Fun at the Afghan Embassy

The below images come to us courtesy of the Project On Government Oversight. POGO is a nonprofit organization that exposes government corruption and other misconduct. Below the rather distrubing photos is a letter POGO sent to Hillary Clinton regarding the "issues" with the guard force at the Kabul Embassy.

"I'll have the Vodka a la Buttcrack"

"The Whizz Kids"


"Buns of Steel"

September 1, 2009

The Honorable Hillary ClintonSecretary, Department of State2201 C Street, NWWashington, DC 20520Dear Secretary Clinton:

As you know, last month eight rockets were fired into Kabul, two landing near the U.S. Embassy.1 Not long after, at least seven people were killed and 91 wounded, including children, when a suicide bomber struck close to the Embassy. Following the second attack, a Taliban spokesman declared that the target had been the U.S. Embassy itself. 2 In response to these and other incidents, Chairman of the Joint Chiefs of Staff Admiral Michael Mullen conceded that the situation in Afghanistan is "serious and it is deteriorating."3

In light of this increasingly violent and uncertain environment, effective security of the U.S. Embassy in Kabul and the nearly one thousand U.S. diplomats, staff, and Afghan nationals who work there 4 is paramount. Security for the Embassy is provided under a Department of State contract with ArmorGroup, North America (AGNA), which is now owned by Wackenhut Services, Inc. (Wackenhut).5 Some 450 guards and their supervisors protect the Embassy and are quartered at Camp Sullivan, a few miles from the Embassy.

The Project On Government Oversight (POGO) initiated an investigation after nearly one-tenth of the U.S./ex-pat 6 guards individually contacted us to express concerns about and provide evidence of a pattern of blatant, longstanding violations of the security contract, and of a pervasive breakdown in the chain of command and guard force discipline and morale. This environment has resulted in chronic turnover by U.S./ex-pat guards. According to the State Department, "nearly 90% of the incumbent US/Expats left within the first six months of contract performance."7 According to POGO sources, the U.S./ex-pat guard turnover may be as high as 100 percent annually. This untenable turnover prevents the guard force from developing team cohesion, and requires constant training for new replacement recruits. The guards have come to POGO because they say they believe strongly in the mission, but are concerned that many good guards are quitting out of frustration or being fired for refusing to participate in the misconduct, and that those responsible for the misconduct are not being held accountable.

After extensive interviews with eyewitnesses, and examination of documents, photographs, videos, and emails, POGO believes that the management of the contract to protect the U.S. Embassy Kabul is grossly deficient, posing a significant threat to the security of the Embassy and its personnel—and thereby to the diplomatic mission in Afghanistan.

Ineffectual Oversight by the Department of State

Failed management of security contractors by the Department of State is not new, and since the 2007 Iraqi Mansour Square massacre involving five Blackwater personnel, the State Department has promised repeatedly to strengthen its oversight.8 Yet, as in Iraq, the Department of State has utterly failed to properly manage another contractor, this time at the U.S. Embassy Kabul, Afghanistan. State has repeatedly warned AGNA about its performance on this security contract, but its threats have been empty. As a result, violations of the contract continue.

In June 2009, an investigation by the Senate Subcommittee on Contracting Oversight revealed a pattern of ineffectual Department of State oversight of the AGNA contract.9 The Senate found, for instance, that in July 2007, State issued a "cure notice," a formal advisory that AGNA's deficiencies were endangering the performance of the contract. In the cure notice, State identified 14 performance deficiencies, including the failure of AGNA to provide an adequate number of guards, relief personnel, and armored vehicles. The contracting official stated "I consider the contract deficiencies addressed below to endanger performance of the contract to such a degree that the security of the US Embassy in Kabul is in jeopardy…."10

In April 2008, the Department of State sent another cure notice notifying AGNA of numerous other serious problems with its performance, including a lack of English proficiency in a large portion of the guard force. State also cited AGNA for failing to correct many of the deficiencies identified in the July 2007 cure notice, including those related to staffing and training of the guard force. State further informed AGNA that, due to the contractor's continued weaknesses and deficiencies, the Department was considering not extending the contract for another year.11

In July 2008, despite AGNA's continuing problems, State decided to extend the contract for an additional year, noting that based on satisfactory meetings with the incoming Wackenhut managers, it was "reasonable" to expect that all performance problems would be corrected by October of that year.12 Just a month later, however, the Department of State reiterated to AGNA that it questioned the contractor's ability to provide security for the U.S. Embassy in the hostile environment of Afghanistan. Citing ongoing staffing concerns, State concluded that "AGNA needs to come quickly to terms with contract requirements especially in light of the current incidents occurring in and around Kabul and the corresponding threat environment they pose."13

By September 2008, AGNA's performance problems had grown so severe that Department of State issued a "Show Cause" letter 14 and advised that it was considering terminating the contract because the failure to provide an adequate number of guards "has negatively impacted the security posture of the Local Guard Program for the U.S. Mission to Kabul….[T]he staffing situation has further deteriorated to a level that…gravely endangers performance of guard services in a high-threat environment such as Afghanistan."15

In March 2009, the Department of State again informed AGNA that it had "grave concerns" relating to AGNA's continuing failure to provide sufficient numbers of guards. In inspections of the guard force operations, the Department of State observed that 18 guards were absent from their posts at the U.S. Embassy Kabul. In response, AGNA stated that the guards' absences were due to "supervisory personnel negligence."16

Despite these and other past problems, senior representatives from the State Department and Wackenhut Services, Inc. offered sworn testimony at a June 2009 Senate hearing that security at the Embassy is effective, and that previously identified problems had been fully remedied.17 The State Department renewed the contract again through July 2010, with the option to extend it until 2012.18 Yet the extensive evidence provided to POGO of continued security problems at the U.S. Embassy Kabul counters those sworn statements; calls into question AGNA and Wackenhut's ability to provide effective security of the Embassy; and makes a clear case that the State Department has failed in its oversight of its security contractor.

Serious Security Vulnerabilities

Was Congress Misled?

Despite Wackenhut Vice President Sam Brinkley's sworn Senate testimony that "…the Kabul contract has been fully-staffed since January 2009…" the truth is that chronic understaffing of the guard force continues to be a major problem.19 And evidence suggests Mr. Brinkley knew that. Around March, according to numerous participants, he was confronted by some 50 guards at Camp Sullivan who complained to him directly about a severe, ongoing guard shortage. Then, in an April 2009 memo to a State Department official, U.S. Embassy Kabul guard force Commander Werner Ilic reported that guard shortages had caused chronic sleep deprivation among his men. He described a situation in which guards habitually face 14-hour-day work cycles extending for as many as eight weeks in a row, frequently alternating between day and night shifts. He concluded that "this ultimately diminishes the LGF's [Local Guard Force's] ability to provide security." (Attachment 1) The contract with the State Department specifies that guards may not be on duty for longer than 12 consecutive hours.20 Interviewees and documents reveal that short-staffing frequently results in the denial of contractually guaranteed leave and vacation, and that those who do not comply are threatened with termination or actually fired.

In further contradiction of Mr. Brinkley's assurances, the Knoxville News reported on August 22 that Wackenhut has moved or is planning to deploy up to 18 guards from the nuclear weapons facilities in Tennessee to cover guard shortages in Kabul, quoting a Wackenhut spokesperson as confirming the use of the guards "to deal with personnel shortages at the embassy…."21

Communication Breakdown?

There is a significant problem with the guards' ability to communicate with each other: most of the Gurkhas 22—nearly two-thirds of the guard force—cannot adequately speak English. Although most of the Gurkha guards are serious about their jobs and perform their duties in a professional manner, the inability to speak English adequately has impaired the guard force's ability to secure the Embassy. According to a Pentagon counter-terrorism expert, tactical communications are critical to success in either preventing a gunfight or the successful execution of one should it occur, and are part of the fabric of a good military or security unit. If different languages are used, the fog of battle is significantly increased, small tactical formations do not adjust as required, and close tactical formations are likely to fail in their mission. Further, any soldier or security officer who does not know of changes in mission orders as the fight continues is more likely to respond incorrectly, unnecessarily placing them in harm's way and increasing the chances of unit fratricide. Poor tactical communications make mission failure highly probable.

This is a real risk at U.S. Embassy Kabul. The language barrier between the non-English-speakers and English-speakers has forced both sides to use pantomime in order to convey orders or instructions and interpreters to convey facilitate radio communications. One guard described the situation as so dire that if he were to say to many of the Gurkhas, "There is a terrorist standing behind you," those Gurkhas would answer "Thank you sir, and good morning." Clearly this is an unacceptable situation, especially given that security emergencies require immediate response.

The State Department has acknowledged the issue as a problem, but has not fixed it. In June 2009, State officials briefed the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight, admitting that "inadequate English language proficiency among the guard force" remains a contract deficiency.23

Supervisors Engaging in Deviant Hazing and Humiliation

Guards have come to POGO with allegations and photographic evidence that some supervisors and guards are engaging in near-weekly deviant hazing and humiliation of subordinates. Witnesses report that the highest levels of AGNA management in Kabul are aware of and have personally observed—or even engaged in—these activities, but have done nothing to stop them. Indeed, management has condoned this misconduct, declining to take disciplinary action against those responsible and allowing two of the worst offending supervisors to resign and allegedly move on to work on other U.S. contracts. The lewd and deviant behavior of approximately 30 supervisors and guards has resulted in complete distrust of leadership and a breakdown of the chain of command, compromising security.

Numerous emails, photographs, and videos portray a Lord of the Flies environment. One email from a current guard describes scenes in which guards and supervisors are "peeing on people, eating potato chips out of [buttock] cracks, vodka shots out of [buttock] cracks (there is video of that one), broken doors after drnken [sic] brawls, threats and intimidation from those leaders participating in this activity…." (Attachment 2) Photograph after photograph shows guards—including supervisors—at parties in various stages of nudity, sometimes fondling each other. These parties take place just a few yards from the housing of other supervisors.

Multiple guards say this deviant hazing has created a climate of fear and coercion, with those who declined to participate often ridiculed, humiliated, demoted, or even fired. The result is an environment that is dangerous and volatile. Some guards have reported barricading themselves in their rooms for fear that those carrying out the hazing will harm them physically. Others have reported that AGNA management has begun to conduct a witch hunt to identify employees who have provided information about this atmosphere to POGO.

Beyond basic decency standards, the situation at Camp Sullivan is clearly in violation of AGNA's contract with the State Department, which specifies, "Each contractor employee or subcontractor employee is expected to adhere to standards of conduct that reflect credit on themselves, their employer, and the United States Government."24 More broadly, the behavior is evidence of a complete breakdown of discipline and the chain of command among guards and their leadership, itself a significant security issue.

In fact, an email from a current guard expressed concern about the impact of the supervisors' behavior on the chain of command. "I am convinced the greatest threat to the security of the Embassy is the erosion of the guard forces trust in its leadership and ultimately the [Department of State]. The failure of [the supervisors] to protect those they have been tasked to lead is unacceptable, and if not held accountable will further compromise our mission. The chain of command's failure to curtail [one supervisor's] deviant actions and to not hold him accountable for countless infractions involving alcohol has made them ineffective. This has led to threats and intimidation as the only means to accomplish the day to day operations here [at Camp Sullivan] and at the Embassy. This is 'not' a onetime incident that went unnoticed by [his] direct chain of command. These are events [that] took place over the past year and a half and were ignored by the leadership at the cost of the well being of countless guard force members. If these individuals are not held accountable for their actions it will only embolden those who remain to make the same offenses against this guard force." (Attachment 3)

Alleged Victimization of Afghan Nationals

An Afghan national employed as a food service worker at the guard corps' base at Camp Sullivan submitted a signed statement dated August 16, 2009, attesting that a guard force supervisor and four others entered a dining facility on August 1, 2009, wearing only short underwear and brandishing bottles of alcohol. Upon leaving the facility, the guard force supervisor allegedly grabbed the Afghan national by the face and began abusing him with foul language, saying, "You are very good for fXXXing." The Afghan national reported that he "was too afraid of them I could not tell them any thing." (Attachment 4)

There is also evidence that members of the guard force and their supervisors have drawn Afghan nationals into behavior forbidden for Muslims. For example, photographs show guards posing with Afghan nationals at the U.S. facility at Camp Sullivan as both the guards and nationals consume alcoholic beverages in scenes that suggest drunkenness, and one photo shows a near-naked U.S. guard who appears to have urinated on himself and splashed an Afghan national. Afghanistan is a conservative Muslim country where alcohol consumption and public nudity are considered offensive and, in some instances, prohibited by law.25

Supervisors Compromising Security?

Numerous guards raised concerns to POGO about a Spring 2009 extended reconnaissance mission outside the Embassy perimeter for which guard force supervisors took weapons, night vision goggles, and other equipment from Embassy stores. Photographs posted on the internet show Embassy guards hiding in abandoned buildings in Kabul, armed, dressed as Afghans (despite contractual requirements that they be in uniform when on duty), engaged in a mission for which they had never trained. AGNA guards train for their mission of static security of the Embassy, not for reconnaissance exercises away from the Embassy. This incident created the danger that guards could have been drawn into a military incident with or taken hostage by Taliban or Afghan locals, and created a vulnerability at the Embassy by removing military equipment, leaving the Embassy largely night-blind. AGNA management awarded a commendation to 18 participants trumpeting their "Intrepidity" in a document improperly bearing the seal of the Department of State. (Attachment 5)

According to many guards, another situation in which Embassy security may have been compromised is when, on at least one occasion, supervisors brought prostitutes in to Camp Sullivan. This is a breach of security and discipline made worse because the prostitutes were escorted to the facility by some guard force supervisors themselves. Some interviewees recalled that two AGNA guard force supervisors made no secret that, to celebrate a birthday, they brought prostitutes into Camp Sullivan, which maintains a sign-in log. Women believed to be prostitutes were observed attending the birthday party.

Is Protecting a U.S. Embassy in a Combat Zone an Inherently Governmental Function?

Because the diplomatic mission in Afghanistan is so critical, and because that mission is in a combat zone, the need for effective Embassy security is particularly acute. Just this year at the U.S. Naval Academy 2009 McCain Conference, there was a seminar on "Ethics and Military Contractors: Examining the Public-Private Partnership" which looked at the question of whether security in a combat zone is an inherently governmental function. According to the Executive Summary of the conference, "contractors should not be deployed as security guards, sentries, or even prison guards within combat areas. [Armed Private Security Contractors] should be restricted to appropriate support functions and those geographic areas where the rule of law prevails. In irregular warfare…environments, where civilian cooperation is crucial, this restriction is both ethically and strategically necessary."26 Furthermore, Congress itself passed a Sense of Congress that "private security contractors are not authorized to perform inherently governmental functions in an area of combat operations."27 This language was watered down from legislation that had passed the Senate actively prohibiting private security forces from performing inherently governmental functions. 28 In neither case, however, did the legislative language recognize protecting a diplomatic mission in a combat zone as an inherently governmental function. At the very least, this is a question that needs to be examined regarding the protection of the U.S. Embassy Kabul and other embassies in combat zones.

The use of private contractors for security in a combat zone poses several dilemmas. One is the inherent tension between the effective performance of a mission and the financial interests of the contractor. Cutting costs is good for the bottom line, but can put security at risk. A legal case against AGNA brought by two former U.S. Embassy Kabul guard force supervisors, James Sauer and Peter Martino, illustrates this problem. According to the complaint, AGNA officials "acknowledged that AGNA had underbid the contract in order to secure it," and told Sauer and Martino "to 'make do' and put a 'good face' on the situation to ensure that a profit would be made on the contract and that shareholders would be satisfied....Defendants implemented plans requiring more hours per individual and fewer shifts of staff in order to cut costs and maximize Defendants' profit margin." 29 This is a clear example of the contractor endangering the U.S. diplomatic mission in order to advance its bottom line.

Another dilemma is the threat of work-stoppages—which, according to witnesses, has happened at least twice with the U.S. Embassy Kabul guard force. On two separate occasions, the Gurkhas (who make up two-thirds of the guard force) threatened to walk off the job. In fact, in one instance, buses had arrived in order to take the Gurkhas to the airport to return to Nepal. According to POGO sources, the time it took to resolve just one of those incidents resulted in the on-duty guard shift pulling an 18-hour day.

Yet another dilemma is that the laws in place do

not adequately hold accountable contractors who violate rules and endanger security in combat zones. Unlike the military, which once had the responsibility of guarding embassies and which is bound by the Uniform Code of Military Justice, private employers such as security firms cannot ensure a binding chain of command that provides adequate discipline and professionalism in the guard force.

Contractor in Need of Oversight

POGO is concerned that the security of the U.S. Embassy Kabul is in the hands of a contractor that has knowingly and repeatedly provided substandard equipment and services. For example, to cut costs, AGNA "downgrade[d] the quality of the vehicles to be purchased…."30 AGNA sought to maximize its profit by sacrificing the quality of protective vehicles it bought to secure the Embassy. In addition, as mentioned earlier, the State Department has repeatedly chastised AGNA for the contractor's repeated failures to fulfill staffing, language, and other contract provisions. AGNA has also failed to properly manage Camp Sullivan, as has been detailed above.

The problems with AGNA's U.S. Embassy Kabul security contract do not appear to be unique for this contractor. Recently, an ArmorGroup security guard in Baghdad's Green Zone allegedly shot and killed two fellow guards and wounded at least one Iraqi. Extraordinarily, that guard had a criminal record and was described by one security guard who worked with him as "a walking time-bomb," yet was hired by ArmorGroup anyway.31 This particular incident raises serious concerns about ArmorGroup's vetting process, and adds to the bigger picture of a contractor in serious need of strict oversight.

Recommendations

1. After two years of failed attempts by the Department of State to upgrade the performance of its private security contractors in both Afghanistan and Iraq, the Department should enter into an arrangement with Defense Secretary Gates to provide immediate military supervision of the private security force at the U.S. embassies in Kabul and Baghdad.

2. The State Department should promptly initiate a thorough and independent investigation of the U.S. Embassy Kabul security contract in order to hold corporations as well as individuals accountable for the above noted misconduct and contract violations. Simply removing a few people from contract management at AGNA or Wackenhut, or creating a new corporate ethics compliance officer, is not going to ensure serious accountability. Allowing those responsible to quietly resign and seek work with other U.S. contractors, as guard force whistleblowers report is happening now, will only perpetuate this problem.

3. State Department representatives either knew or should have known about this longstanding and dangerous situation regarding U.S. Embassy Kabul security. The State Department's repeated warnings to AGNA were of no consequence, and Department officials responsible for oversight of this contract themselves should be held accountable.

4. Those whistleblowers who have come forward to disclose the mismanagement of this State Department contract should be protected from retaliation for doing so.

5. The State Department should consider whether the security of an embassy in a combat zone is an inherently governmental function, and therefore not subject to contracting out. The language in the 2009 National Defense Authorization Act could be strengthened to prohibit the reliance on private security contractors for inherently governmental functions, and to include protection of the diplomatic mission in a combat zone as being inherently governmental. If embassy security in combat zones is determined not to be an inherently governmental function, the State Department should consider requiring military supervision of its private security contractors guarding U.S. embassies in combat zones.

6. The State Department should consider initiating suspension and debarment proceedings against the companies ArmorGroup North America, Inc. (AGNA) and Wackenhut Services, Inc., as well as against any individual employees of these companies who were responsible for contract-related improprieties or abuses, to prevent these entities from entering into future contracts with the federal government.

Please contact me at (202) 347-1122 if you have any questions or need further information or evidence to aid your efforts. Thank you for your consideration of this very important matter.

Sincerely, Danielle BrianExecutive Director

Attachments: 5 documents (complete pdf of attachments 1-5)

12 photographs

cc: Senator Susan CollinsSenator Claire McCaskillState Department Inspector General Harold W. GeiselCommission on Wartime Contracting in Iraq and Afghanistan

Link to letter: http://www.pogo.org/pogo-files/letters/contract-oversight/co-gp-20090901.html
==================

When is enough, enough. I think we all have just about had it with this type of taxpayer dollar wasting nonsense.

Foodie Tuesday: Home Made and Home Canned Salsa

What you need:

Four (4) Five gallon buckets of fresh, homegrown tomatos. (Buckets filled to about 3 inches from the top)

Two packages of mild canning salsa mix. Available in the canning section of most large supermarkets. (You can add another package or two if you wish)

Five ounces of Chili Powder.

Three ounces of Dried Garlic Powder.

Four pounds of large White Onions.

Twenty-five Jalapeno Peppers, mostly seeded.

Quarter pound of seeded Serrano Peppers--Optional

This yields approximately 27 quarts of salsa. You may want to split the recipe in half unless you have two large soup pots.

To Prepare:

Wash, core and cut the tomatos into quarters or smaller.

Drain the 'maters. Use a hand blender to churn the tomatos to the consistency of thick tomato sauce. Let sit a half hour or so and skim the excess liquid off the top. (This recipe is not for a chunky style salsa as some may not prefer a really chunky texture, but it IS thick)

Finely chop the peppers and onions---BE SURE TO USE GLOVES!!!

Sweat the peppers and onions.

After the peppers and onions have been duly sweated, add them, together with the salsa mix packs and spices, to the tomatos. (At this point, you can add some salt to taste--couple of level tablespoons or so) Cook over high heat, stirring frequently, until mixture has reduced by about 20%. Turn off heat and ladle salsa into the quart jars. (Salsa should be as thick as the below photo.)

Now, if you Can on a regular basis you may want to use the canning directions in your Ball Blue Book of Preserving, which you can get at most Wal-Marts or online. Since the wife has been canning for years, and is responsible for the outstanding salsa in these photos, and knows a few tricks of the trade, instead of a hot water bath, she uses a pressure cooker. Put a couple of inches of water in the pressure cooker so that when the seven quarts are added, the water comes up to just below the shoulder of the jars. Cover the pressure cooker as you normally would, turn up the heat, and wait until steam steadily escapes from the top nozzle. Add the weight (10 psi notch) and cook for 10-12 minutes. Turn off pressure cooker and let sit 15-20 minutes or so. Remove weight and pressure cooker lid. If jars aren't properly sealed or in the process of their lids popping shut, take the jars out and turn them upside down on a towel for a couple of hours. If a few of the jars still aren't properly sealed, run them through the pressure cooker again or pop them in the fridge and eat the salsa within the next three or four days. (When you remove the jars from the pressure cooker, be sure to tighten the rings which you loosely, but somewhat tightly secured before you put the jars in the cooker.)

For best results, leave the salsa in the fridge overnight. If you follow this recipe, you will feel the heat on the aftertaste rather than upfront. For more heat add the Jalapeno seeds or more hot peppers. As with any recipe, you can modify this to suit your own personal taste.

If you have never canned and are a bit squeamish about using a pressure cooker, they are pretty safe, but most use a plastic plug in the lid as the overpressure relief mechanism. You do not want to be looking down at that plug when it pops. Otherwise, as long as you follow the canning directions, you should be fine. If you do want to start canning, be sure to get the best quality pressure cooker you can afford.

For the cost conscious.....if you are using jars and rings that you already have on hand and are using tomatos that you grew from seed or got from a friendly farmer, then including the cost of the lid and the gas (I do not recommend using an electric cooktop for canning), you can make this salsa for less than fifty cents a quart.

Canning is time consuming, but fun and satisfying..........and it is something your kids will remember and appreciate for the rest of their lives. (And with the economy the way it is, it's a skill you may want to bone up on.)

Why some conservatives favor the Public Option

An interview with Wendell Potter--From Guernica Magazine

The former mouthpiece for insurance giant Cigna divulges his role in misleading the public, the emotional day that led to his whistle-blowing, and what should really scare you.

In June 2007, Wendell Potter was head of corporate communications at Cigna, one of the largest health insurance companies in America, when he attended the U.S. premiere of Michael Moore’s Sicko. Potter was part of the team charged with discrediting Moore’s film, which advance word said was highly critical of the health insurance industry. Potter “sat quietly in the back and took notes,” but soon realized he had a problem. “When I saw the movie, I’ll be honest: I thought it was a real good documentary. I knew from my own studies of other healthcare systems that it was an accurate portrayal of those systems and how they are able to provide universal coverage.”

Yet he was being paid by Cigna to tell people the opposite, that the film was full of lies.
Just a few weeks later, Potter, who is from Tennessee, read in a local paper about a free healthcare expedition being held in Wise County, Virginia. He decided to check it out. Walking through the fairground gates, Potter saw hundreds of people waiting in the rain while physicians attended to patients in animal stalls or on gurneys lying on the rain-soaked pavement. Tents had been pitched across the fairground lawns, creating a scene “like something that could’ve been happening on a battlefield or in a war-torn country.” Tears mixed with the rain to cloud Potter’s vision. “What I thought was: ‘Is this the United States?’ It was so remote from my reality. It just seemed impossible.”

In months and years prior, Potter had grown increasingly skeptical about his job as chief spokesman for Cigna. Though he insists he never intentionally lied to a reporter, he began to spout what he thought were either misleading or less than honest statements. Moreover, his job required him to hype new programs he felt were not in the best interest of patients or the U.S. healthcare system—particularly when it came to high-deductible, or “consumer driven” plans. He came to feel he was on the wrong side of the healthcare debate and would catch himself gazing into a mirror, wondering, “Who is this? How did this happen to me?” After Sicko and Wise County, he resigned.


Since then, Potter has become an outspoken advocate for healthcare reform. Why reform? Because of statistics like these: The U.S. healthcare system is the most expensive in the world, with each person spending more than twice as much on care than people in other industrialized nations. Yet our system ranks 29th in infant mortality, 28th in healthy life expectancy, and 37th overall. In June, Potter testified before the Senate on the devastating effects that Wall Street has on our healthcare system. The overwhelming demand to satisfy investors, Potter told the committee, is what causes insurance companies to “confuse their customers and dump the sick.”

With twenty years of industry experience—he was head of corporate communications with Humana before moving on to Cigna—Potter is an important voice in the healthcare debate. As a former insider, he is uniquely positioned to reveal the industry’s secrets, like its obsession with the medical-loss ratio—the difference between what health insurance companies pay out in claims and what it has left over—which, Potter says, causes otherwise good people in the industry to allow patients to die in order to increase profits. Yet in another sense, Potter is not so unique. We’ve seen them before, former insiders who reap huge financial benefits from an industry or system only to publicly denigrate it years later. If things were so bad, we’re left wondering, why didn’t Potter say something earlier? I recently spoke with Potter by phone.

—Jake Whitney for Guernica

Guernica: During your time in the industry, you created health insurance front groups to mislead the public. Can you give me an example of one of these front groups?

Wendell Potter: When the Clinton plan collapsed [in 1994], there was an effort to pass legislation that would give enrollees in managed care more protections. The industry saw this as anti-managed care legislation, so they established a group called the Health Benefits Coalition. The Health Benefits Coalition, with the funding it got from the insurance industry, killed off the effort to get a Patient’s Bill of Rights passed. A more recent example of a front group I was involved with was trying to blunt the effect of [Michael Moore’s documentary] Sicko. Through a PR firm, the industry created a front group to disseminate misleading information about the healthcare systems featured in Sicko—particularly in Canada, the U.K., and France. This front group was set up specifically to try to counter [Moore’s positive depiction of them].

Guernica: What were your duties with these front groups?

Wendell Potter: To help form messaging and develop strategy with public relations firms. PR firms help create the front groups and serve as the back offices to get the work done. The insurance industry contributes advice and counsel and feedback, but the real work gets done by the PR firms that the insurance industry hires.

Guernica: Was it difficult for you to discredit a movie you felt was accurate?

Wendell Potter: It was very difficult. I was beginning to hate my job. I’d look in the mirror and say, “Who is this? How did this happen to you?” But I had a job to do and was being paid quite a bit, so I soldiered on. I wouldn’t have stayed as long as I did if I didn’t believe that the company I worked for was honest and trying to meet the needs of people. I believed I was making some kind of positive contribution. As I was climbing up the corporate ladder, I got to understand more about how the companies make money and how they are so beholden to Wall Street—both investors and Wall Street analysts—and the things that they do to meet Wall Street’s expectations.

Guernica: You worked in the industry for twenty years. It doesn’t seem like it should have taken so long.

Wendell Potter: You don’t really focus on it or understand the significance of it. I’ll admit I knew that Wall Street looked at the medical-loss ratio. I knew it was an important measure. I didn’t know until, frankly, very recently how important it was. As recently as fifteen years ago, the medical-loss ratio in this country was 95 percent. Since then, there’s been great industry consolidation to the point that now there are seven companies that dominate. They’re all for-profit. During the time that this consolidation, this shift to for-profit occurred, the medical-loss ratio has continued to drop. Now it’s around 80 percent. That means twenty cents of every dollar goes to something other than paying medical claims. Just fifteen years ago, ninety-five cents of every dollar went to paying medical claims. This trend is due to pressure from Wall Street. If a company misses Wall Street’s expectations—if the medical-loss ratio starts to inch up—the company will suffer. I’ve seen companies lose 20 percent of their stock value in one day by disappointing Wall Street with their medical-loss ratio.

Our current reality is far scarier than the fear-mongering. What people have now is a corporate bureaucrat who stands between a person and his or her doctor.

Guernica: So are you saying our healthcare system would be better off if medical insurance companies weren’t publicly traded?

Wendell Potter: We would not have the same problems. Just look at what’s happened since 1993, the beginning of the conversion to for-profit status. The two biggest companies now are Wellpoint and United. In 1993, they were very small. They’ve grown to their size and influence through very aggressive acquisition strategies. In Wellpoint’s case, they bought up many non-profit Blue Cross and Blue Shield plans around the country, which have since converted to for-profit status. United has had a similar strategy. Aetna and Cigna are third and fourth in size, and they, too, have grown largely by acquisition. The fixation that Wall Street has with the medical-loss ratio has created huge problems because investors look at that measure even more than they look at earnings-per-share, which is the primary measure that investors look at in most industries.

Guernica: Shifting to President Obama’s plan: critics often say that Obama’s healthcare plan would be detrimental to care because it would take decisions away from doctors and patients and put them in the hands of a government bureaucrat. Is this a legitimate concern?

Wendell Potter: No. But it is one of those talking points the industry repeats every time we have a debate about reform. They said it in 1993. They say it whenever the industry is under threat of increased government involvement. What I’m telling people is that our current reality is far scarier than the fear-mongering. What people have now is a corporate bureaucrat who stands between a person and his or her doctor. That’s much scarier than the specter of more government. In any event, there is nothing in any healthcare plan that is being proposed that would put a government bureaucrat between a person and his or her doctor.

Guernica: Why is a corporate bureaucrat scarier?

Wendell Potter: Because every person who works for a for-profit company knows that the company has to meet Wall Street’s expectations. Every manager of the company has to pull his or her weight to make sure he and his team are doing all that they can to help the company meet that objective. That includes medical directors. Same with the nurses. They know what the company has to do to meet Wall Street’s expectations and to stay in the good graces of investors.
Guernica: So in other words, corporate bureaucrats have a profit incentive to deny care to people who are enrolled in their plans.

Wendell Potter: Absolutely. It doesn’t have to be stated directly to them that you will be paid a particular bonus if you deny X number of claims; it’s known, and it’s part of the culture.
Guernica: You said you’re familiar with the healthcare systems featured in Sicko and believe them to be superior to the U.S. system.

Wendell Potter: They’re better in many regards. No system is perfect. Every system has flaws and challenges.

Guernica: What about the long wait times we’re warned about, and that government-run healthcare would be one step on the path to socialism? Is there any legitimacy to these claims?
Wendell Potter: No. In fact, we can look at the wait times in this country as more horrific than anything you’ll see in the Canadian system, for example. For elective procedures in many of these countries, yes, you might wait longer for some elective procedure. You might wait longer for an MRI than you would in this country because, on a per capita basis, there are often more machines here than in some of those other systems. But life expectancy in almost every one of these other countries is greater than ours. People do not have to wait long for urgent or necessary care. In fact, in many countries it’s more likely that you would be able to get a same-day appointment with a doctor than here.

Guernica: How do you know?

Wendell Potter: I’ve traveled abroad a lot and I’ve studied them. I’ve been a student of statistics of these other systems, so I do know this, and yes, I have been there.

Guernica: Much was made during the Democratic primaries of health insurance contributions to Democrats. I believe Hillary Clinton raked in a record amount from healthcare companies. Do you think these donations have helped stall legislation?

Wendell Potter: Oh, absolutely. Every step of the way. Let me tell you a story. I am a great admirer of Hillary Clinton’s. I think she’s done terrific things for this country and is a great public servant. But money talks and relationships make a difference. These [insurance] companies contribute more to Democrats than they used to, and they’ve begun hiring lobbyists from the Democratic side of the aisle. They look for the best-connected lobbyists. The CEO of Cigna [H. Edward Hanway] wanted to spend a few minutes with Hillary when she was running for president. One of the lobbyists that Cigna hired was known to be very close to the Clintons, and Hillary Clinton, in particular. Lo and behold, she was able to arrange a meeting for [Hanway] to come to Washington and spend a few minutes with Hillary. I don’t think that [Hanway] necessarily persuaded her to see things from his point of view. She’s not a huge fan of insurance companies. But he was able to get in the door and spend a few minutes with her. And that’s what I’m talking about. It’s the influence insurance companies have been able to buy through hiring people who are well-connected, often former members of Congress or former staff members.

Guernica: Then there are the Blue Dog Democrats and their role in holding up legislation. What’s their motivation?

Wendell Potter: The industry has contributed so heavily to the Republicans over the years that they are pretty much assured that every single Republican in Congress will vote exactly the way they want on any issue pertaining to healthcare. This has not occurred just with campaign contributions. It’s also ideology. The industry has been very determined to carve out its niche on the right side of the political spectrum and, along with the business community, be advocates of a free-market approach to any aspect of our economy—and make sure that there is minimal regulation of any economic sector. So there is a great ideological kinship between the insurance industry and the Republican Party. And this is close to the ideology of the Blue Dog Democrats, who tend to be in border states of the south or where there are more Republicans. Industry has been feeding the Blue Dogs talking points and working overtime to make sure they see things from their philosophical and business perspectives.

Guernica: It was reported late last month [July 29] that a tentative agreement was reached with the Blue Dogs in the House that would omit the “public option.” Do you think that’s a good thing?
Wendell Potter: There have been some compromises that have been made to the Blue Dogs. But Nancy Pelosi said today that the public option is not being sacrificed. I think the leadership in the House and Senate will be fierce defenders of the public option. The Blue Dogs are insurers’ best hope of gutting healthcare reform and removing the public option from legislation. So they are very, very important to the industry, which is why you’re hearing so much about them right now.

Guernica: Do you think the public option is important?

The reason I started speaking out is I knew the insurance industry would come out with guns blazing to kill reform. It’s the same old playbook. I know it because I essentially helped write it.
Wendell Potter: It’s essential. Reform without the public option would be far less meaningful and effective. The public option may not go as far as people would like in some ways, but we need a mechanism that controls costs and makes healthcare more available to citizens. It would go a long way toward keeping the insurance industry more honest, as the president has said.

Guernica: Conservatives’ opposition to the public option is confusing. Shouldn’t conservatives welcome a system that gives more choices to the consumer, which is supposed to be a tenet of conservatism?

Wendell Potter: It doesn’t make a lot of sense. On the one hand, they’re saying that [a public option] would put the private sector at an unfair disadvantage, while they’re also saying that the private sector can operate more efficiently. They are trying to have it both ways. But the reality is that the free-market simply does not work in the healthcare sector as it might in other sectors. A public insurance plan wouldn’t need to have the sales, marketing, and underwriting expenses—and would certainly not need to pay executives exorbitant salaries, and would not need to set aside a significant chunk of every premium dollar to pay shareholders—that private plans do.

Guernica: The [July 30] New York Times had a story that said this: “Obama’s ability to shape the healthcare debate appears to be waning as opponents portray the effort as a government takeover.” Apparently conservative messaging is working.

The industry knows through many years of focus group testing what messages scare people. “Government takeover,” is one of those terms.

Wendell Potter: The reason I started speaking out is I knew the insurance industry would come out with guns blazing to kill reform. I knew the tactics they’d be using and buzzwords they’d be repeating—especially through their shills in Congress, media and business. It’s the same old playbook. I know it because I essentially helped write it. I knew that when the time came, they’d be unleashing that crap. And I knew that it would have the impact it’s having on people and Congress. It’s basically a political contest. At first, it seemed like Obama was just going to walk into office and transformative healthcare legislation would get passed. But I knew it would be a contentious fight—that the industry would be throwing everything conceivable to keep significant reform from happening. Because we’re talking about billions and billions of dollars at stake for those companies and investors. But it’s not a lost cause. Over the next few weeks, we will see one hell of a battle in the districts and over airwaves as proponents and opponents of change spend tons of money on TV and radio advertisements. We’ll be hearing fear mongering like we’ve never heard before, but also be hearing, I hope, effective advertising from the proponents of reform.

Guernica: The Times story really attests to the power of opponents of healthcare reform; don’t most Americans favor reform and some type of universal coverage?

Wendell Potter: They are in favor of it, yes. But the industry knows through many years of focus group testing what messages scare people. And the term you mentioned a few minutes ago, “government takeover,” is one of those terms that they’ve tested and know will scare the bejesus out of people. They know that in the past, people have been so afraid of anything that approaches socialism that you’ll hear that comparison all the time; that if we go with reform, we will have a government takeover of healthcare; that we’ll be on the slippery slope toward socialism.

Guernica: But what about programs like Medicare and the Veteran’s Administration? These are large, extremely effective, government-run programs that have been around a long time, despite the slippery slope rhetoric.

Wendell Potter: The health insurance industry knows this. That is why they’re so careful with language. Medicare is far more popular than almost any private health insurance program in the country. And people in other programs you mentioned are certainly very grateful. But many of them don’t know that it’s a public program.

Guernica: But we’ve heard this exact same talk of socialism decades ago during the battles over Medicare, Social Security, Medicaid, etc. And I don’t think very many people want to lose these programs now.

Wendell Potter: Conservatives are so bound to ideology they refuse to take a serious, open-minded look at how for-profit insurance companies have wrecked our healthcare. They don’t want to take the blinders off. What gives me hope is that despite all the lies and all the disinformation that opponents of reform have spread over the years, real reform has nevertheless been enacted. Like the Medicare program during the Johnson years; like the Medicaid program that is such an essential safety net for so many of our people; the Veteran’s program you mentioned. We have plenty of examples of government programs that work great and have done so much for so many billions of people over many years.

Guernica: You’ve mentioned that when you worked for Cigna, you liked your co-workers. You’ve said that you respected your bosses and still do. Have you had contact with them? Are they aware of what side you’re on these days?

Wendell Potter: Oh, there’s no doubt they know what side I’m on. I have not had contact with my former boss or CEO. My former boss was the company’s general counsel [Carol Ann Petren]. She reports to the CEO [Hanway]. I worked and served [Hanway] throughout my career, knew him very well, and like him personally. But he’s one of those people who we just talked about who are committed to privatizing all aspects of the economy. And he’s benefited enormously—earning many millions of dollars in compensation [According to Forbes, Hanway earned over $30 million in 2007]. So has my former boss, also one of the most highly compensated employees [Petren made $2.18 million in 2008]. She is of the same philosophy. I respect their right to have those opinions. But they’re dead wrong.

Guernica: This is an industry that allows people to die so it can increase profits. I would think that it would be difficult to respect people who remain in that industry.
Wendell Potter: When you’re in an executive office in a skyscraper, and you’ve got people bringing your lunch, who take you home in a company-owned limousine with a driver on the company payroll, you get a very skewed understanding of America. You are removed from the reality of how most people live. And the number—46.7 million people without insurance—remains just a number when you’re in that environment. It’s only when you let yourself be around people who are without insurance, who are underinsured, who wait in line... [long pause]

Guernica: Hello?

Wendell Potter: [Choked up] Yes, I’m here.

Guernica: Sounds like this is very emotional for you.
Wendell Potter: Yes. It’s crazy but I still get choked up when I remember the Wise County experience. Talking about it brings back the vision of all those people standing in line in the rain to get care in animal stalls.

Guernica: Did you ever express your concerns with colleagues at Cigna?

The tragic thing about these town hall meetings is how some of these angry citizens are being manipulated.

Wendell Potter: I talked to friends, but I didn’t muster the courage to [talk to co-workers]. When I decided to quit, I thought I’d just kind of go quietly. I announced it as a retirement, but I could have made a lot more money had I stayed. But I was okay with that. I wasn’t ready to go fishing, but I was ready to take a break. At one point, I thought I might have a chance to change things inside the company and the industry. But I realized very quickly that that was just wishful thinking. The industry is controlled by Wall Street investors. These companies are for-profit. Their first rule is to enhance shareholder value. That is what’s important. If what I said hindered a company’s profitability, I was not going to be listened to, plain and simple.

Guernica: What I’m getting at is this: You’ve become a significant voice in the healthcare debate. But there’s a portion of the public that looks at you skeptically. We’ve seen this before—Scott McClellan is a recent example—someone who is in an industry or system, they make a lot of money, they get out and that’s when they start crying corruption. They write a book and make a little more money. Some are left wondering; “If it was such a bad industry, why didn’t you speak up earlier?” Maybe you could have made a difference in the nineteen nineties.

Wendell Potter: I understand that completely. Looking back, I wish there had been a moment when I could’ve spoken up. On the other hand, I needed to spend time in the industry to gain the perspective I have. I bought into the industry and what it was doing for many years. The company treated me very well for fifteen years, and I didn’t want to be fired; I had to think about the needs of my family. So there was a lot I had to think about as I was sorting through everything. But I can’t help people from thinking that. To those that question my motives, I’d just like to say that I’m doing this because I think it’s the right thing to do. And the timing was something that… I don’t know if it would have been better had I done this earlier. Maybe so; I don’t know. But the way it’s turned out may be just as effective. Right now, the debate is at its peak.

Guernica: Let’s talk about these contentious town hall meetings. What role, if any, does the industry play in causing the disruptive, or what Senator Claire McCaskill called “rude” behavior?

Wendell Potter: One of the big PR firms [for] the insurance industry is APCO Worldwide. They’ve represented the industry for quite a long time. They’re skilled at setting up front groups to spread disinformation to challenge proposals. So they will get talking points into the hands of conservative radio talk show hosts and editorial writers at conservative publications. It all comes from the health insurance industry, but they spread this stuff in such a way that their fingerprints are not directly on it. A guy named Bill Pierce works for APCO; he is an executive there. He used to work as a spokesman for Blue Cross Blue Shield and the Bush Administration. So if you called the number for Healthcare America, you would be connected with Bill Pierce’s office at APCO... The tragic thing about these town hall meetings is how some of these angry citizens are being manipulated. When you see these stories about the meetings and how the participants are so concerned about government takeover of our healthcare system, they use the very words that were fed to them by the health insurance industry, not realizing that that’s where they came from, not realizing that they are unwitting pawns of the industry. Because they hear that stuff from people they believe are credible, like Rush Limbaugh or Glenn Beck.

Guernica: What are the chances that the industry is actually busing people in to disrupt the meetings?

I am very aware of the efforts the [healthcare] industry goes to to bus people to Washington. It’s one of the most sophisticated grass-roots operations you will find in any industry.

Wendell Potter: I think indirectly they are. APCO and other PR firms do stuff like that. It would be hard to trace it directly because they go through a lot of trouble to funnel the money in ways that it’s not directly traceable to them. When I say money, of course we’re talking about insurance premiums that people pay, and it’s being used for these purposes.

Guernica: So you’re saying these PR firms could potentially be sticking people on buses and sending them to these town hall meetings in order to disrupt them?

Wendell Potter: Yeah, they know where to go, what kind of organizations to turn to to get that kind of stuff done. There’s no doubt about it. On the other hand, I’m sure there are individuals who show up at these meetings who show up on their own and feel like they need to make sure their voices are heard... But other people there are very orchestrated.Guernica: When you were with Cigna, did you have any first-hand knowledge of these kinds of tactics?Wendell Potter: I am very aware of the efforts the industry goes to to bus people to Washington. It’s one of the most sophisticated grass-roots operations you will find in any industry. They have a long list of senior citizens, for example, who are enrolled in the Medicare Advantage plan. Insurance companies will pay for these people to fly to Washington for a day of citizen lobbying. [The senior citizens] will give the impression that they are there speaking on their own, but it’s completely orchestrated by the industry. What these seniors don’t know is that the only way they would lose their Medicare HMO is if the insurance company dumps them because they don’t think they’re profitable enough anymore. That happened back in the nineties, Cigna did it, Aetna did it—all the insurance companies that participated in the Medicare HMO program did it. That’s when Congress reduced the reimbursements a little bit, these big insurance companies dumped seniors by the millions...

Guernica: You’ve said that Cigna purges small businesses whose employees have serious health problems by raising premiums on these businesses until they can’t pay them. Senator Rockefeller recently asked Cigna about this practice, but I believe they denied it.

Wendell Potter: Cigna denied it, but there is evidence in a transcript that Rockefeller has in which the president of Cigna Healthcare uses the exact word: purging. So within the last couple of days, Rockefeller sent them a letter asking them to prove that they don’t purge. Because Cigna is saying they don’t [purge], but there’s evidence that they do. So essentially Rockefeller has caught them in a lie.

Guernica: How do we get other health insurance industry executives to see this from the point of the view of the uninsured?

Wendell Potter: It’s hard. My own process of doing this—it was the hardest thing I’ve ever done in my life. To say: “Okay, I’ve got a good job here, I’ve got a family to support, I’ve got a mortgage, I’ve got kids in college; but I’m going to quit my job and do what’s right”—that just doesn’t happen every day. And when you’re in a company, you also are thinking, “I am making a positive difference?” The people who work at these companies by and large are not evil people. But they only see their small part of it; they don’t see the broader picture of what the industry is doing to our healthcare system.

Guernica: If you had a few minutes in a room with some of these executives—maybe some of your former colleagues and friends like Hanway and Petren—who look only at profits. What would you say to them to get them to change their minds?

Wendell Potter: I’d say: “Look at what has happened to our healthcare system and look honestly at the role the insurance industry has played in that. Be honest as you look at this. You know what I’m saying is true. If you were like me, you probably don’t want to think about it. But look at what I’ve been saying, and you’ll recognize what I’m saying as true. You know it’s true. Do the right thing—which in my view is stepping away from the industry and speaking out.” I would also like to say to the critics of healthcare reform: “Open your minds a little bit and take a realistic look at our healthcare system and what has happened to it and the reasons for it. I think you’ll come to the same conclusions that I did.”

Guernica: Knowing people like Hanway, Petren—do you think they will ever come around to seeing things your way?

Wendell Potter: I’m doubtful. I’ve read that people are basically hard-wired to feel the way they do and see the world the way they do. Many people are just born Republican and Conservative. They’re just inclined to believe that the free market is the best thing regardless of in what sense of the economy it is. They have that element; those are the people who control these companies. They might just be hard-wired to see the world like that.