Chemical warfare and car bombings are just a few of the hazards working in war-torn countries such as Iraq and Syria. For Supreme Group BV, it’s the cost of doing business.
Dubai-based Supreme delivers fuel and food -- 100,000 meals a day -- to troops stationed in some of the most inhospitable parts of the world, including Liberia, Mali and Sudan. The perilous business, where contractors dodge bullets fired by the Taliban and explosives set by insurgents, has made the company’s majority owner, Stephen Orenstein, a billionaire.
“Our mantra is to provide the same quality of service in Rwanda or Somalia as we do for restaurant chains in Germany,” Orenstein, 49, said in a phone interview from his office in Dubai. “We took a developed world standard and brought it to the developing world.”
Orenstein’s biggest business has been supplying military personnel in Afghanistan. Since the start of the war there in 2001, Supreme’s revenue has increased more than 50-fold to $5.5 billion in 2011. According to Supreme’s chief financial officer, Mike Thorne, more than 90 percent of the company’s revenue is derived from its Afghanistan operations.
That’s about to change. With the withdrawal of NATO and American troops and the impending loss of a $10 billion food contract with the U.S. military, the company is projecting it will lose more than 75 percent of its sales by the end of 2014.
“We’re still a financially sound company, so I don’t view it as a collapse,” Thorne said by phone. “But we’re going to be a much smaller company.”
Lawsuits, Accusations
The company’s largest contract -- an exclusive deal to distribute food to U.S. military personnel in Afghanistan -- has been riddled with lawsuits and accusations, including the Department of Defense’s assertion that Supreme overcharged it by $757 million.
“The Pentagon lost control of this contract from the beginning and even today may be unable to recover hundreds of millions of dollars in potential overpayments,” said U.S. Representative John Tierney, the ranking Democratic member on the House Government Reform & Oversight Subcommittee on National Security, in a statement to Bloomberg News. “By keeping the money flowing to Supreme through noncompetitive contract extensions, the Defense Department unwisely and unnecessarily put U.S. taxpayers on the hook.”
The bickering has spilled over to new business. In April, Supreme sued the U.S. government in the Court of Federal Claims in Washington after the DLA awarded a new five-year, $10 billion food contract in June 2011 to Dubai-based competitor Anham FZCO LLC, which also supplies food to the U.S. military in Iraq, Kuwait and Jordan.