A U.S. military contractor has been indicted by the Justice Department of defrauding the United States government of “tens of millions of dollars,” Rachel Maddow reported Tuesday on MSNBC. The Los Angeles Times said the fraud may be worth over $1 billion dollars. The Kuwait-based company, Agility (formerly known as Public Warehousing Co.), is the main food supplier to the U.S. military in Iraq and has received $8.5 billion in contracts since 2003.

"And this, once again, was created by the Bush administration," said Naomi Klein. "It created what one former CPA official -- Coalition Provision Authority official [Franklin Willis] -- described it as a 'free-fraud zone'" in 2005. The CPA was the transitional Iraqi government after the removal of Saddam Hussein.

Agility has been “temporarily suspended” but not banned from receiving new military contracts, and the firm says the allegations do not affect its present contracts, according to Reuters News.

Klein, a guest on Maddow’s program, said the prevalence of war profiteering and corruption can largely be attributed to the Bush administration’s embracement of privatizing government responsibilities. In Klein’s book, No Logo, which enjoys its tenth anniversary this Friday, critiques the corporate trends in the 1990s of increased branding and marketing while contracting out the production of goods and services to private firms.

“That’s been the most significant development in the world of branding – is the application of this corporate logic to government,” said Klein. “This war [in Iraq] is the most privatized war in modern history, and Donald Rumsfeld designed it this way – as a for-profit enterprise.”

She drew the parallels between the corporate trends of the ’90 and the Bush administration’s approach to government. “In the same way that Nike outsources all of its production to contractors in China and Thailand, well [Rumsfeld] would outsource all of the work of invasion and occupation to Blackwater and Armored Group and Halliburton,” she continued.

“That was Rumsfeld’s transformation vision.”

Klein said this kind of corruption is inevitable in the government’s current approach in carrying out wars, comparing it to the surge in “sweatshop scandals” during the ‘90s where retailers denied any responsibility for the illegal and immoral activities of their suppliers. “You lose control when you are pitting all of your contractors against each other in that way,” she said.

The news coincides with Transparency International’s recent finding that Iraq and Afghanistan are among the five most corrupt countries in the world, ranking 5th most and 2nd most, respectively. The swelling of this kind of corruption presents new challenges in the United States' efforts in those countries, as much of its success in transforming their political cultures depends on fostering civilian trust in their governments.

This video is from MSNBC's The Rachel Maddow Show, broadcast Nov. 17, 2009.

Download video via RawReplay.com

Additional reporting by Sahil Kapur