THE BLOG
02/28/2006 12:58 pm ET | Updated May 25, 2011

Fat Tuesday for Halliburton

The New York Times' James Glanz reported yesterday that the Army decided to ignore the advice of its own auditors and pay Halliburton for just about every expense it claimed under its the Iraqi oil contract.

The Pentagon is withholding just 3.8 percent of the questionable charges, a miniscule amount compared to the 56.4 percent average of disputed payments withheld by the military from all Iraq contractors in 2005. As Rick Barton of the Center for Strategic and International Studies (one of the more conservative national security think tanks inside the Beltway) observes, with that kind of slap-on-the-wrist penalty, it's hard to see what the Army's scrutiny of the company's practices amounted to in the end: "When they say, 'We questioned their business model or their business decisions' -- well, yeah, so what? ... You questioned it but there was no result."

There's a lot more to this story than Glanz had space to report.

First off, at the risk of sounding a bit jaded, it's worth pointing out that in a way this is old news (though no less outrageous for being so). I.e., this is not the first time the Pentagon ignored the advice of its own auditors when Halliburton submitted a bill, as Rep. Henry Waxman notes in his scathing response to the Army's decision.

As Waxman has meticulously documented in a series of letters that document the many Halliburton Iraq scams, Halliburton subsidiary KBR (Brown and Root Services) originally received the contract back in 2003 "because it previously received a task order to prepare a contingency plan for Iraq's oil sector."

He is referring to a task order that was given out in November 2002, even before the Pentagon told Senator Breaux that it would be awarded through a competitively bid process.

Connecting another dot: In October of 2002, Vice President Cheney's staff "hosted an informal meeting with industry executives" to discuss how to "secure Iraq's oil fields and rehabilitate them." In attendance: ExxonMobil, ChevronTexaco, ConocoPhillips and Halliburton. (See Thaddeus Herrick, "U.S. Wants to Work in Iraq, January 17, 2003).

What connection did that meeting have to the oil contract? For one, it happened about a month before the task order Waxman is referring to was given to Halliburton.

Then, months later, a second oil contract was given to Halliburton without competitive bidding, an "action coordinated with VP's office," according to an email (reportedly from the Army Corps' Stephen Browning to Douglas Feith) that reveals the action not only was taken in consultation with someone in Cheney's office, but was taken with the approval of "DepSecDef" -- i.e. Paul Wolfowitz. (To follow that tentacle further, go here.)

In yesterday's letter, Waxman pointed out that "The Government Accountability Office later investigated this contingency contract" and concluded that it was not awarded "in accordance with legal requirements" because "preparation of the contingency support plan for this mission was beyond the scope of the contract." In other words, the Pentagon representative not only lied when he told Senator Breaux they would give the first contract out properly -- i.e. according to competitive contracting laws -- but the way they did it was flat illegal.

Of course, no one in Congress ever bothered to follow up by charging anyone or demanding a clear explanation.

The GAO added that the work "should have been awarded using competitive procedures," just as the Pentagon told Breaux it would be.

That the second oil contract was given out without competition is even worse, since there was no emergency to justify the no-bid action. This is the same contract that caused the Army Corps top civilian contracting expert -- Bunnatine Greenhouse -- to blow the whistle, an action for which she was demoted.

Greenhouse says she was hired by the Army Corps in 1997 to prevent what she called "casual" and "clubby" contracting practices. But when the Bush administration came to power, all of that changed:

"I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have witnessed during the course of my professional career," Greenhouse said.

Perhaps that's an understatement -- after all KBR has currently received 52 percent of the value of all military contracts awarded for Iraq work, according to a Pentagon auditors' report cited by Waxman and Senator Dorgan.

So it's no surprise that the Pentagon, which is riddled with political appointees tied to the Cheney-Wolfowitz-Rumsfeld cabal -- would continue extending a special favoritism to the Army's number one contractor that is costing both U.S. taxpayers and (because $1.5 billion of the contract is being paid out of Iraqi oil funds, as the NYTimes reports) the Iraqi people.

What's also astonishing about the Pentagon's recent decision is that it is being made without any mention of the massive corruption involved in Halliburton's execution of this particular contract.

If you use the search engine on the Halliburton Watch site and the CorpWatch site, you'll find various stories about the subcontractor that Halliburton used -- Altanmia, stories that reveal how much more corruption there has been in association with this particular contract than the Times or even Waxman had the space to recount.

E.g., there is some evidence, gleaned from internal memos from the U.S. Embassy in Kuwait that the political protection extended far beyond the Pentagon and the VP's office, for reasons that still have not been made clear. E.g., the U.S. ambassador to Kuwait pressured Halliburton to use Altanmia under this contract as a subcontractor, despite evidence that the subcontractor had defrauded the government. The documents also revealed that KBR officers was openly soliciting bribes from subcontractors and "that anyone visiting their seaside villas at the Kuwaiti Hilton who offers to provide services will be asked for a bribe."

The Pentagon later stonewalled and refused to help an investigation by Kuwaiti MPs, just as it helped Halliburton stall an investigation into how Iraqi funds were used to pay off the contract.

Also, at one point the Department of Justice was supposedly conducting a criminal investigation. But like so many other investigations of Halliburton, that one also seems to have disappeared into one of the kleptocracy's many rabbit-holes.

And as a result, the Army Corps of Engineers is free to give more contracts to Halliburton, not only in Iraq, but for the post-Katrina reconstruction contracts at home where, instead of rushing to aid the most neglected and most impacted, the Bush administration's incompetence and cronyism opened the floodgates to an orgy of profiteering that has greatly prolonged the human suffering of nearly a million Americans, including the dozens of immigrant workers who the Gulf Coast Commission on Reconstruction Equity reported today were brought to Mississippi by a fourth-level subcontractor for KBR, and forced to live in rat-infested homes before having to flee without pay after threats were made in the middle of night that "La Migra" (i.e. the INS) was on its way.

From its remote perch at the top of the multi-layered contractual hierarchy, Halliburton can easily claim to have no knowledge of that incident. And yet -- who knows -- if the workers get caught, Halliburton may profit once again from others' misfortune. After all, it did get another Army Corps contract to build an "immigration emergency" detention facility. Now that's a way to get people coming and going! (And if you complain, is it paranoid to suggest you may be one of those "people" ?? According to the company's own press release, the contract could also be used to develop "a plan to react to a national emergency.")

With all these opportunities, it's not much of a surprise that Halliburton had its most profitable year in 2005.
It seems that for Cheney's cronies it's always "laissez les grands temps roulez" in Iraq and at corporate HQ's in Houston.

Yes, it's been a long party for Halliburton on the taxpayer's tab. But just as Fat Tuesday is one of the last days of wildness and foolishness before it becomes time to adopt a kind of Lenten self-discipline and resolve, the pious profiteers may soon need to reflect upon what has gone wrong, atone for the sins of racism, war profiteering, and fraud, and rebuild not only their reputation, but the broken infrastructure that has so many people suffering at home and abroad.