter dated 1 August 1996 Spicer suggested to Prime Minister Chan a 'joint venture with your government, ourselves and RTZ-CRA to reopen and operate the Bougainville mine once recovered'. He says that the proposal was rejected. But in October i996 Spicer met with Chris Haiveta, then PNG finance minister and deputy Prime Minister, and Rupert McCowan, assistant director of merchant bank Jardine Fleming, who were in Hong Kong during their tour to promote the float of shares in PNG mineral resources division Orogen Minerals Ltd. They resurrected the potential for Sandline involvement in Bougainville. Sandline had been recommended to Haiveta, on McCowan's suggestion, by General Sir Peter de la Billiere-linked to Spicer, as we have seen, and a director of merchant bank Robert Fleming, the London-based parent of Jardine Fleming.

Under the nom de plume 'Mr Brown', Spicer met Haiveta, Ijape, and other senior officials in PNG in November 1996 and was asked to provide I a military appreciation of the current situation' on Bougainville. On that basis he was hired as a consultant to the PNG government for US$2 50,000 and was asked to prepare a report by 6 January 1997. Spicer returned to PNG in December 1996 and joined Buckingham in Port Moresby. They presented the Sandline proposal to Haiveta and other ministers, recommending high-speed, precise military operations against the BRA and a subsequent operation to recapture Panguna. At this point EO entered the picture.

The contract, signed on 3 I January I 997, granted EO forces the status of I special constables' and stipulated that in carrying out Operation Contravene they would 'conduct offensive operations in Bougainville in conjunction with PNG defence forces to render the BRA militarily ineffective and repossess the Panguna mine'. EO operational demands included two Mi-24 helicopter gunships and two Hind Mi- 17 troop carrying helicopters as well as small arms.

On 12 February Spicer, McCowan, Haiveta and Ijape flew from Port Moresby to Cairns and then on to Hong Kong. At two dinners in the Peninsular Hotel on 13 and 15 February they met with Sandline's financial manager Michael Grunberg, a director of DiamondWorks and a senior executive of Branch Energy, described in company documents as having 'directed Branch Energy's diversification away from oil and gas to mineral joint ventures in several African states'. Spicer himself held a considerable interest in DiamondWorks. According to the incentive stock options list publicly filed with the Vancouver Stock Exchange on 18 February, Spicer was among the ten acceptance options listed, with 1o,ooo shares at an exercise price of $2.72, and a further 1o,ooo shares, also at $2.72, on the outstanding options list. Tony Buckingham also featured, with 125,000 shares on a similar basis.

McCowan had already approached RTZ-CRA in January this year to ascertain its interest in the sale of its stake in Bougainville Copper Ltd. In February daily turnover of shares in RTZ-CRA rose to more than 46o,ooo, ten times higher than normal for the stock, which has been largely dormant since the civil war broke out on Bougainville. On 2 March Chan announced a government plan to buy out the 53 per cent stake in Bougainville Copper Ltd held by RTZ-CRA, and sought advice through McCowan from Jardine Fleming, but the venture collapsed with his government.

Clandestine Payments

On 24 February Haiveta, McCowan, Spicer, and Vele lamo, under-secretary for Papua New Guinea's Department of Finance, met in the office of Rupa Mulina, managing director of the government-owned commercial bank PNG Banking Corp, to insist that he process the transfer of funds to Sandline immediately. Molina ultimately authorized executive manager Jim Forrester to make the payment. According to Forrester, when he asked what the money was for, McCowan replied 'goods and freight'. The funds to meet the Sandline obligations were originally intended to be derived from the revenue generated through the float of Orogen Minerals Ltd. and processed through a deregistered company, Roadco, directly to Sandline's Hong Kong account. Correspondence dated 23 January from Haiveta to the chairman of the North Fly Highway Development Company, which managed the Roadco account, read that; 'Roadco has been nominated because this expenditure has not been budgeted in the 1997 budget and any financing out of the 1997 budget would only create technical complications in the implementation of the budget as well as conditions relating to the IMF-World Bank loans'. The transfer of funds was entered into PNG governmental accounts as the sunk cost' of Roadco taking over Bougainville Copper Ltd. through 'investing' in a military operation which might free the mine site. In order to circumvent regulations which stipulate that the PNG government is required to tender all goods and services exceeding $500,000, the payment was broken into 100 separate sums Of $48o,ooo each. As an indication of the clandestine nature of the operation, PNG Attorney General Sao Gabi was asked to comment on the contract only after it had already won Cabinet approval.

Jardine Fleming has sought to distance itself from McCowan's activities; Philip Payne, counsel for Jardine, told the inquiry 'Mr McCowan was personally assisting Mr Haiveta to achieve his objective of arranging the financing when he was sacked, and according to a company spokesperson, "Mr McCowan did not inform Jardine Fleming management of all his activities in relation to Papua New Guinea. We believe he acted beyond his authority".'

It is apparent that the PNG military were by this time beginning to get cold feet about the exact nature of the deals arranged by their politicians. In a letter dated 3o January 1997 to a senior Finance Department official, Brigadier-General Singirok stated that- 'You are aware of some issues we have raised with Sandline representatives but they are not obviously prepared to negotiate nor accommodate'. It is probable that the issues' involved were the future ownership and operation of Panguna.

On 17 March Singirok publicly denounced the'Sandline deal and called on Chan to resign. Chan responded the following day by sacking Singirok, appointing Colonel Fred Aikung in his place. After two tours of duty on Bougainville as army commander and one tour as head of military intelligence, Singirok had built up a strong personal following within the PNGDF. His position had been strengthened by a purge six months previously of officers he felt were 'under performing'. A core of officers, led by Major Walter Enuma, staged operation Rausim Kwik (remove quickly), neutralizing the EO employees and escorting them out of the country. The PNGDF rank and file refused to accept their new commander's authority, Riots broke out among the civilian population, and to forestall a revolution Chan replaced Aikung with Singirok ally Colonel Jack Tuat.

On 24 March Chan survived a parliamentary vote of no-confidence, but five of his ministers resigned. Two days later Chan resigned and the governor-general appointed the former mines minister John Gihemo as Prime Minister. Haiveta and Ijape stepped down at the same time and a general election was called. Chan was among the fourteen members of the twenty-eight-strong out-going Cabinet to lose their seats, being defeated by 110 votes in his bid to retain the Namara Nai electorate, which he had represented since PNG was granted independence in 1975.

It was nationalist feeling which provoked the PNG military to unilaterally revoke the Sandline deal. As further evidence that the nationalist impulse is still a powerful counterweight to internationalist military operations, the political setback for EO is complemented by military reverses suffered by other mercenary forces in Zaire, where mercenaries-mostly Serbs, French and Belgians supported by Ukrainian pilots-had been hired by President Mobutu Sese Seko to train his army and participate in putting down the rebellion against his government.

Despite such setbacks, there are forces which favour the mercenaries. Global socioeconomic trends are working to erode national autonomy, if not nationalist feeling. In a world where the authority of the nation state is fading before the challenge of transnational corporations, cornmunications and politics, the era of the trans-national military may be dawning.

The Firms

A number of British firms are engaged in the contract military business. These include Saladin Security, Control Risks Group, Defence Systems Limited, Integrated Security Systems, and Defence Systems Limited (DSL). According to its promotional brochures the 'core business' for DSL, which was founded in 1981 by a team of ex-SAS officers, 'is devising and implementing solutions to complex problems through the provision of highly-qualified specialists with extensive international experience in practical security'. DSL has joint-venture arrangements with British construction companies Tarmac-Wimpy and Hunting, as well as some more surprising contracts; the us embassy in the former Zaire was guarded not by us Marines but by DSL personnel.

It is two United States firms which have set the highest standards in military commercial ventures for the New World Order. Braddock, Dunn and McDonald Inc. (BDM), which has its headquarters in McLean, Virginia, is chaired by former us Defense Secretary Frank Carlucci. Chief Executive of the company is Philip Odeen, who worked for Henry Kissinger on the White House National Security Council in the early 1970s and ran the Pentagon's Future Years Defense Plan study for the Bush administration. The company counts former us Secretary of State James Baker and former White House budget chief Richard Darman among its directors and consultants.

In 1995 BDM employed 8,ooo people and maintained over eighty offices world-wide. Listing its key business areas as 'systems and software integration; computer and technical services; enterprise management and operations', BDM's annual revenue in 1995 was US$890 million. 37 per cent of that revenue was earned in services to us Defense contracts; 25 per cent was earned in defence contracts overseas. One of BDM's four subsidiary companies is the Vinnell Corporation, a construction company founded in 1931. Through experience gained in managing military assignments during the Second World War, Vinnell expanded into a booming construction business in Asia. It won hundreds of millions of dollars worth of contracts and employment for 5,000 personnel during the war in Vietnam. Among its activities there were covert military operations. A Pentagon source described Vinnell as 'our own little mercenary army in Vietnam ... we used them to do things we either didn't have the manpower to do ourselves, or because of legal problems'.

In February 1975 Vinnell secured a US$77 million contract with King Fahd to train the Saudi Arabian National Guard (SANG), the military arm of the House of at-Saud. Today, Vinnell's advertising depicts the firm as 'providing a broad spectrum of professional and technical services to government clients in multiple areas of management and training. Client requirements have led Vinnell to a vast array of challenges, from Malaysia to Mexico to the Middle East, often to the very heart of international conflict areas'. Vinnell has subsidiary operations in Egypt, Oman, and Turkey, but the key area of responsibility remains with SANG. The contract for its one thousand-plus-strong team of advisors was extended in January 1994 to the year 2000 at a cost of US$819 million.

Other US military firms working in Saudi Arabia include Booz-Allen & Hamilton, which drills the Saudi marine corps and maintains the Saudi Armed Forces Staff College; Science Applications International Corp (SAIC), which provides guidance for the Saudi navy; and O'Gara Protective Services, directly hired by the Saudi Defence Minister to provide security for the Saudi royal family.

Military Professional Resources Incorporated (MPRI), of Alexandria, Virginia, was founded in i 987 by former special forces personnel 'to perform world-wide corporate contractual functions requiring skills developed from military service'. MPRI has over 350 employees and can draw on a database of more than 6,ooo former servicemen of the United States armed forces. MPRI is currently engaged in twenty contracts (seventeen domestic, three international) worth more than US$90 million in total. 17 Twenty-two corporate officers Of MPRI are former high-ranking military officers. These include General Carl Vuono, us Army Chief of Staff during the ig8g invasion of Panama and the Gulf War; Ed Soyster, former head of the Defence Intelligence Agency; and General Frederick Kroensen, former commander of the us Army in Europe.

Its mission statement claims that 'MPRI can perform any task or accomplish any mission requiring military skills (or generalized skills acquired through military service), short of combat operations'. MPRI picked up the contract to train the Angolan Army after EO pulled out in January 1996. Its main focus of operations today is in the Balkans. MPRI training prepared the Croat Army for its successful counter-offensive against the Serbs in 1995. The head of Croat Army Headquarters, Zvonimir Cervenko, stated 'We can create by ourselves a new and efficient army. But why lose time if there are in the world institutions which can be paid so that they can transfer very quickly their maximum know-how'? Assistant Secretary of State Richard Holbrooke, who brokered the Dayton peace accord, spoke favourably of MPRI in testimony to the US Congress. In March 1996 James Perdew, the Pentagon's point man at Dayton, flew to Sarajevo to urge the Bosnian government to contract MPRI or one of its competitors for the training of the Bosnian armed forces. In May MPRI Won the contract over rivals Vinnell and SAIC. Its $400 million programme is being paid for largely by Saudi Arabia, Kuwait, Brunei and Malaysia.

Mercenaries Keep the Peace

Why is the US government so keen to incorporate the services of private military firms in its international policy? The shadow of the disastrous Somalia operation looms over US peace-keeping operations. Cooperation with professional outsiders enables the State Department to keep a distance from potentially dangerous or compromising situations in the conduct of foreign policy. 'We will not be able to leave unless the Bosnian government is armed and prepared to defend itself', says Senator Joseph Biden (Democrat, Delaware). 'That's the ticket home for Americans'. MPRI has provided the most expeditious means of achieving that aim whilst maintaining the facade of official us neutrality in the region.

Similarly, Saudi Arabia, despite maintaining military contracts with us companies valued at over US$6o billion, officially does not sanction the stationing of us troops in the country. Vinnell training helps link SANG with the Office of the Program Manager (OPM), an agency of the US Army Material Command responsible for maintaining weapons programs. SANG shares its headquarters with OPM. Nationalists in Saudi Arabia recognize this link as being a key connection between the Saudi and US governments, which is why the building was targeted in the 13 November 1995 car bomb attack which killed five Americans and wounded thirty more.

The growing number, expertise and legitimacy of professional military firms are an unexpected consequence of the post Cold War 'peace dividend'. The burgeoning opportunities provided by the 'New World Order' may eventuate in the mercenary contract being recognized as the standard means of warfare in the twenty-first century. Alvin and Heidi Toffler think of this development in positive terms:

Why not, when nations have already lost the monopoly of violence, consider creating volunteer mercenary forces organized by private corporations to fight wars on a contract-fee basis for the United Nations ... Governments unwilling to send their own young men and women to die in combat ... might have fewer reservations about allowing the UN to contract with a non-political, professional fighting force made up of volunteers from many nations-a rapid deployment unit for hire. Or one under contract to the UN alone.

Martin Van Creveld, author of The Transformation of War, concludes that if promoted unchecked the rise of the trans-national contract military may ultimately result in its acquiring the remnants of national sovereignty itself. 'much of the day-to-day burden of defending society against the threat of low-intensity conflict will be transferred to the booming security business; and indeed the time may come when the organizations that comprise that business will, like the condottieri of old, take over the state'.