Audit Notes: The Pentagon’s Privatized Propaganda, Chesapeake, Inequality

This story is just amazing:

A USA TODAY reporter and editor investigating Pentagon propaganda contractors have themselves been subjected to a propaganda campaign of sorts, waged on the Internet through a series of bogus websites.

Fake Twitter and Facebook accounts have been created in their names, along with a Wikipedia entry and dozens of message board postings and blog comments. Websites were registered in their names.

The timeline of the activity tracks USA TODAY’s reporting on the military’s “information operations” program, which spent hundreds of millions of dollars on marketing campaigns in Iraq and Afghanistan — campaigns that have been criticized even within the Pentagon as ineffective and poorly monitored.

USA Today didn’t nail down who the contractor was, but Gawker’s John Cook reports that it’s a sketchy-sounding outfit called Leonie Industries that does psychological warfare for the Pentagon in Afghanistan:

Leonie Industries, which the Vanden Brook and Locker investigation called the U.S.’s top contractor in Afghanistan, is an interesting company. It was founded in 2004 by a Lebanese-American brother and sister, Camille Chidiac and Rema Dupont, and has cobbled together $130 million in Pentagon contracts for, as Vanden Brook and Locker put it, “plant[ing] unattributed broadcasts, plaster[ing] the countryside in war zones with billboards, stag[ing] concerts and drop[ping] leaflets” in Afghanistan.

USA Today had reported on Leonie in its investigation into the Pentagon’s privatized propaganda mills.

Forbes’s Christopher Helman writes a very good post on what the revelations from Reuters’s big Cheseapeake Energy/Aubrey McClendon investigation mean:

Here is the core of what is wrong with McClendon’s massive borrowing: Chesapeake is severely capital constrained (a result of high debt loads, reckless spending on ever more shale gas acreage and rock bottom natural gas prices) to the point that the company is trying to sell billions of dollars in assets this year to make ends meet. At the same time this is going on, McClendon has been competing directly against his own company for access to the capital markets in order to shore up his own finances — without telling shareholders the extent of his financings..


The simple truth is that McClendon’s well participation perk does not align his interests with those of shareholders. As I detailed in my cover story on McClendon last fall, at the heart of Chesapeake’s operation is the land machine, which scoops up promising acreage across America, paying billions to secure the rights to drill. Much of that land turns out to have oil and gas; some doesn’t. When land turns out not to be worth drilling, the millions sunk into accumulating it is lost.

Chesapeake only drills wells on land where it has a good belief that there’s oil and gas to be had. It drills more wells in the choicest parts of a field. McClendon only participates in the good acreage; he doesn’t get docked for the bad acreage Chesapeake has no use for. Thus he is absolutely guaranteed to get better opportunities and better returns than Chesapeake’s shareholders. He shares in the boons and avoids the banes.

— Read Columbia J-School Dean Nicholas Lemann New Yorker piece on the politics, and lack thereof, of inequality:

Occupy Wall Street and its companion movements briefly spurred President Obama to become more populist in his rhetoric, but there’s no sign that Occupy is going to turn into the kind of political force that the Tea Party movement has been. There was a period during the Republican primary campaign when Romney rivals like Newt Gingrich tried to take votes from the front-runner by bashing Wall Street and private equity, but that didn’t last long, either. Politics does feel sour and contentious in ways that seem to flow from the country’s economic distress. Yet much of the ambient discontent is directed toward government—the government that kept the recession from turning into a depression. Why isn’t politics about what you’d expect it to be about?

Traditionally, class figured less in politics in America than in most other Western countries, supposedly because the United States, though more economically unequal, and rougher in tone, was more socially equal, more diverse, more democratic, and better at giving ordinary people the opportunity to rise. That’s what Alexis de Tocqueville found in the eighteen-thirties, and the argument has had staying power. It has also been wearing thin. During the five decades from 1930 to 1980, economic inequality decreased significantly, without imperilling “American exceptionalism.” So it’s especially hard to put a good face on the way inequality has soared in the decades since. Even if you think that all a good society requires is—according to the debatable conservative mantra—equal opportunity for every citizen, you ought to be a little shaken right now. Opportunity is increasingly tied to education, and educational performance is tied to income and wealth. When it comes to social mobility between generations, the United States ranks near the bottom of developed nations.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,