Young Firm Finds a Bonanza in Middle East

By Charles R. Babcock
Washington Post Staff Writer
Friday, December 23, 2005

The Lincoln Group has a K Street address and an executive in charge of "insight and influence." It was not a household name in the Washington influence industry, however, when a controversy started after recent reports that the firm, while working under a U.S. military contract, had paid Iraqi journalists to place pro-democracy stories in the media there.

That's because Lincoln was formed just two years ago, when two thirty-somethings, Christian Bailey, an Oxford University graduate from England, and Paige Craig, a former Marine who once attended West Point, decided that post-invasion Iraq would be a great business opportunity. And it wasn't until last year that Lincoln won its first federal contract.

The founders' initial plan in late 2003, to help commercial clients do business in the new Iraq and publish a business magazine there, stalled when the insurgency escalated in the spring of 2004, company officials said in recent interviews. But they said the same deterioration in security made the U.S. military realize that it needed to do more to reach out to the local communities.

The new company helped Marines in Anbar province in such an outreach program, a Lincoln executive said. That led to a first military contract with the Marines, locally producing and handing out thousands of water bottles -- labeled with a phone number for reporting threats -- to religious pilgrims heading to Najaf and Nasrullah in the spring of last year.

Last summer the firm won a $5 million contract from military commanders in Iraq to win public support there through a public relations and advertising campaign. At the time, Bailey was quoted as saying the new firm had close ties to more than 300 members of the Iraqi media.

This summer Lincoln was one of three firms hired, at up to $100 million over five years, to help special operations forces develop media programs around the world. More recently, it was awarded a $20 million contract to advertise in Anbar province in the run-up to the national elections this month.

Pentagon officials have declined to provide details of the military's contracts with Lincoln Group, or its government services subsidiary Iraqex LLC, other than to say they are looking into the matter. A spokesman for the special operations command said that the command has spent only about $700,000 so far on the media program contract and that none of it is connected to activities in Iraq.

Lincoln has had 20 contracts with the military, a company spokesman said. Some in the global communications business question the newcomer's success. One official said his firm was aware of only two such contracts being awarded competitively.

Lincoln officials said they won the early contracts because they were on the ground, having set up a string of offices across Iraq staffed mostly by Iraqis. That was a key selling point that Craig, now 31, used on U.S. military commanders, they said. With its rapid expansion in recent months, the company now has 40 employees in Washington, including Iraqi Americans, a cultural anthropologist, a veteran international broadcaster, a former British intelligence officer and U.S. military civil affairs specialists, a spokeswoman said.

It has 200 more workers in the Middle East, more than half of them in Iraq, the company said. All of Lincoln's contracts are for work overseas, officials said, and it is expanding to other countries in the region, including Lebanon, the United Arab Emirates, Pakistan and Afghanistan. The company would not disclose the names of commercial clients or its annual revenue.

The Los Angeles Times reported last month that Lincoln employees had helped translate stories written by the U.S. military and then secretly paid Iraqi papers to have them published. That led John W. Warner (R-Va.), chairman of the Senate Armed Services Committee, to express concern because "our credibility abroad is very important."

"A free and independent press is critical to the functioning of a democracy, and I am concerned about any actions which may erode the independence of the Iraqi media," Warner said in a written statement.

Lincoln officials, in recent interviews, defended their role, saying the practice of paying to have stories published is common in many Middle Eastern countries and was needed to counter false stories that insurgents have intimidated some Iraqi papers into publishing.

Bailey, 30, would not directly address his company's work for U.S. commanders in Iraq. But he said, "We're proud of all the work we do on the ground, and this is precisely the sort of engagement in the war of ideas the U.S. must pursue if we are ever to overcome terrorism.

"We have had new commercial and government clients approach us since this story broke, which only validates the need for more of this work," Bailey said.

Laurie Adler, a Lincoln spokeswoman, said: "We have scrupulously and successfully executed our U.S. military contracts with on-scene supervision of our work, receiving high praise for our contributions. Our own research, feedback from our clients and a succession of new contracts all indicate that we have made important contributions to the U.S. and Coalition efforts in Iraq."

Lincoln's founders are listed as executive vice presidents, and the company is recruiting a president, one official said. While Bailey was attending Oxford in the mid-1990s, Craig was at West Point. Impressed by a Marine teacher, he left after three years and joined the Marine Corps, a company spokesman said. Craig served in several Middle Eastern and Asian countries as an intelligence specialist and was discharged as a sergeant in 2000, he said.

Bailey came to the United States in 1999 and worked in Silicon Valley before moving to a hedge fund in New York that set up a fund to make intelligence and defense acquisitions in 2003.

Craig and Bailey met that spring. They soon decided there was more of an opportunity running a company than doing buyouts, a company official said. Using the name Lincoln Alliance Corp., they established an office in Iraq in December 2003. Iraqex was set up early last year for government contracts, and Lincoln Group became the operating name this spring.

Bailey, 30, said in a recent interview that he had attended the Republican convention in 2004 and was co-chairman in New York of a young Republican group called Lead21, which he described as a social group focused on current events that does not hold fundraisers or contribute to political campaigns. Neither Bailey nor Craig is listed as making any donations to federal political candidates.

Lincoln hired two Washington lobbying firms, Van Scoyoc Associates Inc. and BKSH & Associates, this summer. The Van Scoyoc registration said it was hired to lobby for "appropriations regarding information operations." Military information operations cover a wide range of activities designed to fool, confuse or refute an enemy.

The company says it used the lobbying groups to tell its story in Congress after it won the large special operations contract, not to lobby for new contracts.

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