The only problem is part of the caption; 'former sniper'. I'm not sure what emphasis this minor fabrication gives the photo, in contrast to perhaps 'former Marine'. Would that still have been an issue in context?
There's also the 'false location' which sets up the series, but that's a set up, not a specific reference made either subjectively in the photo or to it through a caption.
The filmmaker Werner Herzog does a similar kind of thing all the time, with fabrications. He calls it 'ecstatic truth' and gets away with it in the name of art. Magnum's internal conflict, of course, is that it is now made up of art photographers. The photographer, like most (hence Magnum's problems), doesn't have faith in straight photojournalism and obviously felt the need to create a narrative to give his images more weight in presentation. The real question should be; is there a greater good being aimed at? All photographs lie or skirt around the truth as we think we know it.
I should add, I'm trying to understand this from the perspective of the photographer - since this is a photography forum. I put it down to pressure.
The subject's beef is that it hurts his 'integrity' - he hasn't lost his job - I'd argue he'll probably make some new friends because of it. And possibly money...