At least someone finally realized what Bu$h is really up to...
Uproar over Halliburton puts administration on defensive
By DAVE MONTGOMERY
Fort Worth Star-Telegram
WASHINGTON - The renewed uproar over billions of dollars in government
work awarded to Texas-based Halliburton is forcing the Bush
administration to defend itself against accusations of conflict of
interest and sweetheart deals as it struggles to maintain public support
for U.S. involvement in Iraq.
At the center of the controversy is Vice President ***** Cheney, who was
Halliburton's chief executive from 1995 to 2000. He still holds
Halliburton stock options and draws a deferred salary from the Houston
energy and construction company.
Cheney says he no longer has an active financial interest in the company
and dismisses the criticism as "political cheap shots" from Democrats.
But his former Halliburton ties have heightened scrutiny over the more
than $1 billion awarded to Kellogg, Brown and Root, a Halliburton
subsidiary, to aid the recovery of Iraq's battered oil industry. All
told, Halliburton's various government contracts for work in Iraq now
total nearly $2 billion.
"I think we ought to ask a lot of tough questions here, especially since
the vice president has a deferred compensation package from
Halliburton," said Rep. Martin Frost, a Democrat and dean of the Texas
congressional delegation.
Kellogg, Brown and Root, the engineering and construction arm of
Halliburton, has considerable experience with big projects in both energy
and construction. The company has performed billions of dollars of work
for the U.S. military since it won its first defense contract in 1940.
It is believed to be the biggest U.S. government contractor in postwar
Iraq. In addition to the oil field contract, the Halliburton subsidiary
provides a broad range of military logistics, from building bases to
serving chow and delivering the mail to G.I.s.
(EDITORS BEGIN OPTIONAL TRIM)
Halliburton has a work force in Iraq of more than 4,500 people. But
company spokeswoman Wendy Hall countered assertions that the contracts
grew out of political influence or ties to the administration.
"Certainly, it's easier to assign devious motives than to take the time
to learn the truth," she said. "Our Halliburton people are sharing the
hardships and the risks."
Three Halliburton workers, she said, have been killed, including one mail
handler who died in an explosion and another caught in a crossfire. The
third was a car wreck victim.
Critics, however, argue that the perception of special treatment toward
Halliburton, whether accurate or not, undercuts President Bush's efforts
to shore up public support for the U.S.-led military presence in Iraq. It
could also complicate his request to Congress for an additional $87
billion to pay for U.S. operations in Iraq and Afghanistan.
Some Republicans have begun to question the $20.3 billion in the package
to be set aside for rebuilding Iraq. But the questions about
Halliburton's deals have been raised primarily by Democrats and public
watchdog groups.
Halliburton's role was first questioned last year after it became clear
that the company and its subsidiaries were getting millions of dollars in
new government work in wake of the 9-11 attacks.
But the controversy has flared anew in recent days as Bush began pressing
for additional funds.
"The situation in Iraq is challenging enough without the bureaucrats
causing additional problems by awarding a contract to the vice
president's former company," said Tom Fitton, president of Judicial
Watch, a public watchdog group that supports Bush's Iraq policy but has
long sparred with Cheney.
Judicial Watch won a court order last year forcing the administration to
release documents relating to an energy task force run by Cheney. Also
last year, Judicial Watch filed suit accusing Cheney and Halliburton of
misleading investors. The suit was dismissed this month.
Halliburton's presence in Iraq evolved from a broad-ranging Pentagon
contract that the company has held intermittently since 1992, according
to officials with Halliburton and the Army. The contractor provides the
Army with virtually every conceivable logistical need in hot spots across
the globe.
The oil field contract has drawn the most controversy because it was
awarded on a no-bid basis with a ceiling of $7 billion over two years.
Kellogg, Brown and Root has fulfilled five work orders totaling $1.2
billion since receiving the contract March 8, just before U.S. troops
invaded Iraq.
Lt. Gen. Robert Flowers, commander of the Army Corps of Engineers, has
said military planners gave the oil-repair job to Kellogg, Brown and Root
because the Texas company held the wider Pentagon contract and "was
already very familiar" with operational plans.
At that point, he said, U.S. plans to rebuild Iraq's oil infrastructure
were classified and conducting a bid competition would have undercut both
speed and secrecy.
But Rep. Henry A. Waxman of California, senior Democrat on the House
Government Reform Committee and a frequent critic of the administration,
said a staff inquiry into the contract suggests that the Halliburton
subsidiary received favorable treatment from the Pentagon because it got
the job without competition.
The contract reimburses Halliburton for its expenses, plus a fee based on
7 percent of the total cost of the job. The terms give the company little
incentive to control costs, Waxman said.
"They have, I fear, given Halliburton a blank check," Waxman told the
Fort Worth (Texas) Star-Telegram last week.
Officials with the Corps of Engineers, which is overseeing oil field
renovation, said the no-bid contract was a transition step to get the
work started. The Corps is soliciting bids for two new contracts,
totaling $1 billion, which will phase out the existing contract held by
Kellogg, Brown and Root. Companies in more than 20 countries are eligible
to compete for the contracts, to be awarded in mid-October.
Although Waxman has avoided suggestions that Halliburton landed the
contract because of the company's ties to Cheney, others have shown no
such hesitancy. Democratic leaders in Congress, as well as some of the 10
Democratic presidential candidates, are hammering away at Cheney's
Halliburton connections to bolster a pet theme that the Bush
administration is a captive of big corporations.
Cheney, a former defense secretary and Republican congressman from
Wyoming, headed Halliburton for five years until he was tapped to become
Bush's running mate in 2000. The 84-year-old company was based in Dallas
before moving its headquarters to Houston in midsummer.
The vice president told NBC's "Meet the Press" on Sept. 14 he had no
influence on Halliburton's current contracts in Iraq, never lobbied the
defense department on behalf of the company and has no financial interest
in the company.
But the Congressional Research Service, a non-partisan arm of Congress
that provides research for members, said in a report released Thursday
that Cheney's deferred salary and stock options constitute a "financial
interest" under federal ethics standards. The report was released by Sen.
Frank Lautenberg, D-N.J., one of the most vocal critics of the
Halliburton contracts.
The vice president's aides say Cheney received $147,579 in deferred
compensation in 2001 and $162,392 in 2002 under a binding arrangement he
made with Halliburton in 1998. The annual payments will continue through
2005.
Cheney has said he has sought to avoid the appearance of a conflict of
interest by taking out an insurance policy guaranteeing that the deferred
salary would continue, regardless of what happened to Halliburton. The
intent was to free Cheney from being tied to Halliburton's fortunes so he
would have no interest in trying to protect the company through his
government position.
Cheney also holds 433,333 Halliburton stock options, but his office says
the options are controlled by an administrator and that after-tax profits
go to charities.
"The vice president has no financial interest in Halliburton, and the
allegations are irresponsible and baseless," said Cheney's press
secretary, Cathie Martin.
Cheney took over at Halliburton after serving as defense secretary during
the Persian Gulf War in 1991 and led the company through substantial
growth. The Center for Public Integrity, a watchdog organization in
Washington, reported in 2001 that Halliburton doubled its government
contracts during Cheney's tenure, to $2.3 billion, from $1.2 billion.
With 96,000 employees in 120 companies, Halliburton is the world's
largest supplier of products and services to petroleum and energy
industries, and it has a widening expertise in military logistics.
Kellogg, Brown and Root specialists have installed and maintained bases
in Somalia, Haiti and Bosnia, often deploying within 72 hours of
notification.
Loren Thompson, a defense analyst with the Lexington Institute in
Arlington, Va., said Halliburton's twin skills in energy and construction
give it an edge over many competitors.
"It's very hard for outsiders to evaluate the criteria that led to some
of the Iraq reconstruction awards," Thompson said. "There are only a
handful of large international construction companies that have the skill
to do these kind of large reconstruction jobs."
Cheney made the same point during the NBC interview, while stressing he
had "no idea" why Halliburton got the no-bid oil field repair contract.
"There are few companies out there that have the combination of the very
large engineering construction capability and significant oil field
services," he said.
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