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Propaganda firm co-owner barred from Army contracts

Jun. 20, 2012 - 11:06AM   |  
By TOM VANDEN BROOK and GREGORY KORTE, USA TODAY   |   Comments
House Armed Services Committee member Hank Johnson, D-Ga., has been an outspoken critic of the military's propaganda effort in Afghanistan.
House Armed Services Committee member Hank Johnson, D-Ga., has been an outspoken critic of the military’s propaganda effort in Afghanistan. (File photo / Getty Images)

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The Army has suspended the co-owner of the military’s top propaganda firm in Afghanistan from receiving federal contracts after revelations about the owners’ tax debts and the admission by one owner that he launched an online campaign against journalists, according to government documents.

Rep. Hank Johnson, D-Ga., who is on the Armed Services Committee, asked Defense Secretary Leon Panetta on Tuesday to expand the Pentagon investigations into Leonie Industries. In a letter, Johnson cited allegations that the company may have misrepresented its finances while bidding for federal contracts and had started an online smear campaign directed against two journalists.

Those actions, Johnson wrote, “suggest a pattern of malice, dishonesty, and incompetence that renders Leonie Industries unsuitable for continued service as a federal contractor. The intimidation of journalists, in particular, is unacceptable. The notion that taxpayers’ dollars would go to such a company is abhorrent.”

Camille Chidiac, who owns 49 percent of Leonie Industries, was placed on a list of people ineligible to receive federal contracts, effective May 30.

Chidiac said May 24 that he established websites in the names of journalists who had written about the company and Chidiac’s unpaid taxes.

The Pentagon denounced the sites as a smear campaign.

Despite the suspension, Chidiac retains his ownership stake in the company, which has been paid more than $120 million in federal contracts since 2009. He said May 24 he would “divest” from Leonie but has not done so, Leonie spokesman Gar Smith said.

Lt. Col. Wayne Wallace, an Army debarment and suspension official, said Chidiac is the only person connected to Leonie the Army is currently pursuing debarment against.

Chidiac’s suspension should not affect Leonie’s contracts, Smith said. Chidiac is not an employee or officer of the company and has not been involved in its contracts since 2008, Smith said. He set up the websites on his own, not on behalf of Leonie, Smith said.

The Army does not comment on proceedings regarding specific contractors, Army spokesman George Wright said.

This month, Pentagon criminal investigators started an inquiry into taxes paid by Leonie’s owners and treatment of the company’s Afghan employees.

USA Today reported in February that Leonie’s owners owed more than $4 million in unpaid federal taxes. That debt was settled in March, federal records show.

Last month, Johnson introduced an amendment that would have cut $122 million for military information operations, calling the program a “fiasco.” He withdrew the amendment over concerns that it might harm troops in combat.

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