Halliburton accused of stonewalling

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Halliburton unscathed by overcharge flap

ABC 28 -December 19
Washington-AP -- According to Vice President Cheney's former company Halliburton, the Pentagon had no business reading a company audit.

In fact, a Halliburton spokeswoman says a Pentagon auditor may have broken the law by reading the internal audit.

Asia Times -December 20 By Hussain Khan

TOKYO - The timely capture of Saddam Hussein virtually eclipsed, for a while, the embarrassing scandal involving the apparent US$128 million overcharging of US taxpayers by Halliburton, Vice President Dick Cheney's old firm, which received $7 billion in no-bid contracts for oil services and other work in Iraq. The total overcharge, revealed by a Pentagon audit, covers about $61 million for fuel and another $67 million for supplying army food services.

But investors in Halliburton and its engineering subsidiary Kellogg, Brown & Root (KBR) paid little heed to the uproar in Washington and the field day by Democratic presidential candidates excoriating what they called the apparent war-profiteering and sweetheart deals with Halliburton. Investors figure the firm once run by Cheney will continue to be favored and will continue to reap enormous profits. And that's how it's playing out.

Stock prices are rising and new contracts are still being awarded to the company. Group revenues surged 39 percent to $4.1 billion on the back of a stunning 80 percent revenue rise to $2.3 billion at the KBR engineering and construction subsidiary that won the government work. And this despite the fact that third-quarter earnings fell 38 percent to $58 million, or 13 cents a share, because of a loss on discontinued operations as well as litigation over asbestos.

The Pentagon awarded another $222 million worth of Iraq reconstruction work to Halliburton last week.

A Pentagon audit revealed that Halliburton's KBR subsidiary overcharged the government by as much as $61 million for supplying and transporting fuel in Iraq. No one claims that the company pocketed ill-gotten gains, and Texas-based Halliburton contends that it was forced to pay higher costs because it was overcharged by a supplier in Kuwait.

It also said that in other related work it saved US taxpayers as much as $164 million. President George W Bush was politically embarrassed and stung by allegations that the Halliburton overcharging confirmed that his administration was favoring big-business friends, even while excluding foreign critics of his war policy from bidding competitively on major reconstruction contracts in Iraq. He said Halliburton must repay the funds.

Halliburton has been doing everything in Iraq from repairing oil wells to delivering soldiers' mail and even preparing the display turkey Bush posed with when he visited troops in Baghdad on Thanksgiving. Some competitors have complained that the Pentagon has already given Halliburton so much work in Iraq's oil sector that it would be nearly impossible to dislodge the company even if, in future, bidding is allowed for the competitors. If they find blood, look out for piranhas

"This is a contract everybody is watching," said Steven Schooner, a professor of contract law at George Washington University law school. "If they find blood, they're going to set the piranhas loose. It's going to be a nightmare for Halliburton."

The Bush administration denies the charge that the Iraq war was fought for oil and that it waged the war to pay off business cronies of the White House. Nonetheless, the Pentagon findings on Halliburton overcharges are likely to fuel the allegations of favoritism, especially since it was revealed that the firm had been granted the contract to manage Iraq's oilfields, valued at up to $7 billion, without competition and without any bidding. Cheney's name inevitably surfaces.

Cheney denies that his connections and influence as vice president have improperly aided his old company. His links to Halliburton, however, have drawn intense scrutiny because he ran the company for five years and was given a $33 million payoff when he left to run for office. Before joining Halliburton he was secretary of defense, and in a position to know about and grant Pentagon contracts. Halliburton's military work has expanded over the past decade as the Pentagon has sought to increase its procurement ratio by outsourcing non-combat tasks to private contractors.

During the decade of Halliburton's extraordinary growth, Cheney was the defense secretary for four years, from 1989-93, and then the chief executive of the company for five years, from 1995-2000. As vice president, Cheney has maintained his contacts with energy-industry executives and solicited their views in developing US energy policy. The secrecy of those contacts - which the White House refuses to divulge - is the subject of a US Supreme Court lawsuit.

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printed from Halliburton accused of stonewalling on 2004-06-22 14:54:02