could make a bundle off Navy contracts if the GOP candidate winds up in the White House.
Former Navy Secretary John F. Lehman, an investment banker, is one of Mitt Romney’s key military advisers, notable for his raising the specter of the “Soviet Union” and the supposed betrayal of “Czechoslovakia” last April. According to David Axe at Wired.com’s Danger Room, Lehman stands to make a lot of money if Romney becomes president.
Since at least his speech a year ago at the Virginia Military Institute, Romney has been making waves with his call for a bigger Navy. All along, he’s been proclaiming that the current Navy, at 285 ships, is smaller than it was in 1916.
The foreign policy debate Monday night wasn’t the first time that he’s been called on how ridiculous such a comparison is nearly a century later. Today’s Navy, after all, includes 14 nuclear-powered, nuclear-armed ballistic-missile Ohio-class submarines, a single one of which—even under the New Start disarmament treaty with Russia—can wipe out 100 major cities in less than an hour. Other modern ships of various types are equally sophisticated if not quite so apocalyptically lethal.
While it’s easy to question the military’s need for building 15 new ships a year (instead of the nine being built by the Obama administration), there is another “necessity”—contracts with the military-industrial-congressional complex.
As Navy secretary under Ronald Reagan, the neo-conservative Lehman argued in favor of a 600-ship Navy. It was then that the first of those Ohio-class ballistic missile subs was built. Two decades later, Lehman became the chairman Hawaii Superferry, a company that briefly provided inter-island transportation via two new-technology catamarans built by Austal USA. Lehman says he lost money in the bankruptcy of the ferry service that had received a $ 136 million loan guarantee from the federal Maritime Administration and benefited from millions of dollars in state of Hawaii-funded port improvements.
But the story is more complicated than that. Austal’s ferries have military potential. In fact, the Navy bought the company’s two ferries when Hawaii Superferry went down, as recounted in a book on the subject by Koohan Paik and Jerry Mander. They believe the ships were originally built as a proof-of-concept project design with the military in mind.
At first glance it’s not clear how Lehman could have benefited from his money-losing investment in Hawaii Superferry. The answer lies in another of the former Navy secretary’s investments: the Atlantic Marine family of shipyards. In 2006, Lehman purchased the shipyards in Alabama, Mississippi, Florida, Boston and Philadelphia for a reported $ 170 million. In 2009, the federal government awarded three of the yards $ 2.7 million in stimulus grants for improvements.
In 2010 international defense giant BAE Systems, which handles ship repairs among other specialties, acquired the Florida, Mississippi and Alabama yards for $ 352 million — ringing up an estimated $ 180 million profit for Lehman that more than makes up for his “failed” investment in Hawaii Superferry. Lehman held onto the remaining two yards in Philadelphia and Boston. Recently both have received lucrative ship-repair contracts from the Navy. They could receive even more such contracts if the sailing branch were to grow at a faster pace, as Lehman intends.
Today the Alabama yard, which is adjacent to Austal USA’s own facilities, plays a critical role in military programs on which Austal USA and BAE Systems collaborate. “We launch both their JHSV and [Littoral Combat Ship] vessels with our dry docks; we also support Austal with warranty repairs, if requested,” BAE Systems spokesperson Stephanie Moncada tells Danger Room.
Ryan Sibley, an editor watchdog Sunlight Foundation, has tracked Lehman’s investments: “Lehman’s involvement with the Superferry shows that he is no stranger to using personal connections to influence costly decisions.”
That, of course, does not make Lehman unique in the world of military contracting. Although he served relatively briefly in the Air Force Reserve and later the Navy Reserve in addition to his time as civilian Navy secretary, he, like 20- and 30-year career officers at the Pentagon, has found the intersection of military-related government service and military contracting highly lucrative. It is, however, the rare operator who gets to advise a presidential candidate directly regarding a foreign policy that calls for an expansion of the instruments of war which likely will pad the adviser’s bank account in the event of victory at the polls. Nice gig.
Source: Daily Kos