HelluvABurden

Chron.com | Report to slam Halliburton on water woes

2006-04-07T10:10:00.000-04:00

By DAVID IVANOVICH
Copyright 2006 Houston Chronicle Washington Bureau

WASHINGTON - Halliburton Co. exposed troops in Iraq to contaminated water even after a former company worker publicly accused the Houston-based contractor of failing to chlorinate water supplies, Senate Democrats alleged Thurs- day.

Back in January, a one-time water purification specialist for Halliburton subsidiary KBR told a Democratic panel he tested water used for showers, shaving and washing clothes at Camp Junction City in Ramadi last March and found it had not been treated with chlorine.

Sen. Byron Dorgan, D-N.D., chairman of the Senate Democratic Policy Committee, said he will release a report today from an Army doctor confirming that water contamination problems continued even after the issue was raised on Capitol Hill.

Halliburton allowed troops to bathe in water pumped from the Tigris River that tested positive for E. coli and coliform bacteria, Dorgan said.

Halliburton spokeswoman Cathy Mann pointed to a March 14 statement on water quality that said, "KBR has worked closely with the Army to develop standards and take action to ensure that the water provided in Iraq is safe and of the highest quality possible.

"Halliburton and KBR are committed to doing the right thing because we care about the health and welfare of the troops, our employees and all those who serve and work in Iraq."

Halliburton overcharged for Iraq oil work: report

2006-03-31T22:18:00.000-05:00

By Andrea Shalal-Esa
Reuters
Tuesday, March 28, 2006; 7:30 PM

WASHINGTON (Reuters) - Halliburton Co., the world's second largest oil services company, repeatedly overcharged taxpayers and provided substandard cost reports under a $1.2 billion contract to restore Iraq's southern oil fields, according to a new report by U.S. Rep. Henry Waxman.

Waxman, a California Democrat, said Democratic staff members of the House Committee on Government Reform examined a series of previously undisclosed government audits and correspondence that criticized Halliburton's performance under the "Restore Iraqi Oil 2" (RIO2) contract.

The documents, which cover the period from January 2004 to July 2005, painted "an absolutely abysmal picture of Halliburton's RIO2 work" and cited profound systemic problems, misleading and distorted cost reports, he said.

Halliburton, a Texas-based company formerly run by Vice President Dick Cheney, dismissed the committee report as partisan and said it focused on old issues with the two-year contract that have been resolved.

"After two years and from thousands of miles away, it is easy to criticize decisions and actions that were based on urgent mission requirements and severe time constraints," the company said in a statement.

Halliburton, the largest private contractor in Iraq, said the contract went through "countless changes" and review by at least 15 different government contracting officials.

Waxman, who has introduced legislation to limit sole-source contracts in the future, said lawmakers did not know much about what had happened with the contract since July 2005, adding: "From what we can see, major problems remain."

Halliburton said its engineering and construction arm KBR, which is gearing up for an initial public stock offering, had received 30 task orders under the contract to date, for a total current value of nearly $750 million and work was ongoing.

The Democratic report said that, in addition to the RIO 2 contract, Halliburton was also paid $13.5 billion for providing troop support under a logistics contract with the U.S. Army, and $2.4 billion under the original RIO contract to import fuel into Iraq and rebuild Iraq oil infrastructure.

The Pentagon's Project and Contracting Office (PCO) found that Halliburton repeatedly overcharged the government, Waxman said, citing the documents.

PCO put KBR on notice in January 2005 that it could cancel the contract for cause. It lifted the notice six months later, saying KBR demonstrated "adequate" compliance. In January, it exercised one of three one-year options to extend the deal.

In one case, the agency said Halliburton tried to inflate cost estimates by $26 million. In another, it said Halliburton claimed costs for laying concrete pads and footings that the Iraqi Oil Ministry had already installed.

The report said the same agency reported Halliburton was "accruing exorbitant indirect costs at a rapid rate," while the Defense Contract Audit Agency challenged $45 million of $365 million in costs as unreasonable or unsupported.

The PCO also cited "profound systemic problems" with Halliburton's cost reporting and said some documents were stripped of information that would allow tracking of details.

It said Halliburton's work under RIO 2 was 50 percent late and officials refused to cooperate with oversight officials.

Halliburton, run by Cheney from 1995-2000, has been under scrutiny for its contracts in Iraq.

© 2006 Reuters

Halliburton, in trouble again, to float KBR - Business - Business - smh.com.au

2006-03-30T09:11:00.000-05:00

NEW YORK: Halliburton, the American energy and construction group which used to be run by US vice-president Dick Cheney, is understood to have hired Goldman Sachs to run the $US9 billion ($12.8 billion) float of its Kellogg Brown & Root subsidiary.

KBR has been heavily criticised for its dominant role in war-torn Iraq as major contractor to the US military, the contracts won apparently without arms' length tenders being called, and for heavily overcharging.

In Washington on Tuesday frustrated US Government auditors pleaded, cajoled and finally threatened Halliburton executives who repeatedly failed to comply with government reporting requirements under a key Iraq contract with a $US1.2 billion potential price tag, newly released documents show.

The documents, along with a report, were issued on Tuesday by the Democratic staff of the House Committee on Government Reform.

The 15-page report cites findings by auditors that Halliburton overcharged - "apparently intentionally" - on the contract by using hidden calculations and attempted, in one instance, to invoice the US Government for $US26 million in costs it did not incur.

The report blamed the Department of Defence for awarding the contract despite warnings from auditors that Halliburton's cost estimating system had "significant deficiencies".

Halliburton remains the largest private contractor in Iraq.

The contract, awarded in January 2004, was one of three Iraq contracts awarded to Halliburton.

While the other two agreements - one for supplies for US troops and the other for fuel and oil industry repairs - have faced heavy criticism as no-bid contracts, Mr Waxman and his staff said Tuesday's report was the first to focus on the third Halliburton contract, for the repair of oilfields in southern Iraq, which was awarded after a competitive bidding process.

Melissa Norcross, a spokeswoman for Halliburton, dismissed the report as "partisan".

Halliburton is planning to float 20 per cent of KBR in the next few months and the remaining 80 per cent in a year's time. KBR has been selling some of its assets, including Kellogg Brown Root Production Services, based in Aberdeen, Scotland, for £100 million ($248 million) to its own management two weeks ago.

The sale came amid renewed speculation about the future of the Plymouth-based Devonport group in the UK, which refits Britain's nuclear submarine fleet and is 51 per cent owned by KBR

Report Adds to Criticism of Halliburton's Iraq Role - New York Times

2006-03-29T00:22:00.001-05:00

Even as a Halliburton subsidiary was absorbing harsh criticism of its costs on a 2003 no-bid contract for work in Iraq, the government officials overseeing a second contract wrote that the company was running up exorbitant new expenses on similar work, according to a report issued yesterday by the staff for the Democrats on the House Government Reform Committee.

The report, prepared for a frequent critic of Halliburton, Representative Henry A. Waxman of California, is based on previously undisclosed correspondence and performance evaluations from 2004 and 2005.

The documents show that the government's contracting officers became increasingly frustrated as they tried to penetrate what they considered to be inaccurate or misleading progress reports and expense vouchers filed by the subsidiary, Kellogg Brown & Root.

In August 2004, one of the officers wrote to the company that "you have universally failed to provide adequate cost information as required."

A few months later, after the company was served with a "cure notice," in which the government threatened to terminate the contract if performance was not improved, or "cured," another officer said he was writing "in sheer frustration with the consistent lack of accurate data."

Kellogg Brown & Root's second contract, awarded in January 2004 for rebuilding oil infrastructure in southern Iraq, has a maximum value of $1.2 billion. A company spokeswoman, Melissa Norcross, said that the report was "as devoid of context as it is new information" and that many of the issues raised by the contracting officers had been resolved.

The company, Ms. Norcross said, was forced to work with an ever-shifting cast of oversight organizations and at least 15 government contracting officials. "With each change, the company adjusted to meet the needs of its customer," she said, "all while operating in an extremely hostile war zone."

But Mr. Waxman, the ranking Democrat on the committee, said the report showed that the company had "actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract."

William L. Nash, a retired Army general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones, said the unusually revealing documents laid bare "a microcosm of all the ills" of the Iraq rebuilding effort. "This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground," he said.

The second contract was not terminated after the cure notice, and contracting officers later noted improvements in some areas. But the company received what appears to be a rebuke when it was given nothing out of a possible $7.9 million in socalled award fees for its first year of work on the contract. The award fees are incentives given by the government to reward good performance.

An award fee given for a later period, roughly the first half of 2005, was about 20 percent of the maximum, which Mr. Nash, who has been involved in determining such fees, described as extraordinarily low.

Both Kellogg Brown & Root contracts called for things like repairing oil wells and pipelines, installing power generators at oil facilities and importing fuel to Iraq. The first contract, worth $2.4 billion, generated enormous controversy after Pentagon auditors questioned more than $200 million in fuel delivery costs.

Critics like Mr. Waxman called the challenged costs overcharges, a description rejected by the company, which claimed a measure of vindication last month when the Army overruled the auditors and reimbursed nearly all of the delivery charges.

The new report, which says that Pentagon auditors have questioned $45 million of the $365 million in costs they reviewed, may revive the battle. A spokesman for the Defense Contract Audit Agency confirmed those figures.

Responding to the numbers, an official with Kellogg Brown & Root said, "Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only."

But what are likely to be seen as the most striking portions of the report are those that cite the variously stern, heated and even anguished language of contracting officers trying to bring the company to heel.

"As I have said in numerous meetings, KBR's lack of cost containment and funds management is the single biggest detriment to this program," one officer, Maj. Michael V. Waggle, wrote in the cure notice. He noted that the company had listed an impossibly high cost overrun of $436,019,574 on one job, charges of $114,308 for an oil spill cleanup that failed to remove any oil and another set of tasks in which the overruns were 36.9 percent of all costs.

The slides used in presentations during the deliberations of the board that determined the first award fee are almost equally eye-catching. On one slide, covering the company's success at meeting its planned schedules, a section labeled "Strengths" bears only the notation "N/A," presumably meaning no answer or not applicable. The "Weaknesses" section contains four detailed items.

Report Adds to Criticism of Halliburton's Iraq Role - New York Times

2006-03-29T00:22:00.000-05:00

Battle Creek Enquirer - Whistleblower, "community heroes" honored

2006-03-25T12:35:00.000-05:00

Bunnatine Greenhouse describes leadership as "taking the responsibility to do what is right and make a difference," so she seemed to fit right in with local leaders and activists in Battle Creek.

Greenhouse, a former senior contracting official of the U.S. Army Corps of Engineers, made headlines when she testified against Halliburton — one of the world's largest providers of oil and gas services — alleging specific instances of fraud, waste and other irregularities by Halliburton in regard to its operations in Iraq.

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Greenhouse was the key speaker and guest of honor at a Community Heroes Mixer held Friday at McCamly Plaza. The event honored both Greenhouse and community members who have created positive change in the local area.

"I am so honored to be in Battle Creek and you all have etched something on my mind and in my heart," Greenhouse said. "This is an activist community and people here work to improve this community for their neighbors. I am blessed to have had the Battle Creek experience."

The South Central Michigan American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), PheNix Concepts, a local Concerned Citizens group and Families Against Murder/For Equal Justice (F.A.M.E.) sponsored Greenhouse's visit. The evening was emceed by Richard Frantz, president of the South Central Michigan AFL-CIO, Reba Harrington of PheNix Concepts and Mary Knapp, a community activist.

Several dozen community members were awarded certificates on behalf of PheNix Concepts and the AFL-CIO for "outstanding community leadership and unselfish service."

Trace Christenson, a reporter for the Enquirer was an award recipient. A complete list of winners and their accomplishments will be published at a later date.

Greenhouse was presented with a T-shirt from F.A.M.E. with a list of victims of local unsolved murders on the back, which she commented she will wear in Washington with pride. Mildred Mallard, owner of ABC Boutique in Battle Creek presented Greenhouse with a collectible statue of Sojourner Truth.

"We are so proud that you shared your story with us. You remind of us so much of Sojourner," Mallard said. "She said speak the truth and we want you to continue to speak your truth."

After the awards, Greenhouse — joined by her lawyer Michael Kohn — delivered a passionate speech on her demotion and dismissal from her position at the Army Corps of Engineers. A video of an Enquirer interview with Greenhouse is available online at battlecreekenquirer.com.

"I was dismissed from my job because I did my job too well," Greenhouse said. "I am now fighting the most important fight of my career and I am fighting for the people. Please know that Battle Creek's support gives me the strength to go on fighting."

Chron.com | Firm Failed to Protect U.S. Troops' Water

2006-03-16T11:22:00.000-05:00

By LARRY MARGASAK Associated Press Writer
© 2006 The Associated Press

WASHINGTON — Halliburton Co. failed to protect the water supply it is paid to purify for U.S. soldiers throughout Iraq, in one instance missing contamination that could have caused "mass sickness or death," an internal company report concluded.

The report, obtained by The Associated Press, said the company failed to assemble and use its own water purification equipment, allowing contaminated water directly from the Euphrates River to be used for washing and laundry at Camp Ar Ramadi in Ramadi, Iraq.

The problems discovered last year at that site _ poor training, miscommunication and lax record keeping _ occurred at Halliburton's other operations throughout Iraq, the report said.

"Countrywide, all camps suffer to some extent from all or some of the deficiencies noted," Wil Granger, Theatre Water Quality Manager in the war zone for Halliburton's KBR subsidiary, wrote in his May 2005 report.

AP reported earlier this year allegations from whistleblowers about the Camp Ar Ramadi incident, but Halliburton never made public Granger's internal report alleging wider problems.

The water quality expert warned Halliburton the problems "will have to be dealt with at a very elevated level of management" to protect health and safety of U.S. personnel.

Halliburton said Wednesday it conducted a second review last year that found no evidence of any illnesses in Iraq from water and it believes some of its earlier conclusions were incomplete and inaccurate. The company declined to release the second report.

The company said it has "worked closely with the Army to develop standards and take action to ensure that the water provided in Iraq is safe and of the highest quality possible."

Halliburton was headed by Vice President Dick Cheney for several years before he ran for vice president. Its KBR subsidiary, also known as Kellogg Brown & Root, works under contract to provide a number of services to the U.S. military in Iraq, including providing water and purifying it.

The contaminated, non-chlorinated water at Ar Ramadi was discovered in March 2005 in a commode by Ben Carter, a KBR water expert at the base. In an interview, Carter said he resigned after KBR barred him from notifying the military and senior company officials about the untreated water.

A supervisor at Ar Ramadi "told me to stop e-mailing" company officials outside the base and warned that informing the military "was none of my concern," Carter said. He said he threatened to sue if company officials didn't let him be examined to determine whether he suffered medical problems from exposure to the contaminated water.

Granger's report cited several countrywide problems:

_A lack of training for key personnel. "Theatre wide there is no formalized training for anyone at any level in concerns to water operations."

_Confusion between KBR and military officials over their respective roles. For instance, each assumed the other would chlorinate the water at Ar Ramadi for any uses that would require the treatment.

_Inadequate or nonexistent records that could have caught problems in advance. Little or no documentation was kept on water inventories, safety stand-downs, audits of water quality, deliveries, inspections and logs showing alterations or modifications to water systems.

_Relying on employees the company identified as semiskilled labor, and paid as unskilled workers in the pay structure.

The report said the event at Ar Ramadi could have been prevented if KBR's Reverse Osmosis Units on the site had been assembled, instead of relying on the military's water production facilities.

"This event should be considered a 'near miss' as the consequences of these actions could have been very severe resulting in mass sickness or death," Granger wrote.

The report said that KBR officials at Ar Ramadi tried to keep the contamination from senior company officials.

"The event that was submitted in a report to local camp management should have been classified as a recordable occurrence and communicated to senior management in a timely manner," Granger wrote. "The primary awareness to this event came through threat of domestic litigation."

Beginning last May, Halliburton said it began using its equipment to remove contaminants, bacteria, and viruses in Ar Ramadi, and disinfect the water with chlorine. The company said KBR has worked closely with the Army to develop safe water standards.

It said its subsequent review in August-September 2005 found nonpotable water used for washing "was effectively filtered" to remove at least 99 percent of the parasite giardia and 90 percent of viruses. The Ar Ramadi water also tested negative for bacteria, Halliburton added.

Army to Pay Halliburton Unit Most Costs Disputed by Audit - New York Times

2006-02-27T10:14:00.000-05:00

By JAMES GLANZ
The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.

The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs.

Under the type of contract awarded to the company, "the contractor is not required to perform perfectly to be entitled to reimbursement," said Rhonda James, a spokeswoman for the southwestern division of the United States Army Corps of Engineers, based in Dallas, where the contract is administered.

The contract has been the subject of intense scrutiny after disclosures in 2003 that it had been awarded without competitive bidding. That produced criticism from Congressional Democrats and others that the company had benefited from its connection with Dick Cheney, who was Halliburton's chief executive before becoming vice president.

Later that year auditors began focusing on the fuel deliveries under the contract, finding that the fuel transportation costs that the company was charging the Army were in some cases nearly triple what others were charging to do the same job. But Kellogg Brown & Root, which has consistently maintained that its costs were justified, characterized the Army's decision as an official repudiation of those criticisms.

"Once all the facts were fully examined, it is clear, and now confirmed, that KBR performed this work appropriately per the client's direction and within the contract terms," said Cathy Mann, a company spokeswoman, in a written statement on the decision. The company's charges, she said, "were deemed properly incurred."

The Pentagon's Defense Contract Audit Agency had questioned $263 million in costs for fuel deliveries, pipeline repairs and other tasks that auditors said were potentially inflated or unsupported by documentation. But the Army decided to pay all but $10.1 million of those contested costs, which were mostly for trucking fuel from Kuwait and Turkey.

That means the Army is withholding payment on just 3.8 percent of the charges questioned by the Pentagon audit agency, which is far below the rate at which the agency's recommendation is usually followed or sustained by the military — the so-called "sustention rate."

Figures provided by the Pentagon audit agency on thousands of military contracts over the past three years show how far the Halliburton decision lies outside the norm.

In 2003, the agency's figures show, the military withheld an average of 66.4 percent of what the auditors had recommended, while in 2004 the figure was 75.2 percent and in 2005 it was 56.4 percent.

Rick Barton, co-director of the postconflict reconstruction project at the Center for Strategic and International Studies in Washington, said despite the difficulties of doing business in a war zone, the low rate of recovery on such huge and widely disputed charges was hard to understand. "To think that it's near zero is ridiculous when you're talking these kinds of numbers," he said.

The Halliburton contract is referred to as a "cost-plus" agreement, meaning that after the company recovers its costs, it also receives various markups and award fees. Although the markups and fees are difficult to calculate exactly using the Army figures, they appear to be about $100 million.

One of Halliburton's most persistent critics, Representative Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform, said in a written statement about the Army's decision, "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."

About $208 million of the disputed charges was mostly related to the cost of importing fuel, which was at the heart of the controversy surrounding the contract. Kellogg Brown & Root hired a little-known Kuwaiti company, Altanmia, to transport fuel in enormous truck convoys. The Pentagon auditors found that in part because of the transportation fees that Kellogg Brown & Root agreed to pay Altanmia, the cost for a gallon of gasoline was roughly 40 percent higher than what the American military paid when it did the job itself — under a separate contract it had negotiated with Altanmia.

The Army said in a written statement that it had largely accepted Kellogg Brown & Root's assertions that costs had been driven up by factors beyond its control — the exigencies of war and the hard-line negotiating stance of the state-owned Kuwait Petroleum Corporation. The Army said the Kuwaiti fuel company blocked attempts by Kellogg Brown & Root to renegotiate its transportation contract with Altanmia. In the end, the Army decided to pay the Halliburton subsidiary all but $3.81 million of the $208 million in fuel-related costs questioned by auditors.

The Kellogg Brown & Root contract, called Restore Iraqi Oil, or RIO, will be paid with about $900 million of American taxpayer money and $1.5 billion of Iraqi oil proceeds and money seized from Saddam Hussein's government. Official criticism of the work became so intense that in November, an auditing board sponsored by the United Nations recommended that the United States repay some or all of the $208 million related to the alleged fuel overcharges — an allegation Halliburton says has never been justified.

In fact, Ms. Mann said, the Army's decision clearly showed that "any claims that the figures contained in these audit reports are 'overcharges' are uninformed and flat wrong." She said that the fuel charges themselves had been 100 percent reimbursed and that the reductions all came from adjustments on administrative costs associated with that mission.

Still, the Army conceded that some of the criticisms of the company's business practices were legitimate. As a result, the Army said, it would exclude about half of the auditors' questioned charges from the amount used to derive the markups and fees, which are calculated as a sliding percentage of the costs. That decision could cost the company a maximum of about $7 million.

Ms. James, the Corps of Engineers spokeswoman, said that in addition to the other modest penalties that Kellogg Brown & Root had been assessed by the Army's contracting officers, the sliding percentages on some of the fees had been lowered by unspecified amounts to reflect shortcomings in the company's dealings in Iraq. "All fees were awarded in accordance with the award fee plan set out in the contract, which placed more emphasis on timely mission accomplishment than on cost control and paperwork," Ms. James said.

Mr. Barton, of the Center for Strategic and International Studies, said that with the relatively small penalties paid by the company for falling short in its performance in Iraq, it was hard to see what the Army's scrutiny of the company's practices had amounted to in the end.

"When they say, 'We questioned their business model or their business decisions' — well, yeah, so what?" Mr. Barton said. "You questioned it but there was no result."

In answer to written questions, a spokesman for the Defense Contract Audit Agency, Lt. Col. Brian Maka, said the settlement of the disputed charges was based on "broader business case considerations" beyond just Pentagon audits.

But when asked whether the Army's decision reflected on the quality of the audits, Colonel Maka said only that the agency "has no indication of problems with the audit process," and he referred questions on the settlement itself to the Army.

A former senior Defense Department manager knowledgeable about the audits and the related contracting issues said, "That's as close as D.C.A.A. can get to saying, 'We're not happy with it either.' "

Because of the size of the contract and the contention surrounding Halliburton's dealings with the government, the RIO audits were carried out by the agency's top personnel and were subjected to extraordinarily thorough reviews, the former manager said.

This is unlikely to be the last time the Army and Halliburton meet over negotiated costs. On a separate contract in Iraq, for logistics support to the United States military, more than $11 billion had been disbursed to Kellogg Brown & Root by mid-January, according to the Army Field Support Command, based in Rock Island, Ill. Pentagon auditors have begun scrutinizing that contract as well.

IPO stems insider stock sales - Houston - MSNBC.com

2006-02-06T10:13:00.000-05:00

KBR disclosure curbs brisk trading activity by Halliburton CEO

By Jim Greer
Houston Business Journal
Updated: 7:00 p.m. ET Feb. 5, 2006

David Lesar made millions on insider stock sales over the past two months, but Halliburton Co. policy prevented the chairman and CEO from making millions more this week.

On Jan. 27, Lesar went public with the news that 20 percent of the energy service company's KBR unit was slated for an initial public offering.

On Jan. 26, he sold 75,000 shares of Halliburton at more than $73 per share for a gross of about $5.5 million.

Added to eight previous stock sales executed in December and January, Lesar cashed in just under 354,000 shares for about $24.3 million in an eight-week period (see chart).

The KBR public offering announcement lit an even bigger fire under an already hot Halliburton stock price.

At close of trading on Jan. 27, the stock had moved into the $79 range after closing near $75 on the previous day. On Jan. 30, the price topped $82 before settling near $81.

On Feb. 1, in midday trading, shares of Houston-based Halliburton changed hands around $81.31, or about 8.4 percent above the stock's closing price the day before Lesar announced plans to publicly spin off the longtime engineering and construction business formerly known as Kellogg Brown & Root.

At midday on Feb. 1, the price remained north of $81, about 8.4 percent above the closing price the day Lesar executed his most recent sale.

But Lesar personally couldn't cash in on the extra boost Halliburton shares got from the KBR IPO news on the following day. Company policy restricts insiders from cashing in on material information that hasn't been made public knowledge.

The rule closed the trading window on Jan. 27 and forced Lesar to leave millions of dollars on the table.

At the stock's Feb. 1 perch above $81, shedding the same 353,981 shares that were sold in December and January transactions would have delivered Lesar an extra $4.5 million or so pretax.

Specifics for investors
The potentially plumper payout remains purely hypothetical.

A Halliburton representative points to the company's "Code of Business Conduct: Use and Public Disclosure Of Material Nonpublic Information."

This stodgy-sounding corporate policy, which reflects U.S. Securities and Exchange Commission regulations, states that it is a violation of federal laws "for any person to buy or sell securities if he or she is in possession of material nonpublic information relating to those securities."

The KBR IPO details publicly disclosed by Lesar on Jan. 27 appear to fall into the "material nonpublic information" category.

Last year, Halliburton reported an intent to sell or spin off KBR, with an IPO as one possible option. Timing remained unclear.

The specific course of action for KBR wasn't announced until Lesar's Jan. 27 disclosure that Halliburton would pursue a KBR IPO filing.

Wall Street already expected that Halliburton would do an IPO instead of pursuing another option. But Lesar on Jan. 27 offered specifics that investors have been awaiting, according to Citigroup Investment Research analyst Geoff Kieburtz.

Immediately after filing a 10K, the annual report due by mid-March, Halliburton expects to file KBR IPO documents, Kieburtz adds.

So various details on the planned IPO, including proceeds Halliburton could receive, aren't likely to emerge until next month, at the earliest.

But today, "the substantial proceeds expected from the IPO are already fueling rumors" of future acquisitions that Halliburton will make, according to a Jan. 30 report from equity analyst David Rewcastle of Argus Research Co.

Even ahead of the KBR stock offering, Halliburton is awash in cash.

Argus Research on Jan. 30 raised the 2006 earnings per share projection for Halliburton by $1.05 to $5.25. At the same time, Argus unveiled a preliminary estimate that envisions Halliburton earning $6.55 per share for 2007.

Halliburton is the world's second-largest energy services company.

Late in the day on Jan. 26, Halliburton announced robust financial results for the fourth quarter and full year of 2005.

"The best (year) in our 86-year history," Lesar said in the Jan. 26 news release.

Halliburton's announcement of the banner year, including fourth-quarter earnings that beat analyst expectations, came out only hours after Lesar made the last of his most recent stock sales.

So the earnings news, like the KBR details, also had qualified as material nonpublic information. One more reason Lesar wouldn't have been able to cash in his stock at the new highs set this week.

Still, Lesar's selling of Halliburton shares at prices well below previous levels points up the fact that insiders aren't necessarily the best traders. Indeed. Lesar also shed stock in the oilfield services giant before December last year, again leaving millions of dollars on the table.

"His track record's actually quite bad," says Jonathan Moreland, editor of Insider Insights. "He sells and it goes up."

But Lesar still has ample ammunition for future trading.

According to a Jan. 26 filing with the Securities and Exchange Commission, Lesar still beneficially owns nearly 700,000 shares of Halliburton.

Inner City Press --Halliburton Repays $9 Million, While Iraq’s Oil Remains Unmetered

2006-01-31T12:47:00.000-05:00

Byline: Matthew Russell Lee, Inner City Press U.N. Correspondent

January 31, NEW YORK – The U.S. government has required Halliburton subsidiary Kellogg, Brown & Root to repay only $9 million on a controversial contract, and promised information about the metering of Iraq’s oil output has still not been provided, in the stealth January 30 release by the International Advisory and Monitoring Board for Iraq.

The IAMB last took question from the media, including Inner City Press, on December 28 at the United Nations in New York. At that time, IAMB stated that an oil metering contract had recently been let. It promised to provide more information shortly. Inner City Press twice asked the IMF for this additional information, but none was provided. Then on January 30 a summary of a January 23 meeting in Paris was placed online. The release tersely states that at the meeting, the IAMB

“reiterated its concern that key actions, especially the installation of an oil metering system, were taking a long time to implement. The IAMB urged the Government of Iraq to implement all IAMB recommendations promptly."

Apparently, the December 28 statement that the oil metering contract was in place was incorrect. No one has apologized, and the (unmetered) oil continues to flow. The Jan. 30 release also states, in the nature of disclosure:

“The U.S. Government informed the IAMB that a global settlement of all six DFI funded task orders under the KBR contract was reached between the U.S. Government and KBR on December 22, 2005. The settlement provided for a reduction of contract costs of US$9 million.”

This is much less than had been contested, and previously reported. Given the costs, most importantly in lives, of this Iraq war, what kind of transparency is this? It also raises questions, on timing and other issues, in light of Halliburton's January 27 announcement that it intends to sell off a stake in Kellogg, Brown & Root in an initial public offering of stock. Developing...

Inner City Press's last report on this topic:

More Questions than Answers about the Development Fund for Iraq: Representatives of Iraq Absent from UN Meeting and Press Conference, Purportedly Due to Visa Problems

On December 28, four of the five members of the oversight board of the Development Fund for Iraq answered reporters’ questions for an hour at the United Nations in New York. Missing was the representative of Iraq on the International Advisory and Monitoring Board. The explanation offered by the IAMB’s chairman Jean-Pierre Halbwachs was that the Iraqi representatives had not been able to obtain U.S. visas in time. Their absence proved convenient, as questions soon arose about a line in Mr. Halbwachs prepared remarks, regarding the ongoing lack of metering on oil production in Iraq. Mr. Halbwachs read out: “we understand that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task” of oil metering.

When asked for the name of the U.S. company, the IAMB chairman’s response was that only the Iraqi representatives would have that information. When a question arose about the Iraqi representative’s written reference to the cost of metering being covered by “donations,” no answer was forthcoming. When asked why it has taken two years to make even this gesture toward metering, the representative of the Arab Fund for Economic and Social Development Khalifa Ali Dau shrugged and smiled. Finally, the IMF’s deputy press secretary said he will be providing follow-up information about the metering contract (presumably on the IAMB’s web site, www.iamb.info).

There were questions about KPMG’s partial audit, and Halliburton’s subsidiary Kellogg, Brown & Root. The IMF’s representative Bert Keuppens confirmed reports of oil smuggling out of, and in some cases back into, Iraq. (For another report, which puts the Iraqi absence last, see CNN. The UN’s own write-up is here).

-- Jean-Pierre Halbwachs briefing reporters on Dec. 28

When asked in conclusion to assign a grade to the transparency of the spending process at the Development Fund for Iraq, the World Bank’s representative Fayezul Choudhury declined to assign a grade, and pointed out that even most European Union countries, and also the United States, have only qualified opinions from their auditors. The press conference ended with many questions unanswered. The IMF’s Bert Keuppens rushed out of the briefing room. He returned a few minutes later and handed out two business cards. It would have made sense, one wag said, to provide contact information for the representatives to the IAMB from Iraq. And to have thought more deeply about this question of their visas. The IAMB's online self-description:

"The IAMB shall consist of duly qualified representatives of each of the Secretary-General of the United Nations, the Managing Director of the International Monetary Fund, the Director-General of the Arab Fund for Economic and Social Development and the President of the International Bank for Reconstruction and Development and a duly qualified individual designated by the Government of Iraq.

"B. The IAMB, after consulting with the Government of Iraq, may appoint up to 5 observers to the IAMB from a list of independent, qualified candidates, which should include Iraqi nationals nominated by the Government of Iraq.

"C. At any meeting of the IAMB, each member may be accompanied by an alternate, designated in a way identical to the designation of each member, and up to two advisors."
Neither the Iraqi representative nor his alternate / deputy nor even advisors were present, for the meeting or to answer questions.

Halliburton prepares to spin off KBR unit - Financial Times - MSNBC.com

2006-01-28T01:02:00.000-05:00

By Sheila McNulty in Houston
Financial Times
Updated: 12:43 a.m. ET Jan. 28, 2006

Halliburton, the world's largest diversified energy services, engineering and construction company, on Friday said it was ready to spin off and list its KBR unit, which is the US's biggest private contractor in Iraq, and might also consider selling "some pieces of KBR" outright.

The decision to list 20 per cent of KBR, which had been expected, comes as Halliburton reported the best annual figures in its 86-year history – it earned $2.4bn, or $4.54 per share, in 2005, compared with a full-year net loss of $1bn, or $2.22 per share, in 2004.

Its overall gains were driven not only by KBR but also its Energy Services Group, which has benefited from increased use of its crews and assets amid an industry scramble for oil and gas resources in the high-priced environment.

Halliburton is eager to separate itself from KBR, which, despite bringing in billions of dollars from US military contracts in Iraq, has plagued the parent company with controversy since the war began. Not only was KBR accused of overcharging for services, but critics said KBR was being favoured by the US government for contracts because US vice president Dick Cheney used to run Halliburton. Even though Halliburton has denied any wrong-doing, the controversy has dogged it.

The company had to wait to hive off KBR because the unit was caught up in a bankruptcy restructuring as part of the company's $4bn asbestos settlement.

Dave Lesar, Halliburton president, chairman and chief executive, said Halliburton planned to file for an initial public offering for KBR soon after filing its 10-K financial form with regulators, which should be a matter of months.

"We believe the IPO market in general, and the public market for engineering and construction companies in particular, is very attractive, and a public valuation of KBR would benefit Halliburton's stock price," Mr Lesar said.

"Valuation multiples of publicly traded engineering and construction firms are currently very favourable."

Copyright The Financial Times Ltd. All rights reserved.

WKYT 27 NEWSFIRST & WYMT Mountain News - Contractor allegedly supplied tainted water to Iraq base

2006-01-23T09:46:00.000-05:00

WASHINGTON -- Water supplied to a U.S. base in Iraq was contaminated and the contractor in charge, Halliburton, failed to tell troops and civilians at the facility, according to internal documents from the company and interviews with former Halliburton officials.

Although the allegations came from Halliburton's own water quality experts, the company once headed by Vice President Dick Cheney denied there was a contamination problem at Camp Junction City, in Ramadi.

"We exposed a base camp population (military and civilian) to a water source that was not treated," said a July 15, 2005, memo by William Granger, the official for Halliburton's KBR subsidiary who was in charge of water quality in Iraq and Kuwait.

"The level of contamination was roughly 2x the normal contamination of untreated water from the Euphrates River," Granger wrote in one of several documents.

The Associated Press obtained the documents from Senate Democrats who are holding a public inquiry into the allegations Monday.

Sen. Byron Dorgan, D-N.D., who will chair the session, held a number of similar inquiries last year on contracting abuses in Iraq. He said Democrats were acting on their own because they had not been able to persuade committee chairmen in the Republican-run Senate to investigate.

The company's former water treatment expert at Camp Junction City said he discovered the problem last March, a statement confirmed by his e-mail the day after he tested the water.

While bottled water was available for drinking, the contaminated water was used for virtually everything else, including handwashing, laundry, bathing and making coffee, said water expert Ben Carter of Cedar City, Utah.

Another former Halliburton employee who worked at the base, Ken May of Louisville, Ky., said there were numerous instances of diarrhea and stomach cramps _ problems he also suffered.

A spokeswoman for Halliburton, Melissa Norcross, said its own inspection found neither contaminated water nor medical evidence to substantiate reports of illnesses at the base. The company now operates its own water treatment plant there, she said.

A military medical unit that visited Camp Ramadi in mid-April found nothing out of the ordinary in terms of water quality, said Marine Corps Maj. Tim Keefe, a military spokesman. Water-quality testing records from May 23 show the water within normal parameters, he said.

"The allegations appear not to have merit," Keefe said.

Halliburton has contracts to provide a number of services to U.S. forces in Iraq and was responsible for the water quality at the Ramadi base.

Granger's July 15 memo said the exposure had gone on for "possibly a year" and added, "I am not sure if any attempt to notify the exposed population was ever made."

The first memo on the problem _ written by Carter to Halliburton officials on March 24, 2005 _ was an "incident report" from tests Carter performed the previous day.

"It is my opinion that the water source is without question contaminated with numerous micro-organisms, including Coliform bacteria," Carter wrote. "There is little doubt that raw sewage is routinely dumped upstream of intake much less than the required 2 mile distance.

"Therefore, it is my conclusion that chlorination of our water tanks while certainly beneficial is not sufficient protection from parasitic exposure."

Carter said he resigned in early April after Halliburton officials did not take any action to inform the camp population.

The water expert said he told company officials at the base that they would have to notify the military. "They told me it was none of my concern and to keep my mouth shut," he said.

On at least one occasion, Carter said, he spoke to the chief military surgeon at the base, asking him whether he was aware of stomach problems afflicting people. He said the surgeon told him he would look into it.

"They brushed it under the carpet," Carter said. "I told everyone, 'Don't take showers, use bottled water."

A July 14, 2005, memo showed that Halliburton's public relations department knew of the problem.

"I don't want to turn it into a big issue right now," staff member Jennifer Dellinger wrote in the memo, "but if we end up getting some media calls I want to make sure we have all the facts so we are ready to respond."

Halliburton's performance in Iraq has been criticized in a number of military audits, and congressional Democrats have contended that the Bush administration has favored the company with noncompetitive contracts.

The Raw Story | Halliburton, other lobbyists stall Pentagon ban on human trafficking

2005-12-28T10:25:00.000-05:00

Filed by RAW STORY

Three years after a 2002 Presidential Directive demanding an end to trafficking in humans for forced labor and prostitution by U.S. contractors, the Pentagon is still yet to actually bar the practice, The Chicago Tribune reports. Congress approved a similar ban one year later, which was reauthorized by the Senate just last week.

The President and Congress have demanded that government agencies include anti-trafficking provisions (covering forced labor and prostitution) in all overseas company contracts. It also extended the ban to subcontractors.

According to the Tribune, the concerns of five lobbying groups - including representatives of Halliburton subsidiary KBR and DynCorp - are stalling Pentagon action. These companies are specifically targeting provisions requiring companies to monitor their overseas contractors for violations. Both KBR and DynCorp have been linked to human trafficking cases in the past.

The original Bush order came on the heels of revelations that DynCorp employees had purchased women and girls as sex slaves during the 1990s U.S. military presence in Bosnia. The company responded by firing eight employees over the incidents, as well as involvement in illegal arms sales.

An excerpt from the Tribune piece details Halliburton's role:

#
In a two-part series published in October, the Tribune detailed how Middle Eastern firms working under American subcontracts in Iraq, and a chain of human brokers beneath them, engaged in the kind of abuses condemned elsewhere by the U.S. government as human trafficking. KBR, the Halliburton subsidiary, relies on more than 200 subcontractors to carry out a multibillion-dollar U.S. Army contract for privatization of military support operations in the war zone.

...

The Tribune retraced the journey of 12 Nepali men recruited from poor villages in one of the most remote and impoverished corners of the world and documented a trail of deceit, fraud and negligence stretching into Iraq. The men were kidnapped from an unprotected caravan and executed en route to jobs at an American military base in 2004.

At the time, Halliburton said it was not responsible for the recruitment or hiring practices of its subcontractors, and the U.S. Army, which oversees the privatization contract, said questions about alleged misconduct "by subcontractor firms should be addressed to those firms, as these are not Army issues."

Once implemented, the new policy could dramatically change responsibilities for KBR and the Army.

ABC News: Halliburton Contractor Arrested for Alleged Bribery Attempt

2005-12-16T09:50:00.000-05:00

Contractor Was Returning From Cruise in Mexico
By JACK DATE

WASHINGTON, Dec. 15, 2005 ? A contractor who works for Halliburton in Iraq was arrested Thursday in Tampa for allegedly attempting to bribe Immigration and Customs Enforcement agents at Tampa Seaport in Florida, an ICE official tells ABC News.

The man, who works as a driver of jet fuel trucks in Iraq, was not identified.

Returning from a Mexican cruise, the contractor and his fianc�e, also a government contractor, were stopped by customs officials for questioning regarding small amounts of painkillers that officials said they were bringing into the country.

After learning the two were contractors for U.S. Central Command, ICE agents contacted CENTCOM headquarters at MacDill Air Force Base in Tampa. CENTCOM told ICE to confiscate the pair's military contractor IDs.

The male contractor then allegedly asked ICE agents what it would take to make this incident go away. Officials say he then offered a $1,000 bribe to the ICE agent. The agent asked the pair to meet for lunch.

According to an ICE official, the ICE agent got approval to wear a microphone. During the meeting, officials say the Halliburton contractor offered the ICE agent a bribe and handed him $1,000. The contractor was arrested and is expected to be charged with bribery. His fianc�e was released and has sought counsel.

TownOnline.com - Braintree Forum - Lynch seeks crackdown on bribery, fraud in Iraq contracting

2005-12-07T09:37:00.000-05:00

Holbrook's congressman, Stephen F. Lynch, member of the House Subcommittee on National Security, Emerging Threats and International Relations, introduced the "Iraq Contracting Fraud Review Act of 2005" (H.R. 4351), legislation that would ensure greater accountability and transparency in Iraq contracting.

Specifically, Lynch's bill would require the Secretary of Defense to review all Defense Department Iraq reconstruction and troop support contracts involving any contractor, subcontractor, or U.S. official that has been indicted or convicted for related contract illegalities. The bill would also require the secretary to report subsequent findings back to Congress within 180 days.

Lynch's legislation stems from the subcommittee's continuing investigation of documented waste, fraud, and abuse in Iraq reconstruction and troop support contracting and arose in response to the recent federal indictments of a former Halliburton official and subcontractor.

In March of 2005, the Department of Justice announced that Jeffrey Mazon, a former Halliburton procurement manager, and Ali Hijazi, the managing partner of LaNouvelle General Trading and Contracting Company, a Kuwaiti firm and Halliburton subcontractor, had been indicted in relation to a kickback scheme through which the company overcharged the U.S. government by approximately $3.5 million.

During resulting subcommittee hearings, Lynch repeatedly asked Defense Department representatives whether, in light of the indictments, all contracts involving Mazon, Hijazi, or LaNouvelle were being reviewed. Unfortunately, aside from very vague assurances that a contractual review is "ongoing," these officials failed to offer any specifics on the nature, scope, and any results of the work.

According to Lynch, "Our goal with this legislation is to assist in tracking the flow of up to $20 billion that has already been misallocated or unaccounted for in Iraq and ensure greater governmental transparency and accountability as we continue towards the stabilization and reconstruction of Iraq. Regrettably, the extent of financial waste, fraud, and abuse amounts to a lost opportunity to provide meaningful assistance to the Iraqi people and has frustrated our overall policy in Iraq, an effort for which we've sacrificed a great deal financially and, more importantly, the lives of more than 2,000 of our men and women in uniform."

Lynch added, "This is a matter of common sense. Clearly, these indictments have raised significant questions regarding the integrity of other contracts involving these parties, yet a comprehensive contractual review does not appear to be a priority for the Defense Department. It's about time we adopt a real system of accountability."

Specifically, Lynch's bill would promote greater governmental transparency and accountability in Iraq reconstruction contracting by requiring the Secretary of Defense to:

Review all defense contracts (including a task or delivery order contract) entered into on or after March 1, 2003 by the Defense Department that:

Relate to reconstruction or troop support in Iraq; and

Involve any contractor, subcontractor, or federal officer/employee that has been indicted or convicted for fraud or any other violation of federal law with respect to another Defense Department contract relating to reconstruction or troop support in Iraq.

Notify the House Government Reform and Armed Services Committees and Senate Governmental Affairs and Armed Services Committees when the review required by the Act has begun.

Complete the review and submit a subsequent report to the appropriate Committees within 180 days of enactment.

The Raw Story | Congressman says Pentagon auditors found Halliburton paid $130 million for 'unsupported' charges

2005-12-02T11:44:00.000-05:00

Filed by RAW STORY

Congressman Henry Waxman (D-CA), the ranking Democrat on the House Government Reform Committee has disclosed that Halliburton received $130 million for charges that the Pentagon's own auditors had found to be "unsupported," RAW STORY has learned.

Waxman disclosed the information in a letter to Rep. Tom Davis (R-VA), the Republican chairman of the Government Reform Committee, in which he called on Rep. Davis to convene hearings.

Waxman's letter follows, slightly abbreviated.

#
The Honorable Tom Davis
Chairman
Committee on Government Reform
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

I am writing to request a hearing on the decision by the Army Corps of Engineers to pay Halliburton $130 million in cost reimbursements, profits, and bonuses for billings that Defense Department auditors determined to be unreasonable and unsupported. The Committee should also insist that the Corps of Engineers provide the award fee documentation for Halliburton's contract that we requested in April.

The payments in question were made under the no-bid Restore Iraqi Oil (RIO) contract, which Halliburton was awarded in March 2003. Under the contract, the Defense Department issued ten task orders to Halliburton for oil-related work in Iraq, including the importation of fuel and the repair of oil facilities. Halliburton charged over $2.5 billion for this work, which is now complete. Because RIO is a cost-plus contract, Halliburton is reimbursed for its costs and then receives additional profits and bonuses. The profits are based on a negotiated estimate of the contract costs, known as a "definitization." Under the RIO contract, Halliburton receives 2% of the definitized costs as an automatic base fee and up to 5% of the definitized costs as an additional award fee bonus. Based on considerations such as cost control and performance, a government award fee board or official determines what percentage bonus, if any, Halliburton should receive under each task order.

Recently, without any announcement, the Corps of Engineers posted on its website the definitized value of six RIO task orders and the amount of Halliburton's fees and bonuses under each of these task orders. The posted information reveals that the Corps of Engineers appears to have ignored auditor findings in three ways: by reimbursing Halliburton for costs determined to be unreasonable or unsupported, by permitting Halliburton to collect profits on these challenged costs, and by giving Halliburton unwarranted bonuses.

Pentagon auditors identified $169 million in excessive and unsubstantiated costs under the six task orders. The auditors found Halliburton's fuel importation and other costs to be unreasonably high and determined that Halliburton's cost proposals were "not acceptable for negotiation of a fair and reasonable price." As a result, the auditors recommended that Halliburton not be reimbursed for these costs and not receive profits on them.

It now appears, however, that the Corps rejected the auditor findings and paid Halliburton for $124 million of the challenged costs. Although between 60% and 70% of costs challenged by Pentagon auditors are typically sustained, the Corps sustained only 27% of the challenged costs in this case. The Administration has offered no explanation for this decision to pay three-quarters of Halliburton's challenged costs.

Moreover, because RIO is a cost-plus contract, the decision to pay Halliburton for these challenged costs increased the company's profits by millions of dollars. Under the RIO contract, Halliburton received a larger base fee because the pool of definitized costs is larger. In this case, Halliburton was paid $2.5 million in base fee profits for billings that Pentagon auditors challenged.

Compounding these egregious payments, it appears that the Corps also gave Halliburton million-dollar bonuses for overbilling the taxpayers. Two factors determine the size of Halliburton's award-fee bonus: the percentage of the award fee provided to Halliburton and the value of the definitized task orders. In this case, both appear to be inflated, with Halliburton receiving bonus awards of up to 3.4% on the challenged costs being reimbursed. In fact, given Halliburton's track record of overcharging the government, the entire $38 million in bonuses awarded to Halliburton under the six task orders is questionable.

The decisions by the Corps of Engineers seem inexplicable. For many months, Pentagon auditors have criticized Halliburton's cost estimation systems as "inadequate" and its fuel charges as "unreasonable." Our Committee should require the Corps to explain why it decided to reimburse Halliburton for challenged costs, to permit Halliburton to collect profits on challenged costs, and to give Halliburton large bonuses as a reward. With reimbursement and fee decisions still pending on four other RIO task orders, it is important that we receive prompt answers.

Background

On March 8, 2003, the U.S. Army Corps of Engineers awarded Halliburton subsidiary KBR a no-bid monopoly contract to restore and operate Iraq's oil infrastructure. The contract was awarded in secret, and other qualified companies, like Bechtel, which did most of the oilfield work after the first Gulf War, were precluded from bidding.[1] Halliburton received the contract because it had previously been awarded a task order to prepare a contingency plan for Iraq's oil sector. The Government Accountability Office later investigated the award of the contingency contract and concluded that it was not "in accordance with legal requirements" because "preparation of the contingency support plan for this mission was beyond the scope of the contract."[2] GAO added that the work "should have been awarded using competitive procedures."[3]

Halliburton charged approximately $2.5 billion under the RIO contract, which had a potential value of $7 billion.[4] The Corps of Engineers issued ten different task orders under the RIO contract. Work has now concluded on all ten task orders.

Halliburton's work was split generally between oil infrastructure projects and fuel importation tasks: Task Orders 1, 2, 3, 4, and 6 related to various oil infrastructure projects, while Task Orders 5, 7, 8, 9, and 10 involved the importation of fuel from Kuwait, Turkey, and Jordan. The majority of Halliburton's charges under this contract were for fuel importation and distribution. Halliburton charged approximately $1.5 billion for fuel work and $1 billion for infrastructure work.[5] There were two sources of funding for this work: approximately $875 million came from U.S. taxpayer funds and $1.64 billion came from Iraqi oil proceeds and other funds in the U.S.-controlled Development Fund for Iraq.[6]

RIO is a "cost-plus" contract, meaning that Halliburton is reimbursed for its costs and then receives additional profits and bonuses. The profits are based on a negotiated estimate of the contract costs. The process by which the government and Halliburton agree on a cost estimate for each task order is called "definitization." Under the RIO contract, Halliburton receives 2% of the definitized costs as an automatic base fee and up to an additional 5% of the definitized costs as an optional award fee bonus. A government award fee board or award fee determination official considers factors such as cost control and performance to determine what bonus percentage between 0% and 5% Halliburton should receive under each task order.[7]

Audit Findings

Rep. John Dingell and I began to raise questions about Halliburton's RIO contract immediately after the contract was awarded in March 2003.[8] In a series of letters, we expressed concern about the exorbitant prices of Halliburton's fuel imports from Kuwait. We reported that Halliburton appeared to be charging twice as much as it should have for fuel imports,[9] and we cited independent experts who characterized Halliburton's charges as "highway robbery" and "outrageously high."[10]

Our concerns about Halliburton's inflated costs were validated by Pentagon auditors. In December 2003, the Defense Contract Audit Agency (DCAA) announced at a press conference that it had completed a preliminary draft audit of Halliburton's fuel importation work. DCAA auditors found that Halliburton had overcharged the U.S. government by as much as $61 million for gasoline imported from Kuwait into Iraq.[11] This audit was preliminary, however, and covered only the period until September 30, 2003.

In 2004 and 2005, DCAA completed final audits of each of the ten task orders. In this series of audits, DCAA identified $219 million in "questioned" costs under the entire RIO contract.[12] DCAA determined that all of these costs were unreasonably high. DCAA also identified $60 million in "unsupported" charges under the RIO contract.[13]

DCAA auditors found unreasonable costs for Kuwaiti fuel under all of Halliburton's fuel importation task orders. The auditors criticized Halliburton for failing to negotiate better pricing for the fuel and transportation costs, concluding that Halliburton failed to provide "adequate documentation to demonstrate the reasonableness of the Kuwait fuel prices over the life of the purchase orders."[14]

The auditors also repeatedly criticized Halliburton for making unnecessary retroactive payments to its Turkish fuel subcontractors. DCAA noted that Halliburton had negotiated "fixed-unit-rate" and "firm-fixed-price" subcontracts with various Turkish subcontractors to import fuel into Iraq. During the term of these subcontracts, the market price of the fuel increased. DCAA reported that the Turkish companies asked Halliburton "to increase the unit price of the fuel to compensate for losses due to market increases."[15] According to DCAA, Halliburton "agreed to pay the higher prices retroactively."[16] DCAA concluded: "We do not believe it was appropriate to retroactively adjust the fuel unit prices of KBR's fixed-unit-rate and firm-fixed-price subcontracts when there are no provisions in the subcontracts to do so."[17]

All the DCAA audits reported that Halliburton's proposals were "not acceptable for negotiation of a fair and reasonable price."[18] DCAA found that Halliburton's cost and pricing submissions were "not adequate" because "proposed" costs "exceed recorded costs," because Halliburton's proposals "did not contain data to support the reasonableness of the negotiated purchase orders," and because they were not prepared "in accordance with applicable Cost Accounting Standards and appropriate provisions of FAR," the Federal Acquisition Regulation.[19]

Moreover, DCAA criticized Halliburton for producing inadequate cost estimates for definitization. On December 31, 2003, DCAA issued a "Flash Report," alerting various Defense Department agencies about "significant deficiencies" in Halliburton's cost estimating system.[20] According to the auditors, these deficiencies "could adversely affect the organization's ability to propose subcontract costs in a manner consistent with applicable government contract laws and regulations."[21] On August 4, 2004, DCAA found Halliburton's "estimating system to be inadequate for providing verifiable, supportable, and documented cost estimates that are acceptable for negotiating a fair and reasonable price."[22]

I released a report in July 2004 with additional information about Halliburton's inflated gasoline charges. This report compared the price charged by Halliburton to import gasoline from Kuwait to Iraq with the costs incurred by the Pentagon's fuel importation office, the Defense Energy Support Center (DESC), to perform the same task. Because DESC assumed Halliburton's fuel importation responsibilities on April 1, 2004, a direct "apples-to-apples" price comparison could be made. The report found that Halliburton charged more to purchase fuel than DESC, three times as much to transport the fuel into Iraq, and 40 times as much to cover its fees and markups.[23]

On April 15, 2005, the Committee requested award fee determinations and related documents for a number of Iraq contracts.[24] After meeting with Committee staff, the Defense Department provided the requested information for 20 contracts.[25] However, the Department still has not provided the requested compensation documentation for the RIO contract.

Halliburton's Reimbursements, Profits, and Bonuses

On November 3, 2005, without any announcement, the Corps of Engineers posted on its website the definitized value of six RIO task orders and the amount of Halliburton's base and award fees under each of these task orders.[26] Information was posted for Task Orders 1, 2, 4, 5, 6, and 7. Together, these task orders are worth over $1.5 billion, or about 60% of the total value of the RIO contract.[27] Information for Task Orders 3, 8, 9, and 10 was not posted.

For these six task orders, DCAA had identified $169 million in questioned and unsupported costs.[28] The auditors recommended that Halliburton not be reimbursed for or receive profits on these costs.

The posted information reveals that the Corps of Engineers appears to have ignored the findings of the Defense Department's own auditors. According to the information from the Corps, the agency reimbursed Halliburton for unreasonably high costs challenged by auditors, allowed Halliburton to collect profits on these challenged costs, and even gave Halliburton a substantial bonus.

Instead of disallowing the costs challenged by DCAA, the Corps largely ignored the Pentagon auditors and reimbursed Halliburton for $124 million in questioned or unsupported costs.[29] This represents 73% of the $169 million in costs challenged by the auditors under these task orders. These figures are shown in Table A.

Historically, between 60% and 70% of DCAA's challenged costs have been sustained. But in this case, the Corps sustained only 27% of the challenged costs. On Task Order 7, one of the large fuel importation task orders, the Corps upheld just 8% of the costs challenged by auditors.

In addition to reimbursing Halliburton for challenged costs, the Corps also allowed Halliburton to profit from the challenged costs. Because Halliburton's pool of definitized costs includes $124 million in challenged costs, Halliburton's 2% base fee is larger than it should be. The company will automatically receive $2.5 million in profits for costs Pentagon auditors found to be unreasonably high or unsubstantiated.

Finally, the Corps gave Halliburton a large bonus for the costs challenged by the Department's auditors. For each task order, Halliburton's award fee bonus depends on two determinations: the percentage bonus awarded to Halliburton and the definitized value of each task order. Under the RIO contract, the Halliburton can receive a bonus fee of up to 5% of the definitized value of a task order. The bonus percentage selected by the award fee board or determination official is multiplied by the definitized value to produce the final bonus award.

Ironically, Halliburton received some of its highest bonuses for projects with the most inflated costs. On the two fuel importation task orders, Task Orders 5 and 7, the company was given an award fee of 3% despite repeated auditor findings of unreasonable charges for Kuwaiti fuel and improper overpayments to Turkish subcontractors. In fact, although Halliburton's fuel costs were deemed unreasonable by DCAA and have been the subject of widespread criticism, over $36 million of the $38 million bonus awarded to Halliburton are for these fuel task orders.

In total, Halliburton received reimbursements worth $124 million, base-fee profits worth $2.5 million, and bonuses worth $3.4 million for the specific charges challenged by DCAA. Given that Halliburton's entitlement to any bonuses could be called into question by its pattern of unreasonable billings, the company's entire bonus of $38 million for the six task orders is also suspect.

Conclusion

The Administration has consistently asserted that cost-plus contracts protect the taxpayer because the government can use the prospect of raising or lowering award fees to encourage "effective control of costs" by the contractor.[30] Clearly this has not occurred with the RIO contract. Rather than relying on the findings of its own auditors, the Pentagon reimbursed Halliburton for $124 million in costs that the auditors determined to be excessive or unsupported. And rather than holding Halliburton accountable for squandering taxpayer and Iraqi funds, the Administration rewarded Halliburton with large bonuses and special treatment.

The Committee on Government Reform has held no full Committee hearings on Iraq this Congress. In light of the mounting reconstruction problems in Iraq and the questions raised in this letter, the Committee should initiate a series of hearings into contracting in Iraq, starting with a hearing to investigate the federal payments to Halliburton. In order to adequately prepare for these hearings, we should also insist that the Pentagon produce the detailed RIO compensation determination documents previously requested by the Committee. We cannot allow the Administration to waste additional taxpayer dollars paying Halliburton's inflated costs and undeserved profits on the remaining four RIO task orders.

Sincerely,

Henry A. Waxman

Federal Times | Two charged with Iraq contracting abuses

2005-11-25T17:25:00.000-05:00

The government has arrested a contractor and a former federal official on charges of corrupt contracting practices in Iraq.

An American businessman, Philip Bloom, is accused of conspiring with the official to rig the bids on more than $13 million in contracts that he won. He also allegedly paid hundreds of thousands of dollars in gifts to the official and others to win contracts.

The official, Robert Stein, was comptroller and funding officer for the Coalition Provisional Authority in South Central Iraq in 2003 and 2004.

Bloom and Stein are charged with conspiring to commit money laundering and wire fraud in connection with a bribery and fraud scheme, the Justice Department said in a Nov. 17 announcement.

Bloom owned numerous construction and service companies doing business in Iraq. The case is before the U.S. District Court in the District of Columbia.

The Justice Department is weighing another possible criminal case related to Iraq contracting, according to a letter released Nov. 14 by Sen. Byron Dorgan, D-N.D.

Justice is weighing claims by Bunnatine Greenhouse, principal assistant for contracting at the Army Corps of Engineers, of abuses in connection with a contract to Halliburton division Kellogg, Brown and Root, according to the letter to Dorgan from the Defense Department inspector general?s office.

A company spokeswoman, Melissa Norcross, said KBR ?continues to cooperate fully with the Justice Department?s investigation of certain issues pertaining to our work in Iraq? and said the company?s contracting practices are within bounds.

Ex-Halliburton Employee Gets Jail Sentence

2005-11-19T09:51:00.000-05:00

Saturday, November 19, 2005

ROCK ISLAND, Ill. - A federal judge sentenced a former employee of a Halliburton subsidiary to 15 months in prison Friday for accepting more than $100,000 in kickbacks from an Iraqi company that was awarded a construction contract in Iraq.

Glenn Allen Powell, 40, of Cedar Park, Texas, was also ordered to pay restitution of $91,000. He pleaded guilty in August to fraud and violating an anti-kickback law.

Prosecutors said he was a subcontracts administrator for Halliburton subsidiary KBR Inc., which provides engineering and other project management services for the military.

In exchange for $110,300 in kickbacks, Powell recommended the Iraqi company for a $609,000 subcontract to renovate four buildings, prosecutors said. They declined to name the company.

An internal investigation by KBR in January uncovered the kickbacks.

Halliburton has said it removed the Iraqi company from its list of subcontractors and gave the military a credit for the amount of the kickback.

The case was prosecuted in Illinois because the Army Field Support Command at the Rock Island Arsenal oversees the military contract with KBR.

A service of the Associated Press(AP)

Halliburton Allegations Are Sent to Justice Dept.

2005-11-19T09:50:00.000-05:00

No-Bid Contracts In Iraq Are at Issue

By Renae Merle
Washington Post Staff Writer
Saturday, November 19, 2005; A15

An investigative arm of the Pentagon has sent an Army Corps of Engineers whistle-blower's allegations of wrongdoing against Halliburton Co. to the Justice Department.

Bunnatine H. Greenhouse was removed from her position as the Corps of Engineers' top procurement official in August after raising concerns over the volume of Iraq-related work given to the Houston-based oil-services giant without competition. She is appealing.

Kellogg, Brown & Root, a Halliburton subsidiary, had a competitively awarded contract to provide logistics support for the military in the Middle East and was awarded a no-bid contract to repair Iraq oil fields.

The Defense Criminal Investigative Service, the criminal investigative arm of the Pentagon inspector general, investigated her charges and "has shared its findings" with the Justice Department, John R. Crane, assistant inspector general, said in a letter to Sen. Byron L. Dorgan (D-N.D.). "The DOJ is in the process of considering whether to pursue the matter," the letter said.

"This is the first evidence that someone is taking seriously these allegations," said Dorgan, chairman of the Democratic Policy Committee, which heard Greenhouse in June.

Two former Halliburton workers have been charged with taking kickbacks while working for the company in the Middle East. And Pentagon auditors have questioned more than $1billion in costs for the company's work there.

"The company continues to cooperate fully with the Justice Department's investigation of certain issues pertaining to our work in Iraq," Halliburton said in a written statement. "As the investigation is ongoing, it would be inappropriate to comment further at this time."

� 2005 The Washington Post Company

Halliburton Case Is Referred to Justice Dept., Senator Says - New York Times

2005-11-18T23:22:00.000-05:00

By ERIK ECKHOLM
Pentagon investigators have referred allegations of abuse in how the Halliburton Company was awarded a contract for work in Iraq to the Justice Department for possible criminal investigation, a Democratic senator who has been holding unofficial hearings on contract abuses in Iraq said yesterday in Washington.

The allegations mainly involve the Army's secret, noncompetitive awarding in 2003 of a multibillion dollar contract for oil field repairs in Iraq to Halliburton, a Texas-based company. The objections were raised publicly last year by Bunnatine H. Greenhouse, then the chief contracts monitor at the Army Corps of Engineers, the government agency that handled the contract and several others in Iraq.

In a letter received and released yesterday by Senator Byron L. Dorgan, Democrat of North Dakota, the assistant Pentagon inspector general, John R. Crane, said that the criminal investigation service of the Defense Department had examined Ms. Greenhouse's allegations "and has shared its findings with the Department of Justice." Senator Dorgan is the chairman of the Democratic Policy Committee, a Congressional group that has repeatedly used unofficial hearings to question the administration's record of awarding contracts in Iraq.

The Justice Department, the letter said, "is in the process of considering whether to pursue the matter."

Ms. Greenhouse, a 20-year veteran of military procurement work, says her objections before the contract was signed were ignored. After internal clashes with officials at the agency and threats of demotion, she went public with her charges in the fall of 2004.

This year, she was demoted in August from the elite Senior Executive Service, on charges of poor performance, and given a lower-ranking job as a project manager. She has filed appeals, but for now "she has no projects to manage and she just sits in the corner," her attorney, Michael Kohn, said yesterday in a telephone interview from Washington. The inspector general's office at the Defense Department had already begun its own investigation of her charges regarding the contracting. Exactly which issues are of most interest to investigators in the Justice Department is unclear. Mr. Crane wrote that he could not provide more details "as this is an ongoing criminal investigation."

Melissa Norcross, a spokeswoman for Halliburton, said in an e-mail message, "The company continues to cooperate fully with the Justice Department's investigation of certain issues pertaining to our work in Iraq."

In letters to senior Army officials and in public testimony, Ms. Greenhouse said that in early 2003 the Corps had violated procedures when it secretly awarded a five-year, potentially $7 billion contract for oil field repairs to a Halliburton subsidiary, Kellogg Brown & Root.

Among other things, the same company had been secretly hired months earlier to draw up a plan for the job, she said. She also said that even if the urgency of war required dispensing with competitive bidding, the duration of the contract should have been shorter. She objected again in December 2003, when officials granted a waiver to Kellogg Brown & Root, approving the high prices it had paid to import fuel from Kuwait. Other Pentagon agencies said the company had paid tens of millions of dollars too much, without offering any justification for the payments.

In her e-mail message, Ms. Norcross said, "KBR will continue to work with our customers and the appropriate government agencies to demonstrate, once and for all, that KBR delivered vital services for the U.S. troops and the Iraqi people within the appropriate bounds of government contracting and at a fair and reasonable cost, given the circumstances."

Salon.com News | Gulf Coast slaves

2005-11-15T17:48:00.000-05:00

Halliburton and its subcontractors hired hundreds of undocumented Latino workers to clean up after Katrina -- only to mistreat them and throw them out without pay.
By Roberto Lovato

Nov. 15, 2005 | Arnulfo Martinez recalls seeing lots of hombres del ejercito standing at attention. Though he was living on the Belle Chasse Naval Base near New Orleans when President Bush spoke there on Oct. 11, he didn't understand anything the ruddy man in the rolled-up sleeves was saying to the troops.

Martinez, 16, speaks no English; his mother tongue is Zapotec. He had left the cornfields of Oaxaca, Mexico, four weeks earlier for the promise that he would make $8 an hour, plus room and board, while working for a subcontractor of KBR, a wholly owned subsidiary of Halliburton that was awarded a major contract by the Bush administration for disaster relief work. The job was helping to clean up a Gulf Coast naval base in the region devastated by Hurricane Katrina. "I was cleaning up the base, picking up branches and doing other work," Martinez said, speaking to me in broken Spanish.

Even if the Oaxacan teenager had understood Bush when he urged Americans that day to "help somebody find shelter or help somebody find food," he couldn't have known that he'd soon need similar help himself. But three weeks after arriving at the naval base from Texas, Martinez's boss, Karen Tovar, a job broker from North Carolina who hired workers for a KBR subcontractor called United Disaster Relief, booted him from the base and left him homeless, hungry and without money.

"They gave us two meals a day and sometimes only one," Martinez said.

He says that Tovar "kicked us off the base," forcing him and other cleanup workers -- many of them Mexican and undocumented -- to sleep on the streets of New Orleans. According to Martinez, they were not paid for three weeks of work. An immigrant rights group recently filed complaints with the Department of Labor on behalf of Martinez and 73 other workers allegedly owed more than $56,000 by Tovar. Tovar claims that she let the workers go because she was not paid by her own bosses at United Disaster Relief. In turn, UDR manager Zachary Johnson, who declined to be interviewed for this story, told the Washington Post on Nov. 4 that his company had not been paid by KBR for two months.

Wherever the buck may stop along the chain of subcontractors, Martinez is stuck at the short end of it -- and his situation is typical among many workers hired by subcontractors of KBR (formerly known as Kellogg Brown & Root) to clean and rebuild Belle Chasse and other Gulf Coast military bases. Immigrants rights groups and activists like Bill Chandler, president of the Mississippi Immigrant Rights Alliance, estimate that hundreds of undocumented workers are on the Gulf Coast military bases, a claim that the military and Halliburton/KBR deny -- even after the Immigration and Customs Enforcement agency turned up undocumented workers in a raid of the Belle Chasse facility last month. Visits to the naval bases and dozens of interviews by Salon confirm that undocumented workers are in the facilities. Still, tracing the line from unpaid undocumented workers to their multibillion-dollar employers is a daunting task. A shadowy labyrinth of contractors, subcontractors and job brokers, overseen by no single agency, have created a no man's land where nobody seems to be accountable for the hiring -- and abuse -- of these workers.

Right after Katrina barreled through the Gulf Coast, the Bush administration relaxed labor standards, creating conditions for rampant abuse, according to union leaders and civil rights advocates. Bush suspended the Davis-Bacon Act, which requires employers to pay "prevailing wages" for labor used to fulfill government contracts. The administration also waived the requirement for contractors rebuilding the Gulf Coast to provide valid I-9 employment eligibility forms completed by their workers. These moves allowed Halliburton/KBR and its subcontractors to hire undocumented workers and pay them meager wages (regardless of what wages the workers may have otherwise been promised). The two policies have recently been reversed in the face of sharp political pressure: Bush reinstated the Davis-Bacon Act on Nov. 3, while the Department of Homeland Security reinstated the I-9 requirements in late October, noting that it would once again "exercise prosecutorial discretion" of employers in violation "on a case-by-case basis." But critics say Bush's policies have already allowed extensive profiteering beneath layers of legal and political cover.

Halliburton/KBR, which enjoys an array of federal contracts in the United States, Iraq and Guant?namo Bay, Cuba, has long drawn criticism for its proximity to Vice President Dick Cheney, formerly Halliburton's CEO. Halliburton/KBR spokesperson Melissa Norcross declined to respond directly to allegations about undocumented workers in the Gulf. "In performing work for the U.S. government, KBR uses its government-approved procurement system to source and retain qualified subcontractors," she said in an e-mail. "KBR's subcontractors are required to comply with all applicable labor laws and provisions when performing this work."

Victoria Cintra is the Gulf Coast outreach organizer for Mississippi Immigrant Rights Alliance, which recently partnered with relief agency Oxfam America to help immigrant workers displaced by Katrina. She says KBR is exposing undocumented workers like Martinez to unethical and illegal treatment, even though they are supposed to be paid with federal Katrina-recovery dollars to clean and rebuild high-security facilities like the one President Bush recently visited. Cintra is one of several people fighting to recover the wages owed the workers: She drives her beat-up, chocolate-colored car across the swamps, damaged roads and broken bridges of the Gulf Coast to track down contractors and subcontractors. With yellow legal pad in hand, she and other advocates document abuses taking place at Belle Chasse, the Naval Construction Battalion Center at the Seabee naval base in Gulfport, Miss., and other military installations.

I was with Cintra when she received phone calls from several Latino workers who complained they were denied, under threat of deportation, the right to leave the base at Belle Chasse. Cintra also took me along on visits to squalid trailer parks -- like the one at Arlington Heights in Gulfport -- where up to 19 unpaid, unfed and undocumented KBR site workers inhabited a single trailer for $70 per person, per week. Workers there and on the bases complained of suffering from diarrhea, sprained ankles, cuts and bruises, and other injuries sustained on the KBR sites -- where they received no medical assistance, despite being close to medical facilities on the same bases they were cleaning and helping rebuild.

Cintra and other critics say there's been no accountability from the corporate leaders who signed on the dotted line when they were awarded multimillion-dollar Department of Defense contracts. "The workers may be hired by the subcontractors," Cintra says, "but KBR is ultimately responsible."

"Latino workers are being invited to New Orleans and the South without the proper conditions to protect them," adds Cintra, who recently provided tents to Martinez and several other unpaid Mexican workers who fled Belle Chasse for Gulfport after being dismissed by Tovar. Cintra, a Cuban exile and born-again Christian, has since seen a small tent city of homeless immigrants spring up in the yard of her church, Pass Road Baptist, in Gulfport. "This is evil on top of evil on top of evil," she says. "The Bush administration and Halliburton have opened up a Pandora's box that's not going to close now."

Halliburton/KBR is the general contractor with overarching responsibility for the federal cleanup contracts covering Katrina-damaged naval bases. Even so, there is an utter lack of transparency with the process -- and that invites malfeasance, says James Hale, a vice president of the Laborers' International Union of North America. "To my knowledge, not one member of Congress has been able to get their hands on a copy of a contract that was handed out to Halliburton or others," Hale says. "There is no central registry of Katrina contracts available. No data on the jobs or scope of the work." Hale says that his union's legislative staff has pressed members of Congress for more information; apparently the legislators were told that they could not get copies of the contracts because of "national security" concerns.

"If the contracts handed out to these primary contractors are opaque, then the contracts being let to the subcontractors are just plain invisible," Hale says. "There is simply no ability to ascertain or monitor the contractor-subcontractor relationships. This is an open invitation for exploitation, fraud and abuse."

Congress has heard a number of complaints recently about Halliburton/KBR's hiring practices, including the alleged exploitation of Filipino, Sri Lankan, Nepalese and other immigrant workers paid low wages on military installations in Iraq. And KBR subcontractor BE&K was a focus of Senate hearings in October, for the firing of 75 local Belle Chasse workers who said that they were replaced by "unskilled, out-of-state, out-of-country" workers earning $8 to $14 for work that typically paid $22 an hour.

Sen. Mary Landrieu, D-La., who has been an outspoken critic of the use of undocumented workers at Belle Chasse and on other Katrina cleanup jobs, said in a recent statement, "It is a downright shame that any contractor would use this tragedy as an opportunity to line its pockets by breaking the law and hiring a low-skilled, low-wage and undocumented work force."

Sen. Carl Levin, D-Mich., is also against the practice, citing its "serious social ramifications." As he told Salon, it devastates "local workers who have been hit twice, because they lost their homes."

Seventeen-year-old Simitrio Martinez (no relation to Arnulfo) is another one of the dozens of workers originally hired by Tovar, the North Carolina job broker working under KBR. "They were going to pay seven dollars an hour, and the food was going to be free, and rent, but they gave us nothing," says the thin Zapotec teenager. Simitrio spent nearly a month at the Seabee base. "They weren't feeding us. We ate cookies for five days. Cookies, nothing else," he says.

Simitrio, his co-workers, and the dozens of KBR subcontractors that employ them operate under public-private agreements like federal Task Order 0017, which defines the scope of work to be fulfilled under the contracts. Under the multimillion-dollar Department of Defense contract, KBR is supposed to provide services for "Hurricane Katrina stabilization and recovery at Naval Air Station Pascagoula, Naval Air Station Gulfport, Stennis Space Center and other Navy installations in the Southeast Region," according to a Defense Department press release.

But the details of the agreements remain murky. "Not only is it very difficult to see the actual signed DoD contracts, but it is nearly impossible to see the actual task orders, which assign the goods or services the government is buying," says Scott Amey, general counsel for the Project on Government Oversight in Washington. The military can ask for goods and services on an as-needed basis, he says, which means that the contracts, which add up to tens of millions of dollars, can remain open ended. According to DoD press statements, the contracts call for considerable manual labor, including "re-roofing of most buildings, barracks, debris removal from the entire base, water mitigation, mold mitigation, interior and exterior repairs to most buildings, waste treatment plants, and all incidental related work."

Simitrio and any other workers on the high-security military bases must get permission before entering the guarded gates, where they get patted down by M-16-wielding military police. Responsibility for getting private-sector construction and cleanup workers on the bases rests with the general contractor -- in KBR's case, security chief Kevin Flynn. One of Flynn's responsibilities is to negotiate passes and entry for KBR subcontractors -- and their hires -- to do the work stipulated by the task order.

Yet, following several complaints by Landrieu, and just a few days after President Bush visited the Belle Chasse base, agents from the Immigration and Customs Enforcement agency raided the facility and detained 10 workers who ICE spokeswoman Jamie Zuieback said had "questionable" documentation.

Representatives of Halliburton/KBR do not acknowledge the existence of undocumented workers providing labor for their operations on the Gulf Coast bases. Flynn suggested speaking to the U.S. military, who he said "has real strict control" and would know whether there were undocumented workers. "We have workers from all ethnic groups on the base," Flynn said. "To the best of my knowledge, there are no undocumented workers."

Steve Romano, head of housing on the Belle Chasse base, said, "We have no relationship with [KBR] at all. I have no idea what that's about." A similar response was given by an official at the base's health facility when asked about undocumented workers who complained about health issues and injuries sustained on the KBR sites. The only military person to acknowledge seeing Latino workers was a watch commander who greeted me at an entry to the base. The commander estimated there were 100 such workers there. Meanwhile, representatives with the Mississippi Immigrant Rights Alliance say they received calls from undocumented workers at Belle Chasse who estimated there were more than 500, or "about eight busloads" of immigrant workers on-site.

Texas-based DRS Cosmotech is another subcontractor that provided cleanup crews to Halliburton/KBR in the Gulf. Roy Lee Donaldson, CEO of the company, refused to respond to accusations of non-payment and exploitation leveled at his company by several workers, including 55-year-old Felipe Reyes of Linares, Nuevo Leon, Mexico. (Donaldson hung up the phone when I identified myself as a reporter.)

"Mr. Donaldson promised us we'd live in a hotel or a house. We lived in tents and only had hot water that smelled like petroleum," Reyes said. The city of Belle Chasse has been identified in recent years as one of the most toxically polluted areas in the entire region, with several major energy companies operating there. A wide range of advocacy groups have warned about serious health risks facing Katrina cleanup workers.

"They didn't want to pay us for two weeks of work. So we stopped working. We started a huelga [strike] on the base" added Reyes, who along with other workers, says he was later paid $1,100 -- only part of what he says he was owed.

Another KBR subcontractor, Alabama-based BE&K, says it is not responsible for keeping track of the workers. BE&K spokesperson Susan Wasley said, "I can't say that we require our subcontractors' employees to produce documentation for us, because that's what our subcontractor as employer has to do. That's his responsibility."

At the bottom of the KBR subcontracting pyramid are job brokers like Tovar and Gregorio Gonzalez, who helped hire laborers for Florida-based On Site Services, another subcontractor that reportedly failed to pay wages owed to workers in the Gulf Coast. The job brokers find workers by placing ads in Spanish-language newspapers like La Subasta and El Dia in Houston; the ads typically promise room, board and pay in the range of $1,200 a week. Job brokers also run television ads on Spanish-language stations like Univision. And they attend job fairs in places like Fresno, Calif.

Not all subcontractors refuse to discuss their links to KBR. Luis Sevilla is pretty open about it if you can get to the crowded hangar on the restricted premises of the Seabee naval base where he and his crew sleep and work. Sevilla put together crews for KBR subcontractors to remove asbestos and do other construction work; his workers told me they are paid and treated well. Asked about the people who own the R.V. with a "KBR" logo outside the hangar where his workers crowd into small tents, Sevilla says, "They contract with many, many companies." Interviews with members of Sevilla's crew revealed a number of undocumented workers.

Despite the evidence of undocumented workers cleaning up after Katrina, Halliburton/KBR maintains that it runs its operations within the bounds of the law. "KBR operates under a rigorous Code of Business Conduct that outlines legal and ethical behaviors that all employees and subcontractors are expected to follow in every aspect of their work," spokesperson Norcross said by e-mail. (She did not respond to several requests for a phone interview.) "We do not tolerate any exceptions to this Code at any level of our company."

Standing in spitting distance of the KBR-branded R.V., which is parked as if it were guarding the hangar, Jose Ruiz of Nicaragua knows that his role in the Katrina cleanup is anonymous at best. "I don't have any papers, kind of like in that song by Sting -- 'I'm an illegal alien,'" says Ruiz, who lived in the United States for many years before arriving to work for Sevilla at the Seabee base. "That's the way it is."

Reuters AlertNet - CORRECTED - U.S. reconstruction chief challenged by Iraqis

2005-11-13T13:06:00.000-05:00

Source: Reuters

In BAGHDAD story headlined "U.S. reconstruction chief challenged by Iraqis" please read in paragraph eight ... when temperatures rose above 120 degrees Fahrenheit (around 49 Celsius) ... instead of ... when temperatures rose above 120 degrees Fahrenheit (around 40 Celsius) ... (correcting temperature conversion).

A corrected version follows.

By Claudia Parsons

BAGHDAD, Nov 13 (Reuters) - Iraqi perceptions that not enough is being done to rebuild the country after the U.S.-led invasion are simply a case of bad public relations, Washington's new reconstruction chief said on Sunday.

Challenged by Iraqi reporters at his first news conference since he arrived in Baghdad to head the U.S. embassy's Iraq Reconstruction Management Office, Dan Speckhart listed a string of U.S.-funded projects covering health, education, transport, water and electricity generation.

"I recognise some people are frustrated perhaps that it's not moving as fast as they would like but the basis is there," Speckhart responded when asked why there was little evidence of progress in Baghdad, where electricity is erratic at best.

Speckhart said more than half of a $2.8 billion reconstruction programme in the capital had gone towards infrastructure projects, such as electricity, water and sewage.

"This is a big challenge. There's been more than 30 years of decay and neglect that has run down the infrastructure tremendously," Speckhart said, adding that demand for electricity was also rising as Iraqis buy more fridges, air conditioners and other appliances previously in short supply.

Speckhart said roughly half the electricity generation in Iraq now was the result of U.S.-funded projects; that 350 water and sewage treatment projects had been undertaken; and that 700 schools had been renovated.

In July a report by the U.S. Congress' investigative arm said that as of May 2005, power generation in Iraq was at a lower level than before the U.S. invasion of Iraq in March 2003.

Many Iraqis spend whole evenings without power, and last summer, when temperatures rose above 120 degrees Fahrenheit (around 49 Celsius), families were making do with about eight hours of power a day, two hours on and then four off.

Iraq's oil output, which U.S. officials initially said would help pay for rebuilding projects, had also dropped in the past two years, the Government Accountability Office report said.

During the 2003 U.S.-led invasion, there was extensive damage to buildings, including the telecommunications system, bridges and other infrastructure, while electricity and oil installations suffered from a decade of international sanctions.

LARGEST RECONSTRUCTION PROGRAMME

Speckhart described the $30 billion rebuilding programme funded by the U.S. and other international donors as "the largest reconstruction programme for a single country in the history of the world". But he said even that was only a start, and further international help would be needed.

Another Iraqi reporter asked him about a recommendation by a U.N. watchdog agency that Washington should repay $208 million in apparent overcharges paid to a Halliburton Co. subsidiary.

Speckhart said the problem was much of the U.S.-funded work done was not visible enough. "I wish I had time to take you all on field trips," he told the reporters.

"I understand it's a big country and it's not happening as fast as Iraqis would like, but it is happening," he said.

Pressed by a third reporter about an unfinished hospital project in a Shi'ite district in Baghdad, Speckhart said penalties for companies would depend on their contract.

"Sometimes in Iraq there can be delays that are not the fault of the companies," he said.

A report by the U.S. special inspector general for Iraq reconstruction at the end of October said more than a quarter of all reconstruction funds had been spent on security costs to protect contractors, hundreds of whom have died in Iraq. That eats away at what ends up being spent on Iraq and Iraqis.

"We're trying to build and the terrorists are trying to destroy," Speckhart said, adding that U.S. authorities often did not publicise successes to avoid attracting attacks.

"Part of the challenge we have faced is we haven't advertised what we're doing in all these places," he said.

Speckhart said reporters who questioned why so many contracts had gone to U.S. firms, such as Halliburton, a company once led by Vice President Dick Cheney, were misinformed.

"It's not the case any more that there are just large international firms doing this," Speckhart said. "Iraqi firms are making the money."

SignOnSanDiego.com -- Halliburton repays $8.6 million to pension holders

2005-11-11T14:56:00.000-05:00

HOUSTON ? Oil field services company Halliburton Co. repaid $8.6 million to pension holders in 2003 and 2004 for failing to properly fund the plans and for a bookkeeping error, according to a letter from the Labor Department.
The Labor Department closed its investigation into the pension violations after the payments were made, according to a copy of the Oct. 6 letter obtained by Reuters Friday.

"Because you have taken the corrective actions ... the Department will take no further action," Roger Hilburn, regional director for the Labor Department said in the letter, which cited several potential legal violations by the company.

The Houston-based company said once the errors were discovered, it moved to cover the payments.

"Halliburton cooperated extensively with the Department of Labor to identify and successfully resolve, on a voluntary basis, issues involving certain retirement plans," the company said.

According to the letter, Halliburton failed to make proper payments on three occasions to the fund.

The company paid about $5.8 million in stock and cash in 2003 and 2004 to the fund from the sale of Prudential Insurance Co. stock that it wrongly kept, and also paid $2.6 million to reimburse its pension trusts for expenses.

An error in the company's payroll system in 2003 wrongly led to about 100 employees being charged a 10 percent early withdrawal penalty on their pensions by the Internal Revenue Service. The company reimbursed those employees the $191,000 they had been charged.

Feds say Halliburton mishandled pension funds - NYT - General Industrial Services - Industrial, Diversified - Industrial Products & Services - General

2005-11-11T10:15:00.000-05:00

By MarketWatch
Last Update: 12:43 AM ET Nov. 11, 2005

SAN FRANCISCO (MarketWatch) -- An investigation of Halliburton Co.'s pension plan has found the company violated federal pension law, including charging some costs of Halliburton's executive pension and bonus plan to the workers' pension fund, according to a report published Friday.

According to the Times story, the Labor Department concluded that Halliburton's actions violated federal pension law prohibitions against self-dealing and using pension money for the benefit of the company, as well as the requirement to handle pension money with "care, skill, prudence and diligence."

The documents show Halliburton replenished funds that were improperly withdrawn from the pension fund, made the affected individuals whole and paid an undisclosed tax penalty, the Times reported.

Two of the violations began while Vice President Dick Cheney was the company's chief executive. The third, which the Times reported involved the largest amount of money, took place after Cheney resigned in 2000.

The report said Halliburton responded to an inquiry about the findings with a statement that said: "Halliburton cooperated extensively with the Department of Labor to identify and successfully resolve these issues on a voluntary basis. As the letter indicates, these issues have all been fully resolved."

Representatives for Halliburton could not be reached early Friday for comment on the report.

Shares of Halliburton fell $2.40 Thursday, or 4.11%, to $56.

UN audit says Halliburton overcharged Iraq - Yahoo! News

2005-11-05T20:25:00.000-05:00

A UN auditing board has recommended the United States pay as much as 208 million dollars to Iraq for overbilling or shoddy work performed by a subsidiary of the US oil services firm Halliburton, The New York Times reports.

The work, carried out by Kellogg, Brown and Root, was paid for with Iraqi oil revenues but was delivered at inflated prices or done poorly, the board said, quoted by the US newspaper.

While audits had called into question 208 million dollars worth of contracting work, it was too early to say how much of the funds should be paid back because analysis of financial statements and documents was still under way, the newspaper wrote.

Once the analysis was finished, the UN monitoring board "recommends that amounts disbursed to contractors that cannot be supported as fair be reimbursed expeditiously," the board said in a statement, quoted by the daily.

The board, which relied mainly on Pentagon audits for its findings, could only make recommendations and the ultimate decision on repayment would be up to the United States government. The Pentagon has yet to release its audits of the contracting work.

A spokeswoman for Halliburton told the newspaper questions raised by earlier US military audits had focused on documentation and not the quality of the work performed by Kellogg, Brown and Root.

"Therefore, it would be completely wrong to say or imply that any of these costs that were incurred at the client's direction for its benefit are 'overcharges,'" spokeswoman Cathy Mann was quoted as saying in an e-mail to the paper.

Halliburton, once managed by now Vice President Dick Cheney, has been accused previously of overbilling and opposition Democrats have alleged it enjoyed preferential treatment for government contracts. Cheney has rejected the allegations.

A former Iraqi academic, Louay Bahry, told the newspaper that the board's findings would confirm suspicions among ordinary Iraqis that Washington's underlying motive in going to war against Saddam Hussein's regime in 2003 was to control the country's oil wealth.

"Something like this will be caught in the Iraqi press and be discussed by the Iraqi general public and will leave a very bad taste in the mouth of the Iraqis," Bahry, who works at the Middle East Institute in Washington, told the newspaper.

Charged with overseeing Iraq's oil revenues and money seized from Saddam Hussein's regime, the monitoring board includes representatives from the United Nations, the International Monetary Fund, the Arab Fund for Economic and Social Development, the International Bank for Reconstruction and Development and the Iraqi government.

The results of the audit should allow the Iraqi government "the right to go back to K.B.R. (Kellogg, Brown and Root) and say, 'Look, you've overbilled me on this, this is what you could repay me,'" a board member was quoted as saying by the paper.

HoustonChronicle.com - Suit says Halliburton shirked on overtime

2005-11-03T08:33:00.000-05:00

5 workers claim Army contract was broken
By L.M. SIXEL
Copyright 2005 Houston Chronicle

Halliburton and KBR violated their contracts with the Army when they failed to pay workers in Iraq and Kuwait overtime, a lawsuit filed in a Houston federal court alleges.

The lawsuit, filed by five workers seeking class-action status, claims Halliburton and its subsidiaries shorted 20,000 to 40,000 truck drivers, cooks, mechanics and other workers millions of dollars.

"It appears to us from our investigation and talking to several hundred employees that they were required to work 80 to 100 hours a week simply because it's cheaper to have them work overtime then have (other employees) start a new week," said Ramon Rossi Lopez, a trial lawyer with Lopez, Hodes, Restaino, Milman & Skikos in Newport Beach, Calif.

Houston-based Halliburton declined to discuss the lawsuit.

"At this time, we are investigating the situation, but with litigation pending it would not be appropriate to comment further," said Halliburton spokeswoman Cathy Mann. The Army also did not respond to requests for comment by press time.

According to the suit, Brown & Root Services signed a contract with the Army in December 2001 to provide non-combat support services.

Despite the fact that federal law does not require companies to pay their overseas workers overtime, the agreement between the Army and Halliburton required the payment of time and one-half for workers who put in more than 40 hours a week, the suit alleges.

But Halliburton and its subsidiaries required its workers to sign contracts stipulating that they would not receive overtime, according to the lawsuit, which also claims they routinely worked between 80 to 100 hours a week.

Halliburton's contract is under the Logistics Civil Augmentation Program, better known as LOGCAP, which helps plan for the use of civilian contractors in wartime and emergencies.

lm.sixel@chron.com

statesman.com | Ex-official may testify on Abramoff

2005-11-02T10:27:00.000-05:00

THE DENVER POST

Wednesday, November 2, 2005

WASHINGTON -- The former top deputy to Interior Secretary Gale Norton, Steven Griles, is expected today to become the first former high-ranking Bush administration official to testify in the Senate investigation of indicted lobbyist Jack Abramoff and his dealings with Indian tribal gambling.

Griles aggressively pushed Norton and the Interior Department to help Abramoff's clients and block their rivals, according to documents and officials.

The Senate Indian Affairs Committee is investigating whether Abramoff bilked Indian tribes out of millions of dollars.

KRT Wire | 11/01/2005 | Civilian contractors in Iraq dying at faster rate as insurgency grows

2005-11-01T20:45:00.000-05:00

BY SETH BORENSTEIN
Knight Ridder Newspapers

WASHINGTON - As the nation focused last week on the 2,000th U.S. soldier who died in Iraq, Gloria Dagit of Jefferson, Iowa, got a box filled with the belongings of her son, Keven, who was killed when his convoy of trucks was ambushed in northern Iraq.

Keven Dagit's death Sept. 20 - along with two other truckers - didn't register on the tally of Iraq deaths broadcast daily. That's because they were civilians working for U.S. defense contractors.

As the violence of the protracted war continues and some 75,000 civilian employees struggle to rebuild the war-torn nation and support the military, contractor casualties mount. Their deaths have more than tripled in the past 13 months.

As of Monday, 428 civilian contractors had been killed in Iraq and another 3,963 were injured, according to Department of Labor insurance-claims statistics obtained by Knight Ridder.

Those statistics, which experts said were the most comprehensive listing available on the toll of the war, are far from complete: Two of the biggest contractors in Iraq said their casualties were higher than the figures the Labor Department had for them.

The dead and injured come from many walks of life, drawn by money and patriotism. Some are American citizens. Most are not. They are truckers, police officers and translators. They're counted only if they were paid by companies hired by the Pentagon. Their deaths and injuries were compensated by insurance policies required by federal law.

The Labor Department lists 156 dead for an L-3 Communications subsidiary in Virginia. The company, which provides translators who work with the military, puts the death toll at 167, of whom 15 were Americans. The Labor Department's accounting reports that Halliburton, the largest contractor in Iraq, has had 30 employees killed in Iraq and 2,471 injured. A Halliburton spokeswoman, Melissa Norcross, said Tuesday that the company had lost a total of 77 workers in Iraq, Afghanistan and its base in Kuwait. One worker is unaccounted for. Halliburton couldn't give a breakdown by country.

The government's listing shows the contractors' casualty rate is increasing. In the first 21 months of the war, 11 contractors were killed and 74 injured each month on average. This year, the monthly average death toll is nearly 20 and the average monthly number of injured is 243.

"You've got a greater number of contractors on the ground carrying out a greater number of roles putting them in danger," said Peter W. Singer, a contracting expert at the Brookings Institution, a Washington research center. "And issue No. 3, you've got a much more dangerous environment."

Keven Dagit, a truck driver for Halliburton, knew it. The day before he was killed he told his mother, "Now, it's really getting dangerous," she recalled.

He left two daughters, ages 9 and 11.

"I want more people to realize that these guys are out there defenseless," Gloria Dagit said. "It was an ambush. ... They are not allowed to carry weapons."

So far this year, 196 contractors in Iraq have been killed and 2,427 have been injured, according to Labor Department statistics.

In August, Mike Dawes of Stillwell, Okla., a longtime police officer who'd been hired to train Iraqi police, was killed by a suicide bomber in downtown Baqoubah, 36 miles northeast of Baghdad. He'd worked for DynCorp International and had survived as a private contractor in Kosovo, where he also taught police from Poland, India and Pakistan. He described that experience as "really an honor."

Dawes "was an excellent officer," said Stephen Farmer, the police chief at the Tahlequah Police Department in Oklahoma. "If he wasn't the first one there on the call, he was usually the one right behind."

The invisible nature of the contractors' deaths irks their friends and families.

"We get hurt right next to them in many cases," said Erick Fern, a Houston trucker for Halliburton who injured his back in Iraq and is fighting to get compensation. "It seems to be that we don't exist since we're getting paid."

Private companies aren't obligated to report deaths to the news media, as the military does. But they're required to carry federal insurance for all their workers in Iraq and to report claims to the Labor Department under the Defense Base Act. That doesn't include contractors who work for agencies outside of the Pentagon, however.

"Most of what you see on TV is strictly about the military," said Steve Powell of Azle, Texas, who worked for Halliburton in the Iraqi city of Mosul and watched friends get killed. "There's very little said about the contractors. ... I felt like I was over there doing something to help the military in a way."

Rick Kiernan, a spokesman for L-3 Communications, said his firm had had so many losses because its translators were "with the combatants; they're with the special forces; they're with the infantry units. That probably puts them out in the most dangerous places."

Kiernan noted that L-3's employees aren't killed in combat, they're being assassinated. Of the company's 152 dead Iraqi employees, 105 were murdered because they collaborated with Americans, he said.

"They've been targeted," Kiernan said. "A lot of these local nationals are really doing their part as well in a very courageous way."

The workers' families also make sacrifices.

Yvette English, a pregnant Colorado woman with a 19-month-old daughter, helps run an Internet message board to assist families with loved ones in Iraq. Her husband is a Halliburton truck driver.

"While he's gone, it's very lonely," she said. "You didn't bargain in a marriage to be alone and be a single mom. Then again, you support your husbands and what they're doing. For them, it's a sense of duty."

Todd Drobnick of Everett, Wash., was one of the first American employees of L-3 to be killed, dying with two military personnel in a suicide bomb attack two years ago this month.

For his father, John Drobnick, his son's loss is still painful. "I was just crying today," he said.

"There are days I get angry, but that's not the way you honor someone; you go and do something decent," he said. So he and his wife, Sharon, plan to mark the second anniversary of their son's death by fixing up houses that Hurricane Katrina damaged in Louisiana.

"That's the kind of thing he would have done," John Drobnick said, weeping. "That's the reason he worked in the (Persian) Gulf. He was there five times. He went back because he loved the people, because he thought they needed help and he could help."

Soldier of fortune

2005-10-30T11:23:00.000-05:00

By: Anish Trivedi
October 30, 2005
--------------------------------------------------------------------------------
Just about 18 months ago, I was packing my bags. For Baghdad. The allied invasion was over. Iraq had been liberated from slavery under Saddam. And a new world order was sweeping the streets, and everything else, clean.

This was the new land of opportunity. While Halliburton may have been making hay, thanks to the largesse of the US Vice Presidential office, there was enough reconstruction activity to excite the rest of the business world.

Including me. I was going to buy two radio stations, one in Baghdad itself. The other in Kurd country. As a business, it made perfect sense. It was significantly cheaper than trying to buy one in Bombay.

And as a new market, it offered far more possibility than the taxi drivers in this town who appear to be the only audience that our radio stations aim for. So there I was, spreadsheet in hand, ready to bet that I could give Iraqi youth their first fling with international entertainment in years.

I didn’t. Largely because I couldn’t go. Not that there was a problem getting a visa. Back then, no one knew who needed to issue a visa. So as long as the US military command didn’t mind my coming, all was well.

The problem was in just getting there. Two flights a week from Amman. If that. Because air traffic control in Iraq didn’t know how safe the corridor coming in was. It seems there were still a few 100 surface-to-air-missiles in existence in the hands of rebels. So ‘planes flew high over Baghdad airport. Then dived down in a narrow flight path that brought them to the ground. Hopefully with their fuselage intact. And passengers alive.

At the time I sat in Dubai trying to make it across to Amman so I could then make it over to Iraq, the corridor closed. The occupying force had discovered that there were more missiles on the ground than they’d previously thought possible.

Which meant tempting fate while catching a flight. While I am willing to go to most lengths to further my business and the reach of radio around the world, I draw the line at having to put my head between my legs hoping my ass will still be attached to them when I reach the ground. I opted to stay in Dubai.

Cowards don’t die

Which probably means I lost my last opportunity in a long while to see Iraq. In the week I waited in Dubai, a few dozen soldiers, mostly American, lost their lives in rebel attacks. The hotel in which I would have stayed, and indeed on whose roof the radio station I was buying had its transmitters, had gaping holes in the walls.

Rockets fired into the building didn’t kill anyone that week. But they played havoc with room service. While I wouldn’t quite call myself a coward, I do draw the line at being blown up. Or shot. Or kidnapped. It’s hard to run a radio station if your tongue’s been ripped out. Along with the rest of your head.

Since then, the body count has risen considerably. In this last week, a sombre ceremony counts the 2,000th American soldier to be killed in Iraq since the war of liberation began.

And then there are Brits. And the soldiers of other nations. And the journalists. And the contractors. All of whom have fallen victim to an unseen army. One that doesn’t want them there.

It can’t just be the Saddam supporters. The former dictator is behind bars. In no position to be summoning troops from his jail cell. The rest of his regime is decimated. With the various public enemies the US has tried to catch or killed.

Or captured. Which doesn’t leave much more than the citizens of the country. Who for some strange reason don’t appear to be too happy with their new found freedom. So when they’re not mowing down their own people, they’re killing soldiers.

Two thousand and counting.

Not that it’s going to stop. In his wisdom, something only he believes he has, Mr Bush has reiterated his desire to keep his soldiers there. To keep fighting a losing battle. To keep talking of peace when the presence of those men and women just prolongs the war. You’d think the man would get it. But then, let’s face it. He’s not very bright.

I never did buy those radio stations. It’s bad enough being in a city where email and text messages and telephone calls heap criticism on your jocks. To be in one where a missile is the only missive you get when you offend someone doesn’t make much sense. Not to me.

So there you have Baghdad. A city without peace. Without hope. And without radio. But come to think of it, given what we hear here, that’s not a bad thing.

Stock Market News and Investment Information | Reuters.com

2005-10-28T10:58:00.000-04:00

NEW YORK, Oct 28 (Reuters) - Halliburton Co. (HAL.N: Quote, Profile, Research) on Friday named a new chief financial officer for KBR, its engineering and construction subsidiary that it is considering spinning off in an initial public offering.

Cedric Burgher was with Halliburton from 2001 to 2004 before leaving to become CFO of Burger King Corp., the company said. He will be based in KBR's Houston office.

Halliburton said in September 2004 it would restructure KBR and possibly sell it or launch an IPO for the unit.

Prevailing Wages to Be Paid Again On Gulf Coast

2005-10-27T17:30:00.001-04:00

Rule Was Waived for Post-Katrina Work

By Griff Witte
Washington Post Staff Writer
Thursday, October 27, 2005; A01

The White House yesterday reversed course and reinstated a key wage protection for workers involved in Hurricane Katrina reconstruction, bowing to pressure from moderate House Republicans who argued that Gulf Coast residents were being left out of the recovery and that the region was becoming a magnet for illegal immigrants.

The Bush administration decided in the days after the hurricane to waive a provision of the Davis-Bacon Act that guarantees construction workers the prevailing local wage when they are paid with federal money. The administration said the waiver on hurricane-related work would save the government money and speed recovery efforts.

The decision immediately was criticized by Democrats and labor unions. It also exposed fault lines in the president's party. Conservatives strongly backed the waiver. But a group of moderate Republican members of Congress -- many from districts in industrial areas populated by blue-collar workers -- lobbied the White House and the congressional leadership for the prevailing-wage provision to be reinstated. In recent weeks, the lawmakers wrote to President Bush, met with Deputy White House Chief of Staff Karl Rove and Republican National Committee Chairman Ken Mehlman, and persuaded House Speaker J. Dennis Hastert to arrange a meeting with Andrew Card, the White House chief of staff.

Yesterday morning, leaders of that group were summoned to the White House, where Card told them that the administration had changed its mind. The prevailing-wage rule is to go back into effect Nov. 8, two months after the suspension. It will not apply retroactively.

"When the crisis of the moment is over, we should return to the regular order. Part of that order is Davis-Bacon," said Rep. Steven C. LaTourette (R-Ohio). He said the law is needed to ensure that skilled, local workers find jobs and to keep the area from being inundated with illegal immigrants willing to work for low wages.

The decision was a rare victory for organized labor during George W. Bush's presidency. It was a defeat for traditional Bush allies, including the construction industry and conservatives in Congress. Yesterday, both groups said the president's reversal would inflate the cost of reconstruction.

"It's the kind of thing that shows they're turning their backs on the things that Ronald Reagan and those who built this party care deeply about," said Rep. Tom Feeney (R-Fla.).

"Certain special interests and their allies in Congress are more concerned about reinstating this wasteful and outdated act than they are with fairly and expeditiously reconstructing the devastated areas," M. Kirk Pickerel, chief executive of Associated Builders and Contractors, said in a written statement.

White House spokesman Trent Duffy said yesterday that the waiver was always considered temporary and that it had outlived its usefulness.

Gulf Coast workers and businesses have complained that they are being left out of the recovery. While the federal government spends more than $60 billion on recovery, they say that out-of-state companies receive most of the contracts and that many of those firms pay workers less than the prevailing wage -- which is often the union wage.

For example, 75 unionized electricians said they lost their $22-an-hour jobs rebuilding the Belle Chasse Naval Air Station near New Orleans because a Halliburton Co. subcontractor found workers to do the job for less.

The company, Alabama-based BE&K, said yesterday that U.S. Immigration and Customs Enforcement investigators found two undocumented workers on the company's payroll. The company said the two had provided false paperwork. Last week, Navy officials said they found 13 illegal immigrants working at Belle Chasse for another contractor, Texas-based BMS Catastrophe Inc.

New Orleans resident Sam Smith, 55, was among those who lost jobs. He expressed satisfaction yesterday with the reinstatement of the prevailing-wage rule, but blamed the administration for his dismissal at a time when he was trying to put his life, and his city, back together. "This is the way it should have been from the beginning," he said.

Rep. Frank LoBiondo (R-N.J.) said the reinstatement would help federal money flow to people like Smith, who lost his 9th Ward house in the storm. "People who live in the area will have the opportunity to do the rebuilding," LoBiondo said.

Many of the 37 House Republicans who pushed for the reinstatement are from swing states or Democratic-leaning states where labor unions are relatively strong. The congressmen said ending the exemption could save money because it reduces the potential for fraud. The waiver exempted some contractors from reporting wage data to the government.

Since Hurricane Katrina, the Bush administration has reversed several decisions made as it tried to get the recovery on track after a slow start.

For example, it rescinded a ruling that lifted the purchase limit on government credit cards from $15,000 to $250,000. Later, the acting director of the Federal Emergency Management Agency, R. David Paulison, said the agency would put out for bid four big housing contracts that it had awarded without competition.

© 2005 The Washington Post Company

HoustonChronicle.com - U.S. settles some Halliburton disputes

2005-10-27T17:30:00.000-04:00

By TOM FOWLER
Copyright 2005 Houston Chronicle

The Army Corps of Engineers has settled payment disputes for six out of 10 task orders under its Restore Iraqi Oil contract with Houston-based Halliburton.

Those task orders primarily dealt with fuel that the company's subsidiary, KBR, provided as part of a project to restart Iraqi oil field production after the 2003 U.S. invasion of the country.

The 10 task orders covered jobs costing about $1.4 billion. Auditors concluded the military had been overcharged by about $108.4 million for fuel brought into Iraq from Kuwait under the orders.

In a conference call this week, Halliburton officials said the six task orders had been settled in their favor.

"We have resolved the majority of that, over $1 billion of the $1.4 billion" in contracts, Chief Financial Officer Christopher Gaut said during the call. "So that's largely behind us, and we're just negotiating the few remaining task orders that were separate and had some other activities with them."

A Corps of Engineers spokesman confirmed the settlements but said he didn't know the terms.

Halliburton booked $24 million in third-quarter earnings related primarily to the partial settlement of the fuel dispute.

The company's billings have been under scrutiny by the Pentagon and members of Congress in the past. Democrats claim the company has been able to run up excessive charges largely because of "deficient Defense Department oversight and an unquestioning reliance on Halliburton's assurances."

The company says those claims have been exaggerated.

Halliburton's Iraq-related work in the third quarter accounted for $1.2 billion in revenue and $44 million in income.

Sen.'s office: Halliburton subcontractor hired illegal workers

2005-10-21T02:49:00.000-04:00

NEW ORLEANS A Halliburton subcontractor is denying that immigration agents are detaining a large number of illegal immigrants it hired to do Hurricane Katrina recovery work.

Senator Mary Landrieu's office said today that there may be more than 100 workers involved. They were detained yesterday by Immigration and Customs Enforcement agents. They had been setting up a tent city at a Navy base just outside New Orleans.

The Birmingham, Alabama-based subcontractor, B-E-and-K, was awarded the work by Halliburton, which won contracts after Katrina to repair several military bases in the Gulf Coast region.

A B-E-and-K spokeswoman says immigration officials descended on the work site, but she denies that any of its employees were detained.

She says that all the company's workers have valid work documents and that only about three of the 150 workers at the Navy base are green-card holders.

A Web of Truth

2005-10-19T17:28:00.000-04:00

By Neely Tucker
Washington Post Staff Writer
Wednesday, October 19, 2005; C01

Bunny Greenhouse was once the perfect bureaucrat, an insider, the top procurement official at the U.S. Army Corps of Engineers. Then the 61-year-old Greenhouse lost her $137,000-a-year post after questioning the plump contracts awarded to Halliburton in the run-up to the war in Iraq. It has made her easy to love for some, easy to loathe for others, but it has not made her easy to know.

In late August, she was demoted, her pay cut and her authority stripped. Her former bosses say it's because of a years-long bout of poor work habits; she and her lawyer say it's payback for her revelations about a politically connected company.

Now Bunnatine Hayes Greenhouse is becoming one of the most unusual things known in the upper echelons of government and industry -- a top-shelf bureaucrat who is telling all she knows. For honesty's sake, she says.

"It's not a process for the weak-hearted," says Jeffrey Wigand, the former tobacco company executive whose high-profile whistle-blowing inspired the film "The Insider."

Greenhouse, whose case has also become a media event, unloaded more of her burn-the-house-down allegations on PBS's "Now" last week because, let her tell you, Bunny Greenhouse didn't grow up on the black side of the segregated tracks in Rayville, La., to run from a fight -- even if that includes the vice president of the United States.

"[Expletive] yourself!" former Halliburton chief executiveand current veep Dick Cheney snapped at a senator last year in an exchange related to Greenhouse's allegations.

"If prison inmates don't like the warden who keeps them from breaking out," Greenhouse says of her stewardship of Corps contracting, "do you replace the warden because the inmates don't like him?"

Ah. Metaphors equating the Corps of Engineers with prison inmates. Expletives. Vice president. Throw in a subtext of race, gender and war profits. You see the problem here.

* * *

In the dazzling eye of memory, she can see the wiry object twisting there, perhaps in the lazy hours of a Sunday afternoon, when she pulled it out to admire it once again.

It was a bit of metal twisted in the shape of an eye, a gift from her big sister. It was kept, in a childhood pun, in a can: an Eye-Can . A reminder of can-do determination.

Lost in the middle of cotton country in the Louisiana delta at the mid-century, Bunnatine Hayes and her siblings clung to such self-confidence like a life raft. Their parents, Chris and Savannah Hayes, were uneducated and numbingly poor, stuck in a world run by richer, more powerful whites. They raised their children with a ferocious, almost frightening drive.

Bunny's older sister grew up to be one of the first black professors at Louisiana State University, holding a doctorate in linguistics and literature of Chaucer. An older brother got his doctorate and taught at Southern University in Baton Rouge. Her kid brother, Elvin -- Elvin Hayes -- grew up to score 27,000 points in the National Basketball Association, lead the Washington Bullets to their 1978 title and be named, at the end of the century, as one of the best 50 athletes to ever play the game.

"My father always taught me to be strong and have dignity, to not have to bow down or have anyone run over you," he once told a Dallas newspaper, summing up the family creed.

So it stands to reason that Bunny was not only valedictorian of her high school class, not only a magna cum laude graduate of Southern in three years (with a degree in math), but she also went on to get three master's degrees over the years -- in business management from the University of Central Texas, in engineering management from George Washington University and in national resources strategy from the National Defense University at the Industrial College of the Armed Forces.

She married an Army man, Al Greenhouse. She taught math and, during the lightning-rod year of local integration, came back to teach at her hometown high school. She was the first black teacher the white students had ever seen.

"At the time, I didn't quite know what to make of a black person who didn't have a hoe in their hand," remembers Miriam Lane Davey, a white student of Greenhouse's that year, 1968. "She had been somewhere else, she was cosmopolitan, she was sophisticated. It really changed my viewpoint. . . . Later on, when I saw Claire Huxtable [the wife on "The Cosby Show"], I thought she was just like Mrs. Greenhouse."

Greenhouse, like her famous kid brother, didn't have problems with self-confidence as an adult and, like her kid brother, didn't have a problem with letting others know that. When a reporter asks for her rsum, she hands over a 32-page document.

"The Hayeses were different ," she says now, proud. "They were raised different."

It's not clear who she means different from , but it is clear that she means they were exceptional, and Greenhouse would hew to little touches of refinement over the years. She is broad-shouldered, elegant, devoutly Christian. She often refers to herself in the third person. She enunciates "math" as mathematics ; "again" as agayn .

She followed Al in his career as an Army procurement official, and after 16 years as a teacher, entered government service. She started as a mere GS-5, near the bottom of the scale, specialized in the minutiae of contracting. She worked insane hours, attended endless job-improvement seminars, raised three children and climbed the government ladder, working at the Pentagon and for the Army.

In 1997, it all came together -- Lt. Gen. Joe Ballard hired her as one of the top civilians in the Corps of Engineers. Her position was the principal assistant responsible for contracting, or the PARC. She oversaw the management of billions of dollars. The job elevated her into the Senior Executive Service, the very top level of the federal government's 1.8-million-employee pyramid.

Ballard hired her, he has said, because she was "one of the most professional people I've ever met." As the first black director of the Corps, he also wanted her to break up the "good old boys' " network of informal contracting arrangements at the Corps, he said, to professionalize the agency.

Greenhouse was an instant success. She handled the budgets, conducted workshops, gave speeches, produced a newsletter, developed proposals for ways to save tens of millions of dollars, work records show.

"There wasn't another SES who could touch me sideways," she says.

Three years running, she was rated near or at the highest level possible in job reviews. Sample job review comments from those years: "Effective, enthusiastic, energetic, tenacious, selfless . . . ensured the epitome of fairness in Corps contracting . . . has ensured professionalism in the acquisition workforce second to none . . . made the tough decisions that reflect the highest degree of entrepreneurial and critical thought."

That should be the end of the story, shouldn't it? Isn't that the way these up-from-poverty things go?

* * *

In reality, there were fault lines developing in her job that would, during the Iraq war, blow up into national news.

Ballard once witnessed a senior Corps attorney yelling at Greenhouse in a staff meeting with such vitriol that Ballard had to clear the room to lecture the man about civility, he wrote in a 2003 affidavit. He wrote in the same document that he had been told that staff officers routinely made racist comments about Greenhouse and that they were greatly resistant to the idea of more minorities working there. After he retired in 2000, he was told that the senior attorney in question had told a director of human resources that the attorney had pledged to fire her, and he used a vulgarity in describing the woman who prided herself on being refined.

It's impossible to survey the full story of what happened in subsequent years, because most records have not been made public, and the Corps declines all comment on personnel issues. But it is clear, looking at documents requested from and made available by Greenhouse's lawyer, veteran whistle-blower attorney Michael Kohn, that her career hit an ugly wall shortly after Ballard left. Whether she failed at the larger aspects of her post or was undermined and removed under false pretenses is up for speculation.

Her new bosses said in an internal hearing that she was "hardheaded." She says she was told that "nobody likes you." She was assigned a deputy who, her superior later acknowledged, had problems dealing with "a female boss." The man eventually left after bitter confrontations with Greenhouse, but the episode led her to file a complaint with the Equal Employment Opportunity Commission alleging race and gender discrimination (a complaint that has never been investigated, Kohn says).

Her annual job reviews went from the best possible to the worst possible. Review panels twice instructed Corps officials to upgrade them, after concluding they were unwarranted. Sample remarks: "Needs to work harder to gain the respect of subordinates in her office. . . . Interaction with headquarters staff and field commanders is poor. . . . Attempts at counseling have been unproductive."

Ballard reviewed those appraisals in retirement. He called them "absurd" in his affidavit. He wrote that the problem was that Greenhouse was insisting that the letter of the law be followed and that when she refused to back down, she was pushed aside. (He did not return five phone calls requesting comment for this article.)

Before the war in Iraq even started, Greenhouse and her superiors were quarreling almost daily.

With the war looming, the agency wanted to award a no-bid "emergency" contract to Kellogg, Brown and Root (a Halliburton subsidiary) that was originally scheduled to last for two years -- and up to five years -- to provide a range of services in Iraq.

A potential five-year emergency? Worth billions? On a no-bid contract?

Greenhouse thought that was absurd. There were other companies who could do the work, she said, and they should be allowed to bid on it. She wrote that the original "emergency" contract should be limited to one year, with no options after that. She says when she got the final contract back, it was unchanged. So she wrote her reservations on it in ink.

Her notations became public through a media outlet's Freedom of Information Act request to see government war contracts. Given Halliburton's political connections, the issue eventually blew up into international news last fall, just before the elections. Greenhouse and Kohn gave interviews to national media. The FBI opened an investigation -- still ongoing -- into alleged price-gouging, overbilling and awarding of sole-source contracts to a politically connected company. Many of those questions still linger, and by no means do they all stem from Greenhouse, but from a range of sources. Greenhouse herself made several allegations of wrongdoing, but one of the most sensational charges, initially seeming to back up her concerns, was a Pentagon audit that found that KBR apparently overbilled the government $61 million for fuel in Iraq.

The audit was quelled, however, when the Corps granted KBR a waiver from explaining the apparent discrepancy. The agency said KBR's pricing had been dictated by an Iraqi subcontractor.

As the chief contracting officer, Greenhouse was furious. She said her superiors made an end-run around her. They waited until she was out of the office, she said, then hurriedly approved the paperwork in a single day. She was never told about it until it hit the headlines.

Halliburton spokeswoman Melissa Norcross wrote in an e-mail response to several questions that Greenhouse's claims of overcharges "are misinformed" and that the company "undertook substantial efforts -- including two competitive procurement processes -- to ensure that it was paying the lowest possible price."

Norcross also noted that a Government Accountability Office report said the initial contract dealing with Iraq was "properly awarded."

The atmosphere in the office was getting worse than unpleasant -- the Corps was already trying to demote her -- but Greenhouse was just getting a full head of steam.

This past summer, when she prepared to testify before the Senate Democratic Policy Committee -- the only congressional body that has expressed interest in her charges (though the committee has no oversight power) -- Greenhouse's superiors told her it would not be in her "best interests" to do so.

She thought about that over the weekend. She thought about the lessons her parents imparted to her, a half-century ago, in another time, another place.

Then she testified: "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."

It was stunning in its confrontational nature, its moral conviction, its assurance -- and, one might observe, in its full-blown career suicide.

The Corps kicked her out of her job weeks later.

In Greenhouse's dismissal letter, Lt. Gen. Carl A. Strock said her removal was "based on her performance and not in retaliation for any disclosures of alleged improprieties she may have made." She was moved to a lesser post in the civil works division. She says she was "totally" removed from contracting and was banished from the Senior Executive Service. She also says her yearly salary has been cut by $2,000.

"They stuck me in a little cubicle down the hall, took my building pass," she said. "It's all about humiliation."

Her dismissal made national news, played out in editorials and news stories as a whistle-blower done wrong.

"She was aware she was taking considerable risk," says Marty Linsky, author and professor at Harvard University's John F. Kennedy School of Government, who taught Greenhouse in a leadership seminar a few years ago. "She cared a lot about the values she believed in and was prepared to take risks that a lot people would not have."

The merits of her allegations about contracting, about her treatment in the Corps, remain unclear.

A Corps spokesman declined to address the specifics. Instead, the Corps issued a written statement that says the agency followed the law in its dealings with Halliburton. As for Greenhouse's EEOC complaint, the statement said the agency "takes seriously" its employees' right of privacy, and thus could not comment.

Any further investigation appears to be minimal.

This, from another DPC hearing last month, after Greenhouse was demoted:

Sen. Byron Dorgan (D-N.D.): "Ms. Greenhouse, has the Inspector General's Office made any attempt to interview you?"

Greenhouse: "None whatsoever."

Dorgan: "None?"

Greenhouse: "None whatsoever."

Dorgan: "That's unbelievable to me."

* * *

It is 11:20 on a recent weeknight in Greenhouse's million-dollar home in Reston, a picture-perfect manse in a picture-perfect development.

In the formal dining room, elegant napkin holders, a shade between bone and gold, match placemats that match chair cushions that match picture frames that match just-so floor-length drapes. Moonlight floats across the manicured lawn outside.

It would be domestic perfection if not for the masses of white paper heaped on the dining room table, great reams of files held in place with black binder clips. Crumbs from a takeout chicken sandwich are on a plate. A couple of glasses of melted ice and Dr Pepper are leaving a ring on a stray document.

Greenhouse is still dressed in her office suit, going through files that she says will prove that she's right. The kids are grown and gone; Al is away on business most of the time. Cheryl, her daughter, says the family has tried to get her to find another job, but she has refused. She says her mom is very, very disappointed.

Alone in the house, Greenhouse sits at the table and considers the fight of her life, and perhaps if she's lost it, or whether she should elevate it to federal court.

"I learned very early that everything you did in life you did with every fiber of your being," she says, her voice a mix of pride and fury. "Why would I sit here now and let them tell me that I'm something I'm not? Why would I do that? I'm Bunny Greenhouse first, then I'm in a government position. I will not compromise who I am."

In that sentence, in the expansive, quiet house, you hear the echoes of her parents talking to her and her siblings in that sleepy, cotton-picking delta town, a place where the world told you that you were second-rate, second-class, an afterthought of humanity. You wonder how this is all going to end up, here in another place and another time; you wonder if the lessons of youth can always hold sway over the lessons of the world.

Cheap labor flows to Iraq -- Page 1 -- TimesUnion.com

2005-10-16T18:32:00.000-04:00

Halliburton unit is tapping pipeline of illicit workers for U.S. military jobs in war zone

By CAM SIMPSON and AAMER MADHANI, Chicago Tribune
First published: Sunday, October 16, 2005

American tax dollars and the wartime needs of the U.S. military are fueling an illicit pipeline of cheap foreign labor, mainly impoverished Asians who often deceived, exploited and put in harm's way in Iraq with little protection.

The United States has long condemned the practices that characterize this human trade as it operates elsewhere in the Middle East. Yet this very system is now part of the privatization of the American war effort and is central to the operations of Halliburton subsidiary KBR, the U.S. military's biggest private contractor in Iraq.

To document this system, the Chicago Tribune retraced the journey of 12 Nepalese men kidnapped last year from an unprotected convoy en route to an American military base in Iraq. The Tribune's reporting found that:

To maintain the flow of low-paid workers key to military support and reconstruction in Iraq, the U.S. military has allowed KBR to partner with subcontractors that hire laborers from Nepal and other countries that prohibit citizens from being deployed in Iraq. That means brokers recruiting such workers operate illicitly.

The U.S. military and KBR assume no responsibility for the recruitment, transportation or protection of foreign workers brought to the country. KBR leaves every aspect of hiring and deployment in the hands of its subcontractors. Those subcontractors often turn to job brokers dealing in menial laborers.

Working in tandem with counterparts in the Middle East, the brokers in South and Southeast Asia recruit workers from some of the world's most remote areas. They lure laborers to Iraq with false promises of lucrative, safe jobs in nations such as Jordan and Kuwait, even falsifying documents to complete the deception.

Even after foreign workers discover they have been lured under false pretenses, many say they have little choice but to continue into Iraq or stay longer than planned. They feel trapped because they must repay brokers' huge fees.

Some U.S. subcontractors in Iraq -- and the brokers feeding them -- employ practices condemned by the U.S. elsewhere, including fraud, coercion and seizure of workers' passports.

The State Department has long expressed concerns about the treatment of foreign workers in the same Middle Eastern nations the United States relies on to supply labor for bases in Iraq. In June, the department added four of these nations -- Kuwait, Qatar, Saudi Arabia and the United Arab Emirates -- to the top tier of its human trafficking watch list for not undertaking "significant efforts to combat forced labor trafficking."

U.S. law calls for sanctions in such cases. But last month, citing Kuwait's and Saudi Arabia's efforts in the "global war on terror," President Bush waived the sanctions against them. This allowed more than $6 billion in combined military sales to go forward. One reason laborers from developing countries are sought for work in Iraq is the U.S. military fears that hiring Iraqis would allow insurgents to infiltrate its bases.

Halliburton would not say whether it includes such laborers in its public tallies of contractor casualties in Iraq. But figures compiled by Iraq Coalition Casualty Count, a private group, indicate that third-country nationals -- neither Iraqis nor citizens from U.S. coalition members -- account for more than 100 of the roughly 270 contractor fatalities in the country since the start of the war. Those numbers are based on the group's tracking of Defense Department releases and media accounts.

Halliburton declined to make KBR executives available for an interview, agreeing to respond only to written questions from the Tribune. In a written statement, Halliburton said it outlines the "legal and ethical behaviors that all employees and subcontractors are expected to follow in every aspect of their work."

The U.S. military has outsourced vital support operations in Iraq to KBR at an unprecedented scale, a deal that has cost U.S. taxpayers more than $12 billion. KBR, in turn, outsources much of that work to more than 200 subcontractors, many of them based in the Middle East.

The subcontractors employ an army of workers from developing countries to dish out food, wash clothes and clean latrines. About 35,000 of the 48,000 people working for those subcontractors are not Americans, KBR has said.

According to salary statements obtained by the Tribune, the pay for such workers can range from about $65 to $112 weekly -- a fortune to those scratching a living from the farm fields and brick factories of Nepal, where the per capita annual income is about $270.

The Nepalese government must grant permission before workers can legally go abroad or brokers can legally send them. It has refused to do so for Iraq, because of the dangers there.

Some Nepalese job brokers have been raided or shut down, but it is unclear how vigorously authorities have pursued those involved. The government, consistently ranked among the world's most corrupt, has little incentive to do so because the Nepalese economy is reliant on the estimated $1 billion sent home each year by citizens working overseas.

Many Nepalis willingly assume the risks of working in Iraq, although their knowledge of its dangers before leaving home is questionable. Only 16 of every 1,000 Nepalis even had a phone line when the war broke out in 2003.

Asked what it was doing to stop the flow of workers from these nations or to monitor its subcontractors, KBR said questions "regarding the recruitment practices of subcontractors should be directed to the subcontractor."

The U.S. Army, which oversees the contract, said much the same. "Questions involving alleged misconduct toward employees by subcontractor firms should be addressed to those firms, as these are not Army issues."

An estimated 10,000 Nepal citizens are now in Iraq despite policies restricting such work.

Editor's note: Read a local soldier's blog entry about "Third Country Nationals" in the timesunion.com Life During Wartime blog.

Missteps Hamper Iraqi Oil Recovery - Los Angeles Times

2005-09-26T10:02:00.000-04:00

Efforts to fix facilities founder. Hundreds of millions of dollars are lost as fields deteriorate.
By T. Christian Miller
Times Staff Writer

September 26, 2005

QARMAT ALI, Iraq — The failure to rebuild key components of Iraq's petroleum industry has impeded oil production and may have permanently damaged the largest of the country's vast oil fields, American and Iraqi experts say.

The deficiencies have deprived Iraq of hundreds of millions of dollars in potential revenue needed for national rebuilding efforts and kept millions of barrels of oil off the world market at a time of growing demand.

Engineering mistakes, poor leadership and shifting priorities have delayed or led to the cancellation of several projects critical to restoring Iraq's oil industry, according to interviews with more than two dozen current and former U.S. and Iraqi officials and industry experts.

The troubles have been compounded in some cases by security issues, poor maintenance and disputes between the U.S. and its main contractor, Houston-based KBR, a subsidiary of Halliburton Corp., according to the interviews and documents.

Despite the United States' spending more than $1.3 billion, oil production remains below the estimated prewar level of 2.5 million barrels per day and well below a December 2004 goal of up to 3 million barrels per day.

Interviews and documents from whistle-blowers show problems with at least three projects deemed crucial to Iraq's oil production:

• Qarmat Ali water treatment plant. This massive pumping complex is needed to inject water into Iraq's southern oil fields to aid in oil extraction. Under a no-bid contract, KBR was instructed to repair the complex at a cost of up to $225 million, but not the leaky pipelines carrying water to the fields. As a result, the water cannot be delivered reliably, raising concerns that some of Iraq's oil may not be recoverable.

• Al Fathah pipelines. As part of the same no-bid contract, the U.S. gave KBR a job worth up to $70 million to rebuild a pipeline network in northern Iraq despite concerns that the project was unsound. In the end, KBR built fewer than half the pipelines, and the project was given to another contractor. The delay has aggravated oil transport problems, which have forced Iraq to inject millions of barrels of oil back into the ground, a harmful practice for the oil fields and the environment. A government audit is being conducted based on a complaint by a whistle-blower.

• Southern oil well repairs. A $37-million project to boost production at dozens of Iraqi oil wells was canceled after KBR refused to proceed without a U.S. guarantee to protect it from possible lawsuits.

It is striking that although the reconstruction of the northern oil infrastructure has been hampered by security issues, the southern oil fields — which account for most production — have been attacked only a few times since the conflict in Iraq began but still face serious problems.

After the 2003 invasion, U.S. officials and KBR moved swiftly, resuming oil production only a month after the war began and slowly increasing output. But after matching the prewar peak of 2.5 million barrels a day in September 2004, production declined to about 2.2 million barrels daily last month.

If the U.S. had successfully completed the planned repairs, Iraq could be producing up to 500,000 additional barrels a day, according to some estimates.

The difference would add up to more than $8 billion a year — money that the Iraqi government could use for new schools and hospitals, to supplant U.S. reconstruction spending and improve the Iraqi security forces that Washington hopes will replace American troops.

U.S. reconstruction officials acknowledged the delays but said the efforts had turned a corner and that despite the contract disputes, they were satisfied with KBR's performance. The company avoided a possible cancellation of its contract this year after addressing problems associated with cost estimates. The U.S. also has brought in an Australian-American firm to finish several projects started by KBR that had been delayed.

"Overall, reconstruction is moving forward," said Bob Todor, the senior U.S. advisor to Iraq's Oil Ministry. "Like everything else, it took longer than everyone expected."

KBR officials, meanwhile, said their work reflected the orders they had been given by U.S. reconstruction officials. The rebuilding, they said, takes place under difficult conditions, especially in the north.

"KBR can't emphasize enough that it performs all work at the direction of the U.S. government," spokeswoman Melissa Norcross said in an e-mailed response to questions. "We only do what we are tasked to do."

Current and former Iraqi oil officials expressed disappointment, frustration and anger at the U.S. performance.

They said that rather than tapping Iraqi state oil company officials, the U.S. program was overseen by American officials with little experience in the oil industry. In an interview, one senior U.S. official managing part of the restoration effort jokingly described his knowledge level as "Oil for Dummies."

Iraqi officials also said KBR relied too heavily on foreign contractors, conducted lengthy, unnecessary studies and failed to deliver promised equipment. They acknowledged that Iraq needed to spend more on its oil industry but wondered why the U.S. investment had not had more of an effect.

"They need to speed it up a bit," said Ibrahim Bahr Uloum, the Iraqi oil minister, in an interview. "There's great work to be done in all these fields."

Other Iraqis said that the U.S. and KBR simply failed to deliver. "I think we had the worst quality of U.S. service, staff and companies," said Jaafar Altaie, who was a senior planner at the Oil Ministry and now works with Amman-based Tabouk Energy Group, a consulting firm. "We had maximum rhetoric and minimum results on the ground."

Only weeks after the U.S.-led invasion in March 2003, the U.S. hired KBR under a no-bid contract to repair the Qarmat Ali water treatment plant, a complex of twisting pipes and rusting metal that sits in the middle of drab, flat desert a few miles north of Basra in southern Iraq.

Both the United States and Iraq considered the water treatment plant a high priority. Oil rises from the ground in southern Iraq because of natural pressure in the sands. As the oil surges out, the pressure declines, making extraction more difficult.

*

Oil and Water

To counter the problem, the Iraqis inject water into the earth to maintain the pressure in the oil field. That water, however, must be first cleaned at Qarmat Ali so that particles or bacteria don't plug up the holes in the soil that allow the oil to rise.

By August 2004, KBR had completed most repairs at the plant, which had badly deteriorated during 12 years of sanctions and because of the looting that followed the U.S.-led invasion. KBR rebuilt motors, refurbished pumps and installed electrical generators and chlorination and anti-corrosion systems.

But when KBR opened the taps to send the treated water to Iraq's legendary Rumaila oil field, the deteriorated pipes were unable to handle the increased pressure. The pipeline burst repeatedly, delaying work for weeks on end, KBR and U.S. Army Corps of Engineers officials said. In the five months ending December 2004, KBR managed to send water through the pipes for only 29 days. Even today, the plant delivers only about a third of its capacity.

To make matters worse, farmers tapped into the pipeline, using it to irrigate their fields. KBR found one local who was watering his entire tomato crop courtesy of the Qarmat Ali pipeline.

Despite the problems, the U.S. never assigned KBR the task of repairing the aging lines. Todor, the U.S. oil advisor, said that by the time the problem became apparent, most of the money available in the south had already been committed to other projects.

The Iraqis, meanwhile, have not invested in repairs, using most of their oil revenue for fuel subsidies and salaries.

"The Iraqis have not had the money to do the work," Todor said.

On a recent tour of the sprawling, decades-old complex, its decrepit state was obvious. The walls were cracked; motors, valves and pipes were rusted. Dirt and mud covered the floors.

Only two of the five pumps that KBR fixed were operating. An Iraqi engineer said a machine to add cleaning chemicals to the water was unusable. Another system to protect the interior of the pipelines from rust was not being used for fear that the anti-corrosion additive would damage the oil fields.

Neither the U.S. nor KBR have provided additional maintenance or operating funds to the plant since turning it over to the Iraqis. For their part, the Iraqis said KBR had installed substandard equipment and had not provided sufficient training.

"It's useless. We have material from KBR, but we don't have documents on how to use it," said the Iraqi engineer, who requested anonymity because of security concerns.

KBR said it had done all that was asked of it.

"KBR is not responsible to support with the ongoing maintenance and repair of these facilities unless tasked to do so" by the U.S. government, said Stephanie Price, another KBR spokeswoman, in response to questions sent by e-mail. "To date, most of the follow-on problems at [Qarmat Ali] have stemmed from the overall age of the equipment and the availability of spare parts."

A big part of the problem, some U.S. officials said, was the Army Corps of Engineers, which oversaw initial repairs under the Restore Iraqi Oil project. The Corps, which had little experience in the oil industry before the war, was forced to rely on advice from KBR and other experts in making rebuilding decisions.

Bunnatine Greenhouse, who was the top contracting official in the Corps, sharply criticized its involvement at a congressional hearing in June. "The Corps had absolutely no competencies related to oil production," said Greenhouse, who also criticized the no-bid contracts awarded to KBR. She was demoted in August. The end result of the U.S. investment here is that Qarmat Ali still does not produce enough water to be used for injection into the oil fields, nor can the water reliably be delivered to the injection stations, which also remain in need of repair.

That means that every day, Iraq forgoes about 200,000 barrels of oil — or about $11 million in revenue at current Iraqi crude prices, according to Iraqi and U.S. officials. A joint venture formed by Australian firm WorleyParsons Ltd. and Pasadena-based Parsons Corp. was recently brought in to complete the work that KBR began.

The lack of reliable water injection has led to a debate about whether Iraq's southern oil fields have been permanently damaged. Although nobody is sure, some oil experts fear that America's failure to fix the problems has worsened damage that may have occurred during Saddam Hussein's rule.

United Nations oil experts have told the U.S. government that some oil reservoirs in southern Iraq have been so badly managed that the Iraqis will be able to recover only between 15% to 25% of the oil, well below the industry standard of 35% to 60%, a recent Department of Energy report states.

Norm Szydlowski, a U.S. consultant to the Iraqi Oil Ministry, said that the Iraqis had begun an in-depth study of the health of their fields, the first in years.

The possibility of damage "was and is a focus. It is a significant concern," Szydlowski said. "The extent of the potential damage is really unknown. The Iraqis prudently have been working at this stage of the game as quickly as they can to get the right analysis of their reservoirs."

But some said the U.S. and Iraq needed to work harder, especially on fixing Qarmat Ali.

"It's frustrating. You've got one of the biggest fields in the world that's sitting there and needs some help," said one contractor familiar with the project who asked not to be named. "It's like your favorite pet dog got hurt and you want to help it."

The status of reservoirs elsewhere in Iraq is also a concern. Once an oil well begins production, it is difficult to shut it down. But attacks on pipelines in the north are so frequent that the Iraqis can't export the oil, nor do they have enough capacity to store it.

As a result, when oil production backs up, the Iraqis are forced to pump the oil back into the ground — a practice widely condemned in the industry because the re-injected oil, which is thicker, can plug fissures through which the petroleum flows. Iraq puts almost 200,000 barrels of oil per day back into the ground — meaning that Iraq's net production is even lower than the official figure of 2.2 million barrels.

"Once you have damaged the fields, there is almost nothing you can do about it. I have a great worry that we are not too far from it," said Farouk Kasim, an Iraqi oil expert, at a conference in London this summer. "The last two years have been a nightmare."

*

Al Fathah

The pipelines at Al Fathah bridge became one of the nightmares of the reconstruction effort.

A squat concrete and steel structure over the Tigris River in northern Iraq, the bridge was bombed by U.S. jets during the 2003 invasion. The attack knocked out a stretch and destroyed a network of oil and gas pipelines that ran underneath.

The 16 pipelines were a crucial part of Iraq's deteriorating oil infrastructure, moving crude and other petroleum products from northern wells around Kirkuk to Baiji, a dusty refinery town south of the bridge.

The Army Corps of Engineers decided it would be quicker to run the pipelines under the riverbed instead of repairing the bridge. The agency ordered KBR to drill under the river despite warnings against such a route, said a Corps contracting official involved in the project. The official asked to remain anonymous, fearing retaliation from commanders.

Trouble began soon after the project started in January 2004. The soil was unstable, and a borehole drilled to hold the pipes collapsed. In an e-mail obtained by The Times, the contracting official described the project as "placing a pipe in a large box of marbles."

The project, originally envisioned to take 10 weeks, turned into a nearly yearlong job. As the months went by, the cost soared. In the end, KBR managed to install six of the sixteen pipelines originally planned. Although the Corps said it still had not determined the final cost of the project, one source said it might approach $88 million. KBR defended the project, saying that "unforeseen" subsurface conditions had resulted in "technical challenges." They also noted that the horizontal drilling needed to install the pipelines below the riverbed had never been done in Iraq, requiring the importation of new equipment.

"KBR ultimately completed six of the drill lines and installed six of the pipelines when [the Army Corps] decided to stop work on the project due to funding limitations at the time," Price, the KBR spokeswoman, wrote.

Todor, the advisor to the Oil Ministry, said neither the Army Corps nor KBR anticipated the poor soil conditions. KBR and Army Corps officials said they were unaware of any study warning against the pipeline plan.

"In hindsight, maybe you would have done things differently," Todor said.

In February this year, the U.S. reassigned the pipeline crossing to the joint venture led by WorleyParsons. When the project is completed, Iraq will be able to increase exports and stabilize a system that has suffered constant attack by insurgents in the region around the bridge. Increased flow also will mean that Iraq will have to inject less oil back in the ground around its northern fields.

Two years after the project was first proposed, a senior U.S. official said the fully restored pipeline network would be completed this fall.

*

The Wells

Another crucial aspect to restoring Iraq's oil production have been "well work-overs" — cleanup jobs that can improve the productivity of oil wells.

The Project and Contracting Office, a government reconstruction agency, wanted KBR to perform 30 work-overs on wells in southern Iraq for $37 million.

Negotiations got bogged down over KBR's demand that the U.S. indemnify it in case of lawsuits arising from the work, a senior U.S. official said.

KBR insisted on the guarantee, saying that indemnity was provided by governments worldwide. The U.S. said that only the Iraqi government, as a sovereign nation, could give such protection. In July, the two sides reached an impasse and the U.S. terminated the project, according to a statement. Other companies approached by U.S. officials also refused to take on the project without indemnification.

The U.S. has now decided to use the $37 million to train Iraqis to do the work-overs. At stake: an estimated increase of 300,000 barrels of oil per day.

"Indemnification was a big problem. For a lot of companies, it was a stumbling block," said a senior U.S. official overseeing the work-over project. "Our schedule, though behind, should get a lot better now."

*

Broken Promises

Such promises ring hollow to Iraqis, who are frustrated with the U.S. and KBR. Abdul Raof Ibraheem is a manager at one of Iraq's largest refineries. His massive complex of rusting metal spheres is nearly silent these days. KBR is supposed to be supplying parts to fix the plant. But the firm recently told Ibraheem that the worldwide spending boom in oil infrastructure had made it hard to purchase the required equipment. The parts will arrive perhaps by next summer, KBR officials told him.

Ibraheem said he had expected more.

"Frankly speaking, I am not satisfied with KBR's work. What I saw from KBR, their performance is not what we had expected. We heard a lot about KBR, but we're not satisfied.

"The results have meant nothing for us."

HoustonChronicle.com - Auditors investigate Katrina contracts

2005-09-23T11:14:00.000-04:00

Halliburton, Bechtel deals not clearly defined
By HOPE YEN
Associated Press

WASHINGTON - Government auditors are questioning whether several multimillion-dollar Katrina contracts — including one involving a subsidiary of Houston-based Halliburton Co. — invite abuse because they are open-ended and not clearly defined.

The contracts, for services such as levee repair and emergency housing, were granted to companies based on their pre-existing business relationships with the government. Critics say the arrangements foster cronyism because a few repeat players typically get the best deals. The Government Accountability Office and the Homeland Security Department, which has primary responsibility for reviewing the billions of dollars worth of Katrina contracts, said they will focus on agreements awarded with little or no competition.

They include "indefinite delivery-indefinite quantity" contracts such as those involving Halliburton Co. subsidiary KBR and Bechtel Corp. Both firms have strong ties to the Bush administration.

"We've been looking at all the contracts from day one," said Richard Skinner, the Homeland Security Department's inspector general. "One concern is whether you are getting the fair market value. The second is whether the people we are giving contracts to are the best qualified."

Of the 22 contracts awarded so far by the Army Corps of Engineers, 11 are so-called ID-IQs; so are several granted by the Federal Emergency Management Agency.

One such contract is a $16 million government work order given to the subsidiary of Halliburton, the company headed by Vice President Dick Cheney from 1995 to 2000 that has been accused of overcharging the government for work in Iraq. The deal, to plug levee breaches, was awarded as part of a Navy construction contract.

Previous government audits have cited these contracts as vulnerable to abuse because government officials and companies can exploit their broadly defined terms, such as services.

"We want to make sure agencies have processes and procedures in place to ensure contracts are performed as required," said Bill Woods, a director at the GAO, the investigative arm of Congress.

"Things can slip through the cracks."

Other targets include an agreement with Bechtel Corp. for short-term housing that was awarded without competition. The company, whose CEO Riley Bechtel served on President Bush's Export Council from 2003-04, began providing work even though a formal contract with cost and payment provisions has yet to be signed.

Bechtel spokesman Howard Menaker said the company was asked to provide an immediate supply of trailers and mobile homes in the Gulf Coast based on Bechtel's "long and accomplished history in emergency response."

BostonHerald.com - Business News: Halliburton, set to clean up, denies overcharges

2005-09-19T09:34:00.000-04:00

By Brett Arends
Monday, September 19, 2005

Politically-wired Halliburton Inc. is denying it overbilled the U.S government in Iraq – just three months after a Pentagon report showed $422 million in ``unsupported'' costs in the company's contracts.

The company, which is in line for Federal work helping rebuild New Orleans and the Gulf Coast, also responded to scrutiny of its CEO's growing fortune by taking the unusual step of highlighting the share option gains of an executive at a rival firm.

Halliburton has been a target of Bush administration critics over its work in Iraq. Vice-President Dick Cheney ran the company from 1995 to 2000.

In an exclusive communication to the Herald, company communications director Cathy Mann said audits of Halliburton's $9 billion in Iraq contracts ``are part of the normal contracting process'' and their role ``is advisory only. Any claims that the figures contained in these audit reports are `overcharges' are uninformed and flat wrong.''

Her assertion comes just three months after the release of a Pentagon report which showed $1.03 billion in ``questioned'' costs and $422 million in ``unsupported'' costs in the company's Iraq contracts.

The Department of Defense Audit Agency, in a detailed review, criticized the company for failing to provide ``current, accurate, and complete data'' on the financials of its Iraq work, noting the error was so bad ``it decreases the government confidence in and reliance on the contractor estimating system.''

Halliburton, at the time, disputed many of the findings. But it admitted, in a submission to the Defense Contract Audit Agency in December 2003, that ``we did not use current, accurate or complete information that was available for pricing of subcontracts.''

In one instance, the Pentagon found ``an approximate $67 million overstatement of proposed costs'' in Halliburton's bill setting up and running military canteens in Iraq.

In reply, Halliburton's own director of government compliance, William R. Walter, agreed with the point but disputed the figure. ``(T)he difference between the proposed cost of total dining facility costs and the amount using the current, accurate and complete data provided was a total of $37 million,'' he wrote.

``There are many excuses and reasons available – but – in the end, KBR did not include the most current data in our proposal,'' he wrote to the Pentagon.

KBR is the Halliburton division involved in the Iraqi work.

The company's latest statement followed a Herald article last week about Halliburton's soaring stock price and the resulting paper profits made by CEO David Lesar.

Communications director Cathy Mann asked why no ``other energy services company or executive'' was cited in the analysis, adding: ``A review of public trading information for other energy services industry executives would have revealed that one Weatherford executive has exercised 446,839 shares since early September.''

Companies rarely point fingers at rivals, let alone at rival executives. Weatherford, like Halliburton and most of the big oil companies, is based in Houston, Tex.

Investigators to Monitor Katrina Contracts - Yahoo! News

2005-09-13T19:35:00.000-04:00

By LARA JAKES JORDAN, Associated Press Writer
Tue Sep 13, 4:05 PM ET

A team of investigators is being sent to the Hurricane Katrina-ravaged Gulf Coast to follow the money — namely, billions of dollars in relief aid the federal government is pouring into the region without normal contracting safeguards.

The 30 Homeland Security Department investigators and auditors are part of what officials call an unprecedented effort to ensure federal funds are properly distributed in a rescue, relief and rebuilding process expected to exceed $100 billion.

The team is being dispatched to monitor government contractors' work in Alabama, Louisiana and Mississippi as critics call the spending deluge a disaster in waiting if not properly controlled.

"The message has gone out very clearly to everybody that we're going to be efficient, we're going to cut through red tape, but we're not going to cut though the laws," Homeland Security Secretary Michael Chertoff said Tuesday.

Yet many of the normal safeguards have been temporarily suspended in Katrina's wake to ensure emergency federal aid gets to victims as soon as possible. So far, Congress has approved spending $62 billion in Katrina-related relief efforts. Of $50 billion directed to the Federal Emergency Management Agency, an arm of Homeland Security, just over $9 billion has so far been spent, FEMA spokeswoman Natalie Rule said.

"It is entirely appropriate that the money go out just as quickly as possible to people whom we think need it, and to worthy contractors on a competitive basis," said former Homeland Security inspector general Clark Kent Ervin. "But in the rush to do it, there is real potential for waste and certainly for fraud as well."

Congress also let federal employees temporarily charge up to $250,000 on government credit cards for hurricane rescue and relief operations. Guidelines issued Tuesday by the White House budget office said the new spending authority will go only to select individuals, and many purchases will require prior approval.

Some contracts, including five with emergency housing and construction companies, were awarded hurriedly without undergoing normal competitive bidding processes. Meanwhile, the Bush administration has waived prevailing wage requirements that ensure government-contracted workers in disaster areas are fairly compensated.

Among the most controversial Katrina awards is one that the Homeland Security team cannot investigate: a $16.6 million contract with Kellogg, Brown & Root Services Inc. of Arlington, Va., for emergency repairs at Gulf Coast naval and Marine facilities. The money is part of a $500 million Navy contract that KBR won by competitive bid last July.

Because the Pentagon awarded the KBR contract, Homeland Security has no authority to audit it. But KBR, a subsidiary of Halliburton Co., has been at the center of scrutiny for receiving a five-year, no-bid contract to restore Iraqi oil fields shortly before the war began in 2003. Vice President Dick Cheney headed Halliburton from 1995 to 2000, and Democrats have questioned whether the company has gotten favorable treatment because of his connection.

"Congress is rightly spending billions of dollars to help the people and businesses of the Gulf Coast who have been devastated by Hurricane Katrina," House Democratic leader Nancy Pelosi said. Over the weekend she called for an independent commission to oversee relief contracts "to ensure taxpayers' money goes to those in need, not to fraudulent contractors."

The Homeland Security investigators are part of a $15 million effort by the department's inspector general that Congress approved last week to keep an eye on Katrina relief spending.

Department officials believe the money represents the first time emergency funds have been set aside for FEMA or Homeland Security's internal watchdogs to monitor relief spending. Even investigations into contracts after the Sept. 11, 2001, terror attacks were paid for out of FEMA's relatively meager budget for internal audits.

"However, Katrina costs will be far greater than those costs associated with the federal response/recovery for 9/11," said Homeland Security Inspector General Richard Skinner, who ran FEMA's internal watchdog unit after the terror attacks.

A spokesman for Bechtel Corp. said he did not know how much the San Francisco-based engineering and construction company won to provide emergency housing to hurricane victims in southern Mississippi. But he said Bechtel was still negotiating its contract with FEMA, even after it began relief efforts around Sept. 1.

Generally, Katrina contractors "will be given the benefit of the doubt," Senate Appropriations Committee Chairman Sen. Thad Cochran (news, bio, voting record), R-Miss., said.

FEMA spokesman James McIntyre put it more bluntly: "You had 200,000 people who were displaced, possibly more," he said Monday. "We needed to get families into housing, as soon as possible, and off the floor of the stadium. "We needed the contracts to hit the ground running to get that process up and running."

___

The Observer | Business | Congress probes hurricane clean-up contracts

2005-09-11T20:41:00.000-04:00

Oliver Morgan, industrial editor
Sunday September 11, 2005
The Observer

A powerful investigative agency of the US Congress is to investigate the award of contracts by the Bush administration for emergency and reconstruction work in the wake of Hurricane Katrina.
The Government Accounting Office, which monitors public spending, is to audit the contracts won by the US firms. Already contracts have been given for repairing New Orleans' flood levees, rebuilding naval facilities, providing temporary housing and removing debris.

Companies winning work include US contracting giants Bechtel and Halliburton. Halliburton, formerly headed by Vice President Dick Cheney, is facing questions for allegedly overcharging on work done in Iraq. The Department of Defense was criticised for awarding Iraq reconstruction contracts to these two companies without competition. Other groups include Fluor and Shaw Group, a Louisiana engineer. The move comes as leading congressional figures express concern over the contracting process.

California representative Henry Waxman, who led much of the investigation into the Iraq reconstruction contracts, says: 'The administration has an abysmal contracting record in Iraq. We can't afford to make the same mistakes again. We must make sure taxpayer funds are not wasted, because every dollar thrown away today is a dollar that is not available to hurricane victims and their families.' Contracts had to be awarded in 'full transparency'. He added the audit of the contracting was 'a very good first step'.

Bechtel has been asked by the Federal Emergency Management Agency to assess the need for, and then to provide, temporary 'trailer' housing in the hardest hit areas.

Halliburton is repairing damage to three naval bases under a logistical contract with the US nav

Halliburton's KBR unit gets contract to repair Gulf Coast facilities - 2005-09-06

2005-09-06T14:23:00.000-04:00

Halliburton Co.'s Kellogg Brown & Root subsidiary has begun work on a $500 million U.S. Navy contract for emergency repairs at Gulf Coast naval and marine facilities that were damaged by Hurricane Katrina, according to an Associated Press report.

KBR has been under fire for receiving a five-year, no-bid contract to restore Iraqi oil fields shortly before the U.S. went to war against Iraq in 2003.

The subsidiary, Kellogg, Brown & Root Services Inc. of Arlington, Va., won the competitive-bid contract last July to provide debris removal and other emergency work associated with natural disasters.

Jan Davis, a spokeswoman for the Naval Facilities Engineering Command, told AP that KBR will receive $12 million for work at Naval Air Station Pascagoula, Naval Station Gulfport and Stennis Space Center in Mississippi. The company will receive $4.6 million for work at two smaller Navy facilities in New Orleans and others in the South.

KBR has provided similar work after major disasters in the United States and abroad for more than 15 years, including in Florida after Hurricane Andrew.

AP added that Houston-based Halliburton (NYSE: HAL) has reported being paid $10.7 billion for Iraq-related government work during 2003 and 2004. Pentagon auditors have questioned tens of millions of dollars of Halliburton charges for its operations there.

Halliburton Watch - Halliburton gets Katrina contract, hires former FEMA director

2005-09-02T17:08:00.000-04:00

WASHINGTON, Sept. 1 (HalliburtonWatch.org) -- The US Navy asked Halliburton to repair naval facilities damaged by Hurricane Katrina, the Houston Chronicle reported today. The work was assigned to Halliburton's KBR subsidiary under the Navy's $500 million CONCAP contract awarded to KBR in 2001 and renewed in 2004. The repairs will take place in Louisiana and Mississippi.

KBR has not been asked to repair the levees destroyed in New Orleans which became the primary cause of most of the damage.

Since 1989, governments worldwide have awarded $3 billion in contracts to KBR's Government and Infrastructure Division to clean up damage caused by natural and man-made disasters.

Earlier this year, the Navy awarded $350 million in contracts to KBR and three other companies to repair naval facilities in northwest Florida damaged by Hurricane Ivan, which struck in September 2004. The ongoing repair work involves aircraft support facilities, medium industrial buildings, marine construction, mechanical and electrical improvements, civil construction, and family housing renovation.

In March, the former director of the Federal Emergency Management Agency (FEMA), which is tasked with responding to hurricane disasters, became a lobbyist for KBR. Joe Allbaugh was director of FEMA during the first two years of the Bush administration.

Today, FEMA is widely criticized for its slow response to the victims of Hurricane Katrina.

Allbaugh managed Bush's campaign for Texas governor in 1994, served as Gov. Bush's chief of staff and was the national campaign manager for the Bush campaign in 2000. Along with Karen Hughes and Karl Rove, Allbaugh was one of Bush's closest advisers.

"This is a perfect example of someone cashing in on a cozy political relationship," said Scott Amey, general counsel at the Project on Government Oversight, a Washington watchdog group. "Allbaugh's former placement as a senior government official and his new lobbying position with KBR strengthens the company's already tight ties to the administration, and I hope that contractor accountability is not lost as a result."

Middle East Times - Halliburton-linked company stripped of Iran contract

2005-09-01T18:03:00.000-04:00

August 24, 2005

TEHRAN -- A private Iranian oil company linked to the US oil giant Halliburton has lost a multimillion-dollar contract to drill for natural gas amid accusations that it won the deal through bribery, officials said on Tuesday.

"It was recognized that there was financial corruption by Oriental Oil Kish, so according to the law the decision was made to dismiss the company from its activities," National Iranian Oil Company (NIOC) official Mohammad Reza Moghaddam told the student news agency ISNA.

The $310-million deal was awarded in January, even though a US law introduced in 1996 threatens sanctions on both American and foreign companies investing more than $40 million in Iran's energy sector.

The managing director of Pars Oil and Gas Company (POGC) - the body that supervises the South Pars gas field in question - confirmed the report.

"We have sent the cancelation of the contract with Oriental Oil Kish to NIOC and we are awaiting the decision on a new contractor," Akbar Torkan said.

Another report said that a rival to Oriental Oil Kish, the state-run National Iranian Drilling Company, had been offered the contract.

In early January the POGC awarded the contract for drilling South Pars phases 9 and 10 to Oriental Oil Kish.

Iranian officials said at the time that Halliburton had not directly signed the contract but that it had offered its services via Oriental Kish.

Halliburton, once chaired by US Vice-President Dick Cheney, has also come under investigation in the United States for its dealings with Iran.

Iran, which is OPEC's second largest oil exporter, has the world's second largest gas reserves.

Phases 9 and 10 of South Pars, operated jointly by South Korean and Iranian companies, are expected to produce 50 million cubic meters (1.8 billion cubic feet) of natural gas, 80,000 barrels of condensates and 400 tons of sulfur a day.

Iran hopes to boost gas output from 110 billion cubic meters a year in 2000 to 292 billion cubic meters in 2010. Gas accounts for about one-third of Iran's domestic energy consumption.

The Raw Story | Senior Democrat says decision to demote Halliburton worker will chill whistleblowing

2005-08-29T16:16:00.000-04:00

The top U.S. Army contracting official who first raised criticism over Halliburton's no-bid contract in Iraq was demoted Sunday for what the army called poor job performance -- the first time her performance was rated low in 20 years.

Today, Sen. Frank Lautenberg (D-NJ) blasted the Bush administration’s decision to fire the lead government whistleblower in a statement to RAW STORY. Democrats also sent a letter to Defense Secretary Donald Rumsfeld today demanding an explanation. The letter follows this article.

“Secretary Rumsfeld has lowered the axe on someone courageous enough to speak the truth about an abuse of taxpayer dollars," he remarked. "Ms. Greenhouse was simply being honest, which seems to be enough to get you fired in this Administration.

"This action is meant to send a chilling message to other federal workers: keep your mouth shut," he added.

Lautenberg has repeatedly called for Senate hearings to investigate Halliburton’s contracts, but the Republican leadership of Congress has declined to hold any inquiries.

“Instead of getting to the truth of these contracts, this Administration wants to get rid of anybody who tells the truth,” Lautenberg said.

The official, Bunnatine "Bunny" Greenhouse, had overseen contracts at the Army Corps of Engineers, which has managed Iraq reconstruction work. She was removed Saturday from her elite Senior Executive Service position and reassigned her to a lesser job in the civil works division.

Greenhouse's lawyer, Michael Kohn, told the New York Times he saw "obvious reprisal" for the objections she raised to a series of decisions involving the Halliburton subsidiary Kellogg, Brown Root, which has netted more than $10 billion for work in Iraq and Afghanistan.

"She is being demoted because of her strict adherence to procurement requirements and the army's preference to sidestep them when it suits their needs," he said Sunday.

Democratic National Committee Chairman Howard Dean also weighed in, saying, "Today's news regarding Bunnatine Greenhouse is another disturbing example of the Bush Administration's determination to abuse their power to hide the truth and silence, smear or demote their critics."

A spokeswoman for the Army Corps of Engineers, told the Times that the action against Greenhouse was approved by the Army.

#
LETTER ISSUED BY REP. HENRY WAXMAN (D-CA); SEN. DORGAN (D-ND), SEN. LAUTENBERG (D-NJ)

We are writing to request that you investigate the Secretary of the Army's decision to remove Bunnatine Greenhouse, a career civil servant in the Senior Executive Service, from her position as principal assistant for contracting for the Army Corps of Engineers. The decision to remove Ms. Greenhouse from her position and demote her appears to be retaliation for her June 27, 2005 testimony before Congress.

In her June 27 testimony, Ms. Greenhouse detailed her objections to improper and potentially illegal conduct in the award of contracts for Iraq reconstruction projects. Specifically, Ms. Greenhouse objected to the contract awarded to a Halliburton subsidiary, Kellogg, Brown & Root, to restore Iraqi oil infrastructure. Ms. Greenhouse testified that the contract award process was compromised by improper influence by political appointees, participation by Halliburton officials in meetings where bidding requirements were discussed, and a lack of competition.[1]

On July 14 - less than three weeks after her testimony - the Secretary of the Army approved Ms. Greenhouse's removal. The dismissal is to take effect on August 27, 2005.

At the hearing, Ms. Greenhouse testified that she had been warned by the acting general counsel of the Army Corps of Engineers that her appearance before Congress would not be in her best interest. She testified nonetheless because she had exhausted all internal avenues and believed she had an obligation to bring her concerns to the attention of Congress. The Secretary's action appears to be the retaliation that she was warned about.

Ms. Greenhouse first raised questions about special treatment for Halliburton in 2003, when she objected to the five-year term of the no-bid, sole-source Restore Iraqi Oil contract. On October 22, 2004, the Army referred Ms. Greenhouse's allegations of procurement irregularities to the DOD Inspector General. The Acting Secretary of the Army further ordered that any adverse personnel action against Ms. Greenhouse be suspended "so that Ms. Greenhouse remains in her current position until a sufficient record is available to address the specific matters [she] raised."[2]

The DOD Inspector General's office has confirmed to our staff that its investigation of Ms. Greenhouse's allegations is "open and ongoing."[3] The Inspector General's office indicated that it has not provided any findings or final report to the Secretary of the Army regarding Ms. Greenhouse's allegations. Indeed, the office further told us that it is working with the Department of Justice regarding potential prosecutions relating to the Halliburton contracts.[4]

Given these facts, the sudden dismissal of Ms. Greenhouse appears highly suspect. The appropriate procedure would be to wait for the results of the ongoing Inspector General investigation. In fact, this is exactly what the Acting Secretary of the Army ordered last October. No explanation has been provided for the reversal in policy and the rash dismissal of Ms. Greenhouse.

Retaliation against employees for providing information to Congress is illegal and entirely unacceptable. Ms. Greenhouse has given Congress important information essential to our oversight of waste, fraud, and abuse. Instead of turning a blind eye to improper conduct, Ms. Greenhouse worked within her own agency to object. When her internal objections were dismissed, she raised her concerns with Congress. These actions to protect the integrity of the procurement process and prevent the waste of taxpayer dollars should be commended, not serve as grounds for dismissal.

We ask that you conduct an investigation into the decision to remove Ms. Greenhouse from her position. We also request that you reinstate Ms. Greenhouse pending such an inquiry.

Aljazeera.Net - US Army demotes Halliburton critic

2005-08-29T11:30:00.000-04:00

A top US Army contracting official who criticised a large, non-competitive contract with the Halliburton Company for work in Iraq has been demoted for what the army called poor job performance.

The New York Times said Bunnatine Greenhouse had worked in military procurement for 20 years and for the past several years had been the chief overseer of contracts at the Army Corps of Engineers, the agency that has managed much of the reconstruction work in Iraq.

The demotion removes her from the elite Senior Executive Service and reassigns her to a lesser job in the corps' civil works division, the report said on Monday.

Greenhouse's lawyer, Michael Kohn, called the action an "obvious reprisal" for the strong objections she raised in 2003 to a series of corps decisions involving the Halliburton subsidiary Kellogg, Brown & Root which has garnered more than $10 billion for work in Iraq, The Times said.

Sidestepping requirements

Vice-President Dick Cheney was chief executive at Halliburton before he joined President George Bush's election campaign in 2000.

"She is being demoted because of her strict adherence to procurement requirements and the Army's preference to sidestep them when it suits their needs," the newspaper quoted Kohn as saying in an interview.

He also said the army had violated a commitment to delay Greenhouse's dismissal until the completion of an inquiry by the Pentagon's inspector-general.

Good past reviews

Carol Sanders, spokeswoman for the Army Corps of Engineers, said the personnel action against Greenhouse had been approved by the Department of the Army, the paper said.

In a memorandum dated 3 June 2005, the commander of the corps, Lieutenant-General Carl Strock, said the administrative record "clearly demonstrates that Ms Greenhouse's removal from the SES is based on her performance and not in retaliation for any disclosures of alleged improprieties that she may have made".

Kohn said Greenhouse had initially received stellar performance ratings, the paper pointed out.

But her reviews became negative at roughly the time she began objecting to decisions she saw as improperly favouring Kellogg Brown & Root, he said.

Worker admits to kickbacks in Iraq - The Honolulu Advertiser - Hawaii's Newspaper

2005-08-24T18:15:00.000-04:00

By Griff Witte
Washington Post

WASHINGTON — A former worker for a Halliburton Co. subsidiary faces up to 20 years in prison and a fine of as much as $1.25 million after pleading guilty to taking kickbacks in Iraq in a scheme that defrauded the U.S. government, court records show.

It marks the second case this year of a Halliburton worker facing criminal charges in connection with the company's work in Iraq.

Glenn Allen Powell, who pleaded guilty on Friday in U.S. District Court in Rock Island, Ill., was employed by Halliburton subsidiary Kellogg Brown & Root Inc. in Iraq from October 2003 until January 2005. During that time, he admitted to taking 20 percent off the top of a subcontract, or more than $110,000.

The fraud came as part of KBR's work on a multibillion-dollar Army contract to provide logistical support to U.S. troops worldwide, including in Iraq. According to the plea agreement, Powell accepted kickbacks from an Iraqi business that had won a job to help renovate four buildings in Iraq for office and warehouse space.

Powell's fraud was discovered in January when KBR investigators searched Powell's residence in Baghdad and found large amounts of cash, including $8,000 worth of $100 bills stuffed in a jacket pocket, $1,580 on top of the refrigerator and about $3,500 worth of Iraqi dinars in the top shelf of a dresser, the court papers said.

KBR then fired Powell, and he returned to the United States.

While the scheme was ongoing, KBR had been unwittingly billing the U.S. government an inflated amount for reimbursement because of the 20 percent kickback. The difference has since been refunded.

"When the issue was discovered, KBR removed the company in question from consideration for any future work as a subcontractor," Halliburton spokeswoman Cathy Mann said in a statement.

In March, a former KBR manager named Jeff Alex Mazon was charged in an indictment with defrauding the U.S. government of nearly $4 million by inflating the price of fuel tankers for military operations. He is accused of taking $1 million from a subcontractor. In that case, too, federal prosecutors began to investigate after an internal KBR investigation uncovered evidence of wrongdoing.

Mann said the cases are not related. Halliburton is the Pentagon's largest contractor in Iraq. Its work has come under scrutiny in part because Vice President Dick Cheney was the firm's chief executive between 1995 and 2000. Halliburton and the Pentagon deny the firm receives favorable treatment.

Halliburton’s role in toppling Oriental Oil Kish to be probed

2005-08-23T15:37:00.000-04:00

TEHRAN, Aug. 23 (MNA) — The Oriental Oil Kish Company’s success in the bid to drill the phases 9 and 10 of the South Pars Gas Field Development Plan against its rival companies including National Iranian Drilling Company (NIDC) became possible due to the company’s partnership with the Halliburton (the oil services company once headed by U.S. Vice President Dick Cheney).
“When it won the tender for drilling South Pars phases 9 and 10, Oriental Oil Kish was a small contractor and it lacked the necessary drilling equipment, particularly the drilling mast. But due to the presence of Halliburton and its supports for the company, the Kish Oil Company attended the tender and was even able to win the bid,” an informed source said.

He added that after the international media disclosed the Oriental Oil Kish’s relationship with an American company and their successful bid to develop oil projects in Iran, Halliburton announced that it will not work or conclude agreement with Iran. However, in an unofficial letter, it later on revealed its indirect cooperation with the Iranian side in the drilling project of the phases.

Following the withdrawal of Oriental Oil Kish Co., NIDC managing director Seifollah Jashnsaz told the Iranian Students News Agency (ISNA) that it has been about a month since they put forward the proposal for developing the project. “We have agreed to answer them by the end of the week on August 25.”

He further explained that the NIDC is reviewing the prices to see if the company is able to take the project based on the formerly suggested prices.

HoustonChronicle.com - Chicago Bridge gets Halliburton-related subpoena

2005-08-22T19:26:00.000-04:00

Dow Jones/AP

WASHINGTON — Chicago Bridge & Iron Co., a Netherlands-based engineering and construction company, has received a subpoena from a Securities and Exchange Commission investigation into a Halliburton Co. construction project in Nigeria where Chicago Bridge was a subcontractor.

Houston-based Halliburton's foreign operations have been the focus of investigations by various regulatory agencies. The U.S. Department of Justice and the SEC have been investigating allegations of bribery of Nigerian officials connected to the construction of a natural-gas liquefaction plant at Bonny Island.

Halliburton said it was under formal SEC investigation in June 2004.

Chicago Bridge & Iron said in its filing Friday with the SEC that it is cooperating with the request, but it didn't provide further details about the subpoena.

Ex-Halliburton Subsidiary Worker Guilty

2005-08-20T00:02:00.000-04:00

By JAN DENNIS
The Associated Press
Friday, August 19, 2005; 8:32 PM

PEORIA, Ill. -- A former employee of a Halliburton Co. subsidiary pleaded guilty Friday to accepting more than $100,000 in kickbacks from an Iraqi company in exchange for securing it a U.S. military construction contract, prosecutors said.

Glenn Allen Powell, 40, of Cedar Park, Texas, will be sentenced Nov. 18 in federal court for major fraud against the United States and violating the anti-kickback act. He faces 10 years in prison on each count and up to $1.25 million in fines.

"He's very sorry about what he did. He made a mistake and he wants to make it right," said Powell's attorney, Samuel Bassett.

Powell, who was fired after an internal investigation, has repaid part of the money to Halliburton and plans to repay the rest, Bassett said.

Prosecutors say Powell was a subcontracts administrator for Halliburton subsidiary KBR Inc., which provides engineering and other project management services for the military.

In exchange for $110,300 in kickbacks, Powell recommended the Iraqi company for a $609,000 subcontract to renovate four buildings into office and warehouse space, prosecutors say. Prosecutors declined to name the company.

"A government contract is not a license to steal," U.S. Attorney Jan Paul Miller said in a statement. "The public should be able to trust that the individuals who implement government contracts do so honestly."

Halliburton has removed the Iraqi company from its list of subcontractors and given the military a credit for the amount of the kickback, spokeswoman Melissa Norcross said.

Vice President Dick Cheney headed Halliburton from 1995 to 2000, and Democratic members of Congress have repeatedly questioned whether Halliburton and its subsidiaries received favorable treatment because of its connections. Cheney and other administration officials have denied Cheney had any role in Halliburton's government contract work.

Vanguard - Cover Stories : Senate probes N280bn Halliburton contract

2005-08-15T01:10:00.000-04:00

By Emmanuel Aziken & Hector Igbikiowubo
Posted to the Web: Monday, August 15, 2005
*Crude oil prices top $67p/b

ABUJA —THE Senate has launched a probe into the $2 billion (about N280 billion) gas to liquid project awarded by the Chevron/NNPC joint venture to Halliburton, the American-based multinational service company that was recently accused of paying $180 million bribe to past Nigerian officials.

The US thirst for gasoline and fears of a hurricane have pushed the oil market further into uncharted territory, with prices breaking the $67 mark at the weekend.

Besides, the Senate investigation under the aegis of its Committee on Upstream Petroleum, is also focusing attention on the Nigerian National Petroleum Corporation (NNPC’s) utilisation of the 450,000 barrels of crude allocated to it daily for domestic utilisation. The NNPC which is spearheading agitation for the increase of the domestic prices of petroleum products has acknowledged importing a significant proportion of products utilised in the country.

The Senate investigations, according to letters dispatched to the NNPC, ChevronTexaco and the Department of Petroleum Resources (DPR), followed petitions on contracts received by stakeholders. The DPR is being drawn into the investigation to ascertain the quantity of crude it has been allocating to the NNPC for domestic consumption.
The letters were signed by Senator Lee Maeba, chairman of the Senate Committee on Upstream Petroleum.
In its letter to ChevronTexaco entitled: “Request for Information on the Escravos Gas to Liquid (GTL) Project,” the Senate Committee requested information on the contract awarded to Halliburton.
The letter reads:

“The Senate Committee on Petroleum Resources, Upstream has received several petitions from the public with respect to the Escravos Gas to Liquid (GTL) project.
“You are, therefore, requested to submit all information on the project which include but not limited to:

lEvidence of due process leading to the award of the contract.
lCopy of the contract to Halliburton Services Inc. including commercial value of (the) project
lTechnical/Commercial evaluation report of all bids received
lDetails of Final Investment Decision (FID) reached with the NNPC
lAny other information to prove transparency of the process…”
Halliburton was, in 2004, the subject of an investigation that centred on the alleged payment of an estimated $180 million of bribe to past Nigerian government officials.

In its letter to Dr Funso Kupolokun, Group Managing Director of the NNPC dated August 2, 2005, on the same project, the Senate Committee requested information on the project and also information on the utilisation of the 450,000 barrels of crude given the NNPC for domestic consumption.

Crude oil prices top $67 p/b

On the local front, the Shell Petroleum Development Company operated Joint Venture in Nigeria’s upstream petroleum sector paid over $3.5billion (about N469 billion) in taxes and royalties to both the state and Federal Governments in year 2004, indicating a quantum leap when compared to the previous year’s figures.

US light crude closed $1 up at $66.80 a barrel, after hitting $67.10 earlier, while in London Brent crude closed $1.12 higher at $66.50. Worldwide petrol and gasoline prices are at unprecedented levels. US refinery stoppages came just as car sales and demand hit highs. The latest surge has been partly triggered by more than a dozen breakdowns at US installations, the latest of which hit a ConocoPhillips refinery in Illinois.

And fears Tropical Storm Irene, which could intensify to hurricane strength, is heading for the US Gulf Coast have added to worries about supply interruptions. Last week, US government figures showed a 2.1 million barrel decline in US stockpiles during the first week of August.

Shell pays $3.5bn tax

The SPDC joint venture also accounted for 43 per cent of Nigeria’s total crude oil production, while topping gas production by six per cent during the period under review.

Specifically, last year, the SPDC joint venture paid $2.2 billion (about N294.8 billion) as Petroleum Profit Tax to the Federal Government, representing an 83 per cent increase compared to $1.2billion (about N160.8billion) paid in 2003.

The joint venture also paid $904 million (about N121.136 billion) as royalty payments, indicating over 40 per cent increase compared to $608 million (about N81.472 billion) paid in year 2003. “The SPDC also made a statutory contribution of $68.9 million (about N9.23billion) to the NDDC (of which Shell share was $21 million).”

The SPDC joint venture also paid Pay As You Earn (PAYE) tax to state governments where its staff are resident as well as education tax to the Federal Government coffer. Although the amount paid by the joint venture as PAYE tax and education tax could not be ascertained from the report, there are indications that it may exceed $350 million (about N46.9 billion).

Oil production during the period also averaged one million barrels per day (p/d) compared to 910,000 b/d in 2003, indicating a 10 per cen increase and the highest level achieved since 1980.
The increase in production is due to a higher contribution from the EA field which accounts for 150,000 b/d, lower production deferments and the reactivation of some previously shut-in oil wells.

This improved working environment saw the joint venture’s crude oil output accounting for 43 per cent of Nigeria’s total output in 2004. Similarly, gas sales recorded an average 1,242 million standard cubic feet per day, against 1,171 million standard cubic feet p/d sold in 2003.

The report also revealed that during the period crude oil theft peaked at 60,000 b/d and low periods of 40,000 b/d, recorded from 71 incidents, indicating a 20 per cent drop from 88 incidents in year 2003.

The report also showed that the joint venture increased the use of local contractors in support of the Federal Government’s drive for improved Nigerian content, pointing out that contracts valued at $727 million (about N97.4 billion) was awarded to Nigerian companies. “20 per cent from the Niger Delta).”

Responding to questions on the report, Shell's Director of External Affairs, the Reverend Precious Omuku, explained that contrary to reports about a tax default by some oil companies, there was an assumption on the part of oil companies that the Federal Government would let them enjoy some of the oil windfall.

“When the oil price gets to $30, according to the MoU, government can begin to be generous to the industry by letting it use certain percentage in the upside by giving you some of the windfall. But you can not take it unless government gives you. There was an assumption that government would give. But government did not give. That is what they were referring to. It wasn’t a default on tax,” he said.
On the issue of gas supply to proposed IPPs for the Niger Delta, the Shell director explained that a gas supply programme was required, adding that this will take sometime to put in place.

“They can build those thermal plants very quickly. They can even buy them off the shelf. But you need a programme to gather the gas to supply to them. So the two must shake hands. That is what we mean when you hear we can not supply all of them in the time span.

“But given time to develop all your gas projects, you can supply them. There isn’t a dearth of gas, it is the timing. We need an alignment of the two. Everybody would have to bring money to the table. It has cost us in the past like two billion dollars in gas development.
When I say us, I mean the joint venture and that money has to be found in order to grow that kind of venture. Among the stakeholders, there is no lack of commitment to any of the IPPs,” he said.

Ön shortage of gas supply to the Egbin thermal power plant, he said contrary to claims, there was no competition between LNG and domestic supplies, adding that the power utility company has suddenly become more efficient.

“What has happened is that NEPA suddenly became more efficient and started demanding for more gas beyond the contract level that we have with the NGC and so there is a tightness in the supply. We have had very good consultations with NEPA and NGC and there is this level of growth and the industry is ramming up to get to that level of supply. There was no failure really or preference to supply to the NLNG.”
He also reiterated the joint venture’s commitment to the flare-out target noting however, that the target is predicated on a particular level of funding.

Al Jazeera - Halliburton provided Iran with key nuclear reactor components

2005-08-10T09:23:00.000-04:00

Halliburton, the scandal-plagued oil company, that Vice President Dick Cheney used to run, sold an Iranian company key components for a nuclear reactor, Halliburton sources revealed.

Cheney was CEO from 1995 to 2000, during which Halliburton Products and Services set up shop in Iran.

Halliburton, which sells about $40 million a year worth of oil field services to the Iranian Government, was secretly aiding one of Iran’s top nuclear program officials on natural gas related projects and provided the official's oil development company with the components last April, the sources said.

FARS, one of Iran's many state controlled news agencies reported last month the arrest of several executives of the Oriental Oil Kish Company, which is owned by sons and other relatives of the defeated mullah presidential candidate Hashemi Rafsanjani, saying that the men were involved in widespread corruption of Iran's oil industry, specifically tied to the country's business dealings with Halliburton.

According to a report posted on the Iran Press News website: "They were brought up on charges of economic corruption". “Following the necessary investigations by the judiciary's bailiffs, with warrants from the public prosecutor's office, the case of economic corruption and malfeasance, certain of the authorities of Oriental Kish Oil Company have been arrested and under questioning. The head of the board of directors was also among those detained.”

Halliburton, with a history of violations of U.S. law by conducting business with countries the Bush administration claims are supporting “terrorism”, was working with Cyrus Nasseri, vice chairman of the board of directors of Oriental Oil Kish, on oil and natural gas development projects in Tehran, registered in the United Kingdom and Dubai. Nasseri, a key member of Iran’s nuclear development team, participated in Iran’s nuclear negotiating with the European Union and the International Atomic Energy Agency.

According to a report published by the Financial Times: “Nasseri, a senior Iranian diplomat negotiating with Europe over Iran's nuclear program, is at the heart of deals with U.S. energy companies to develop the country's oil industry”.

“A reliable source stated that, given the parameters, the close-knit cooperation and association of one of the key members of the regime's nuclear negotiation team with Halliburton can be an alarm bell which will necessarily instigate the dynamics of the members of the regimes' negotiating committee,” according to the Iran Press News story.

In late July, Nasseri was questioned for passing Iran’s nuclear secrets to Halliburton and receiving $1 million in bribes from the company, Iranian government officials said.

According to Iran Press News, a huge network of oil mafia was uncovered during investigations.

Halliburton sources revealed that the company sold Iran centrifuges and detonators to be used specifically for a nuclear reactor as well oil and natural gas drilling parts for well projects to Oriental Oil Kish.

Halliburton’s business with Oriental Oil Kish first surfaced in January, when the Iranian company said that it gave some contracts of the South Pars natural gas drilling project to Halliburton Products and Services, a subsidiary of Dallas-based Halliburton.

Later on, Halliburton said the South Pars gas field project in Iran will be the its last project in the country, “due to a poor business environment,” according to BBC.

In May and under mounting pressure from lawmakers in Washington, Halliburton decided to end its deals with Nasseri, but continued acting as an advisory capacity to his company.

Currently, the U.S. law doesn’t prohibit foreign subsidiaries from having business with what President Bush calls “rouge” nations as long as the subsidiaries are truly independent of the mother company.

But Halliburton’s Cayman Island subsidiary never did fit that description.

According to a February 2001 report in the Wall Street Journal, “Halliburton Products & Services Ltd. works behind an unmarked door on the ninth floor of a new north Tehran tower block. A brochure declares that the company was registered in 1975 in the Cayman Islands, is based in the Persian Gulf sheikdom of Dubai and is non-American. But, like the sign over the receptionist's head, the brochure bears the company's name and red emblem, and offers services from Halliburton units around the world.”

The Seattle Times: Nation & World: Unafraid to blow the whistle

2005-08-07T09:07:00.000-04:00

By Deborah Hastings
The Associated Press

WASHINGTON — In the world as Bunnatine Greenhouse sees it, people do the right thing. They stand up for the greater good, and they speak up when things go wrong. She believes God has a purpose for each life, and she prays every day for that purpose to be made evident.

She is praying her heart out these days, because she is in a great deal of trouble.

Bunnatine "Bunny" Greenhouse is the Principal Assistant Responsible for Contracting ("PARC" in the alphabet soup of military acronyms) in the Army Corps of Engineers. Lest the title fool, she is responsible for awarding billions upon billions in taxpayers' money to private companies hired to resurrect war-torn Iraq and to feed, clothe, shelter and do the laundry of American troops stationed there.

She has rained a mighty storm upon herself for standing up, before members of Congress and live on C-SPAN, to proclaim things are just not right in this staggeringly profitable business.

She has asked many questions: Why is Halliburton — a giant Texas firm that holds more than 50 percent of all rebuilding efforts in Iraq — receiving billions in contracts without competitive bidding? Do the duration of those contracts make sense? Have there been violations of federal laws regulating how the government can spend its money?

Halliburton denies wrongdoing. "These false allegations have been recycled in the media ad nauseam," the company said in response to a list of e-mailed questions from The Associated Press.

Bunny Greenhouse now may lose her job — and her reputation, which she spent a lifetime building.

She is a black woman in a world of mostly white men; a 60-year-old workaholic who abides neither fools nor frauds. But she is out of her element in this fight, her former boss said.

"What Bunny is caught up in is politics of the highest damn order," said retired Gen. Joe Ballard, who hired Greenhouse and headed the Corps until 2000. "This is real hardball they're playing here. Bunny is a procurement officer, she's not a politician. She's not trained to do this."

Stirring the pot

Greenhouse has known for a long time that her days may be numbered. Her needling of contracts awarded to Halliburton subsidiary Kellogg, Brown & Root (KBR) predated the Iraq war, beginning with costs she said were spiraling "out of control" from a 2000 Bosnia contract to service U.S. troops. From 1995 to 2000, Halliburton's CEO was Dick Cheney, who left to run for vice president. He maintains his former company has not received preferential treatment.

She since had questioned both the amounts and the reasons for giving KBR tremendous contracts in the buildup to invading Iraq. She was ignored at first, she said. She then was cut out of the decision-making process.

On Oct. 6, she was summoned to the office of her boss. Maj. Gen. Robert Griffin, the Corps' deputy commander, was demoting her, he told her, taking away her Senior Executive Service status and sending her to midlevel management. Griffin declined to be interviewed.

Her performance was poor, according to a letter he presented. This was a surprise. Her previous job evaluations had been exemplary, she said.

If she didn't want the new position, she could retire with full benefits, the letter noted.

Over my dead body, Greenhouse said.

She has hired lawyer Michael Kohn. Two weeks after Greenhouse's trip to the woodshed, Kohn wrote a letter to the acting secretary of the Army, requesting an independent investigation of "improper action that favored KBR's interests."

The status of an independent investigation by the Defense Department is unclear. "As a matter of policy, we do not comment on open and ongoing investigations," said Lt. Col. Rose-Ann Lynch, a Pentagon spokeswoman.

Halliburton also is under federal investigation for alleged favoritism by the Bush administration. FBI agents questioned Greenhouse for nine hours in November about that probe. In March, a former employee was indicted for taking bribes while working for KBR in Iraq.

Company spokeswoman Melissa Norcross said KBR has "delivered vital services for U.S. troops and the Iraqi people at a fair and reasonable cost, given the circumstances."

Going after the big boys

When Ballard hired Greenhouse in 1997 she was overqualified — three master's degrees and more than 20 years of contracting experience in private industry and the military.

"She is probably the most professional person I've ever met," Ballard said.

Ballard used her, he said, to help him revolutionize the Corps — by ending the old-boys practice of awarding contracts to a favored few, and by imposing private-industry standards on a mammoth, 230-year-old government agency.

"The Corps is a tough organization. And I'll tell you, it's not easy to be a woman in this organization, and a black one at that," said Ballard, who was the first black leader of the Corps.

He is not optimistic about her future.

"I think you can put a fork in it," he said. "Her career is done."

At Corps headquarters, few speak to her, she said, and her bosses write down what she says at departmental meetings.

In a city where politics is everything, including blood sport, she refuses to play.

"I have never gone along to get along," she said.

Her contracting staff was reduced sharply, she said, and her superiors have gone behind her back, most notably in issuing an emergency waiver — on a day she was out of the office — that allowed KBR to ignore requests from Department of Defense auditors who issued a draft report in 2003 concluding KBR overcharged the government $61 million for fuel in Iraq.

The Army Corps of Engineers declined to comment on Greenhouse's complaints. "It's a personnel matter," Corps spokeswoman Carol Sanders said.

"They want me out," Greenhouse said.

A list of one

Greenhouse is mandated by Congress to find the best quality at the cheapest price from the most qualified supplier. Over her objections, KBR was awarded three multibillion-dollar contracts, two without competitive bidding.

Greenhouse's most strenuous complaints were over the Restore Iraqi Oil contract, estimated at $7 billion, originally planned to handle oil-field fires that might be started by Saddam Hussein's troops. When that didn't happen, it morphed into an agreement to repair oil fields and import fuel.

KBR was given the contract in March 2003. In Greenhouse's view, that process violated federal regulations concerning fair and open bidding. Halliburton denies that.

Later, she would tell Democratic members of Congress: "The abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have ever witnessed during the course of my professional career."

At the Corps, Greenhouse said she was told KBR was the only qualified firm.

With the country on the brink of war, she reluctantly signed the RIO contract.

Greenhouse grew up in the segregated South. Her brother is Elvin Hayes, the Hall of Fame basketball player. She's a registered independent. Her husband, Aloyisus, is retired after a career as a senior Army procurement officer. They have three grown children.

No matter what, Bunny Greenhouse's faith still beams.

"I simply believe that we have callings and purposes in this life. I walk through this life for a purpose. I wake up every day for a purpose. And every day I say, 'Here I am. Send me.' "

Copyright © 2005 The Seattle Times Company

Ex-Employees Faulted Halliburton Role in Iraq - from TBO.com

2005-08-06T23:36:00.000-04:00

By Deborah Hastings The Associated Press
Published: Aug 6, 2005

WASHINGTON (AP) - Others besides Bunnatine Greenhouse have testified that Halliburton, the biggest holder of American rebuilding contracts in Iraq, has deceived the government and cheated taxpayers.
The company denies the claims.

Rory Mayberry, who worked for Halliburton subsidiary KBR from February through April 2004, testified from Iraq, via videotape, to the Democratic Policy Committee in June.

As a food manager at a U.S. military camp, Mayberry said he witnessed KBR employees serving spoiled food to American troops, including items whose expiration date was more than a year old, and food from trucks that had been bombed and shot at. "We were told to go into the trucks and remove the food items and use them after removing the bullets and any shrapnel," Mayberry said.

Halliburton also charged the U.S. government for hundreds of specialty meals prepared for foreign workers from Turkey and the Philippines, Mayberry said. The foreign workers were actually given leftovers from troop meals, Mayberry said.

KBR managers told employees not to speak with government auditors who arrived at the camp, Mayberry said, saying he ignored those orders. As punishment, he said, he was sent to Fallujah for three weeks, where there was heavy fighting. "The employees that talked to the auditors were moved to other bases that were under fire," Mayberry told the committee.

Its members expressed outrage.

"There obviously is no honor by a company that would serve outdated food to American troops in Iraq, serving their country," said Sen. Byron Dorgan, D-N.D. "The more I learn, the more I shake my head and wonder. Who on Earth is minding the store here?"

Halliburton spokeswoman Melissa Norcross said the claims were a "gross mischaracterization." KBR does not interfere with government auditors, she said. Food service is monitored by employees and invoices are not padded.

"The only thing that has been inflated is the political rhetoric," Norcross said.

In July 2004, former KBR logistics and subcontract planner Marie DeYoung testified before the House Committee on Government Reform. While working in Kuwait, she said, she was told by KBR managers to pay invoices to subcontractors without verifying their accuracy - because government auditors were only scrutinizing unpaid bills.

DeYoung said she also witnessed "significant waste and overpricing" for laundry and other services provided to troops. That included paying $100 per 15-pound bag of laundry in Iraq, a cost which was passed on to the government.

"Every dollar that is squandered because of waste, fraud, or abuse is a dollar we do not have for critical equipment and supplies for our troops," said DeYoung, who served more than 10 years in the military as a commander, a chaplain and an operations officer.

9news.com | News | Ex-employees faulted Halliburton role in Iraq

2005-08-06T15:23:00.000-04:00

WASHINGTON (AP) - Others besides Bunnatine Greenhouse have testified that Halliburton, the biggest holder of American rebuilding contracts in Iraq, has deceived the government and cheated taxpayers.

The company denies the claims.

Rory Mayberry, who worked for Halliburton subsidiary KBR from February through April 2004, testified from Iraq, via videotape, to the Democratic Policy Committee in June.

As a food manager at a U.S. military camp, Mayberry said he witnessed KBR employees serving spoiled food to American troops, including items whose expiration date was more than a year old, and food from trucks that had been bombed and shot at. "We were told to go into the trucks and remove the food items and use them after removing the bullets and any shrapnel," Mayberry said.

Halliburton also charged the U.S. government for hundreds of specialty meals prepared for foreign workers from Turkey and the Philippines, Mayberry said. The foreign workers were actually given leftovers from troop meals, Mayberry said.

KBR managers told employees not to speak with government auditors who arrived at the camp, Mayberry said, saying he ignored those orders. As punishment, he said, he was sent to Fallujah for three weeks, where there was heavy fighting. "The employees that talked to the auditors were moved to other bases that were under fire," Mayberry told the committee.

Its members expressed outrage.

"There obviously is no honor by a company that would serve outdated food to American troops in Iraq, serving their country," said Sen. Byron Dorgan, D-N.D. "The more I learn, the more I shake my head and wonder. Who on Earth is minding the store here?"

Halliburton spokeswoman Melissa Norcross said the claims were a "gross mischaracterization." KBR does not interfere with government auditors, she said. Food service is monitored by employees and invoices are not padded.

"The only thing that has been inflated is the political rhetoric," Norcross said.

In July 2004, former KBR logistics and subcontract planner Marie DeYoung testified before the House Committee on Government Reform. While working in Kuwait, she said, she was told by KBR managers to pay invoices to subcontractors without verifying their accuracy -- because government auditors were only scrutinizing unpaid bills.

DeYoung said she also witnessed "significant waste and overpricing" for laundry and other services provided to troops. That included paying $100 per 15-pound bag of laundry in Iraq, a cost which was passed on to the government.

"Every dollar that is squandered because of waste, fraud, or abuse is a dollar we do not have for critical equipment and supplies for our troops," said DeYoung, who served more than 10 years in the military as a commander, a chaplain and an operations officer.

Halliburton Secretly Doing Business with Key Member of Iran’s Nuclear Team

2005-08-05T20:28:00.000-04:00

by Jason Leopold

August 5, 2005
GlobalResearch.ca

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Scandal-plagued Halliburton, the oil services company once headed by Vice President Dick was secretly working with one of Iran’s top nuclear scientists on natural gas related projects and, allegedly, selling the scientists’ oil company key components for a nuclear reactor, according to Halliburton sources with intimate knowledge of both companies’ business dealings.

Just last week a National Security Council report said Iran was a decade away from acquiring a nuclear bomb. That time frame could arguably have been significantly longer if Halliburton, which just reported a 284 percent increase in its fourth quarter profits due to its Iraq reconstruction contracts, was not actively providing the Iranian government with the financial means to build a nuclear weapon.

Now comes word that Halliburton, which has a long history of flouting U.S. law by conducting business with countries the Bush administration said has ties to terrorism, was working with Cyrus Nasseri, the vice chairman of Oriental Oil Kish, one of Iran’s largest private oil companies, on oil development projects in Tehran. Nasseri is also a key member of Iran’s nuclear development team.

“Nasseri, a senior Iranian diplomat negotiating with Europe over Iran's controversial nuclear program is at the heart of deals with US energy companies to develop the country's oil industry”, the Financial Times reported.

Nasseri was interrogated by Iranian authorities in late July for allegedly providing Halliburton with Iran’s nuclear secrets and accepting as much as $1 million in bribes from Halliburton, according to Iranian government officials.

It’s unclear whether Halliburton was privy to Iran’s nuclear activities. A company spokesperson did not return numerous calls for comment. A White House also did not return calls for comment.

Oriental Oil Kish dealings with Halliburton became public knowledge in January when the company announced that it had subcontracted parts of the South Pars natural gas drilling project to Halliburton Products and Services, a subsidiary of Dallas-based Halliburton that is registered in the Cayman Islands.

Following the announcement, Halliburton announced the South Pars gas field project in Tehran would be its last project in Iran. The BBC reported that Halliburton, which took in $30-$40 million from its Iranian operations in 2003, "was winding down its work due to a poor business environment."

In attempt to curtail other U.S. companies from engaging in business dealings with rogue nations, the Senate approved legislation July 26 that would penalize companies that continue to skirt U.S. law by setting up offshore subsidiaries as a way to legally conduct business in Libya, Iran and Syria, and avoid U.S. sanctions under International Emergency Economic Powers Act (IEEPA). The amendment, sponsored by Sen. Susan Collins, R-Maine, is part of the Senate Defense Authorization bill.

"It prevents U.S. corporations from creating a shell company somewhere else in order to do business with rogue, terror-sponsoring nations such as Syria and Iran," Collins said in a statement.

"The bottom line is that if a U.S. company is evading sanctions to do business with one of these countries, they are helping to prop up countries that support terrorism - most often aimed against America," she said.

The law currently doesn’t prohibit foreign subsidiaries from conducting business with rogue nations provided that the subsidiaries are truly independent of the parent company.

But Halliburton’s Cayman Island subsidiary never did fit that description.

Halliburton first started doing business in Iran as early as 1995, while Vice President Cheney was chief executive of the company and in possible violation of U.S. sanctions. According to a February 2001 report in the Wall Street Journal, "Halliburton Products & Services Ltd. works behind an unmarked door on the ninth floor of a new north Tehran tower block. A brochure declares that the company was registered in 1975 in the Cayman Islands, is based in the Persian Gulf sheikdom of Dubai and is "non-American." But, like the sign over the receptionist's head, the brochure bears the company's name and red emblem, and offers services from Halliburton units around the world." Moreover, mail sent to the company’s offices in Tehran and the Cayman Islands is forwarded to the company’s Dallas headquarters.

Not surprisingly, in a letter drafted by trade groups representing corporate executives vehemently objected to the amendment saying it would lead to further hatred and perhaps incite terrorist attacks on the U.S and “greatly strain relations with the United States’ primary trading partners.”

"Extraterritorial measures irritate relations with the very nations the U.S. must secure cooperation from to promote multilateral strategies to fight terrorism and to address other areas of mutual concern," said a letter signed by the Coalition for Employment through Exports, Emergency Coalition for American Trade, National Foreign Trade Council, USA Engage, U.S. Council on International Business and the U.S. Chamber of Commerce. "Foreign governments view U.S. efforts to dictate their foreign and commercial policy as violations of sovereignty, often leading them to adopt retaliatory measures more at odds with U.S. goals.”

Still, Collins’ amendment has some holes. As Washington Times columnist Frank Gaffney pointed out in a July 25 story, “the Collins amendment would seek to penalize individuals or entities who evade IEEPA sanctions — if they are "subject to the jurisdiction of the United States."

“This is merely a restatement of existing regulations. The problem with this formulation is that, in the process of purportedly closing one loophole, it would appear to create new ones. As Sen. Collins told the Senate: "Some truly independent foreign subsidiaries are incorporated under the laws of the country in which they do business and are subject to that country's laws, to that legal jurisdiction. There is a great deal of difference between a corporation set up in a day, without any real employees or assets, and one that has been in existence for many years and that gets purchased, in part, by a U.S. firm. It is a safe bet that every foreign subsidiary of a U.S. company doing business with terrorist states will claim it is one of the ones Sen. Collins would allow to continue enriching our enemies, not one prohibited from doing so.”

Going a step further, Dow Jones Newswires reported that the U.S. Securities and Exchange Commission sent letters in June to energy corporations demanding that the companies disclose in their security filings any business dealings with terrorist supporting nations.

“The letters have been sent by the SEC's Office of Global Security Risk, a special division that monitors companies with operations in Iran and other countries under U.S. sanctions, which were created by the U.S. Congress in 2004,” Dow Jones reported.

The move comes as investors have become increasingly concerned that they may be unwillingly supporting terrorist activity. In the case of Halliburton, the New York City Comptroller's office threatened in March 2003 to pull its $23 million investment in the company if Halliburton continued to conduct business with Iran.

The SEC letters are aimed at forcing corporations to disclose their profits from business dealings rogue nations. Oil companies, such as Devon Energy Corp., ConocoPhillips, Marathon Oil Corp. and Occidental Petroleum Corp. that currently conduct business with countries that sponsor terrorism, have not disclosed the profits received from terrorist countries in their most recent quarterly reports because the companies don’t consider the earnings “material.”

Devon Energy was until recently conducting business in Syria. The company just sold its stake in an oil field there. ConocoPhillips has a service contract with the Syrian Petroleum Co. that expires on Dec. 31.

Jason Leopold is the author of the explosive memoir, News Junkie, to be released in the spring of 2006 by Process/Feral House Books. Visit Leopold's website at www.jasonleopold.com for updates.

Cayman Net News: Current News about the Cayman Islands in the Foreign Press

2005-08-04T00:45:00.000-04:00

Iran’s top nuclear negotiator faces charges over ties to Halliburton’s Cayman subsidiary

TEHRAN, Iran: Iran Focus, 29 July 2005 – Iran’s judiciary has arrested several executives of a privately-owned oil drilling company over their dealings with the U.S.-based oil giant Halliburton and one of the country’s top nuclear negotiators is facing charges of involvement in an oil scam, a semi-official news agency reported.

Fars News Agency said the chairman of the Board of Directors of Oriental Oil Kish, and several of his colleagues are being interrogated over the company’s trading. A senior member of Iran’s nuclear negotiations team, Sirus Nasseri, is the vice-chairman of the oil company.

Oriental Oil Kish first blipped on the international media’s radar screen in January, when it was announced that the company had subcontracted parts of the South Pars drilling project to Halliburton Products and Services registered in the Cayman Islands.

German executive arrested for tax evasion involving fictitious
Cayman transaction

NEW YORK, USA: Bloomberg News, 31 July 2005 – Ben Bartel, chief executive of AvCraft Aviation LLC, was arrested last week at the Frankfurt airport, Focus magazine reported. Munich's chief public prosecutor Ruediger Hoedl said his office is investigating whether Bartel evaded $8.49 million in taxes in Germany through a fictitious transaction in the Cayman Islands, the magazine said.

Veteran Israeli politician founded Cayman Islands venture capital entity

TEL AVIV, Israel: Israel Insider, 31 July 2005 – An Israeli official who may have a financial interest in the Disengagement is veteran Israeli politician Shimon Peres, who is currently Israel's deputy prime minister. Peres is the founder of something called the Peace Technology Fund, a venture capital entity chartered in the Cayman Islands, which had as its stated goal bringing together investors from around the world to promote development in the Palestinian “territories,” including Gaza.

Iran Focus-News - Special Wire - Iran’s top nuclear negotiator faces charges over Halliburton ties

2005-07-29T21:13:00.000-04:00

Iran Focus

Tehran, Iran, Jul. 29 – Iran’s judiciary has arrested several executives of a privately-owned oil drilling company over their dealings with the U.S.-based oil giant Halliburton and one of the country’s top nuclear negotiators is facing charges of involvement in an oil scam, a semi-official news agency reported.

Fars News Agency said Mehrdad Safdari, chairman of the Board of Directors of Oriental Oil Kish, and several of his collegues are being interrogated over the company’s trading.

A senior member of Iran’s nuclear negotiations team, Sirus Nasseri, is the vice-chairman of the Board of Directors of the oil company. The news agency said “a well-informed source” close to the investigation sharply criticized Iran’s “security and political agencies” for their “blatant weakness” in preventing Nasseri from dealing with Halliburton.

“The authorities must be particularly vigilant about the extensive economic activities of some of the country’s officials”, he said. The source noted that “Nasseri had access to the country’s most secret information as a member of Iran’s nuclear negotiations team and was at the same time dealing directly with the American company, Halliburton, which used to be run by Dick Cheney”.

Oriental Oil Kish, one of Iran’s largest private oil companies, was set up in 2003 with an initial capital of 10 million tomans. In a few weeks, the company’s capital rose to 200 million dollars and soon jumped to seven billion tomans, a startling 700 percent rise in less than a year.

“The judiciary has been investigating this company for six months and after the collection of sufficient information and completion of inquiries, prosecution has begun”, Fars news agency, which is close to Supreme Leader Ayatollah Ali Khamenei, reported.

Other senior executives of the oil company facing charges include managing director Mohammad Madani, Chief Executive Officer Ali Matin Nejati, and operations director Ahmad Salari.

The Tehran-based daily Kayhan reported that investigators had discovered one million dollars in cash at the home of one of the detained oil executives. “Powerful figures have been exerting pressure to secure his release, but Judiciary Chief Ayatollah Mahmoud Shahroudi has insisted that the case be prosecuted”, the daily wrote, adding that it would uncover “a chain of corruption and embezzlement scams”.

Oriental Oil Kish first blipped on the international media’s radar screen in January, when it was announced that the company had subcontracted parts of the South Pars drilling project to Halliburton Products and Services registered in the Cayman Islands.

“Nasseri, a senior Iranian diplomat negotiating with Europe over Iran's controversial nuclear programme is at the heart of deals with US energy companies to develop the country's oil industry”, the Financial Times wrote.

The next day Halliburton announced the South Pars gas field project would be its last in Iran. The BBC reported that Halliburton, which took in $30-$40 million from Iranian operations in 2003, "was winding down its work due to a poor business environment."

But the controversy over a key nuclear negotiator signing up big oil contracts with a U.S. oil giant did not die down in Iran. Hard-line members of Iran’s parliament demanded to question Nasseri over his oil deals and an influential Tehran daily reported that the Ministry of Oil was handing over multi-million-dollar contracts to Oriental Oil Kish while much of the company’s operations exist only on paper.

“This company has won contracts worth more than 500 million dollars from the Oil Ministry in the past three years, while it is not even registered in Iran”, the daily Kayhan wrote in an editorial on January 20, 2005.

Evidence shows that Oriental Oil Kish was set up by entrepreneurs and officials close to ex-President Ali-Akbar Hashemi Rafsanjani. Nasseri himself is a long-time protégé of Rafsanjani.

Investigators have pointed out that the company’s operational centre in Dubai is a small office with seven, mostly Indian, employees. Its two offices in Tehran’s Vali-Asr and Africa streets have no signboard and have a staff of about 15 persons. The company’s letterhead has no address and only provides one telephone number.

While there is a strong case for the prosecution of the senior executives of Oriental Oil Kish, Iran analysts see the crackdown on the company as a frontal assault by the ultra-conservative camp on the oil businesses of Rafsanjani and his allies. The new hard-line President-elect Mahmoud Ahmadinejad’s top election pledge was to “purge the country’s oil industry of Mafia-like influence and corruption”. This was widely seen as a thinly-veiled allusion to election rival Rafsanjani’s involvement in privately-owned oil companies in Iran.

“By targeting the private oil companies run by the Rafsanjani clan, Khamenei is going for the ex-President’s jugular”, said Ahmad Nassehi, a Dubai-based financial analyst. “Rafsanjani has lost much of his political clout in the elections. If his economic power is undermined, too, he’ll be out of the game for good”.

Analysts say the prosecution of Oriental Oil Kish executives will provide an indication as to how far, and how high, the incoming hard-line government is going to pursue the anti-corruption campaign.

Halliburton announces 284 percent increase in war profits

2005-07-27T19:15:00.000-04:00

WASHINGTON, July 25 (HalliburtonWatch.org) -- Halliburton announced on Friday that its KBR division, responsible for carrying out Pentagon contracts, experienced a 284 percent increase in operating profits during the second quarter of this year.

The increase in profits was primarily due to the Pentagon's payment of "award fees" for what military officials call "good" or "very good" work done by KBR in the Middle East for America's taxpayers and the troops.

Despite the scandals that plague KBR's military contracts, the Pentagon awarded $70 million in "award" fees to the company, along with four ratings of "excellent" and two ratings of "very good" for the troop logistics work under the Army's LOGCAP contract.

The Pentagon has provided preferential treatment to Halliburton on a number of occasions, including the concealment from the public of critical reports by military auditors.

Audits conducted by the Pentagon's Defense Contract Audit Agency determined that KBR had $1 billion in "questioned" expenses (i.e. expenses which military auditors consider "unreasonable") and $442 million in "unsupported" expenses (i.e. expenses which military auditors have determined contain no receipt or any explanation on how the expenses were disbursed).

But the top Pentagon brass ignored these audits and rewarded KBR's work anyway.

Halliburton's earnings announcement comes on the heels of new reports showing the Iraq and Afghan wars have already cost U.S. taxpayers $314 billion and that another ten years of war will cost $700 billion.

In another coup for Halliburton, a federal judge this month decided that whistleblowers may not sue U.S. companies for fraud if payment for services was made in Iraqi, not U.S., money. Halliburton was paid over $1 billion in Iraqi oil money during the first 15 months of the occupation. The judge's ruling means the False Claims Act cannot be used to offer large rewards to corporate insiders who reveal wrongdoing or overcharges for services. The law is considered America's most successful deterrent against contractor fraud, but the judge's decision will help Halliburton and other contractors avoid tough scrutiny in Iraq.

Former Bush aide turns critic as Iraq inspector

2005-07-26T17:47:00.000-04:00

Tuesday, July 26, 2005

By Yochi J. Dreazen, The Wall Street Journal

During a routine audit last summer of an American office in charge of doling out reconstruction funding in Hillah, Iraq, U.S. government investigators made a series of startling discoveries.

The office had paid a contractor twice for the same work. A U.S. official was allowed to handle millions of dollars in cash weeks after he was fired for incompetence. Of the $119.9 million allocated for regional projects, $89.4 million was disbursed without contracts or other documentation. An additional $7.2 million couldn't be found at all.

To many officials in both Baghdad and Washington, the only thing more surprising than the problems was the identity of the man who had uncovered them: Stuart Bowen, the special inspector general for Iraq reconstruction.

Mr. Bowen is a Texas lawyer who parlayed a job on George W. Bush's first gubernatorial campaign into senior posts in Austin and Washington. He began the Iraq war lobbying for an American contractor seeking tens of millions of dollars in reconstruction work. Last October, California Democratic Rep. Henry Waxman singled him out in a report on "The Politicization of Inspectors General" in the Bush administration. The report suggested that such auditors wouldn't be "independent and objective."

Instead, Mr. Bowen has become one of the most prominent and credible critics of how the administration has handled the occupation of Iraq. In a series of blistering public reports, he has detailed systemic management failings, lax or nonexistent oversight, and apparent fraud and embezzlement on the part of the U.S. officials charged with administering the rebuilding efforts.

White House officials declined to comment on Mr. Bowen. But he has drawn harsh criticism from other quarters.

Aides at both the State Department and the Defense Department have tried to curb the independence of his office. L. Paul Bremer, head of the Coalition Provisional Authority until June 2004, has criticized Mr. Bowen for "misconceptions and inaccuracies" and for expecting the occupation authority, amid postwar chaos, to follow accounting standards that "even peaceful Western nations would have trouble meeting." Newt Gingrich, the former House speaker, has called Mr. Bowen's staff "dramatically out of touch with the practical realities of waging war and setting up a new government in a war-torn country."

Mr. Bowen acknowledged in one report that "the CPA operated in a dangerous working environment under difficult conditions." But the report said the U.S. still should have "established controls and provided oversight over" reconstruction funds "precisely because there was no functioning Iraqi government."

In 1994, Mr. Bowen was a senior member of Mr. Bush's campaign team in his successful run for governor of Texas. After Mr. Bush took office, Mr. Bowen served as assistant general counsel in the governor's office and then deputy general counsel under Alberto Gonzales, now U.S. attorney general. Mr. Bowen crafted some of Gov. Bush's most controversial legal decisions, such as ousting a Democratic judge and dismissing widespread questions about the guilt of a death-row inmate.

When Mr. Bush ran for president, Mr. Bowen spent 35 days in Florida during the recount, and then served as deputy counsel to the Bush transition team. He rejoined Mr. Gonzales at the White House as associate counsel. In a 2002 ceremony marking the unveiling of Mr. Bush's official gubernatorial portrait in Austin, the president singled out Mr. Bowen as one of the aides who followed him to the presidency. "I truly believe America is better off as a result of the influx of Texans who showed up" in Washington, he said.

Mr. Bowen left the administration in March 2003 for a job at Patton Boggs, a prominent Washington law firm with a big lobbying operation. The U.S. launched the invasion of Iraq a few weeks later, and Mr. Bowen began lobbying for reconstruction work on behalf of URS Group Inc., a San Francisco-based company specializing in international construction planning and management. Mr. Bowen, one of three Patton Boggs attorneys on the account, says his only work for the company involved organizing an April 2003 meeting with a senior official at the U.S. Agency for International Development. URS didn't win any AID contracts as a result of that meeting, but the company ultimately won a series of CPA contracts valued at as much as $30 million to oversee reconstruction projects.

The effort to rebuild Iraq quickly became the largest U.S. reconstruction effort since the end of World War II. The funds eventually included $18.4 billion in U.S. money and more than $22 billion in seized Iraqi assets turned over to the U.S. by the United Nations.

In the fall of 2003, Congress created a CPA inspector general to oversee how the money was spent -- a post that eventually morphed into the job of inspector general for all Iraq reconstruction. The official would answer to Mr. Bremer, who headed the occupation authority, and present reports to Congress at least once every three months. The office was given a budget of $75 million.

At the request of the Bush administration, the job was created with many strings attached. Unlike other federal inspectors general, the new official was to be appointed by the secretary of defense, not the president, and wouldn't be subject to Senate confirmation. The White House also won the right to block the inspector general from releasing a report on national-security grounds -- though none have been blocked so far. Administration officials and many Congressional Republicans argued that the situation in Iraq was too chaotic to require normal oversight. They also cited the danger that an unfettered release of information could help insurgents plan more effective attacks against U.S. forces there.

Critics were skeptical that, under those conditions, the inspector general could offer real oversight. The skeptics weren't encouraged when, in January 2004, the White House tapped Mr. Bowen, perceived as a loyal Bush ally, to fill that position.

Mr. Bowen, 47 years old, has an athlete's build and the bearing of the Air Force captain he once was. He usually keeps packed bags in his office near the Pentagon, along with his bulletproof vest, handy for his frequent trips to Baghdad.

He traveled to Iraq for the first time in February 2004, riding from the airport to the heavily fortified Green Zone in an armored bus built to withstand direct hits from rockets and roadside bombs. He and his staff slept in trailers and crammed their entire operation into two small offices.

One of his flights out of Baghdad had to bank sharply and release flares to avoid an insurgent missile. An auditor on his staff resigned after seeing a friend decapitated in a rocket attack.

Mr. Bowen's arrival in Iraq coincided with a significant ramp-up in the pace of the American rebuilding effort. The U.S. had initially planned to maintain full control of Iraq for several years. But with violence raging and influential Iraqis expressing impatience with the American timetable, the Bush administration announced plans to turn over power to an interim Iraqi government by June 30.

Hoping to give the incoming government a public-relations boost, Mr. Bremer ordered American rebuilding officials to use captured Iraqi money to fund as many small-scale rebuilding projects as could be completed by the handover date.

Mr. Bowen's audits later found evidence that the push led contracting officials to take shortcuts that made it difficult to determine where the money actually went. In Hillah, for instance, a contracting officer told Mr. Bowen's investigators that he had been given $6.75 million in cash on June 21 with the expectation that he would spend the entire amount before the handover, which ultimately took place two days earlier than planned on June 28.

He soon found other examples of apparently lax oversight. An employee of the CPA comptroller in Baghdad, for example, kept the key to a safe containing more than $140,000 in cash in an unattended backpack.

In one of his most attention-grabbing reports, issued on Jan. 30, 2005, Mr. Bowen concluded that the American occupation authority failed to keep track of nearly $9 billion that it transferred to Iraqi government ministries, which lacked financial controls and internal safeguards to prevent abuse. One Iraqi ministry cited in the audit inflated its payroll to receive extra funds, claiming to employ 8,206 guards when it actually employed barely 600.

The report sparked harsh responses from both Mr. Bremer, the former occupation chief, and the Pentagon. Mr. Bremer chided the auditor for expecting conventional levels of accountability, saying that "given the situation the CPA found in Iraq at liberation, this is an unrealistic standard." The Pentagon also questioned Mr. Bowen's conclusions. Spokesman Bryan Whitman noted that "the CPA was operating under extraordinary conditions, from its inception to mission completion."

Mr. Bowen says that many of the management problems identified in his reports stem from structural failings in the broader reconstruction venture. He argues that the rebuilding effort has been understaffed. In one report, he noted that the central U.S. contracting office was unable to fill nearly a third of its authorized slots. That meant contracting personnel worked "13 to 15 hours each day, six days a week, with a shortened shift of six to 11 hours on the seventh day."

"An inspector general shouldn't play 'gotcha,' " he says. "My job is to help promote success in Iraq by identifying inefficiencies and helping correct them. I want to be part of the solution."

In a November 2004 report, Mr. Bowen took on the big contractor Halliburton Co. in two separate reports. He urged the Army to withhold nearly $90 million in payments to Halliburton because the company couldn't justify what it had charged the government. The report added that "weakness in the cost-reporting process" was such a problem that his investigators couldn't do a standard audit of Halliburton's bills to the CPA. Halliburton spokeswoman Cathy Mann says the Houston-based oil-services and contracting company is working with the Army to resolve the matter and "we expect to work through any remaining issues in a cooperative manner."

Mr. Bowen's audits have also described what appears to be outright criminal behavior by several government officials. In one case, an Army soldier serving as the assistant to an American boxing coach admitted to gambling away half the $40,000 he was given to cover the expenses of an Iraqi athletic team during a trip to the Philippines; his case was referred to the military's justice system for a court-martial. Mr. Bowen also recently gave the Justice Department information on possibly criminal behavior on the part of U.S. contracting officers in Hillah, the first time government officials have been implicated in potential fraud in Iraq. The officers left the country with no record of how they had spent nearly $1.5 million that couldn't be found by investigators.

With his caseload increasing, Mr. Bowen is hiring new investigators and lawyers in both Virginia and Iraq. He has numerous audits under way, including one looking at the efficiency of a military program that has allowed commanders to disburse hundreds of millions of dollars in cash without going through normal contracting channels. His aides recently began sending engineering teams to U.S.-funded reconstruction projects across the country to assess the actual quality of the work.

The future of Mr. Bowen's job has been embroiled in politics.

Shortly before the June 2004 handover of political sovereignty in Iraq, the State Department proposed folding Mr. Bowen's office into its own inspector-general system. Under heavy fire from Democrats, the plan was dropped.

Another bureaucratic fight erupted in the fall of 2004 as lawmakers debated a bill sponsored by Sen. Russell Feingold, Democrat of Wisconsin, that would convert Mr. Bowen into a standing special inspector general. The new job would probe the entire rebuilding effort while being only loosely overseen by the secretaries of defense and state. The Pentagon's inspector general warned Defense Secretary Donald Rumsfeld in a memo that such a bill would effectively leave Mr. Bowen "accountable to no one" and said he would prepare a directive tying him to the Pentagon's inspectors.

Nonetheless, the bill was signed into law on Oct. 29, 2004, expanding Mr. Bowen's role. Mr. Bowen assumed his new post immediately and currently has a staff of 32 in Baghdad and 70 in Arlington, Va.

Now defenders of Mr. Bowen's office are trying to keep it from being shut down next year. The bill that created Mr. Bowen's position empowered him to probe the rebuilding effort until 10 months after 80 percent of the reconstruction funds were contracted out. That point is likely to be reached this month, which means that the office will close next summer -- well before the money will actually have been spent. Earlier this month, Sen. Feingold introduced a bill extending the life of Mr. Bowen's office, but the measure's prospects are uncertain.

Despite endorsements from initially skeptical Democrats, Mr. Bowen insists that his work shouldn't be seen through the prism of partisan politics. He says he rarely hears from anyone in the White House these days -- either professionally or socially. He says he remains an admirer of President Bush. The only picture in Mr. Bowen's suburban Virginia office other than a photograph of his children is a framed shot of the two men at a White House dinner.

Close Inspection

Some findings of Stuart Bowen, the special inspector general for Iraq reconstruction:

A third of the $10 billion in contracts signed in fiscal 2003 were awarded without competition.

A contractor charged the U.S. $3.3 million for phantom employees assigned to an oil-pipeline repair contract.

Iraqi construction firms allegedly paid U.S. soldiers to help steal construction equipment from the interim government.

At least a third of the government-owned vehicles and equipment that Halliburton was paid to manage were believed lost.

The U.S. failed to keep track of nearly $9 billion it transferred to the new Iraqi government, much of which appears to have been embezzled.

Democrats seek inquiry on expired food in Iraq

2005-07-14T07:33:00.000-04:00

By DAVID IVANOVICH
Copyright 2005 Houston Chronicle Washington Bureau

WASHINGTON - Senate Democrats on Wednesday called for an investigation into allegations that Halliburton Co. served food that had passed its expiration date by as much as a year to U.S. troops in Iraq.

Rory Mayberry, a former food production manager for Halliburton subsidiary KBR, told lawmakers last month that when outdated food arrived, "we were told by KBR food service mangers to use these items anyway."

He also said food packages damaged in insurgent attacks were still used "after removing the bullets and any shrapnel from the bad food that was hit."

In a letter to Defense Secretary Donald Rumsfeld, 28 Democrats called for a formal probe, noting: "We trust you will find this testimony as alarming as we do."

Halliburton spokeswoman Cathy Mann noted that the Army's Preventive Maintenance Division inspects KBR's dining halls monthly, checking on expiration
dates.

"If at any point food is deemed unfit to serve, KBR follows the government-approved ... procedures to destroy it," Mann said.

Mann said KBR officials routinely receive positive comments throughout Iraq
on the quality of the food served.

28 senators call for formal Halliburton inquiry

2005-07-14T01:17:00.000-04:00

Twenty eight Democratic U.S. Senators, led by U.S. Senator Byron Dorgan (D-ND), are calling for a formal Department of Defense investigation into what they described as “alarming” reports of fraudulent, wasteful and abusive practices by Halliburton in providing food to U.S. troops in Iraq, RAW STORY has learned.

In May, despite concerns by the Army's own auditors about billing practices, the firm received a $72.2 million performance bonuses for its work in Iraq. The bonus was the largest ever received by the firm.

Halliburton has billed the government more than $10.5 billion to date under a contract to provide aid for the military in Iraq, Afghanistan and elsewhere.

The Democrats' release, issued by Sen. Dorgan, follows.

#
In a letter to Rumsfeld released Wednesday, the Senators cited testimony received at a Democratic Policy Committee (DPC) hearing Dorgan chaired June 27, at which a range of abuses by Halliburton were cited, including:

• Serving food to American troops that was outdated by as much as a year or contaminated by bullets and shrapnel. When the food’s condition was called to the attention of Halliburton supervisors, witnesses said, workers were instructed to use it anyway.

• Serving 10,000 meals but deliberately billing the government for at least 20,000 meals, every day at one dining hall, at one base.

• Instructions from Halliburton managers that workers were not to speak to government auditors

“We trust you will find this testimony as alarming as we do,” the Senators wrote. “The testimony demands an immediate and full investigation.”

Witness Rory Mayberry, a former food production manager at Halliburton subsidiary KBR, testified that troops were given food that had expired as much as a year earlier. He described a scene in which, after a convoy was ambushed, he and other employees were instructed to remove the bullets and shrapnel from the food supplies and serve them to U.S. soldiers.

Halliburton also charged the U.S. government for tens of thousands of meals that were never served. Mayberry testified that Halliburton managers instructed employees not to speak to government auditors, and punished those who did by sending them to more dangerous camps.

“Our troops deserve to eat their dinner without worrying it is spoiled or contaminated with bits of shrapnel,” Dorgan said. “Halliburton was given a sweetheart deal here, and they’ve done nothing but take advantage of it. I implore Mr. Rumsfeld to look into this matter immediately.”

Senators signing the letter, in addition to Dorgan included: Carl Levin (D-MI), Dianne Feinstein (D-CA), Frank Lautenberg (D-NJ), Daniel Akaka (D-HI), Max Baucus (D-MT), Herb Kohl (D-WI), Ted Kennedy (D-MA), Patty Murray (D-WA), Jeff Bingaman (D-NM), Blanche Lincoln (D-AR), Jim Jeffords (I-VT), John Corzine (D-NJ), Tim Johnson (D-SD), Jack Reed (D-RI), Jay Rockefeller (D-WV), Debbie Stabenow (D-MI), Patrick Leahy (D-VT), Dick Durbin (D-IL), Paul Sarbanes (D-MD), Hillary Rodham Clinton (D-NY), Mark Dayton (D-MN), Mary Landrieu (D-LA), Ken Salazar (D-CO), Kent Conrad (D-ND), Joseph Lieberman (D-CT), Barbara Boxer (D-CA), and Charles Schumer (D-NY).

The Enemy of Our Enemy May Still Be the Enemy of Democracy

2005-07-13T08:24:00.000-04:00

July 13, 2005
By Paul Rogat Loeb

As right-wing religious leaders attack Alberto Gonzales for being insufficiently doctrinaire, it's tempting to accept him as the best we can get for the Supreme Court. In a recent Huffington Post blog, Rob McKay suggested we mute our opposition voices precisely because a Gonzales nomination would divide the political right and fracture their coalition.

But accepting someone with the track record and values of Gonzales would be a grievous mistake. We're in our current mess in large part because our culture has been unable to confront the profoundly destructive consequences of the choices made by our leaders. To equivocate about Gonzales's role in these choices is to accept a culture of lies.

Of course, we don't completely control the outcome in this fight. It depends on the Democrats showing enough spine and the half-dozen supposedly moderate Republicans placing democracy ahead of short-term partisan advantage, and refusing to eliminate the judicial filibuster. But when someone exhibits as much contempt for due process as Gonzales does, we have to challenge him, in every way we can.

Gonzales is not David Souter, a relative unknown. He's someone who's embraced the most radical extensions of presidential power and most radical contempt for human rights. He called the Geneva Conventions "quaint" and "obsolete." He chaired the 2002 meetings that that argued that interrogations were not torture unless they produced "injury such as death, organ failure, or serious impairment of body functions." He wrote the Presidential Order saying that terror suspects could be tried and sentenced to death by secret military tribunals.

Gonzales has also consistently promoted questionable corporate interests. While on the Texas Supreme Court, he accepted major donations from corporations, like Halliburton, with cases before the court (Halliburton had five separate cases). Then he consistently supported the positions of these companies while refusing to recuse himself. He similarly refused to recuse himself from the Bush administration's investigation of the Enron scandal, though he'd received $14,000 from the company of "Kenny Boy." When the Government Accountability Office asked who participated in Dick Cheney's secret energy policy meetings, Gonzales blocked release of the documents.

Maybe a Gonzales nomination would temporarily split the right. But he isn't someone to embrace, either morally or politically. And if we let his potential nomination go through without a fight, Bush can still heal the wounds in his coalition by nominating a "real" conservative to William Rehnquist's seat. Meanwhile we'll have raised the bar still further till we're unable to challenge anyone short of Attila the Hun or Vlad the Impaler, and then only if they've spoken too bluntly.

We may not win in challenging Gonzales, but at least we will make clear why giving him a lifetime appointment is an outrage to democracy. We can highlight the profound destructiveness of the values that he and this administration represent. We can challenge the Republican "moderates" to stay true to their word and maintain the option of the judicial filibuster.

If we do this successfully, we'll help define Bush's Republicans not just as captives to some vague notion of extremism, but to specific policies that assault our democracy, endanger the lives of its citizens, and plunder the planet that we inhabit. If swing Republicans still vote to eliminate the filibuster, or insist on the confirmation of Gonzales, we can and should hang this action around their necks, and brand them, come election time, not only for embracing legal torture and unalloyed giveaways to corporate interests, but also for annihilating 200 years of democratic checks and balances in the service of a raw power grab.

Those on the political right have split and reunited too often for us to count on their rupture over even something as consequential as a Supreme Court nomination. When election time comes, they'll cut their losses and work together to elect those who will give them the maximum power. Learning from this means not giving up on challenging reprehensible nominees before we start.

Paul Rogat Loeb is the author of The Impossible Will Take a Little While: A Citizen's Guide to Hope in a Time of Fear, winner of the Nautilus Award for best social change book of last year. He's also the author of Soul of a Citizen: Living With Conviction in a Cynical Time, and three other books. See http://www.theimpossible.org for more on Paul's work.

Halliburton Fails Upward

2005-07-12T10:57:00.000-04:00

Ari Berman

The Nation -- "Lawmakers, Including Republicans, Criticize Pentagon on Disputed Billing by Halliburton," read a New York Times headline on June 22. "Worries Raised on Handling of Funds in Iraq," the Los Angeles Times wrote the same day. It seemed clear that the Bush Administration's favorite war profiteer was again in hot water. Shortly thereafter, the Democratic Policy Committee released a report alleging that Halliburton subsidiary KBR overcharged the US government by as much as $1 billion, not even counting an additional $442 million in "unsupported" billing, for work in Iraq.

The headlines ceased over the next week. Then, In early July, KBR captured coverage in a decidedly more positive light: "Halliburton Gets More Iraq Work," Reuters reported on July 7. Once again, an Administration ally was/is failing upwards. Five billion dollars of new work, to be exact, on top of a contract that has brought KBR $9.1 billion, almost one sixth of what Bush promised the entire war effort would cost.

The military signed the $4.97 billion deal in May, but didn't reveal the details until this month, "because the Army did not consider it necessary," an Army spokesman told Reuters. Most of the money will go toward logistics--food, sanitation, laundry and other services for the troops--precisely the functions KBR has failed so spectacularly to properly administer thus far.

According to government reports and Army and KBR sources, Halliburton charged the government for 10,000 meals a day it never served, dished out food that had been expired for a year and provided its Turkish and Filipino staff with leftovers in trash bags. The Government Accountability Office concluded last year that the Army could save $43 million on food just by bypassing KBR and working with a different subcontractor. The $1.5 million tailoring fees, $560,000 in unnecessary heavy equipment, $152,000 for movie screenings, $45 cases of soda and exorbitant "cost-plus" contracts were just icing on the cake.

"I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper abuse I have witnessed during the course of my professional career," Bunnatine Greenhouse, the Army's top civilian contracting official, testified before the Democratic Policy Committee. (Republicans have blocked Democratic attempts to hold official hearings on Halliburton.)

Attempting to quash the mounting evidence of misconduct, Halliburton dispatched its own internal investigative units, dubbed "Tiger Teams" to the Gulf. The Tigers' promptly raked up a $1 million bill at Kuwait's five star Kempinski Hotel, journalist Ed Harriman reports, while Army troops were "sleeping in tents at a cost of $1.39 a day."

The Tigers', after much partying, subsequently recommended that the Army extend KBR's subcontracts.

It couldn't be more obvious that the entire company needs to be caged.

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Copyright © 2005 The Nation

Timely terrorism: Death and destruction knock Bush's woes off the front pages

2005-07-11T08:30:00.000-04:00

By Kéllia Ramares
Online Journal Associate Editor

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July 11, 2005—During the morning rush hour of July 7, London's transportation system was rocked by several explosions. Three blasts hit the Underground, London's subway system and a fourth hit a double-decker bus. More than 50 people have been confirmed killed and about another 700 were wounded. The death toll is expected to rise as more blown-up subway cars are evacuated.

British Prime Minister and current G-8 President Tony Blair has linked the explosions in London to the G-8 summit in Gleneagles, Scotland, which was temporarily interrupted while Blair attended to the emergency in his capital.

But is this "timely terrorism" perpetrated by criminals run by US and or British covert ops to distract attention from George W. Bush's political woes? In looking at major alleged terrorist attacks or threats of such attacks, it is critical to watch how Bush is fairing politically.

The Downing Street Memos indicate that Bush wanted war in Iraq well before September 11, 2001, and that "the facts were being fixed around the policy." A Zogby survey of likely voters, taken after Bush's "recruitment" speech at Ft. Bragg, shows that 42 percent of voters believe that Bush should be impeached if he lied to get us into war. (Margin of error was plus or minus 3.3 percent)

Bush's poll numbers are dropping like a stone. A CNN/USA Today/Gallup poll released on June 27 showed that 53 percent of the respondents disapproved of Bush's job performance. (Margin of error was plus or minus 3 percent) The 53 percent overall disapproval rating was the highest this poll has recorded since Bush took the oath of office in January 2001. But when individual issues are polled, Bush continues to score highest on his handling of the so-called "war on terror."

The war in Iraq has grown more deadly and expensive. The web site icasualties.org reports 1,751 dead American soldiers as of July 7, with an additional 90 UK soldiers and 100 other coalition troops killed since the invasion began. And that doesn't count wounded troops or dead Iraqi civilians. The National Priorities Project says that the cost of the Iraq war is over $179 billion dollars. Add in the cost of war in Afghanistan and appropriations requests for future operations and the cost of these wars is around $300 billion.

Remember being told that the Iraqis would greets us with flowers and sweets as liberators, and that the war was supposed to be over quickly? Remember Bush declaring major combat over on May 1, 2003? What else might we be able to do with $300 billion besides killing and maiming people, and spreading depleted uranium around?

Members of Congress and others are calling for an exit date. And Rep. Barbara Lee (D-CA) has introduced a bill attempting to codify the White House claim that the US does not intend a permanent military presence in Iraq.

The Zogby survey of likely voters taken after Bush's speech at Ft. Bragg showed that he did not get a bounce in popularity from his televised attempt to convince the nation that it's important to keep fighting in Iraq.

The Detroit News is reporting that the Army has ordered another $5 billion of work from Halliburton, even as questions linger over Halliburton's billing of previous work. Dick Cheney claims he has nothing to do with Halliburton getting so much war business, but does anybody with a functional brain really believe the former Halliburton CEO who quit that post to run for vice president? Secretary of War Donald Rumsfeld recently said that it could take 12 years to defeat the Iraqi insurgency. That would make Halliburton, Bechtel, and other Bush friends billions and billions more.

Twelve years? How about never? The truth is that standing armies don't defeat resistance fighters. The resistance knows the lay of the land and has popular support against foreign occupiers. Meanwhile, the US Army has missed its recruiting goals for 4 consecutive months, amid reports of hardball and even illegal tactics by recruiters trying to make quota. And then there are the torture scandals, from Attorney General, and possible Supreme Court nominee, Alberto Gonzales calling the Geneva Conventions "quaint," to the photographed goings-on at Abu Ghraib prison.

While the Pentagon has an open checkbook, domestic needs are being unmet as state and local budget deficits mean cuts in programs for schools, housing, transit and health. But people are seeing Bush's plan to rip off Social Security to benefit Wall Street for the reverse Robin Hood transfer of wealth that it is. His poll numbers are worse on Social Security than on any other individual issue.

Also, the nomination of John Bolton to be the anti-UN ambassador to the UN has run into trouble. The USA PATRIOT Act is up for reauthorization and that has met with a bit of resistance as the House narrowly agreed to the Sanders amendment which takes libraries and bookstores out of the purview of the infamous Section 215, allowing the FBI to gather personal records without a warrant.

Even the G-8 meeting was no picnic for Bush. The United States is the only G-8 nation not to ratify the Kyoto protocols on climate change. Bush is claiming that the protocols would have "wrecked" the US economy. Once again, here's the United States standing alone claiming special privileges. All the industrialized nations implementing the protocols, including Russia, Japan, France and England, would have to make some economic sacrifice in an effort to reduce global warming. But here's Bush, who has only recently and most reluctantly acknowledged the reality of climate change, acting as if the US economy, the world's No. 1 oil consumer, is the only thing on earth that matters.

Then there's perhaps the scariest thing of all for the neocons: Special Prosecutor Patrick Fitzgerald might be closing in on the identity of the senior White House official who outed CIA undercover operative Valerie Plame. She was named after her husband, former Ambassador Joseph Wilson, went to Niger and reported back that documents showing that Iraq wanted to purchase yellowcake uranium from the African country were crude forgeries. Was it White House Deputy Chief of staff Karl Rove who illegally leaked Plame's identity? Itﾒs been confirmed that Rove was a source for a July 2003 online story by Time Magazine reporter Matthew Cooper about Ambassador Wilson's trip to Niger. Cooper wrote: "Some government officials have noted to Time in interviews . . . that Wilson's wife, Valerie Plame, is a CIA official who monitors the proliferation of weapons of mass destruction." If "Bush's Brain" was the leaker, could he be forced to resign in disgrace and face criminal prosecution?

Cui Bono?

So now we have these mass murders knocking all of Bush's political woes off the front pages. How timely. How convenient. Now Bush can again pose as a war president before the government's lapdog corporate media and the American sheeple. And Tony Blair, who got a third term as British PM with a greatly reduced parliamentary majority, due largely to British discontent with the war in Iraq, can also strike a dramatic pose.

News reports say a hitherto unknown group called "Secret Organization of al-Q'aeda in Europe" has allegedly claimed responsibility. (A group called "al-Q'aeda in Europe" claimed responsibility for the Madrid bombings). Supposedly billions are being spent on security and intelligence; we've been warned that there are thousands of sleeper terrorist agents in Europe, and yet the acts were committed by an "unknown" group?

Yet, maybe there is no such group. An MSNBC translator, Jacob Keryakes, claimed that the message allegedly sent by the "Secret Organization of al-Q'aeda in Europe" contained an error in one of the Koranic verses cited in the message. The translator said this suggests the claim may be phony. "This is not something al-Q'aeda would do," he said. Al-Q'aeda itself is likely a straw man. While, no doubt, there are people on the ground in colonized nations who are willing to use violence in a bid for their people's freedom, "terrorist" organizations can be co-opted and run by the intelligence operatives of the terrorists' purported targets. Osama bin Laden himself has a long history with the CIA.

With the unpopularity of the war in Iraq growing, and with Bush's political troubles mounting, bombing London now makes no sense for "honest terrorists," i.e., terrorists not being run by the US, which has used terrorism as a tool of foreign policy for decades. Why risk increasing Bush's popularity when it is at an all-time low? The way to get European troops out of Iraq is to get the Americans out. Would Denmark stay if the US left? Attacks in Europe strengthen Bush's "resolve" to stay the course, and the few nations who have not joined "the coalition of the leaving" would stay with the Americans. (Conservative Italian Premier Silvio Berlusconi announced on July 8 that Italy would probably begin its withdrawal in September. Italy has been talking about a withdrawal for several months).

While it makes no sense for alleged extremists to attack now, it makes all the sense in the world for the neocons to order an attack, even on the soil of America's closest ally. There has to be an actual attack from time to time to keep the fear level up. And what's a few more lives taken when these war criminals have squandered so many thousands of others? If an attack distracts the press from Bush's political woes, ups the fear level in the American and British populace and makes increases in war spending and decreases in civil liberties easier for legislatures to vote for, so be it. You can't make an omelet if you don't break some eggs.

Copyright © 2005 Kéllia Ramares. For Fair Use Only.

Halliburton's Higher Bill

2005-07-06T11:36:00.000-04:00

Rising Costs Reflect Growing Demand for Firm's Services

By Griff Witte
Washington Post Staff Writer
Wednesday, July 6, 2005; D01

The Army has ordered nearly $5 billion in work from Halliburton Co. to provide logistics support to U.S. troops in Iraq over the next year, $1 billion above what the Army paid for similar services the previous year.

The new order, which comes despite lingering questions about the company's past billing, replaces an earlier agreement that expired last June but had been extended through this spring to ensure a continuous supply of food, sanitation, laundry and other logistical services for the troops, according to Linda K. Theis, an Army spokeswoman.

The new order does not change the nature of Halliburton's work, but the higher price tag does reflect the growing demand for the company's services as U.S. forces continue to battle a stubborn insurgency two years after the fall of Saddam Hussein.

The increased bill parallels ballooning overall costs in Iraq. President Bush said in March 2003 that combat in Iraq would cost about $60 billion. But the cost for military operations alone had hit $135.3 billion as of March 2005, according to the Office of Management and Budget. The price tag would be far higher if the costs to fund the Coalition Provisional Authority, reconstruction projects and intelligence operations were included.

Halliburton subsidiary Kellogg Brown & Root has received more money from the U.S. involvement in Iraq than any other contractor. The company has been a lightning rod for criticism by administration foes who think Halliburton's high-level connections -- most notably its former chief executive, Dick Cheney, who is now vice president -- may have given it undue influence in winning sole-source business.

Under the Army's previous order for logistics support, Halliburton was paid $6.3 billion for work during the first two years of the occupation, including $3.98 billion between the beginning of May 2004 and the end of May 2005. Under the new deal, Halliburton will receive $4.97 billion to support U.S. troops in Iraq until May 2006.

Both orders stem from a 10-year contract known as LOGCAP, which KBR won in a competitive bid in 2001. As of the beginning of June, the Army had obligated nearly $12 billion to the company under the logistic contract, the vast majority of it for work in Iraq.

The new order took effect two months ago but had not been made public. Theis, the spokeswoman for the U.S. Army Field Support Command, which oversees the contract, said that there was "not a conscious decision" to keep the new deal quiet but that her office had simply been too busy with other news.

Rep. Henry A. Waxman (D-Calif.), a vocal critic of Halliburton, said the Army should not be giving the company orders for more work at the same time it is citing the company for unreasonable bills. "The accountability vacuum at the Defense Department is costing the taxpayer dearly," Waxman said in a statement.

The Pentagon last week confirmed a report by congressional Democrats saying that the Defense Contract Audit Agency has questioned more than $1 billion of Halliburton's bills for work in Iraq under LOGCAP and an energy contract called Restore Iraqi Oil. Among the costs that Pentagon auditors questioned were $152,000 for movie rentals, $1.5 million for tailoring and two multimillion-dollar transportation bills that appeared to overlap.

Pentagon spokeswoman Lt. Col. Rose-Ann L. Lynch said that the questioned costs are not necessarily overcharges and that contracting officials have either resolved, or are in the process of resolving, most of the discrepancies.

Halliburton has said that questioning costs is part of the normal contracting process and that the company is doing all it can to support U.S. troops in a dangerous environment.

About seven months ago, the Army gave Halliburton a list of the services it wanted under the primary task order for the LOGCAP contract, Theis said. But the company estimated the cost of those services would top $10 billion a year, far above what the Army had budgeted. Army officials ended up paring down their list, and they reached agreement with the company on the $4.97 billion figure this spring.

The Army would not provide a copy of the task order without a Freedom of Information Act request. But a draft of the order was provided to The Washington Post by David Phinney, a correspondent for CorpWatch.org, a Web site that monitors contractor involvement in Iraq.

The LOGCAP contract is not the only way the Army can buy logistical services, but it has received heavy use at a time when the Pentagon is outsourcing many of its non-war-fighting functions. Some have questioned whether such reliance on a single contractor makes sense. In a report issued last July, the Government Accountability Office found that the government could save $31 million -- or 43 percent -- on food services at six locations in Kuwait if it bypassed LOGCAP and KBR, working instead through a subcontractor.

Halliburton said in January that it would try to sell KBR, citing in part the controversy surrounding the company's work. Halliburton spokeswoman Jennifer W. Dellinger said in a statement yesterday that "no timeline has been set for a separation of KBR, nor has a decision been made on what form any potential separation might take."

© 2005 The Washington Post Company

Audit questions $1.4b in Halliburton bills

2005-07-06T08:25:00.000-04:00

Expenses at issue from Iraq contracts
By Rick Klein, Globe Staff | June 28, 2005

WASHINGTON -- Internal Pentagon audits have flagged about $1.4 billion in expenses submitted by Halliburton Co. for services the firm is providing in Iraq, charges that include $45 cases of soda, $100-per-bag laundry service, and several months preparing at least 10,000 daily meals for a US military base that the troops did not need and ultimately went to waste, according to a report released yesterday by congressional Democrats.

The Defense Contract Audit Agency, which reviews Pentagon contracting, identified $1.03 billion in Halliburton invoices that it questioned as excessive, and an additional $442 million in expenses the company reported that the agency deemed to be insufficiently documented, according to the report.

The report, which House and Senate Democrats made public yesterday, gives a broad overview of questionable costs racked up by the energy conglomerate once led by Vice President Dick Cheney. Federal officials have also probed allegations that Halliburton executives have run up costs by staying at top-of-the-line hotels in Kuwait, that they have paid too much to import fuel, and that they've prepared thousands more meals than they've served. The report categorizes allegations that previously had been anecdotal, and expands the scope of allegations of waste and financial malfeasance.

It's also the latest salvo in Democrats' long-running contention that Halliburton -- by far the largest private contractor working in Iraq -- has gotten favored treatment from the Bush administration despite overcharging the government.

''Whether the explanation is gross incompetence or deliberate malfeasance, the result is the same: The taxpayers are getting bilked," Representative Henry A. Waxman of California, the ranking Democrat on the House Government Reform Committee, said yesterday at a hearing Democrats held to highlight the report. ''This special treatment must end."

Cathy Mann, a spokeswoman for Houston-based Halliburton, said the $1.4 billion figure is a ''gross mischaracterization" of the expenses that are under review, since some of the discrepancies have already been resolved.

For example, Mann said, Halliburton and the Pentagon disagreed over a bill for food services, but resolved the matter in April. She said both sides ultimately agreed that Halliburton would get $145 million of $200 million that had been withheld over the dispute.

''The only thing that's been inflated is the political rhetoric, which is mostly a rehash of last year's elections," Mann said. ''Halliburton is taking care of our troops' needs so they can focus on the tasks at hand. . .Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only" to the other Pentagon agencies that award private contracts.

The audits surfaced in a joint report prepared by the Senate Democratic Policy Committee and the Democratic staff of the House Government Reform Committee. The audits were part of the Pentagon's normal contract review policy; Democratic lawmakers obtained them from whistle-blowers who thought the information should come to light, according to committee aides. The whistleblowers asked not to be identified.

Much of the money in question has not yet been paid to Halliburton, pending resolution of the concerns raised by auditors.

Halliburton has won a number of contracts -- some the Pentagon handed to them on a no-bid basis -- for military suppport, security and reconstruction work in Iraq, deals that could total as much as $18 billion. Divisions of the company are under contract to provide meals and logistical services for coalition troops, rebuilding Iraq's oil infrastructure, and purchasing equipment and supplies to help with the reconstruction of the country.

The contracts entitle the company to get full reimbursement for its costs from the government, in addition to a fee that is a percentage of those costs, an arrangement that critics say creates an incentive for the company to pad its bills.

Democrats cited numerous instances in the report of apparent double-charging for services and equipment, and seemingly excessive costs for basic materials like food, gasoline, and laundry.

A November report by the Army Audit Agency, another Pentagon review office, found that Halliburton contracts had nearly $10 million in ''duplicate costs" for cargo and freight equipment as well as instances where the company issued more paychecks for a project than the number of people working on it, and the purchase of $560,000 worth of unnecessary equipment. At one point, the company billed the government $152,000 to build a 10,000-title ''movie library," an expense auditors ultimately deemed excessive.

Rory Mayberry, a former food production manager for the Halliburton subsidiary Kellogg, Brown & Root, testified at the hearing that the company routinely overpaid for staples such as tomatoes and bacon by importing the food from Philadelphia instead of using local suppliers overseas and in the region. Mayberry said that in early 2004, the company ordered enough food to prepare 20,000 meals every day at one US base in Iraq even though it was serving only 10,000 of them a day.

''When I questioned these practices, the managers told me this needed to be done because KBR lost money in prior months, when the government suspended some of the dining-hall payments to the company," said Mayberry, who testified via videotape from Iraq, where he is now working for another private company.

Two employees of the fuel transport and security company Lloyd-Owen International, another private company, told lawmakers yesterday that while Halliburton paid a Kuwaiti company about $1.30 per gallon of gasoline to fill the tanks of its vehicles, other contractors paid as little as 18 cents per gallon.

Federal officials have launched investigations of portions of Halliburton contracts, most notably in a March indictment where the Justice Department accused a company official and a subcontractor of overcharging taxpayers by nearly $5 million.

Senate minority leader Harry Reid, Democrat of Nevada, said: ''The American taxpayers have simply been cheated. For every dollar that Halliburton gets in excess profits, these are jobs that cannot go to Iraqis who need them."

Rick Klein can be reached at rklein@globe.com.

© Copyright 2005 Globe Newspaper Company.

Pentagon releases Halliburton documents

2005-07-06T08:18:00.000-04:00

(via the Hill)

In the wake of a subpoena threat, the Pentagon has started turning over to Congress documents related to Halliburton Corp.’s disputed billing under a $2.5 billion contract for Iraqi oil-site repairs and fuel imports.

Rep. Christopher Shays (R-Conn.), chairman of the House Government Reform Subcommittee on National Security, Emerging Threats and International Relations, intended to subpoena the Defense Department if the administration did not provide the long-requested documents.

Halliburton received the contract in 2003 without competition. The company is a major recipient of Development Fund for Iraq (DFI) money. DFI is the successor of the United Nations Oil-for-Food program.

The Pentagon has submitted documents related to the contract without a subpoena, a subcommittee aide said, and more documents are on the way. Subcommittee members objected to heavily redacted internal Defense Department audits provided to a U.N. board charged with monitoring the DFI program.

The audits found more than $200 million in questioned charges that Halliburton had passed to the government.

Pentagon officials said that the documents were redacted to protect the company’s proprietary information.

Roxana Tiron

Halliburton's Higher Bill

2005-07-06T07:39:00.000-04:00

US company accused of rorting Iraq contracts

2005-06-29T13:00:00.000-04:00

By Sue Pleming
Washington
June 29, 2005

A top US Army procurement official has said Halliburton's deals in Iraq are the worst example of contract abuse she has seen, as Pentagon auditors examine more than $US1 billion ($A1.3 billion) potential overcharges by the Texas-based company.

Bunny Greenhouse, the Army Corps of Engineers' top contracting official turned whistleblower, told a congressional hearing by Democrats on Monday that every aspect of Halliburton's oil contract in Iraq had been controlled by the Office of the Secretary of Defence.

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

Her blistering criticism came as the Democrats released a new report that identified more than $US1 billion in "questioned" costs and $US422 million in "unsupported" costs for Halliburton's work in Iraq.

Halliburton's subsidiary KBR is the US military's biggest contractor in Iraq and has been accused by Democrats of getting lucrative work there because of its ties to Vice-President Dick Cheney, who headed the company from 1995 to 2000. Asked if she thought the Defence Secretary's office was involved in handing out and running of contracts to KBR, Ms Greenhouse replied: "That is true."

Halliburton strongly rejected comments by Ms Greenhouse and others at the hearing, including a former KBR employee who said the company overcharged for food services to troops.

"The only thing that's been inflated is the political rhetoric, which is mostly a rehash of last year's elections," spokeswoman Cathy Mann said.

As to claims of political influence because of Mr Cheney, Ms Mann said it was easier to "assign devious motives than to take the time to learn the truth".

The Pentagon and the Army Corps of Engineers have denied any special treatment for KBR.

Democrats called for an urgent hearing and an investigation into what they said were contracting abuses involving KBR. "This testimony doesn't just call for congressional oversight - it screams for it," said Senator Byron Dorgan, a Democrat from North Dakota.

What concerned Ms Greenhouse most was that the oil contract, which had a top value of $US7 billion, was given to KBR without competitive bidding. She irked her bosses by handwriting her concerns in official documents for the oil deal but said these were overlooked.

Among the costs that Pentagon auditors questioned were $US152,000 in "movie library costs", a $US1.5 million tailoring bill that auditors deemed higher than reasonable, more than $US560,000 for heavy equipment that was considered unnecessary and two multimillion-dollar transportation bills that appeared to overlap.

- agencies

Democrats join to target Halliburton 'profiteering'

2005-06-28T12:58:00.000-04:00

By Erik Eckholm The New York Times
WEDNESDAY, JUNE 29, 2005

WASHINGTON Legislators from the Democratic Party stepped up criticism of Halliburton on Monday for what they called "war profiteering," citing Pentagon audits that question more than $1 billion of the company's bills for work in Iraq.

The estimates of excessive spending and improper billing by Halliburton, a Texas-based company that provides logistical support and oil-field repairs in Iraq, are more than twice as high as those in previous official reports. The findings, including previously unpublicized internal Pentagon studies, were released at a forum sponsored by the Democrats.

Party leaders said they organized the forum because the Bush administration and congressional Republicans have refused to hold the contractor accountable.

"The bottom line is, the Republican leadership in the Congress is giving Halliburton a free pass," said Senator Frank Lautenberg, a Democrat from New Jersey.

Large contracts awarded to a Halliburton subsidiary, Kellogg, Brown & Root, have been questioned and criticized since before the invasion of Iraq in 2003, in part because some contracts were awarded without competition and because of allegations that the company, led by Dick Cheney before he became vice president, was aided by political connections. In some cases, the Pentagon has publicly complained about excess billing and reduced its payments as a result, but the audit figures released by the Democrats suggest that billing disputes have been more extensive than previously revealed.

Halliburton said that it performed well and honestly in Iraq and that any billing disputes were part of the routine give-and-take of government contracting. It said that it had been singled out for partisan attack.

Kellogg, Brown & Root, or KBR, "will continue to work with our customers and with the appropriate government agencies to prove, once and for all, that KBR has delivered vital services for U.S. troops and the Iraqi people at a fair and reasonable cost, given the circumstances," said Cathy Gist-Mann, a Halliburton spokeswoman, in an e-mail message.

The estimated total for questioned bills in the Democratic hearing, Gist-Mann said, is "an aggregation of many reviews over a three-year period, and the amount is a gross mischaracterization of the true facts."

The hearing featured videotaped testimony from a former KBR food manager in Iraq who said that the dining hall where he worked in early 2004 charged the U.S. Army for 20,000 meals a day when it was serving only 10,000, routinely used expired foods and punished him for speaking to auditors by transferring him to a more dangerous outpost in Falluja.

The former manager, Rory Mayberry, worked on Halliburton's largest single contract in Iraq: providing housing, food and other logistical services to the U.S. military. As of September 2004, the company had received $8.6 billion under the contract, known as Logcap, which is part of the military's effort to outsource noncombat jobs.

Pentagon auditors had previously criticized the company for poor record-keeping and reduced some payments when the company was found to be charging for more meals than it served.

A new report, released on Monday by two Democrats, Senator Byron Dorgan from North Carolina and Representative Henry Waxman from California, quoted the chief of the Defense Contract Audit Agency, an internal Pentagon watchdog, as saying that "questioned" costs under the Logcap contract now total $813 million.

"Questioned" costs are defined by the agency as those "on which audit action has been completed" and "which are not considered acceptable."

The second-largest KBR contract, now completed and with a total billing of $2.5 billion, was for the repair of Iraqi oil fields after the 2003 invasion and for imports of consumer fuels.

Pentagon audits of the company's performance under that second contract, known as RIO-1, have found $219 million in "questioned" costs, mainly because of what critics have called exorbitant fees paid for fuel imports in 2003.

The company received the oil-repair and fuel contract without competitive bidding, and after it had been secretly hired to detail the needs and the probable costs of postwar oil repairs.

Bunnatine Greenhouse, a senior civilian contracting official with the U.S. Army Corps of Engineers, told the forum that granting the RIO-1 contract to KBR, initially for a period of up to five years, was "the most blatant and improper contract abuse I have witnessed during the course of my professional career."

Beyond the $1 billion in questioned costs, Pentagon auditors found that KBR had not properly documented another $443 million in expenditures under the two largest contracts.

The totals in the report do not include problems with a current $1.2 billion contract that KBR holds to repair Iraq's southern oil fields. The company has already been warned about serious cost overruns and poor performance.

Copyright © 2005 The International Herald Tribune | www.iht.com

Halliburton Accused of Iraq Fraud

2005-06-28T12:53:00.000-04:00

By Reuters
Republished from Al Jazeera
A top US army procurement official has said Halliburton's deals in Iraq were the worst example of contract abuse she had seen.
A top US army procurement official has said Halliburton’s deals in Iraq were the worst example of contract abuse she had seen as Pentagon auditors flagged over $1 billion of potential overcharges by the Texas-based firm.

Bunny Greenhouse, the Army Corps of Engineers’ top contracting official-turned whistle-blower, said in testimony on Monday at a hearing by Democrats on Capitol Hill that every aspect of Halliburton’s oil contract in Iraq had been under the control of the Office of the Secretary of Defence.

“I can unequivocally state that the abuse related to contracts awarded to KBR (Halliburton subsidiary Kellogg Brown and Root) represents the most blatant and improper contract abuse I have witnessed during the course of my professional career,” said Greenhouse, a procurement veteran of more than 20 years.

Her blistering criticism came as Democrats released a new report including Pentagon audits that identified more than $1.03 billion in “questioned” costs and $422 million in “unsupported” costs for Halliburton’s work in Iraq.

Full review

Defence Department spokeswoman Lieutenant-Colonel Rose-Ann Lynch said the Pentagon had received the report but had not had a chance yet to fully review it.

“The department is committed to an integrated, well-managed contracting process in Iraq,” said Lynch, adding that just because costs were questioned by auditors did not mean a company had overcharged the military.

Halliburton’s subsidiary KBR is the US military’s biggest contractor in Iraq and has been accused by Democrats of getting lucrative work there because of its ties to US Vice-President Dick Cheney who headed Halliburton from 1995-2000.

Pressed by lawmakers whether she thought the defence secretary’s office was involved in the handout and running of contracts to KBR, Greenhouse replied: “That is true.

“I observed, first hand, that essentially every aspect of the RIO (Restore Iraqi Oil) contract remained under the control of the Office of the Secretary of Defence. This troubled me and was wrong,” said Greenhouse.

Comments rejected

Halliburton issued a statement strongly rejecting comments by Greenhouse and others at the hearing, including a former KBR employee who accused the company of overcharging for food services provided to troops under a logistics deal.

“The only thing that’s been inflated is the political rhetoric which is mostly a rehash of last year’s elections,” spokeswoman Cathy Mann said of the hearing.

Regarding claims of political influence because of Cheney, Mann said it was easier to “assign devious motives than to take the time to learn the truth”.

Both the Pentagon and the Corps, which was in charge of a sole-source oil contract given to KBR in Iraq, have denied any special treatment for KBR. The Corps did not immediately respond to questions.

Investigation

Democrats called for an urgent hearing and an investigation into what they called contracting abuses involving KBR.

“This testimony doesn’t just call for Congressional oversight – it screams for it,” said Senator Byron Dorgan, a Democrat from North Dakota.

What concerned Greenhouse most was that the oil contract, which had a top value of $7 billion, was given to KBR without competitive bidding.

She irked her bosses by writing her concerns by hand in official documents but said these were overlooked.

In one instance, she said Engineers officials bypassed getting her signature to grant a waiver for KBR to be relieved of its obligation to provide cost and pricing data for bringing fuel into Iraq.

Overcharged

That waiver was granted after a draft army audit said KBR may have overcharged the military by at least $61 million to bring in fuel to Iraq to ease a shortage of refined oil.

Greenhouse acknowledged she had become a thorn in the side of the Engineers and said she had been advised not to attend the hearing because of its partisan nature.

Rory Mayberry, a former food production manager at a US military base for KBR from February-April 2004, said the company charged for meals it did not serve to troops and had dished up spoiled food.

KBR’s Mann dismissed his taped testimony and said issues regarding billing over food services had been resolved.

Reuters

Halliburton Iraq deals 'contract abuse'

2005-06-28T08:23:00.000-04:00

Pentagon auditors flag over $1 billion of potential overcharges by Texas firm.
June 28, 2005: 12:10 PM EDT

WASHINGTON (Reuters) - A top Army procurement official said Monday Halliburton's deals in Iraq were the worst example of contract abuse she had seen as Pentagon auditors flagged over $1 billion of potential overcharges by the Texas-based firm.

Bunny Greenhouse, the Army Corps of Engineers' top contracting official-turned whistle-blower, said in testimony at a hearing by Democrats on Capitol Hill that "every aspect" of Halliburton's oil contract in Iraq had been under the control of the Office of the Secretary of Defense.

"I can unequivocally state that the abuse related to contracts awarded to KBR (Kellogg Brown and Root) represents the most blatant and improper contract abuse I have witnessed during the course of my professional career," said Greenhouse, a procurement veteran of more than 20 years.

Her blistering criticism came as Democrats released a new report including Pentagon audits that identified more than $1.03 billion in "questioned" costs and $422 million in "unsupported" costs for Halliburton's work in Iraq.

Defense Department spokeswoman Lt. Col Rose-Ann Lynch said the Pentagon had received the report but had not had a chance yet to fully review it.

"The department is committed to an integrated, well-managed contracting process in Iraq," said Lynch, adding that just because costs were questioned by auditors this did not mean a company had overcharged the military.

Halliburton's subsidiary KBR is the U.S. military's biggest contractor in Iraq and has been accused by Democrats of getting lucrative work there because of its ties to Vice President Dick Cheney who headed Halliburton company from 1995-2000.

Pressed by lawmakers whether she thought the defense secretary's office was involved in the handout and running of contracts to KBR, Greenhouse replied: "That is true."

"I observed, first hand, that essentially every aspect of the RIO (Restore Iraqi Oil) contract remained under the control of the Office of the Secretary of Defense. This troubled me and was wrong," said Greenhouse.

Halliburton issued a statement strongly rejecting comments by Greenhouse and others at the hearing, including a former KBR employee who accused the company of overcharging for food services provided to troops under a logistics deal.

"The only thing that's been inflated is the political rhetoric which is mostly a rehash of last year's elections," spokeswoman Cathy Mann said of the hearing.

Halliburton defends itself
Regarding claims of political influence because of Cheney, Mann said it was easier to "assign devious motives than to take the time to learn the truth."

Both the Pentagon and the Corps, which was in charge of a sole-source oil contract given to KBR in Iraq, have denied any special treatment for KBR. The Corps did not immediately respond to questions.

Democrats called for an urgent hearing and an investigation into what they called contracting abuses involving KBR.

"This testimony doesn't just call for Congressional oversight -- it screams for it," said Sen. Byron Dorgan, a Democrat from North Dakota.

What concerned Greenhouse most was that the oil contract, which had a top value of $7 billion, was given to KBR without competitive bidding. She irked her bosses by writing her concerns by hand in official documents but said these were overlooked.

In one instance, she said Army Corps officials bypassed getting her signature to grant a waiver for KBR to be relieved of its obligation to provide cost and pricing data for bringing fuel into Iraq.

That waiver was granted after a draft Army audit said KBR may have overcharged the military by at least $61 million to bring in fuel to Iraq to ease a shortage of refined oil.

Greenhouse acknowledged she had become a thorn in the side of the Army Corps and said she had been advised not to attend the hearing because of its partisan nature.

Rory Mayberry, a former food production manager at a U.S. military base for KBR from February-April 2004, said the company charged for meals it did not serve to troops and had dished up spoiled food.

KBR's Mann dismissed his taped testimony and said issues regarding billing over food services had been resolved.

The daughter of a Halliburton employee killed in Iraq has sued the company for wrongful death. Read more here.

Halliburton unit to build $30M jail at Guantánamo

2005-06-18T08:28:00.000-04:00

The Pentagon announced that a Halliburton subsidiary was awarded the contract to build a state-of-the-art $30 million prison for 220 terrorism suspects at Guantánamo Bay, Cuba.

BY CAROL ROSENBERG

crosenberg@herald.com

The Pentagon capped a week of intense debate on the future of its prison for terrorism suspects Friday with an announcement that Vice President Dick Cheney's old firm will build a new, $30 million 220-cell prison block at Guantánamo Bay, Cuba.

Halliburton subsidiary Kellogg, Brown & Root received the work under a $500 million Navy contract from July 2004, according to a Defense Department contract announcement e-mailed to The Herald on Friday.

The $30 million will cover a two-story, air-conditioned building overlooking the Caribbean called Camp Six as well as a security fence. Work should be completed by July 2006 and will include day rooms, exercise areas and space for medical personnel to treat captives.

Amnesty International blasted the decision, noting it came as members of Congress have just begun debating the wisdom and cost-effectiveness of the detention project.

''Amid numerous calls to dismantle the facility, the administration instead plans to memorialize in bricks and mortar its decision to operate outside of the law,'' said deputy director Curt Goering.

Army Brig. Gen. Jay Hood, the prison camp commander, has said the new cells could ultimately replace portions of the more troop-intensive Camp Delta -- a more open-air facility cut from steel shipping containers.

Camp Delta was specially built for al Qaeda and Taliban suspects brought to the base from Afghanistan, starting in January 2002, but prison camp spokesmen have said it is already deteriorating in the humid, salty air.

The prison camp already has a similar building called Camp Five -- with 100 single cells and a central monitoring system and locking hub, which requires fewer guards than Camp Delta.

Camp Five also has state-of-the-art interrogation rooms that have video monitors -- which commanders in Cuba have said are meant for ''high-value'' detainees. Earlier this year, there were 50 captives in the building.

With 520 prisoners at Guantánamo, the new building and electric fence could permit the Pentagon to consolidate more captives into the two buildings and likely decrease the number of soldiers guarding the prisoners and its perimeter.

Army Col. David McWilliams, a spokesman for the Southern Command, said the military had submitted the proposal for the more permanent structure long before the current debate. It was unclear why the announcement of its approval came this week.

Halliburton's KBR subsidiary already has done extensive work at the base in southeast Cuba. Defense Secretary Donald Rumsfeld said this week that prison camp construction has already cost about $100 million, and the Pentagon spends $90 million to $95 million a year to run it.

Military contractors bring in much of their equipment and supplies on a barge from Jacksonville, and most laborers arrive on charter planes because the base is independent of the island's economy -- cut off from Cuba by a minefield and Washington's economic embargo against Fidel Castro's communist government.

The Bush administration had initially included $41.8 million for the new prison and high-tech fence in its supplemental appropriations request. that sought $81.9 billion in war-on-terror funding.

It was not immediately clear whether the price of the project had dropped to $30 million or whether other contracts would provide related work at Camp 6.