Quick Rise for Purveyors of Propaganda in Iraq

By DAVID S. CLOUD
Published: February 15, 2006

WASHINGTON, Feb. 14 — Two years ago, Christian Bailey and Paige Craig were living in a half-renovated Washington group house, with a string of failed startup companies behind them

Mr. Bailey, a boyish-looking Briton, and Mr. Craig, a chain-smoking former Marine sergeant, then began winning multimillion-dollar contracts with the United States military to produce propaganda in Iraq.

Now their company, Lincoln Group, works out of elegant offices along Pennsylvania Avenue and sponsors polo matches in Virginia horse country. Mr. Bailey recently bought a million-dollar Georgetown row house. Mr. Craig drives a Jaguar and shows up for interviews accompanied by his "director of security," a beefy bodyguard.

The company's rise, though, has been built in part by exaggerated claims about its abilities and connections, according to interviews with more than a dozen current and former Lincoln Group employees and associates, and a review of company documents.

In collecting government money, Lincoln has followed a blueprint taught to Mr. Bailey by Daniel S. Peña Sr., a retired American businessman who described Mr. Bailey as a protégé.

Federal contracts in Washington can supply easy seed capital for a struggling entrepreneur, Mr. Peña says he advised a youthful Mr. Bailey in the mid-1990's when the two men started a short-lived technology company. "I told him, 'When in trouble, go to D.C.,' and the kid listened," Mr. Peña said.

Mr. Bailey defends his company's record, saying, "Lincoln Group successfully executes challenging assignments." He added that "teams are created from the best available resources."

Lincoln won its contracts after claiming to have partnerships with major media and advertising companies, former government officials with extensive Middle East experience, and ex-military officers with background in intelligence and psychological warfare, the documents show. But some of those companies and individuals say their associations were fleeting.

Lincoln has also run into problems delivering on work for the military after its partnerships with more experienced firms fell apart, company documents and interviews indicate. The firm has continued to bid for new business from the Pentagon and has hired two Washington lobbying firms to promote itself on Capitol Hill and with the Bush administration.

"They appear very professional on the surface, then you dig a little deeper and you find that they are pretty amateurish," said Jason Santamaria, a former Marine officer whom the company once described as a "strategic adviser."

The company's work in Iraq, where Mr. Bailey and Mr. Craig visit from time to time to direct operations, is facing growing scrutiny.

The Pentagon's inspector general last month opened an audit of Lincoln Group's contracts there, according to two Defense Department officials. A separate inquiry ordered by Gen. George W. Casey Jr., the top American commander in Iraq, after disclosures late last year that Lincoln Group paid Iraqi publications to run one-sided stories by American soldiers, has been completed but not made public, military officials said.

A spokesman for General Casey, Lt. Col. Barry Johnson, declined to comment on Lincoln Group, citing the ongoing investigation.

In interviews, Mr. Bailey, 30, and Mr. Craig, 31, said they had succeeded by anticipating the military's need for help communicating with and influencing the Iraqi public, just as the insurgency was building. "We saw that it was very hard for the U.S. to do that work," Mr. Bailey said. "They didn't do media and outreach very well. We had local offices in a tough environment where traditional U.S. contractors would not operate."

He disputed suggestions that Lincoln had experienced difficulty delivering on work for the military, saying the firm had "successfully executed" more than 20 contracts from the Defense Department.

Lincoln's roster of advisers and other businesses assisting it has continually changed, Mr. Craig said, because "our work in often hostile environments has occasionally proved to be too risky or challenging for some of our partners."

Little in Mr. Bailey's background indicated he would end up doing propaganda work in Iraq. Born in Britain as Christian Jozefowicz, he changed his name when he graduated from Oxford University and moved to San Francisco during the late-1990's dot-com boom.

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