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  Family Business at the Watergate
By Margie Burns |  February 15, 2005   (page 2/3)

Investors in the bankrupt Stratesec are now suing the company's partners, including Walker and Al Sabah, in federal court in Washington. Al Sabah, under contempt-of-court charges, faces arrest if he returns to this country, according to an individual close to the case. He is thought to be in Kuwait, but recently traveled to the United Arab Emirates to conduct the sale of an airplane by Commander Aircraft, now a subsidiary of Aviation General, Walker's other company.

KuwAm was by far the biggest long-term backer for both Stratesec and Aviation General, acting much like a swinging door for Kuwaiti money to pass through. In 1996, KuwAm owned 90 percent of Securacom, directly or through partnerships with names like "Special Situations Investment Holdings" and "Fifth Floor Company for General Trading and Contracting." KuwAm owned 31 percent of Securacom in 1998 and 47 percent of Stratesec in 1999.

Marvin Bush was reelected to the Stratesec board of directors annually from 1993 through 1999. His last reelection was on May 25, 1999, for July 1999 to June 2000.

The company described itself this way: "Stratesec, Incorporated, is a fully integrated single source security systems company. The company provides consulting and planning, engineering and design, systems integration, and maintenance and technical support services to commercial and government clients worldwide. Stratesec has completed security projects for airports, corporations, utilities, prisons, universities, and federal, state and local governments."

When Securacom went public on September 11, 1997, its prospectus for the Initial Public Offering prominently featured photographs of its clients the World Trade Center and Dulles airport, with a client list that included United Airlines and Los Alamos National Laboratories.

While on the board, Marvin Bush served on the company's Audit Committee and Compensation Committee. He acquired 53,000 shares of stock in the company at 52 cents a share, partly through his private company, Andrews-Bush, located in northern Virginia. Shares in the 1997 initial offering sold at $8.50.

Company stock became worthless after the company's de-listing. Securities and Exchange Commission (SEC) filings ceased showing Marvin Bush as a shareholder after 2000, but there are no filings indicating when his stock was sold. Bush, whose investment firm still backs other contractors at the Dulles and Reagan airports, has not responded to requests for comment.

One of Stratesec's biggest security contracts was with the Metropolitan Washington Airport Authority, to provide electronic security for Dulles and Reagan airports. The company got its first preventive-maintenance contract with Dulles airport in 1995 and received about $6.3 million in revenue from the Dulles project between 1995 and 1998.

Stratesec did not handle passenger screening at Dulles, where one of the 9/11 jets was hijacked. According to Dave Swennes, a contracting official for the Metropolitan Washington Airport Authority, its three-year contract was for maintenance of security systems. The company maintained the airfield access system, the closed circuit television system and electronic badging.

Given the security sensitivities of Dulles airport, there are ironies in having some of its electronic security handled by a company with Middle East ties. After completing its three-year contract with Dulles, the company bid on a new contract but lost out in spite of being the lowest bidder.

TIES TO THE TWIN TOWERS—Securacom, beginning with its previous incarnation, Stratesec, unlike many other security firms, did not separate security consulting from providing security services. As a single-source provider of end-to-end security services, it offered everything from a diagnosis of existing systems, to hiring subcontractors, and to installing video and electronic equipment. It also offered armored vehicles and security guards.

The company emphasized continuing relationships with a few big long-term clients, including the World Trade Center, home to the Twin Towers. According to SEC filings, the World Trade Center and the Metropolitan Washington Airports Authority, were two of the company's three biggest clients in 1996 and 1997.

After the first attack on the World Trade Center, in 1993, the Port Authority of New York and New Jersey began a multimillion-dollar, multiyear revamping of security in and around the Twin Towers. As Burns and Roe Securacom, the company had previously done security studies on the World Trade Center. Securacom was hired along with many other contractors for the upgrade and was praised in security industry publications, although the board membership of former President Bush's son Marvin went unnoticed.

NO COMMENT—Marvin Bush had joined Securacom's board of directors in 1993, part of a new management team hired when Securacom separated from Burns and Roe, and he remained on the board through 1999.

The White House has not responded to repeated questions and requests for comment about Marvin Bush's relationship with Securacom. (Wirt Walker and other former management figures were interviewed by phone.)


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