By now, most of us have seen the startling, repellent photographs of American soldiers gloating and abusing Iraqi prisoners in Baghdad's Abu Gharib prison.

If you're wondering why I'm discussing this in the Fool pages, it's because a pair of publicly traded Pentagon contractors, Titan (NYSE:TTN) and CACI International (NYSE:CAI) are mired in the growing scandal.

According to The New Yorker, a leaked 53-page report, written by Maj. Gen. Antonio M. Taguba, documents a pattern of torture and even rape, committed in an atmosphere of intimidation designed to "loosen up" prisoners for questioning by government and private interrogators. A Titan translator is merely named as a witness to the behavior, but the report holds far more trouble for CACI.

It details Taguba's suspicion that two of that firm's employees were "either directly or indirectly responsible for the abuse at Abu Gharib." It recommends their immediate dismissal, alleging that one "clearly knew his instructions equated to physical abuse."

CACI has responded that one of the persons named has never been a CACI employee. In a conference call this morning, Chair, President, and CEO Jack London reiterated that it would take no action against the confirmed employee, unless it receives word from the government regarding the allegations. To date, the company has seen only press stories and copies of the leaked report, nothing official.

Even then, the company policy is to punish employees responsible for "illegal" activity. Sounds tough, but experts have pointed out that given the dubious legal standing of nonmilitary personnel in a war zone, it might be possible for a contractor to be legally inculpable, no matter how heinous the conduct.

You might think it would be in CACI's best interest to reassign the employee pending an investigation, but he remains at the same duty, doing -- as one member of the management team described it -- "a damn good job." Whoah! That is exactly the kind of unrepentant comportment that's likely to draw fire from members of Congress, who are already hopping mad and looking for whipping boys.

Soothed investors bid the stock up 4% this morning, but they ought to keep in mind that this issue is much more than the "bit of stink" or "investigation du jour" that London called it. Legislators love their witch-hunts, and innocent or guilty, it doesn't look to me like CACI is doing nearly enough to ward off a trip to the pyre.

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Fool contributor Seth Jayson owns no stake in any company mentioned above. View his Fool profile here.