Calling Them Out: War Profiteer Steven R. Loranger

Calling Them Out: War Profiteer Steven R. Loranger

War profiteering is defined by Stuart Brandes in his book “Warhogs, a History of War Profits in America,” as “a gain in economic well-being obtained as a result of military conflict.”

As he shows, there is a long history of war profiteering in the United States and an equally long history of public disgust for it. One of the most quoted expressions of this disgust came from President Franklin D. Roosevelt in World War II: “I don’t want to see a single war millionaire created in the United States as a result of this world disaster.”

Brandes also notes there was a time when war was exceptional and war profiteering a nasty exceptional thing that accompanied it. But after World War II, the United States moved more and more to a status of permanent war.

In his new book “Washington Rules,” former Army Col. Andrew Bacevich says a group of “semi-warriors” … “some in uniform, others in suits,” operators in the military-industrial complex, had by 1961 “gained de facto control of the U.S. government.”

With this change, profiting from war has become permanent, so much a part of business life in the United States that it is accepted as normal. While US military people die in Afghanistan, Iraq and Pakistan along with residents of those countries, the CEOs of US military suppliers receive personal incomes of millions of dollars a year.

This first article in the Calling Them Out series focuses on Steven R. Loranger, head of ITT Corporation, simply because his company is based in Westchester County, New York, where I live and because I heard of its work on bomb releases for drone aircraft.

Loranger does not appear to be the most gross war profiteer. Indeed, he and others you will read about here seem to be typical of a group of individuals who are benefiting hugely from our wars, who are exempt from the sacrifices being imposed by the wars and who see no conflict of interest in lobbying to continue the wars.

It has been said that all politics is local. It is also true that all politics is personal. The people reported on in this series are individuals with their own private compulsions for wealth, power and extremely comfortable living, who have come together to be a major force, if not the major force behind Congressional support for our wars.

Steven R. Loranger – ITT Corporation

1. Pay

Loranger is chairman, president and CEO of ITT Corporation, one of the top 10 US military contractors as listed by Defense Systems.com. Loranger, 58, was paid $13,844,981 in 2009, according to ITT 2010 Proxy report. In addition, he received $213,048 for sitting on the board of directors of the FedEx Corporation, according to Forbes.com, bringing his income for 2009 to roughly $14 million. His ITT pay package in 2008 was $12.6 million.

The annual base pay for Adm. Mike Mullen, 63, the chairman of the Joint Chiefs of Staff of the US military, is about $240,000 a year, and that of E-2 enlisted personnel is about $20,000 a year. The UN reports that the annual income of non-poppy-growing farmers in Afghanistan is about $2,000 a year.

The following questions were submitted to Loranger through the ITT press office:

Given the disparity between your annual income and that of individuals in the US military, do you see an ethical problem with accepting your current level of pay compared to military income while our current wars are underway, and would you explain your reasoning? Would you object to being called a war profiteer, and if so why?

Do you believe it is a conflict of interest for ITT to lobby for continued war funding when ITT stands to be a direct beneficiary of that funding, and would you explain your thinking on this?

An ITT press spokesperson said that ITT provides information on Loranger’s compensation on the company web site, which contains the 2010 Proxy statement, and that there would be no other comment.

2. Residence

Loranger and his wife Betsy have a large, brick, Tudor home on 1.4 acres in Greenwich, Connecticut, purchased for $4 million in 2004, the same year he came to head ITT from his position as executive vice president and chief operating officer at Texton Inc., also a major military contractor.

Loranger home in Greenwich, Connecticut.

Loranger home in Greenwich, Connecticut. (Photo: Nick Mottern)

The house is in a secluded neighborhood comprised of large, elegant, beautifully maintained and landscaped homes bordering the Long Island Sound. The atmosphere is one of extreme gentility, separation and quiet. Loranger’s street, though apparently a public way, has a gate at one end blocking through traffic. The speed bumps in the neighborhood are gently graded, painted white and marked by simple, square, white posts, painted with blue, Times-Roman-style lettering announcing: “Bump.” Stop signs are in white with the same blue lettering.

3. The Military Work of ITT

ITT, according to its web site, derives 58 percent of its income, over $6.3 billion in 2009, from its military contracts. The company produces a variety of military electronic gear, such as jammers for signals used to set off land mines, communications equipment, night vision equipment and munitions release mechanisms for aircraft, including bomb releases for 1,000 lb. bombs carried by Predator drones.

Information about Reaper drone from ITT web site.

Source: ITT web site.

It is important to note that the number of reported drone assassination attacks has increased significantly under Barack Obama. For example, the BBC said on July 22, 2010, that the number of drone attacks in Pakistan’s tribal areas “have more than tripled under the Obama Administration,” from 25 between January 2008 and January 2009 to “at least 87 such attacks between January 20, 2009 and June 2010.” The attacks can be made using bombs or missiles, for which ITT also produces launch tubes. The drone attacks have led to extensive civilian casualties and are subject of examination by the UN and others to determine whether and how they may violate international laws of war.

ITT also handles military facility maintenance, and in August 2010, it announced receiving two contracts for managing military facilities in Afghanistan and training Afghanis to take over this work. If all the contract options are exercised over a five-year period, ITT will receive the full contract amount totaling $800 million.

Praise for Loranger

In 2007, ITT pleaded guilty and paid a $100 million penalty for violating arms export prohibitions for transferring night vision technology to China, Singapore and Britain. The transfer occurred before Loranger came to ITT in 2004, and The New York Times reported that Loranger was praised by the federal prosecutor in the case, Robert Brownlee, because Loranger “quickly changed course” in ITT’s handling of the case. Mr. Brownlee was also quoted saying that Loranger’s “cooperation and strong leadership may have saved ITT from permanent ruin.”

Million Dollar General

ITT’s military production and sales are the responsibility of Army Lt. Gen. (retired) David F. Melcher, senior vice president and resident, defense and information solutions. Melcher, a West Point graduate, who was paid $1.6 million in 2009, joined ITT in August 2008 after 32 years in the Army. His last military assignment was deputy for budget for the Army, its senior financial manager, according to a December 2008 ITT press release announcing his elevation to head ITT’s defense work. The release went on to say:

“Dave’s depth of understanding of our biggest customer, the U.S. Department of Defense, his knowledge of the workings of Capitol Hill and his strategic awareness of how the defense space is evolving will be invaluable assets as he takes on his new assignment,” said Steve Loranger, chairman, president and chief executive officer ITT.

Water for Guns?

Anticipating reduced military spending, Barron’s reported in March 2010 that ITT has apparently begun trying to expand the nonmilitary part of its business in pumps and water-related products and in commercial applications of military gear such as air control, space-based weather forecasting and satellite imaging. Barron’s said: “Loranger is trying to parlay defense technologies into commercial applications, to tap into what he calls ‘a wonderful macroeconomic trend related to resources scarcity, environmental sustainability and aging infrastructure.'” Loranger’s writings about this “trend” have appeared in The Huffington Post, and he spoke on infrastructure at a Milken Institute conference in April 2010. If he increases his commercial business, Barron’s said, ITT stock shares might rise more dramatically than the fairly healthy increase of 35 percent over 2009.

A more detailed description of ITT’s military and commercial products appears on its web site www.itt.com.

4. Personal Political Contributions

According to CampainMoney.com, Loranger, a Navy pilot from 1975 to 1982, and his wife each contributed $2,300 to the 2008 presidential campaign of John McCain, who was also a Navy pilot and a prisoner of war during the Vietnam War. Senator McCain is the ranking Republican on the Senate Armed Services Committee and also serves on the Committee on Homeland Security and Government Affairs, both committees that have oversight of agencies doing business with ITT. In addition, Loranger contributed $2,112 in 2008 to the ITT Political Action Committee.

5. Personal Participation in Lobbying Organizations

Aerospace Industry Association (AIA)

Loranger’s political reach is extended by his membership on the executive committee of the Aerospace Industrial Association (AIA), a major Washington, DC, military contractor lobbying organization that boasts on its web site of a corporate membership of “an all time high of 120.”

Loranger’s AIA colleagues on the executive committee include the heads of the Boeing Company, Northrup Grumman Corporation, United Technologies, General Dynamics Corporation, Locheed Martin Corporation, L-3 Communications and Raytheon Company.

In May 2010, Loranger attended the AIA’s 65th annual board of governors and membership meeting held at Colonial Williamburg, which, according to the AIA web site, attracted “230 CEOs, senior company representatives, speakers and staff.”

The AIA members heard talks by, and had an opportunity to meet with, among others, Under Secretary of Defense for Policy Michele Flournoy, Director of the Defense Department’s Defense Advanced Research Program Dr. Regina Dugan and Marine Corps Gen. James N. (Mad Dog) Mattis. At that time General Mattis was head of the Joint Forces Command; in August 2010, he replaced Gen. David Petraeus as commander of the United States Central Command when General Petraeus took over responsibility for the Afghanistan war.

In her presentation, Under Secretary Flournoy “called the trend lines in the defense budget ‘unsustainable,'” according to the AIA web site, “and said that [Defense] Secretary [Robert] Gates’ recent calls to reduce overhead and inefficiencies will ultimately allow for increased investments in programs.”

(One of Secretary Gates’ cost-cutting proposals, announced August 9, 2010, is to eliminate the Joint Forces Command that was headed by General Mattis.)

It is worth noting that, according to the AIA, General Mattis, who worked on the Army-Marine counterinsurgency manual with General Petraeus, talked to the group about the need to relax arms export controls. The Obama administration is moving to reduce the number of controls on arms exports, the McClatchy newspapers reported July 29, 2010, in an effort to enable the US to enlarge its current 30 percent market share. The US is the world’s largest arms exporter with sales of $6.8 billion in 2009; Russia is No. 2 at $4.5 billion.

In September 2010, Loranger will participate in the Annual AIA “March to the Hill,” a lobbying expedition for which Loranger will be a featured speaker. The event will include a “Wings of Liberty” reception at which Congressman Norm Dicks (D-Washington) will receive AIA’s Wings of Liberty Award. Congressman Dicks is the chair of the House Appropriations Committee’s Defense Subcommittee, which approves funding for military purchases. The award is made, the AIA web site says, “to Congressional leaders who have made significant contributions to bolster the aerospace industry.”

Lobbying for More War

The AIA lobbied for Congressional passage of the emergency $59 billion supplemental funding that included $33 billion for expanding the Afghanistan War, warning in a July 12, 2010, press statement that unless the war funding was approved “very quickly … the resulting disruptions to industrial supply lines will cause delays in critical equipment delivery, increased costs and could lead to lost jobs in the private sector.”

Upon approval of the money, AIA issued a press statement on July 28 saying the group was “very pleased” because the funding “prevents serious repercussions to our warfighters from unnecessary cuts, delays or reprogramming from other contracts.”

The Business Roundtable

Loranger is a member of The Business Roundtable, described by a Washington Post reporter as “President Obama’s closest ally in the business community.”

The Post reported on June 23, 2010, that Ivan G. Seidenberg, chair of the Roundtable and president and CEO of Verizon, had complained that Democrats “are pursuing tax increases, policy changes and regulatory actions that together threaten to dampen economic growth.” Nevertheless, the article continued, Mr. Seidenberg said, “he has visited the White House more times in the past year than ‘the previous 16.'”

Other military contractors represented on the Roundtable include: The Boeing Company, Bechtel Group Inc., General Electric Company, Textron Inc. and United Technologies Corporation.

On March 12, 2009, Loranger was listed by the White House as being among 65 Business Roundtable members who would meet that day with President Obama.

For his 2008 campaign, President Obama received $1.03 million from what Open Secrets categorized as the “defense” industry, compared to $701,400 to John McCain contributed by that industry. These totals represent contributions from military industry political action committees and individuals working for military contractors.

The Congressional Medal of Honor Foundation

Loranger is a member of the board of directors of the Congressional Medal of Honor Foundation, which, along with Medal of Honor recipients, includes the heads of The Boeing Company, Lockheed Martin, Raytheon Company, General Dynamics Corporation and TriWest Healthcare Alliance, which handles health care insurance for the US military.

The stated purpose of the foundation is to “reach out to the American citizens, particularly to its youth, to promote awareness of what the Medal of Honor represents and how ordinary Americans through courage, sacrifice, selfless service and patriotism can challenge fate and change the course of history.”

It may be that Loranger and his fellow board members from the corporate world have genuine feelings for those who have received the Medal of Honor and the values it represents. At the same time, it is clear that the foundation offers the military contractors the opportunity to associate themselves with the “courage, sacrifice, selfless service and patriotism” of military service and gain from whatever positive feelings for their corporations and themselves that may be stimulated among the public by their support of the foundation.

5. ITT Corporation Lobbying

(All dollar amounts are from Open Secrets.org.)

In the years 2008 through 2010 (to date), ITT has spent $7.526 million to influence Congress, a sum comprised of its spending on its own and other paid lobbyists and in contributions to Congressional candidates from the ITT Political Action Committee (PAC).

A portion of this spending would necessarily advance ITT interests outside its military work, but given the company’s concerns about declining military spending, it would probably be safe to say that the emphasis has been on “defense” issues. Certainly, this is the case in reviewing its support for Congressional candidates, discussed at the close of this section.

Paid Lobbyists

ITT Corporation – ITT has its own lobbying staff of three to four people, and spent the following in this work:

2010 (to date) – $830,000.
2009 – $1,540,000.
2008 – $2,100,000.

J.A. Green & Co. – Total ITT spending with J.A. Green & Co. 2008 – 2010 (to date) $320,000. Total lobbying income for this firm in 2010 to date is $650,000.

Jeff Green, president of this firm, is a former counsel for the House Armed Services Committee and a lieutenant colonel in the Air Force Reserve, who specializes in “defense” lobbying and consulting. He was also legislative director for the Coalition Provisional Authority (CPA), the agency that oversaw the occupation of Iraq, in its Office of Legislative Affairs where, the firm’s web site says, he worked with “senior CPA, Department of Defense, Department of State, Office of Management and Budget and White House officials.”

The Green firm’s military-related clients in addition to ITT, include the International Peace Operations Association, also called The Association of the Stability Operations Industry. This is a trade group for corporations providing mercenary forces, sometimes called “private contractors,” tens of thousands of whom are deployed in Iraq and Afghanistan. These clients include: Armor Group, Dyncorp International, Olive Group and Triple Canopy.

Other military contractors represented by Green include: Oshkosh Corporation (maker of armored vehicles), Airborne Systems and ADCOR Industries.

Denny Miller Associates – Total ITT spending with Denny Miller Associates 2008-2010(to date) – $260,000. Total lobbying income for this firm in 2010 (to date) is $2.75 million.

Denny Miller, president of his firm, gained his Capitol Hill experience, according to the firm’s web site, working for the late Sen. Henry Jackson, assisting him in his post as ranking member of the Senate Armed Services Committee, as chair of the Energy and Natural Resources Committee, senior member of the Intelligence and Governmental Affairs Committees.

Miller clients include the following military contractors: the Boeing Company, General Dynamics, General Electric, Motorola, Oshkosh Corporation, Raytheon Co. and SAIC Inc.

PMA Group – Total ITT spending with PMA Group in the years 2006 – 2009 – $1.45 million. (ITT spending for this lobbyist for the years 2006-2007 is not included in the overall lobbying total cited above for 2008-2010.)

The PMA Group, which was shut down in March 2009, was operated by Paul Magliocchetti, a former senior staffer working on the House Appropriations Committee Defense Subcommittee for the then chair, the late Congressman John Murtha (D-Pennsylvania). Magliocchetti was arrested by the FBI on August 5, 2010, charged with using PMA funds to make illegal campaign contributions and making false statements to a federal agency.

The FBI press release on the arrest says that Magliocchetti “orchestrated a scheme to make hundreds of thousands of dollars in illegal conduit and corporate contributions in an effort to enrich himself and PMA by increasing the firm’s influence, power and prestige among the firm’s current and potential clients, as well as among the elected officials to whom PMA and its lobbyists sought access.” In this scheme, the release said Mr. Magliocchetti used “straw donors” to make campaign contributions exceeding legal limits to “scores of federal campaign committees.” The release said the committees were not aware of the scheme.

Nonetheless, the Sunlight Foundation reported July 9, 2009 that:

“Some of the dozen lawmakers that the Center for Responsive Politics identified as the top recipients of (PMA) donations continued to request earmarks for organizations (including ITT) that had been clients of the firm ….” (Earmarks specify which firms will receive contracts for various projects, avoiding normal bidding procedures.)

The Sunlight report said that Congressman Jim Moran (D-Virginia), a member of the House Appropriations Committee and PMA fund recipient, made two earmark requests for ITT projects totaling $202.4 million in FY 2010, significantly larger than any other earmark total reported by Sunlight.

As indicated above, ITT spent liberally with PMA. In 2007, ITT was PMA’s largest client, paying the firm $600,000, and in 2008, it competed for top spot, paying $550,000 compared to the $560,000 paid by DRS Technologies, another military contractor.

Campaign Contributions

ITT’s Political Action Committee has donated a total of $222,943 to candidates for the House and Senate in 2010 and $189,000 in 2008.

The following lists ITT support of candidates for the House of Representatives in 2010, sublisting members of key committees for military contractors, Congress’ appropriations and armed services committees.

House Candidates Receiving ITT PAC Money in 2010

Members of House Appropriations Committee

Boyd, Allen (D-Florida) – $2,500
Calvert, Ken (R-California) – $1,000
Carter, John (R-Texas) – $1,000
Dicks, Norm (D-Washington)* – $5,000 (Defense Subcomm. Chair)
Frelinghuysen, Rodney (D-New Jersey)* – $3,500
Israel, Steve (D-New York) – $4,500
Lewis, Jerry (R-California)* – $7,500
Lowey, Nita (D-New York) – $2,500
Moran, Jim (D-Virginia)* – $10,000
Murphy, Patrick (D-Pennsylvania) – $5,000
Murtha, John (D-Pennsylvania)* – $5,000 (Deceased)
Olver, John (D-Massachusetts) – $3,500
Rogers, Hal (R-Kentucky)* – $1,000
Rothman, Steven (D-New Jersey)* – $10,000
Ruppersberger, Dutch (D-Maryland) – $2,500
Ryan, Tim (D-Ohio) – $1,000
Visclosky, Pete (D-Indiana)* – $6,000
Young, C.W. Bill (R-Florida) – $2,500

*Members of the Defense Subcommittee of the House Appropriations Committee

Members of House Armed Services Committee

Coffman, Mike (R-Colorado) – $1,000
Fleming, John (R-Louisiana) – $1,000
Franks, Trent (R-Arizona) – $1,000
Heinrich, Martin (D-New Mexico) – $3,000
Hunter, Duncan (R-California) – $1,000
Lamborn, Douglas (R-Colorado) – $3,000
McKeon, Howard (R-California) – $6,500
Owens, Bill (D-New York) – $1,000
Reyes, Silvestre (D-Texas)- $2,500
Rogers, Mike (R-Alabama) – $1,000
Rooney, Tom (R-Florida) – $1,000
Skelton, Ike (D-Missouri) – $5,000 (Chair)
Thornberry, Mac (R-Texas) – $1,000
Turner, Michael (R-Ohio) – $1,000
Wittman, Rob (R-Virginia) – $3,000

Other

Connolly, Gerry (D-Virginia) – $6,500
Costello, Jerry (D-Illinois) – $3,500
Cramer, Bud (D-Alabama) – ($4,557)
Dent, Charlie (R-Pennsylvania) – $3,000
Gallegly, Elton (R-California) – $3,500
Goodlatte, Bob (R-Virginia) – $4,000
Griffith, Parker (R-Alabama) – $3,000
Hill, Baron (D-Indiana) – $1,000
Massa, Eric (D-New York) – $2,500 (Retired)
Matheson, Jim (D-Utah) – $5,000
McCarthy, Carolyn (D-New York) – $5,000
McCarthy, Kevin (R-California) – $1,000
McNerney, Jerry (D-California) – $1,000
Miller, Candice (R-Michigan) – $1,000
Oberstar, James (D-Minnesota) – $2,500
Pascrell, Bill Jr. (D-New Jersey) – $7,500
Petri, Tom (R-Wiconsin) – $2,500
Rohrabacher, Dana (R-California) – $1,000
Sherman, Brad (D-California) – $4,000
Shuster, Bill (R-Pennsylvania) – $1,000
Slaughter, Louise (D-New York) – $1,000
Souder, Mark (R-Indiana) – $7,000
Tiberi, Patrick (R-Ohio) – $1,000
Wolf, Frank (R-Virginia) – $5,000

Senate Candidates Receiving ITT PAC Money in 2010

Members of the Senate Appropriations Committee’s Defense Subcommittee

Dorgan, Byron (D-North Dakota) – $1,000
Feinstein, Dianne (D-California) – $3,000
Inouye, Daniel (D-Hawaii) – $2,000 (Chair)
Mikulski, Barbara (D-Maryland) – $2,500
Murray, Patty (D-Washington) – $7,500
Shelby, Richard (R-Alabama) – $6,000

Members of the Senate Armed Services Committee

Bayh, Evan (D-Indiana) – $1,500
Webb, James (D-Virginia) – $2,500

Other

Bennett, Robert (R-Utah) – $2,500
Boxer, Barbara (D-California) – $1,000
Coats, Daniel (R-Indiana) – $1,000
Ellsworth, Brad (D-Indiana) – $8,500
Gillibrand, Kirsten (D-New York) – $2,000
Hatch, Orrin (R-Utah) – $2,500
Schumer, Charles (D-New York) – $5,000

(The bold face type indicates the Congress members supported by ITT who voted against the $59 billion emergency supplemental bill that included $33 billion for expanding the Afghanistan War.)

Conclusion

The ethical and moral concerns raised by the conduct of Loranger and other corporate leaders in campaigning for weapons and war financing lead to profound foreign policy, military and economic questions.

  • How much is the military industry responsible for the notions that the US must maintain a global military presence and pursue “preventive” wars.

In “Washington Rules,” Bacevich calls for redefining US military and foreign policy goals to bring US military forces back home from around the world, and refocus taxpayer money on nation building in the US. Can he get a serious hearing in Washington?

  • If all US weapons were invented and built by US government arsenals and factories would the US have a different foreign policy and different, more effective, more economical and possibly more discriminating weapons? Would this change US military tactics and war strategy and result in less violence against civilians?
  • If corporations continue to produce US weapons, should weapons building be split off from the civilian work being done by the corporations? Should military contractors be prohibited from lobbying and making campaign contributions? Should the pay for the leaders of these firms be capped at the level of the pay of the Chairman of the Joint Chiefs of Staff, or less?

These considerations will be revisited and others will be discovered as this series progresses and we all learn more.