Drucker: Booz Allen is the elephant and Snowden is the flea


Public paranoia over government eavesdropping has been disproportionate, as I argued in an earlier blog.

At the same time, the international commotion over fugitive Edward Snowden is equally misdirected. Like a rope trick, the American government has successfully deflected attention away from Booz Allen Hamilton, Snowden’s employer, which should be on the real hot seat for security leaks.

Snowden is a minnow. His crimes charged consist of theft of government property and unauthorised communication of national defence information to an unauthorised person – they carry a maximum penalty of 10 years, plus fines. Despite misconceptions, he is certainly not a traitor under the law, an act defined as “levying war against the US”, or aiding and abetting a country with which America is actively at war.

Even in the court of public opinion, in a recent Reuters/Ipsos poll only one quarter of respondents said he should be prosecuted, while one-third said he should not; 25 per cent described him as a traitor, and 32 per cent as a “patriot.”

Booz Allen Hamilton, a behemoth that employs 24,500, is another story. As the 14th largest recipient of government contracts last year, 99 per cent of its business hails directly from Uncle Sam.

That business is big indeed, reaching $5.76bn in revenues last year, with after tax income of $219m, and a $2.5bn market cap. Its clients include not only the military and Department of Defense, but also Departments of Energy, Homeland Security, Health and Human Services, the Environmental Protection Agency and the Treasury.

The Booz door revolves, with powerful alumni like James Clapper, current director of national intelligence. Its stock, after a brief hiccup, is stable again at $17.8.

But the burning issue remains of American government dependence on outside contractors, based on a belief they are cheaper and more flexible (easier to fire) than government workers. Booz hired Snowden, ignoring gaping holes in his resume. He had originally dropped out of high school, and never completed the computer courses he claimed at Johns Hopkins University.

Still, they paid him $122,000 a year, another example of how such contractors function as a conduit for taxpayer dollars to expensive employees.

Vanessa Drucker is the American editor of Fund Strategy magazine