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Quick Rise for Purveyors of Propaganda in Iraq
By DAVID S. CLOUD
02/15/06 "New
York Times" -- -- WASHINGTON, Feb. 14 — Two years
ago, Christian Bailey and Paige Craig were living in a
half-renovated Washington group house, with a string of failed
startup companies behind them.
Mr. Bailey, a boyish-looking Briton, and Mr. Craig, a
chain-smoking former Marine sergeant, then began winning
multimillion-dollar contracts with the United States military to
produce propaganda in Iraq.
Now their company, Lincoln Group, works out of elegant offices
along Pennsylvania Avenue and sponsors polo matches in Virginia
horse country. Mr. Bailey recently bought a million-dollar
Georgetown row house. Mr. Craig drives a Jaguar and shows up for
interviews accompanied by his "director of security," a beefy
bodyguard.
The company's rise, though, has been built in part by
exaggerated claims about its abilities and connections,
according to interviews with more than a dozen current and
former Lincoln Group employees and associates, and a review of
company documents.
In collecting government money, Lincoln has followed a blueprint
taught to Mr. Bailey by Daniel S. Peña Sr., a retired American
businessman who described Mr. Bailey as a protégé.
Federal contracts in Washington can supply easy seed capital for
a struggling entrepreneur, Mr. Peña says he advised a youthful
Mr. Bailey in the mid-1990's when the two men started a
short-lived technology company. "I told him, 'When in trouble,
go to D.C.,' and the kid listened," Mr. Peña said.
Mr. Bailey defends his company's record, saying, "Lincoln Group
successfully executes challenging assignments." He added that
"teams are created from the best available resources."
Lincoln won its contracts after claiming to have partnerships
with major media and advertising companies, former government
officials with extensive Middle East experience, and ex-military
officers with background in intelligence and psychological
warfare, the documents show. But some of those companies and
individuals say their associations were fleeting.
Lincoln has also run into problems delivering on work for the
military after its partnerships with more experienced firms fell
apart, company documents and interviews indicate. The firm has
continued to bid for new business from the Pentagon and has
hired two Washington lobbying firms to promote itself on Capitol
Hill and with the Bush administration.
"They appear very professional on the surface, then you dig a
little deeper and you find that they are pretty amateurish,"
said Jason Santamaria, a former Marine officer whom the company
once described as a "strategic adviser."
The company's work in Iraq, where Mr. Bailey and Mr. Craig visit
from time to time to direct operations, is facing growing
scrutiny.
The Pentagon's inspector general last month opened an audit of
Lincoln Group's contracts there, according to two Defense
Department officials. A separate inquiry ordered by Gen. George
W. Casey Jr., the top American commander in Iraq, after
disclosures late last year that Lincoln Group paid Iraqi
publications to run one-sided stories by American soldiers, has
been completed but not made public, military officials said.
A spokesman for General Casey, Lt. Col. Barry Johnson, declined
to comment on Lincoln Group, citing the ongoing investigation.
In interviews, Mr. Bailey, 30, and Mr. Craig, 31, said they had
succeeded by anticipating the military's need for help
communicating with and influencing the Iraqi public, just as the
insurgency was building. "We saw that it was very hard for the
U.S. to do that work," Mr. Bailey said. "They didn't do media
and outreach very well. We had local offices in a tough
environment where traditional U.S. contractors would not
operate."
He disputed suggestions that Lincoln had experienced difficulty
delivering on work for the military, saying the firm had
"successfully executed" more than 20 contracts from the Defense
Department.
Lincoln's roster of advisers and other businesses assisting it
has continually changed, Mr. Craig said, because "our work in
often hostile environments has occasionally proved to be too
risky or challenging for some of our partners."
Little in Mr. Bailey's background indicated he would end up
doing propaganda work in Iraq. Born in Britain as Christian
Jozefowicz, he changed his name when he graduated from Oxford
University and moved to San Francisco during the late-1990's
dot-com boom.
There he founded or advised several companies and plunged into
the Silicon Valley social scene, according to Mr. Bailey and
several friends and former business associates. Among the
companies were Express Action, a company that planned to develop
an Internet service to calculate duties on overseas purchases,
and Motion Power, which intended to invent a shoe that would
generate its own electrical power to run portable consumer
devices.
"You would have been proud had you seen this 23-year-old kid
pitching, with no product, no customers, no business plan," Mr.
Bailey wrote in a letter to Mr. Peña, describing how he raised
$15 million from investors for Express Action.
Mr. Bailey later moved to New York and sought investors for an
investment fund, according to documents filed with the National
Futures Association. In 2003, he moved to Washington.
Mr. Craig's path to the capital began when he dropped out of
West Point to pursue, he says, his interests in business and
national security.
Enlisting in the Marines in 1995, he began working in military
intelligence. He earned an undergraduate degree in information
technology while stationed in Okinawa and Australia through the
University of Maryland and a masters in business administration
from National University, which runs academic programs on
military bases. He left the Marines in 2000.
By 2004, Mr. Bailey had moved into Mr. Craig's house near
downtown Washington, and the two had formed the company that
eventually became Lincoln Group.
Their original goal was to make money exploiting Iraq's most
obvious surplus — its shattered infrastructure. But those
efforts faltered.
A project to export scrap metal fell apart after the Iraqi
government banned scrap exports in 2004, Mr. Bailey said. A pile
of scrap metal, purchased with a loan from an Indonesian bank,
has been sitting in Basra ever since, according to two
ex-employees. Like several other former Lincoln workers, they
asked to remain anonymous because they had signed
confidentiality agreements with the company or still dealt with
the firm.
Lincoln also spent about $50,000 for two portable brick-making
machines from Texas. The company had hoped to set up a brick
plant near Mosul, where the demand for construction materials
was vast, according to a presentation Mr. Bailey made to
potential investors in Dubai. The machines, though, were
principally designed for homeowners or small contractors.
Lincoln would not comment on the project.
Eventually, Lincoln began working with the American military,
which was spending millions on contractors for a broad range of
services. The firm rented a one-story house inside the Green
Zone, the heavily fortified government compound in central
Baghdad. Furnished with two sofas and a sheet of plywood that
served as a desk, the house had a single telephone and an
overloaded electrical outlet.
Lincoln formed a partnership with The Rendon Group, a Washington
company with close ties to the Bush administration, and won a $5
million Pentagon contract to help inform Iraqis about the
American-led effort to defeat the insurgency and form a new
government. One contract requirement was to get Iraqi
publications to run articles written by the military, according
to several ex-Lincoln employees.
Rendon soon dropped out and Lincoln handled the contract alone.
But the company had fewer than two dozen workers and little
experience with public relations, according to several
ex-employees.
Problems arose from the start. In a 2004 briefing to the
military, Lincoln conceded that it was "not yet fully staffed"
and that "media monitoring software" required by the contract
was "not ready."
And the government did not provide that much work at first. The
military's public affairs office produced only a few articles a
day during that period, one Lincoln ex-employee said. A small
State Department contract to assist small businesses had just
been cancelled, he said, and the firm was having difficulty
making its payroll.
Lincoln lacked the armored vehicles or security guards employed
by more established contractors. When venturing outside the
Green Zone, employees would grab weapons and climb into one of
two beat-up Proton sedans, which employees were told were chosen
to blend in with dilapidated Iraqi vehicles on the streets.
After winning a small contract from the Marines to do polling,
the company hired Iraqis to go door-to-door in Anbar Province
with questionnaires. To protect themselves from possible
insurgent reprisals, they were told to say they were working for
an Iraqi university, according to a former Lincoln employee.
Last August, gunmen came to the home of one of the Iraqi
workers, killing him and three others, according to an ex-
employee. Mr. Bailey said it was not clear whether the killing
was related to the polling, but the company decided to move a
Lincoln office staffed by Iraqis in downtown Baghdad to a less
noticeable location.
Back in the United States, Mr. Bailey and Mr. Craig worked to
drum up more business.
In late 2004, Mr. Craig traveled to Fort Bragg, N.C., to meet
with officers of the 18th Airborne Corps, which was preparing
take over management of Lincoln's public affairs contract in
Iraq, according to a former employee and company documents.
Despite the problems with the existing work, Lincoln said it
could assist the military in the more secretive realm of
"information operations," according to a transcript of the
briefing. Unlike public affairs work, information operations are
meant to influence and help defeat foreign adversaries, using
deception, if necessary.
The briefing also touted the firm's "strategic advisers,"
including Mr. Santamaria, the former Marine officer, who
received a master's degree from the Wharton business school and
was co-author of a business book called "The Marine Corps Way."
Mr. Santamaria said he reviewed several investment proposals for
Lincoln during a two-week association in late 2004. But after
becoming "concerned about their methods," he said, "I severed
ties with them as quickly as I could."
A Lincoln spokesman, William Dixon, said "it was a mistake" to
include Mr. Santamaria's name in the December briefing because
he was no longer affiliated with the company.
Lincoln may simply have been following another principle taught
by Mr. Peña. "How do you create an instant track record?" Mr.
Peña says he told Mr. Bailey. "You joint-venture with someone
who has a track record."
Early last summer, military commanders made Lincoln Group the
main civilian contractor for carrying out an aggressive
propaganda campaign in Anbar Province, known as the Western
Mission project. Over the next several months, the military
transferred tens of millions of dollars to Lincoln for the
project, records show.
The company hired dozens of employees, including academics and
former military personnel, as well as hundreds of contract
workers in Iraq and elsewhere, a number that fluctuates by
contract requirements, according to Mr. Dixon, the Lincoln
spokesman.
With the new duties came substantial new requirements, including
producing television and radio ads, buying newspaper ads and
placing many more articles in the Iraqi press. The military also
approved paying Iraqi editors to run stories, according to
ex-Lincoln employees.
Lincoln also enlisted the New York advertising executive Jerry
Della Femina, chairman of Della Femina Rothschild Jeary &
Partners. Mr. Della Femina said he was introduced to Mr. Craig
last spring by a Washington lobbyist.
Mr. Della Femina said his firm "did a great deal of work" on
advertising ideas for Lincoln to present to the military's
Special Operations Command, which last summer was soliciting
bids for contracts, potentially worth millions, for
psychological operations.
Lincoln listed Mr. Della Femina as a "creative director" in
materials presented last spring at a meeting with Special
Operations officers in Tampa. But Mr. Della Femina said his firm
pulled out before executing any of the ideas. Three months after
ending the collaboration, Mr. Della Femina said, he discovered
that Lincoln's Web site listed him as one of its partners.
"I was surprised that they had our name on their Web site in the
first place," he said.
After he asked that his name be removed, Mr. Craig said, "we
honored his request within the week."
By that time, Lincoln had already been notified by Special
Operations Command that it and two other companies had been
chosen to compete for work under the contract.
Lincoln later told Special Operations Command that one of its
principal subcontractors was Omnicom Group Inc. of New York, an
advertising and marketing conglomerate. A proposal signed by Mr.
Bailey in October said Lincoln "has exploited the extensive
experience and expertise of the Omnicom Group."
But Pat Sloan, an Omnicom spokeswoman, said she could find no
evidence it has ever worked with Lincoln Group. "We're not aware
of any relationship with Lincoln Group," she said. She noted
that Omnicom had once owned 49 percent of Mr. Della Femina's
agency but had sold the stake in early 2005. Michael J. Jeary,
president of Mr. Della Femina's agency, said Lincoln's claim of
Omnicom as a subcontractor was an "honest mistake" because he
had never told the firm Omnicom had sold its minority stake.
Although Lincoln Group's work in Iraq is now under scrutiny in
two Pentagon investigations, the firm is hunting for more
government work. Last month, Mr. Bailey attended a going-away
reception at the Virginia condominium of a mid-level government
employee on her way to a new job at the American Embassy in
Baghdad. Her job: overseeing contracts.
Copyright 2006The New York Times Company
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