Robert McKeonIn 1992, at the age 37, of Robert McKeon founded equity investment firm Veritas Capital. Veritas, like The Carlyle Group, invested in intelligence and defense, a decision that has paid off handsomely in the Global War on Terror. McKeon’s specializes as a corporate “cleaner,” taking over scandal-ridden companies that need removal from public scrutiny. He hires former government officials to do “due diligence” and is proficient at arranging for the company to keep its government contracts. In other words, he uses tainted companies to do highly classified government work related to our defense and security—work so classified, he says he doesn’t even know much about what they do.
Veritas’s first brush with trouble came in 1999, when the treasurer of Connecticut pleaded guilty to a scheme in which a Veritas consultant paid him kickbacks for approving a $125 million investment by the state in a Veritas fund. Veritas came out of the deal squeaky clean, even though McKeon refused to provide any refunds.
One of Veritas’s first big defense successes was the sale of Vertex Aerospace to L-3 Communications for $650 million in late 2003. Veritas had bought the company just two years earlier for $270 million from Raytheon. Around the same time, Veritas acquired IDT, which quickly acquired a $146 million chunk of major defense contractor BAE. In 2003, Veritas sold IDT to DRS Technologies for $550 million, and McKeon joined DRS’s board. A couple years later, DRS sold two IDT units—DRS Broadcast Technology, Inc. and DRS Weather Systems, Inc.—back to Veritas.
In July 2004, Veritas acquired McNeil Technologies, another major government contractor. McNeil does translation in Iraq, and it has done $10.5 million of work processing Freedom of Information Act (FOIA) requests for TSA and the departments of State, Transportation, Defense. (McNeil’s board counts six retired military brass.) In late 2006, McNeil and DynCorp, another Veritas-owned contractor (see below), won a $4.6 billion joint contract to do translation in Iraq.
McKeon’s most recent high profile project was the assumption of government contractor MZM from founder, and now convict Mitchell Wade, in September 2005. MZM had no federal contracts as of 2002, but after hiring many former intelligence officials from the military, FBI, and CIA, it accumulated $160 million in defense contracts, mostly unneeded no-bid earmarks, and had 85 employees with top-secret clearance. The most notorious contract was with the National Ground Intelligence Center (NGIC), with whom MZM collaborated on the notoriously inaccurate Iraqi WMD findings. MZM also got contracts for other sensitive defense and intelligence work, some with the NSA, FBI, and CIA. The curious rapidity of MZM’s ascent was explained when Wade pleaded guilty to funneling over $1 million worth of bribes to Rep.Randy “Duke” Cunningham. Wade also made other illegal campaign contributions and hired family members of NGIC.
Before purchasing MZM, McKeon hired former CIA counsel Jeffrey Smith to ask Pentagon and intelligence employees about their contracts. When Smith, who works for Arnold and Porter, a firm that has represented defense companies, including Veritas and DynCorp reported back saying intelligence agencies were fond of MZM’s work, McKeon must have liked what he heard. He bought MZM, renamed it Athena Innovative Solutions (Athena was the goddess of wisdom and war), and the Pentagon allowed Athena to take over every one of every one of MZM’s contracts. Two years later, Veritas sold Athena to CACI, another contractor with a notorious history, for $200 million in cash.
McKeon picked up a much dirtier military contractor in 2005: DynCorp International. Veritas bought DynCorp from Computer Science Corporation (CSC) for $850 million and took it public while keeping a 56% stake; DynCorp is now worth $1.4 billion. DynCorp has over $2 billion in government contracts, despite a long list of abuse and controversies.
In Bosnia, DynCorp employees traded sex slaves, including girls as young as 13, and fired the whistleblowers. The site supervisor was caught on tape raping a woman. The company settled with the whistleblowers, but no one was prosecuted. DynCorp continued to reap military contracts and further enhance their bad reputation after Bosnia. The State Department noted DynCorp employees’ “aggressive behavior” with diplomats and journalists in Afghanistan, two DynCorp bodyguards beat journalists in Haiti, and many Ecuadoreans and Colombians have fallen sick in areas where DynCorp sprayed toxins as part of the War on Drugs. For all this, DynCorp was rewarded with an irony-laden contract to recruit police forces in Iraq.
It can’t hurt DynCorp that Veritas Capital’s “Defense & Aerospace Advisory Council” includes Richard Armitage (former Deputy Secretary of State), Gen. Richard Hawley (former Air Force Commander), Gen. Barry McCaffrey (former Drug Czar and Commander-in-Chief of the U.S. Southern Command), Gen. Anthony Zinni (former Commander-in-Chief of the U.S. Central Command and BAE director), and other military luminaries.
In October 2006, Veritas bought another company with a sullied past: Cornell Companies, Inc., a major government contractor in the management of prisons. Veritas paid $245 million and assumed $273 million of Cornell’s debt. The company was indicted for illegal political contributions to Tom DeLay, a Texas Congressman indicted for money laundering and conspiracy. Also, Cornell was sued by shareholders in 2002; stock dove 40 percent and Cornell had to refile earnings statements with the SEC. SEC never found wrongdoing, but Cornell settled for $7 million in 2006.
Before Veritas, McKeon was a founding partner at Wasserstein Perella, where he managed a $1.1 billion fund. He is now on the boards of DynCorp International, The Wornick Company, Athena Innovative Solutions, and McNeil Technologies, and sits as a member at the Council on Foreign Relations and the Center for Strategic and International Studies. The Capital Yacht Club, where Duke Cunningham lived on Mitchell Wade’s yacht “Duke-Stir”—and where members and employees were subpoenaed to testify in front of a grand jury regarding said corrupt Congressman—had a commodore Robert McKeon when the subpoenas took place. Though not determined that this is the same Robert McKeon, there is no denying that someone with that name is rolling in government contracts purchased from Cunningham’s sellout.
- “Tainted Past? No Problem: Private-equity fund Veritas thrives by turning around sullied defense contractors,” Business Week, July 17, 2006, Eamon Javers and Dawn Kopecki, http://www.businessweek.com/magazine/content/06_29/b3993073.htm
- “Defense Contractor Sold to N.Y. Firm; MZM Owner Tied to Grand Jury Probe,” Washington Post, August 18, 2005, Charles R. Babcock