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WASHINGTON -- The U.S. Defense Threat Reduction Agency (DTRA) works to secure or destroy Russian weapons. It's part of the grand vision of former Senator Sam Nunn and Senator Richard Lugar to make America safer not by paying for more arms, but by paying for fewer.
Of more than three dozen DTRA projects in Russia, perhaps the least well-known is the Defense Enterprise Fund. Which is a shame, because the DEF is a great cautionary tale.
It's been almost a decade since Congress created the DEF, gave it $67 million, and instructed it to seek out business investments that would "convert" Soviet-era military infrastructure into peaceful profit-makers. A tough job, and one made tougher by waste and mismanagement.
A Pentagon audit last year found the DEF's team spent at least $35.6 million on managing its $66.7 million -- in other words, it spent 53 cents to manage each dollar. The Pentagon auditors also frowned at more than $1 million the fund's American directors spent on fine dining, tennis games, golf club memberships, vacations to warmer climes and tickets to theaters and the symphony.
The DEF's investments were a series of blunders. As its top manager put it in a 1999 e-mail, "a small number of people did a shitty job of investing a fund and ... it did not have to be that way."
There was a $9.65 million venture with the Russian Railways Ministry to lay fiber-optic cable across the nation -- a telecommunications play in which the DEF lost its shirt and then sucked the U.S. departments of State, Commerce and Defense, and then-Prime Minister Yevgeny Primakov, into a nasty feud.
There was also a starry-eyed scheme to recycle precious metals from Russian electronic scrap, in which the French partner went bankrupt immediately upon receiving the DEF's $5 million ante.
There was a St. Petersburg computer manufacturer the DEF paid $3 million for a stake in -- millions that then evaporated, so the DEF gave the company another $3 million, as a loan. Pentagon auditors later wrote that the entire computer company might be worth $1 million, and they asked what had happened to the other $5 million.
Anyway, lessons learned. The DEF has been conceded to be a flop. Or has it? The Pentagon last year finally posted some information about the DEF on its DTRA web site. The information was dated May 17, 2002 -- long after the publication of two Pentagon audits and one Moscow Times expose. But DTRA wrote that its fund was employing nearly 4,000 former defense workers via 13 projects, and providing "telecommunications services," "personal computers," "precious metal recycling," etc.
I wrote DTRA to ask for details. So did Matthew Maly, a former DEF employee turned ardent critic. DTRA immediately edited downward its boasts, claiming 1,250 defense workers, not 3,375. Maly snorts at even that. "I know for a fact that DEF/DTRA would not be able to provide a checkable list of such workers with more than 200 names on it," he wrote to the Pentagon.
Over the past nine months I've enjoyed a polite e-mail correspondence with one Clem Gaines of the DTRA press office, who regularly promised he'd get me those details the next week; and then, as the Iraq war got under way, wrote that I should stop asking for facts to support their numbers.
Matt Bivens, a former editor of The Moscow Times, writes the Daily Outrage for The Nation magazine. [www.thenation.com].
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