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Ayo Adeyeye

Ayo Adeyeye

Posted: July 8, 2010 11:11 AM

Last month, Arianna Huffington, HuffPost Editor-in-Chief, appeared on ABC's This Week on a panel with Liz Cheney, a former Bush Administration official. In an exchange over the BP oil disaster in the Gulf, Huffington accused Halliburton, the behemoth oil company who's one-time CEO was Ms. Cheney's father and former Vice President, Dick Cheney, of "defraud[ing] the American taxpayer hundreds of millions of dollars." In characteristically caustic Liz Cheney style, Cheney objected to the charge by questioning Huffington's citizenship as a resident of Planet Earth.

PolitiFact, a fact-checking website and project of the St. Petersburg Times whose site proclaims a mission to "help you find the truth in politics" joined the debate and labeled Huffington's claim "Half True" on its six-pronged "Truth-O-Meter," denoting that "the statement is accurate but leaves out important details or takes things out of context." While PolitiFact concedes that all evidence suggests that Halliburton wasted hundreds of millions of taxpayer dollars, whether the waste amounts to fraud "is still being examined," they report. Let's see if we can't speed up that examination.

In November 2003, just less than one year after the start of the War in Iraq, Newsweek ran an article entitled "The $87 Billion Money Pit," reporting numerous allegations of "overspending, favoritism and corruption" against Halliburton and other US contractors engaging in Iraq reconstruction. In the article, Halliburton was accused of gouging prices on imported fuel to the tune of $300 million. Citing the Newsweek piece in her opening statement at a Senate Democratic Policy Committee (DPC) hearing that same month, then-Senator Hillary Clinton (D-NY) touted the need for transparency and greater oversight in Iraq reconstruction contracting, saying "we need to assure the American people that their money is being spent wisely, assure the Iraqi people that it is being spent in their interest and assure the world that it is not being spent for profiteering by American companies."

Since the start of the Iraq War, the DPC, a Senate Leadership Committee established by law in 1947 concurrently with a Republican Policy Committee, has held more than two dozen oversight hearings on waste, fraud, and abuse in Iraq reconstruction contracting. Halliburton and its subsidiary Kellog, Brown and Root (KBR) have been the subject of many of them. Chaired by Senator Byron Dorgan (D-ND), these hearings have "unearthed numerous examples of contracting abuse, including the inappropriate awarding of major contracts to Halliburton; billions of dollars in unsubstantiated costs and overcharges on everything from fuel, to meals for the troops, to hand towels; and the delivery of unsafe water to our troops in Iraq, with which the troops showered and brushed their teeth," Dorgan said in a statement back in 2008. Throughout its investigations into Halliburton, the Committee also uncovered efforts by the Pentagon and the Bush Administration to protect Halliburton from close scrutiny and criticism of its dubious practices including, but not limited to, retaliation against whistleblowers.

Charles Smith, the senior civilian overseeing a multi-billion dollar contract awarded to KBR by the Pentagon, was forced out of his job when he refused to approve payment to KBR of more than $1 billion in questionable spending for which Army auditors had determined KBR lacked credible data or records. Bunnatine Greenhouse, once the most senior civilian contracting official at the Army Corps of Engineers, was removed from her job after raising concerns over the award of a $7 billion sole source, no compete, cost plus contract to KBR to restore Iraq's oil production. Greenhouse testified at a 2007 DPC hearing that the award of the contract to KBR represented the worst abuse she had witnessed in her 23-year career.

Still unsatisfied? Halliburton's transgressions continue. In April 2007, the Pentagon misled Congress about multiple allegations that KBR was providing contaminated water to US troops which, according to KBR's own internal reports, could have caused "mass sickness or death." Interestingly, the General whose testimony at a Senate Armed Services Committee hearing misled Members was the same official who ordered the removal of Charles Smith from his post after he objected to KBR's questionable $1 billion paycheck.

In March of 2008, then-Senator Barack Obama (D-IL), along with Senator John Kerry (D-MA) introduced a bill aimed at preventing government contractors like KBR from setting up shell companies in foreign jurisdictions to avoid payroll taxes. Then-Rep. Rahm Emanuel (D-IL) and Rep. Brad Ellsworth (D-IN) introduced companion legislation in the House. In a press release, Obama said, "This legislation would close a tax loophole that has been exploited by Kellogg Brown & Root (KBR), a former subsidiary of Halliburton Corp. This loophole allowed KBR and potentially other government contractors to set up shell companies in the Cayman Islands in order to avoid paying payroll taxes for their American employees." In his press release, Senator Kerry said "KBR is abusing the public trust at the taxpayer's expense, and our reform will close the loophole that enables big corporations to take advantage of the American people." According to Kerry's office, the loophole that the legislation was intended to close enabled KBR to fleece American taxpayers by nearly $100 million a year. The Fair Share Act of 2008, which was co-sponsored by then-Senator Hillary Clinton was not reported out of the Senate Finance Committee.

Arguably, the most reckless example of KBR's abuse was the subject of a May 2009 DPC hearing, where Senators heard testimony and received internal Pentagon documents showing that in 2007 and 2008, KBR received multi-million dollar bonuses for work that led to the electrocution deaths of US soldiers. In 2008, a Staff Sergeant was electrocuted to death while showering at a US military installation in Baghdad. The Committee obtained testimony based on internal KBR inspection records that KBR had been aware of the electrocution hazard and claimed to fix the problem, meanwhile hiring unqualified third-country electricians and permitting the shocks to persist. Despite the harm done to our troops, KBR was awarded its $83.4 million bonus for the shoddy electrical work done in Iraq in 2007, more than half of which came after the Defense Contract Management Agency warned about ongoing problems with the electrical work.

KBR's infamously reckless conduct throughout the reconstruction process in Iraq is egregious and fundamentally undermines the US mission there. Each time Congress appropriates funds toward war efforts, the government solicits a commitment from the American taxpayer. The American people deserve to have their commitment met with responsible stewardship. Similarly, if it is to live up to its mission statement, PolitiFact has a responsibility to its readers to unambiguously separate fact from fiction and avoid the pitfall of equivocation in the face of controversy by misguided attempts at reaching some artificial middle ground.

At this point, it is plain that KBR's practices have traversed the realm of the wasteful, waded beyond that of the fraudulent, and are now comfortably into the abyss of the outright criminal, so unless PolitiFact's Truth-O-Meter takes into account understatement, its rating of Huffington's charge as "Half True" is unjustified and places it squarely on a long and unsavory list of characters who have deferred to KBR in the face of persistent and well-documented abuse.