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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.