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L-3: the $15 billion defence contractor that will be scanning us at Australia’s international air terminals

Part two of a report by Crikey political correspondent Bernard Keane on the awarding of a airport body scanner contract by the Australian Government without conducting a risk analysis

So who is the real beneficiary of the government’s decision to impose body-scanning technology on international passengers?

Step forward L-3 Communications, a key member of the US defence establishment and one with links to some of the worst scandals of the past decade.

The company will reap $28 million dollars from the government’s obsession with security theatre that has no demonstrated security benefits, through its provision of body scanners.

L-3 began as an orphan company after a Lockheed merger saw several business units sold off to two former Loral executives funded by Lehman Brothers, which still has a big stake in the company and a board seat. Since then, L-3 has grown into one of the top 10 US defence contractors. The company earned nearly a billion dollars in profit in 2010, from revenues of more than $15 billion.

Along the way, it has been involved in some of the US’ biggest defence and procurement scandals. In the late 1990s, the company’s lobbyist Linda Daschle helped the company get a Federal Aviation Authority contract to supply airport baggage scanners courtesy of legislation passed by her husband, Senate Majority Leader Tom Daschle. The scanners were later revealed to be faulty, but the FAA was obliged by Daschle’s legislation to continue to purchase them.

The company later acquired defence contractor Titan, which has been implicated in several procurement scandals. Titan provided “interpreters” at the US Army’s Abu Ghraib prison in Iraq, and the company was sued by a victims of US torture and abuse there, until the US Supreme Court finally dismissed the case in 2011. In 2010, a division of the company was suspended from providing any services to the US government after it was found using US government networks to spy on competitors. There have also been several lesser procurement scandals typical of the US defence industry.

But even as the US looks to cut back defence spending, with flow-on effects for big suppliers such as L-3, the fertile field of security theatre has opened up as a revenue source — there’s little or no political will to cut war-on-terror funding. By 2010, the company had provided nearly $US40 million worth of body scanners following the “underwear bomber”, having massively ramped up its lobbying effort. Not unhelpful is the fact that several US congressional representatives have big L-3 shareholdings, including former 2004 Democrat presidential candidate John Kerry.

Here, the company (with headquarters in Canberra) is represented by two lobbyist outfits. Its specialised night vision and targeting division is represented by defence specialist lobbyists Owen International while its maritime defence equipment arm L-3 Nautronix is represented by CMAX, headed by Tara and Christian Taubenschlag; the latter was Joel Fitzgibbon’s press adviser.

Typical of such companies, L-3’s board has extensive links with the US defence establishment, including a former chairman of the Joint Chiefs of Staff. Here, former Air Vice-Marshal Alan Titheridge is vice-president.

In 2011, L-3 and its various divisions scored more than $31 million dollars from Australian taxpayers, nearly all of it via direct tenders where there’s no competition. Its operations extend across military and communications hardware, from aircraft to detection and communications equipment to business services. Defence spending may be getting tighter, but security theatre is boom industry here and overseas.

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  • 1
    Zarathrusta
    Posted February 27, 2012 at 6:11 pm | Permalink

    What a fantastic scam. Invent something of dubious utility, then get your government to require other countries to use it to be able to fly to the US.

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