Halliburton is a major international oilfield, petrochemical, nuclear, and construction services corporation.
3600 Lincoln Plaza
500 North Alcard Street
Dallas TX 75201
Board Of Directors
(from company website June 19, 2004) (some of the interlocks listed are current and some are historical)
ROBERT L. CRANDALL
American Airlines, Air Cell, Anixter International, Celestica, i2 Technologies, American International Group, Federal Aviation Administration Management Advisory Committee
DAVID J. LESAR
Lyondell Chemical, Mirant Corporation
KENNETH T. DERR
Chevron, AT&T, Citigroup, Calpine
AYLWIN B. LEWIS
YUM! Brands, Pizza Hut, KFC - Pepsico, Walt Disney
CHARLES J. DIBONA
American Petroleum Institute, Logistics Management Institute
J. LANDIS MARTIN
Titanium Metals Corp, NL Industries, Baroid Corp, Apartment Investment and Management Corp, Crown Castle International Corp, Trico Marine Services
W. R. HOWELL
J.C. Penney Company, American Electric Power Company, Exxon-Mobil, Pfizer, Williams Company, Deutsche Bank, Viseon
JAY A. PRECOURT
Scissor Tail Energy, Hermes Consolidated, Tejas Gas, Founders Funds, Timken Company, Apache Corp
RAY L. HUNT
Hunt Oil, Electronic Data Systems Corp, PepsiCo, King Ranch, Federal Reserve Bank of Dallas, Verde Group
C. J. SILAS
Bredero-Price Coaters Ltd
CNOOC-Otis Well Comp Serv Ltd
Devonport Management Limited
European Marine Contractors
Falcon AFB Contract Management Logistics Inc
Goddard SFC JOC
Granherne Pty Limited
Halliburton Canada Inc
Halliburton Energy Services
Halliburton Far East Pte Ltd
Halliburton KBR Production Services
Halliburton Worldwide Ltd
Kellogg Brown and Root (KBR)
Landmark Graphics Geographix Inc
Metro Fast Track II
Mono Pumps Australia
Paragon Engineering Svcs Inc
P.T. Halliburton Indonesia
Seaforth Maritime Limited
Servicios Halliburton de Venezuela SA
Wellstream North Sea
Halliburton unit KBR plans $550M stock float. reuters / CNNMoney.com, April 16, 2006
IPO comes as the division faces numerous investigations into its government billing of war-related contracts in Iraq.
Halliburton Co. subsidiary KBR Inc., which generates more than half its revenue from U.S. government Iraq war-related contracts, filed with U.S. regulators Friday to raise up to $550 million in an initial public offering.
KBR, an oil services contractor, is the subject of several government investigations into billing and accounting practices linked to its war-related contracts.
Halliburton, whose former chairman and chief executive is Vice President Cheney, does not intend to retain any investment in KBR stock following the offering, according to the filing, made with the U.S, Securities and Exchange Commission.
KBR plans to use proceeds from the offering to repay debt owed to Halliburton Energy Services Inc., another subsidiary of the Texas-based energy services conglomerate, and for other general corporate purposes, the filing said.
The filing did not include expected share price, the number of shares to be offered or the underwriters.
KBR, once known as Kellogg Brown & Root, earned $240 million on revenue of $10.1 billion in 2005 after losing $303 million on revenue of $11.9 billion in 2004, according to the prospectus.
The swing from loss to profit came as KBR's "cost of services" as a percentage of revenue dropped from 102 percent to 96 percent between 2004 and 2005, financial statements included in the prospectus showed.
Last month, the government disallowed $51 million KBR claimed on a contract for housing U.S. soldiers in Iraq. In a similar review, officials disallowed a $12 million KBR claim for laundry services in Iraq. The company said it was working to resolve the two matters.
As of December 31, 2005, KBR also had unapproved claims totaling $69 million on U.S. government contracts related to reconstruction of Iraqi oil fields, the filing said. KBR's costs "have exceeded the customer's funded value of the task order," it said.
The company warned investors that they should expect the company to have continued disagreements with U.S. officials.
"Given the demands of working in Iraq and elsewhere for the United States government, we expect that from time to time we will have disagreements or experience performance issues with the various government customers for which we work," the filing said.
Additionally, U.S. military officials may investigate concerns about the quality of water provided to U.S. troops in Ramadi, Iraq, in 2004 and 2005, the filing said.
U.S. Senate Democrats raised issues about Ramadi's water after former KBR employees claimed that it was foul, untreated, and "2x the normal contamination of untreated water from the Euphrates River," according to one employee e-mail released at a January hearing.
The company "believes that all potable and non-potable water currently produced by KBR for Ar Ramadi is filtered to remove contaminants, bacteria and viruses and is chemically disinfected with chlorine," according to the prospectus.
KBR said it plans to apply for a New York Stock Exchange listing under the symbol "KBR".
AFGHANISTAN AND UZBEKISTAN
Cheney's Former Company Wins Afghanistan War Contracts, by Pratap Chatterjee, CorpWatch, May 2, 2002."Employees of Brown & Root, a subsidiary of Vice President Dick Cheney's former company, Halliburton Corporation of Dallas, Texas, are set to arrive at the Bagram airbase in southern Afghanistan in late April or early May 2002 (the exact date is classified) to take over the support services a Force Provider camp. They are also scheduled to arrive at the Khanabad airbase in Uzbekistan, one of the main military support stations for the war in Afghanistan, to run three Air Force Harvest Eagle camps (an earlier version of Force Provider) for the 1,500 U.S troops based there since October, according to Daniel McGinty, a spokesman at the Defense Contract Management Agency. Brown and Root will take charge of support services including base camp maintenance, laundry services, food services, airfield services, and supply operations, among others. Gale L. Smith, a spokesperson for the U.S. Army Operations Support Command in Alexandria, Virginia refuses to confirm or deny whether Brown & Root would be working on similar bases in Manas, Kyrgyzstan or other sites in Afghanistan and Pakistan to support Operation Enduring Freedom. The new job is one of the first examples of a lucrative, new ten-year contract that Brown & Root won from the Pentagon on December 14, 2001 titled Logistics Civil Augmentation Program (LOGCAP). The contract is what the Pentagon calls a "cost-plus-award-fee, indefinite-delivery/indefinite-quantity service," which basically means that the federal government has an open-ended mandate and budget to send Brown & Root anywhere in the world to run humanitarian or military operations for profit."
Between 1997 and July 2000, Halliburton and its CEO Cheney contributed $494,452 to members of and candidates for Congress. A third of that total, or $157,500, went to members of Congress who sponsored legislation to limit the ability of workers exposed to asbestos to sue the corporations responsible. Halliburton has had more than 250,000 asbestos-related lawsuits filed against it since 1976. Halliburton has spent more than $99,000 to settle many of the suits, but more than 100,000 suits were still pending in August 2000. Halliburton vice president Dave Gribbins told reporters that "we give money to candidates for a variety of reasons, usually to those who are supportive of the business agenda, the things that are important to us, like taxes, trade or something specific like this asbestos issue." (Andrew Schneider and Elise Olsen, Cheney's Firm Backed Asbestos Legislation, Seattle Post-Intelligencer, Aug. 4, 2000).
Halliburton Units Exit Bankruptcy Protection. Halliburton Co., the world's largest oil field services company, said its DII Industries and Kellogg Brown & Root units exited bankruptcy protection, formalizing a $4.7-billion settlement of asbestos claims with more than 400,000 people. The units filed for bankruptcy protection in December 2003 to win court approval of the settlement with people who claimed they were exposed to asbestos or silica. (Bloomberg News, Jan 4, 2005).
"In December  it won a $420 million contract from the British Army to support a fleet of new mammoth tank transporters, according to company press releases" (Cheney's Former Company Wins Afghanistan War Contracts, by Pratap Chatterjee, CorpWatch, May 2, 2002).
BROWN & ROOT
Brown & Root rose to prominence as a construction company after backing Lyndon Johnson's rise through Congress to the U.S. Presidency. In return, Brown & Root received many government construction contracts. Founder Herman Brown was a major funder of Rice University (Milton Moskowitz et al, Everybody's Business (Doubleday, 1990), p. 492, citing Robert A. Caro, The Years of Lyndon Johnson: The Path to Power). By the early 1990s, Brown & Root operated in 118 countries (Hoover's Handbook of American Business 1993, p. 311).
Halliburton began oil exploration in Burma in 1989. Myanmar Oil & Gas Enterprise (MOGE), the agency overseeing oil and gas development in Burma, is controlled by the military regime SLORC; since 1989, MOGE has signed multimillion dollar contracts with many foreign oil companies. A subsidiary of the Thai national oil company, PTT Exploration and Production, has proposed developing natural gas in Burma's Gulf of Mataban and shipping it to Thailand through an undersea pipeline. (See article by Dara O'Rourke, "Oil in Burma: Fueling Oppression," Multinational Monitor 13(10):7-11, Oct. 1992).
Halliburton CEO Dick Cheney resigned in August 2000 to become George W. Bush's vice presidential running mate. "Republican vice presidential candidate Dick Cheney is "scrambling" to find a way to keep millions in stock options and still avoid a potential conflict of interest over the money. Cheney is set to receive about $20 million in stock options from the oil firm Halliburton Co., where he worked until quitting this week to campaign. He promised to put the funds into a blind trust, but under company rules, executives are prohibited from transferring stock options from themselves to anyone else, "not to children, not to charities, not even to a trust fund." Democratic presidential nominee Al Gore has repeatedly criticized Cheney for being tied to "Big Oil." Cheney's campaign spokesman Dirk Vande Beek has responded, saying "Secretary Cheney will do whatever he needs to do to avoid any conflict of interest." (John Mintz, Washington Post, Aug. 18). A Washington Post editorial: "The prospect of a vice president's having a large financial interest in the outcome of national policy bearing on oil -- domestic energy policy, environmental policy, foreign policy in the Mideast and elsewhere -- can appeal to no one, not Mr. Cheney, not Mr. Bush, not the public, either" (Greenwire, August 18, 2000).
Halliburton to Build New Cells at Guantanamo Base, Charles Aldinger, Reuters, July 27, 2002."Halliburton Co. has been awarded a $9.7 million contract to build an additional 204-cell detention camp at the U.S. naval base at Guantanamo Bay, Cuba to hold additional suspected al Qaeda and Taliban prisoners, the Pentagon said on [July 26, 2002]. The move will expand the high-security prison on the base, where hundreds of such "detainees" from Afghanistan are already being held in 612 small cells. The prison at Guantanamo Bay Naval Station has played a major part in the U.S. war on terrorism declared after September's attacks on America in which more than 3,000 people died. No prisoners have been charged, but some could eventually face military trials. Brown and Root Services, an engineering division of Halliburton, will build the additional 6-by-8-foot cells on the windward side of the remote U.S. base at the southeastern tip of Cuba, the Pentagon said. The work is expected to be completed by October. But the Pentagon suggested [July 26] that the facility could grow even more and that the contract could eventually total as much as $300 million if additional options were exercised over the next four years. Vice President Dick Cheney is the former chief executive officer of Halliburton, whose main business is providing oilfield services. The company has come under heavy pressure this year because of concerns about its liabilities and a probe by the Securities and Exchange Commission into its accounting for cost overruns on construction projects."
"The company was one of the main contractors hired to construct the Diego Garcia airbase in the Indian Ocean, according to Pentagon military histories" (Cheney's Former Company Wins Afghanistan War Contracts, by Pratap Chatterjee, CorpWatch, May 2, 2002).
Halliburton Settles SEC Charge from Cheney Years, Reuters/ABCNews.com, Aug 3, 2004. "Halliburton Co. will pay $7.5 million to settle charges that it misled investors by not disclosing a 1998 accounting change at a time when Vice President Dick Cheney was CEO, officials said on Tuesday. The U.S. Securities and Exchange Commission said it did not charge Cheney in the case. The agency charged the Houston-based oil services group, as well as its former Chief Financial Officer Gary Morris and former Controller Robert Muchmore. The size of the penalty against Halliburton partly reflects an SEC view that company documents and information were not turned over quickly enough to SEC investigators, it said... The case focused on Halliburton's failure to disclose a change in accounting for revenue from claims against customers for construction project cost overruns, it said. The accounting change boosted Halliburton's pretax profits over several quarters in 1998 and 1999 by more than $120 million, but investors were not informed until March 2000, the SEC said... The SEC found Cheney was not involved in the accounting practice change, nor in the decision on whether to disclose it, said a lawyer for Cheney who asked not to be named. Halliburton and Muchmore agreed to a settlement, with Muchmore paying a penalty of $50,000 and the company a penalty of $7.5 million. Neither admitted nor denied wrongdoing, as is customary in SEC settlement agreements. The enforcement action against Morris is unsettled and has been filed in U.S. District Court in Houston, the SEC said... "
Judge in Halliburton case recuses himself. Associated Press/MSNBC, Aug. 10, 2004. "A judge overseeing a lawsuit accusing Halliburton Co. of using deceptive accounting practices has recused himself from the case, a spokeswoman said. The case, which had been under the guidance of U.S. District Judge David Godbey, will be reassigned to U.S. District Judge Barbara Lynn, said court spokeswoman Sheila Stein. Godbey said Tuesday that he had no comment. In May, Halliburton said it agreed to pay $6 million to settle 20 shareholder lawsuits. The lawsuits had challenged the way that the oilfield-services company counted revenue from cost overruns and change orders on long term fixed-price construction projects. Halliburton began booking some of the unapproved amounts as revenue in 1998 and later disclosed the change in filings with the Securities and Exchange Commission. The cases had been combined into one class-action lawsuit filed in a Dallas federal court. Halliburton had said that three of the four lead plaintiffs agreed to the settlement. Last week Halliburton agreed to pay a $7.5 million fine to settle a Securities and Exchange Commission investigation into the company's accounting practices. The company neither admitted nor denied any of the agency's findings in paying the penalty."
Halliburton works with Caltex on oil field at Duri in central Sumatra, Indonesia (Oil & Gas Journal, May 15, 1989, p.4).
Brown & Root Forest Products was involved in building Barito Pacific's Enim Lestari pulp mill near the Musi River in south Sumatra, with access to 200,000 hectares of forest (PPI: Pulp & Paper International, July 1992, p.19).
US Treasury Department inquiry. Reuters, Feb 11, 2004.
Washington Post, June 23, 2001.
Will Halliburton Clean Up? The company that Dick Cheney once ran stands to make millions rebuilding Iraq, By Jeremy Kahn, Fortune 500 (2003).
Halliburton Contracts in Iraq: The Struggle to Manage Costs, By Jeff Gerth and Don Van Natta Jr., New York Times, December 29, 2003.
Halliburton's Iraq gravy train, By Farhad Manjoo, Salon, Feb. 27, 2004.
Special Investigations: Iraq Contracting from the US House of Representatives Committee on Government Reform, Minority Office.
Pentagon found Halliburton overcharged Army $61 million for gasoline delivered to Iraq (Los Angeles Times, Feb 3, 2004).
Pentagon Freezes Iraq Funds Amid Corruption Probes, By Stephen J. Glain, Boston Globe, Dec 30, 2003.
Military Ends Halliburton Deal To Supply Gasoline to Iraq, By Jackie Spinner, Washington Post, Dec 31, 2003.
Halliburton to Lose Iraq Oil Project, By Larry Margasak, Associated Press, Dec 31, 2003.
Special Investigations: Iraq Contracting from the US House of Representatives Committee on Government Reform, Minority Office.
Iraq and Kuwait: Pentagon, Ex-Workers Hit Halliburton on Oversight, Costs, By T. Christian Miller, Los Angeles Times, June 15, 2004.
Pentagon probes Halliburton's Iraq work: Report: Firm failed to account for over $1.8 billion of work AP / MSNBC, Aug. 11, 2004.Halliburton Co. did not adequately account for more than $1.8 billion it billed the government for work in Iraq and Kuwait, a published report on the findings of Pentagon auditors said Wednesday.
The results of the audit, first reported by The Wall Street Journal, were the latest financial headache for Halliburton subsidiary Kellogg Brown & Root, which filed for bankruptcy protection last year to resolve billions of dollars in pending asbestos claims.
The $1.8 billion amounts to 40 percent of the $4.18 billion KBR has already billed the Pentagon for its work feeding and housing military troops. The Pentagon could begin withholding payments from KBR if it determines it is owed money — though it has yet to do so.
KBR officials told the newspaper the company has done nothing wrong, and expressed confidence the issue would be resolved without such action.
"The fact that we have negotiated and continue to negotiate proposals proves that our estimating system is valid," an unidentified KBR official was quoted as saying. "This is the same system that the company has used for more than 10 years."
The audit, part of a report dated Aug. 4 that has yet to be made public, found that KBR’s "internal control policies" are "inadequate for providing verifiable, supportable, and documented cost estimates that are acceptable for negotiating a fair and reasonable price." Pentagon officials told the newspaper that that no defense contractor has had its estimating system ruled "inadequate" in years.
Auditors’ concerns included more than $900 million in payments for dozens of dining facilities; auditors say that more than a third of those costs may be unjustified, the newspaper said. Auditors also are examining $180 million in costs charged for fuel from Kuwait that was delivered to Iraq.
The dispute over the Iraq/Kuwait billing only intensifies the scrutiny on Halliburton.
Earlier this month, the company agreed to a $7.5 million settlement with regulators to resolve an investigation into its accounting practices.
The company is also working to put its asbestos liabilities behind it. In late July, a federal judge in Pennsylvania affirmed approval of Halliburton Co.’s $4.17 billion plan to settle asbestos- and silica-related health claims."
Army to let Halliburton keep Iraq payment: Report: Pentagon can't find documentation for bills. Reuters, MSNBC, Oct. 22, 2004.The U.S. Army is laying the groundwork to let Halliburton Co. keep several billion dollars paid for work in Iraq that Pentagon auditors say is questionable or unsupported by proper documentation, the Wall Street Journal reported on Friday.
According to Pentagon documents reviewed by the Journal, the Army has acknowledged that the Houston-based company might never be able to account properly for some of its work, which has been probed amid accusations that Halliburton's Kellogg Brown & Root unit overbilled the government for some operations in Iraq.
The company has hired a consulting firm to estimate what Halliburton's services should cost, the report said.
The newspaper, citing the documents and internal memorandums, said that officials are considering using the estimate to serve as the basis for "an equitable settlement", under which the Pentagon could drop many of the claims its auditors have made against the company.
But the Journal added that some disgruntled Pentagon officials see the effort to broker an outside settlement with the company as unusual because the contract is so large.
According to the report, Kellogg Brown & Root so far has billed about $12 billion in Iraq, and about $3 billion of that remains disputed by government officials.
The Journal also cited Pentagon records showing that $650 million in Halliburton billings are deemed questionable. An additional $2 billion is considered to have insufficient paperwork to justify the billing, the report said.
A representative for Halliburton did not immediately return a call seeking comment early Friday.
FBI Investigating Halliburton Contracts, By John Solomon, Associated Press/Chicago Tribune, Oct 28, 2004. The FBI has begun investigating whether the Pentagon improperly awarded no-bid contracts to Halliburton Co., seeking an interview with a top Army contracting officer and collecting documents from several government offices.
The line of inquiry expands an earlier FBI investigation into whether Halliburton overcharged taxpayers for fuel in Iraq, and it elevates to a criminal matter the election-year question of whether the Bush administration showed favoritism to Vice President Dick Cheney's former company.
FBI agents this week sought permission to interview Bunnatine Greenhouse, the Army Corps of Engineers' chief contracting officer who went public last weekend with allegations that her agency unfairly awarded KBR, a Halliburton subsidiary, no-bid contracts worth billions of dollars for work in Iraq, according to documents obtained by The Associated Press.
Asked about the documents, Greenhouse's lawyers said Thursday their client will cooperate but that she wants whistle-blower protection from Pentagon retaliation.
"I think it (the FBI interview request) underscores the seriousness of the misconduct, and it also demonstrates how courageous Ms. Greenhouse was for stepping forward," said Stephen Kohn, one of her attorneys.
"The initiation of an FBI investigation into criminal misconduct will help restore public confidence," Kohn said. "The Army must aggressively protect Ms. Greenhouse from the retaliation she will encounter as a result of blowing the whistle on this misconduct."
FBI agents also recently began collecting documents from Army offices in Texas and elsewhere to examine how and why Halliburton, a Houston-based oil services conglomerate, got the no-bid work.
"The Corps is absolutely cooperating with the FBI, and it has been an ongoing effort," said Army Corps spokeswoman Carol Sanders. "Our role is to cooperate. It's a public contract and public funds. We've been providing them information for quite a while."
The FBI declined to comment Thursday, but a law enforcement official, speaking on condition of anonymity, said the investigation does not involve anyone in the White House -- including Cheney's office.
Wendy Hall, a Halliburton spokeswoman, said the company is cooperating with various investigations, but she dismissed the latest revelation as election politics. She noted Congress' auditing arm, the Government Accountability Office, found the company's no-bid work in Iraq was legal.
"The old allegations have once again been recycled, this time one week before the election," Hall said. "The GAO said earlier this year that the contract was properly awarded because Halliburton was the only contractor that could do the work.
"We look forward to the end of the election, because no matter who is elected president, Halliburton is proud to serve the troops just as we have for the past 60 years for both Democrat and Republican administrations," she said.
Cheney spokesman Kevin Kellems, asked if investigators had contacted the vice president or his office about the contracts, said they had not.
Democrats have tried to make Halliburton an election-year issue, and vice presidential candidate John Edwards quickly seized upon the latest development. "Good people came forward to tell the truth about these contracts because they -- like the American people -- know that the administration's special treatment of Halliburton was wrong," the Edwards said in a statement.
Sen. Frank Lautenberg, a Democrat on the Senate Governmental Affairs Committee who has been investigating Halliburton's contracts, said his office was told the FBI recently sought documents from various government offices. The requests focused on how and why Halliburton got the Iraq contracts.
"This multibillion dollar no-bid contract to Halliburton was suspicious from day one, and now our worst suspicions are confirmed," Lautenberg said. "The FBI doesn't get involved unless there are possible criminal violations."
In a formal whistle-blower complaint filed last week, Greenhouse alleged the award of contracts without competition to KBR puts at risk "the integrity of the federal contracting program as it relates to a major defense contractor." The contracts were to restore Iraq's oil industry.
An internal 2003 Pentagon e-mail says the Iraq contract "has been coordinated" with Cheney's White House office.
The vice president, who continues to receive deferred compensation from when he was Halliburton's chief executive in the late 1990s, has steadfastly maintained he has played no role in the selection of his former company for federal business.
The Army last week referred Greenhouse's allegations to the Defense Department's inspector general. Documents show FBI agents from Quad Cities, Ill., asked Tuesday to interview Greenhouse. Her lawyers declined to discuss the contacts.
Greenhouse alleged in her complaint that after her superiors signed off on the Iraq business in February 2003, a month before the war began, and returned it for her necessary approval, she specifically asked why the work was being extended for several years.
Beside her signature, Greenhouse wrote: "I caution that extending this sole-source effort beyond a one-year period could convey an invalid perception that there is not strong intent for a limited competition," the complaint said.
The oil restoration work was given to KBR without competitive bidding through 10 separate work assignments called "task orders." The orders were issued under an existing contract between Halliburton and the U.S. military that was awarded competitively in December 2001.
While the Corps was authorized to spend up to $7 billion for the oil restoration work, the actual cost so far has been $2.5 billion. Halliburton is still working on the oil facilities, but it is now operating under a new, competitively awarded contract.
Audit: Halliburton lost track of property: Investigators can't locate a third of inventory in Iraq. AP/MSNBC.com, Nov 26, 2004.A third or more of the government property Halliburton Co. was paid to manage for the U.S.-led Coalition Provisional Authority in Iraq could not be located by auditors, investigative reports to Congress show.
Halliburton's KBR subsidiary "did not effectively manage government property" and auditors could not locate hundreds of CPA items worth millions of dollars in Iraq and Kuwait this summer and fall, Inspector General Stuart W. Bowen reported to Congress in two reports. Inspector General's report (PDF)
Bowen's findings mark the latest bad news for Vice President Dick Cheney's former company, which is the focus of both a criminal investigation into alleged fuel price gouging and an FBI inquiry into possible favoritism from the Bush administration.
The Associated Press reported Wednesday that FBI agents have extensively interviewed an Army contracting officer who last month went public with allegations that the Bush administration was improperly awarding contracts to Halliburton without competitive bidding.
Halliburton and the Pentagon deny wrongdoing, and say they are cooperating in all investigations.
Company spokeswoman Cathy Gist said Friday that KBR recently conducted a "wall-to-wall" review of all property it is managing for the Pentagon in war zones including Iraq and Afghanistan and produced results far better than Bowen's findings.
"We are pleased to report that this total inventory review confirmed 99.4 percent accountability of all property," she said. "The facts show that KBR has adequately managed property for this mission by aggressively monitoring its property management functions -- above and beyond what is required."
The U.S.-backed CPA officially dissolved after a year in power in Baghdad when an interim Iraqi government took control of the country this summer. But Bowen's office continues to review how money was spent and it gave a tough assessment of KBR's performance.
KBR won a key logistics contract to manage everything from trucks and generators to computers.
Bowen reported that an audit earlier this summer found KBR had lost track of more than $18 million worth of equipment in Iraq. Investigators could not track down 52 of 164 randomly selected items in an inventory of more than 20,000 items overseen by KBR, including two electric generators worth nearly $1 million, 18 trucks or SUVs and six laptop computers.
Searching since summer
Pentagon and Halliburton officials have been searching since the summer for the missing items and have tracked down many of them. Some were found in the hands of "unauthorized users" and 111 vehicles had not been returned for required check-in, they said.Bowen's auditors found the problems extended beyond Iraq's borders. More recently, auditors sought to determine how well KBR managed the inventory and supplies of the CPA offices and warehouses in neighboring Kuwait, initially sampling 90 items from an inventory of more than 3,000.
The auditors found 30 of the 90 items could not be accounted for, and then reviewed additional documents and projected a total of 1,297 of the 3,032 property items, or 42.8 percent, could not be accounted for or were missing.
The inspector general said 108 additional items were on hand but not properly recorded in inventory. The audit projected more than 400 required hand receipts for property were not available or weren't filled out.
"This occurred because KBR did not effectively manage government property: specifically, KBR did not properly control CPA property items. Further, the KBR property records were not sufficiently accurate or available to properly account for CPA property items," Bowen reported to Congress.
"As a result, the CPA-IG projected that property valued at more than $1.1 million was not accurately accounted for or was missing," it added.
Bowen's report said the Pentagon agency that managed KBR in Iraq did not agree with all of the findings, and the agency declined to force KBR to change its inventory tracking system.
The Pentagon "stated that the contractor has put an accurate property control system in place that is effective, and an analysis of the system does not need to be performed at this time," Bowen's report said.
Bowen told lawmakers the Pentagon didn't provide any information to back its conclusions. However, he said the government did agree to "conduct a thorough review of CPA property and seek to recover the cost of missing equipment from the responsible party."
Halliburton Iraq deals described as contract abuse, By Sue Pleming, Reuters / Yahoo, June 27, 2005.A top U.S. Army procurement official said on Monday Halliburton's deals in Iraq were the worst example of contract abuse she had seen as Pentagon auditors flagged over $1 billion of potential overcharges by the Texas-based firm.
Bunny Greenhouse, the Army Corps of Engineers' top contracting official-turned whistle-blower, said in testimony at a hearing by Democrats on Capitol Hill that "every aspect" of Halliburton's oil contract in Iraq had been under the control of the Office of the Secretary of Defense.
"I can unequivocally state that the abuse related to contracts awarded to KBR (Kellogg Brown and Root) represents the most blatant and improper contract abuse I have witnessed during the course of my professional career," said Greenhouse, a procurement veteran of more than 20 years.
Her blistering criticism came as the Democrats released a new report including Pentagon audits that identified more than $1.03 billion in "questioned" costs and $422 million in "unsupported" costs for Halliburton's work in Iraq.
Halliburton's subsidiary KBR is the U.S. military's biggest contractor in Iraq and has been accused by Democrats of getting lucrative work there because of its ties to Vice Presiden Dick Cheney who headed the company from 1995-2000.
Pressed by lawmakers whether she thought the Defense Secretary's office was involved in the handout and running of contracts to KBR, Greenhouse replied: "That is true."
"I observed, first hand, that essentially every aspect of the RIO (Restore Iraqi Oil) contract remained under the control of the Office of the Secretary of Defense. This troubled me and was wrong," said Greenhouse.
Halliburton issued a statement strongly rejecting comments by Greenhouse and others at the hearing, including a former KBR employee who accused the company of overcharging for food services provided to troops under a logistics deal.
"The only thing that's been inflated is the political rhetoric which is mostly a rehash of last year's elections," said spokeswoman Cathy Mann of the hearing.
HALLIBURTON DEFENDS ITSELF
Regarding claims of political influence because of Cheney, Mann said it was easier to "assign devious motives than to take the time to learn the truth."
Both the Pentagon and the Army Corps of Engineers, which was in charge of a sole-source oil contract given to KBR in Iraq, have denied any special treatment for KBR. The Corps did not immediately respond to questions.
Democrats called for an urgent hearing and an investigation into what they said were contracting abuses involving KBR.
"This testimony doesn't just call for Congressional oversight -- it screams for it," said Sen. Byron Dorgan (news, bio, voting record), a Democrat from North Dakota.
What concerned Greenhouse most was that the oil contract, which had a top value of $7 billion, was given to KBR without competitive bidding.
She irked her bosses by handwriting her concerns in official documents for the oil deal but said these were overlooked, she said.
In one instance, she said Army Corps officials bypassed getting her signature to grant a waiver for KBR to be relieved of its obligation to provide cost and pricing data for bringing fuel into Iraq.
That waiver was granted after a draft Army audit said KBR may have overcharged the military by at least $61 million to bring in fuel to Iraq to ease a shortage of refined oil.
U.S. Army gives $5 billion more work to Halliburton. By Sue Pleming, Reuters, July 6, 2005.The U.S. military has signed on Halliburton (HAL.N: Quote, Profile, Research) to do nearly $5 billion in new work in Iraq under a giant logistics contract that has so far earned the Texas-based firm $9.1 billion, the Army said on Wednesday.
Linda Theis, a spokeswoman for U.S. Army Field Support Command in Rock Island, Illinois, said the military signed the work order with Halliburton unit Kellogg Brown and Root in May.
The new deal, worth $4.97 billion over the next year, was not made public when it was signed because the Army did not consider such an announcement necessary, she said.
"We did not announce this task order as this is really not something we ever really thought about doing," said Theis.
Halliburton, which was run by Vice President Dick Cheney from 1995-2000, has been under scrutiny for its contracts in Iraq and several U.S. government agencies are looking into whether it overcharged for some work.
A Halliburton spokeswoman said the new spending package was approved by the Army after the company submitted estimated costs for the year based on services requested.
The $4.97 billion figure represented the maximum under the contract, and the actual amount could be lower since the Army doled out the work on an incremental basis, she said.
The new contract is about $1 billion more than the company earned under last year's services contract.
In March, a former KBR employee and a Kuwaiti citizen were indicted for defrauding the U.S. government of more than $3.5 million by inflating the cost of fuel tankers.
The new work order, called Task Order 89, is valid until April 30, 2006, and went ahead despite critical military audits released last week by Democratic opponents of KBR's Iraq work.
A top U.S. Army procurement official said last week Halliburton's deals in Iraq were the worst example of contract abuse she had ever seen, a claim KBR strongly rejected as "political rhetoric."
KBR was awarded the logistical contract with the military in December 2001, covering tasks from feeding U.S. troops to delivering mail, doing laundry and building barracks.
U.S. Senate critics of Halliburton were quick to denounce the new deal.
"At this point, why don't we just hand Halliburton the keys to the U.S. Treasury and tell them to turn off the lights when they are done," Democratic Senator Frank Lautenberg said in a statement.
Called LOGCAP, KBR had by May 31 been paid $9.1 billion under the deal, which has nine option years that have been renewed three times. They are up for renewal each December.
Of this amount, $8.3 billion was for work in Iraq and the remainder for Afghanistan and elsewhere. Money obligated for future work amounted to $11.4 billion, said Theis, pointing out not all of this money would necessarily be spent.
The Pentagon has been looking into whether to contract out some services done by KBR, but Theis said she had not heard of any decisions to make changes.
Halliburton has received bonuses for some of its work. Theis said a decision on possible further bonuses will likely be announced this month.
Much of Halliburton's work for the U.S. military is on a cost-plus basis, which means the company can earn up to 2 percent extra depending on its performance.
Halliburton Case Is Referred to Justice Dept., Senator Says. By Erik Eckholm, New York Times, Nov 19, 2005Pentagon investigators have referred allegations of abuse in how the Halliburton Company was awarded a contract for work in Iraq to the Justice Department for possible criminal investigation, a Democratic senator who has been holding unofficial hearings on contract abuses in Iraq said yesterday in Washington.
The allegations mainly involve the Army's secret, noncompetitive awarding in 2003 of a multibillion dollar contract for oil field repairs in Iraq to Halliburton, a Texas-based company. The objections were raised publicly last year by Bunnatine H. Greenhouse, then the chief contracts monitor at the Army Corps of Engineers, the government agency that handled the contract and several others in Iraq.
In a letter received and released yesterday by Senator Byron L. Dorgan, Democrat of North Dakota, the assistant Pentagon inspector general, John R. Crane, said that the criminal investigation service of the Defense Department had examined Ms. Greenhouse's allegations "and has shared its findings with the Department of Justice." Senator Dorgan is the chairman of the Democratic Policy Committee, a Congressional group that has repeatedly used unofficial hearings to question the administration's record of awarding contracts in Iraq.
The Justice Department, the letter said, "is in the process of considering whether to pursue the matter."
Ms. Greenhouse, a 20-year veteran of military procurement work, says her objections before the contract was signed were ignored. After internal clashes with officials at the agency and threats of demotion, she went public with her charges in the fall of 2004.
This year, she was demoted in August from the elite Senior Executive Service, on charges of poor performance, and given a lower-ranking job as a project manager. She has filed appeals, but for now "she has no projects to manage and she just sits in the corner," her attorney, Michael Kohn, said yesterday in a telephone interview from Washington. The inspector general's office at the Defense Department had already begun its own investigation of her charges regarding the contracting. Exactly which issues are of most interest to investigators in the Justice Department is unclear. Mr. Crane wrote that he could not provide more details "as this is an ongoing criminal investigation."
Melissa Norcross, a spokeswoman for Halliburton, said in an e-mail message, "The company continues to cooperate fully with the Justice Department's investigation of certain issues pertaining to our work in Iraq."
In letters to senior Army officials and in public testimony, Ms. Greenhouse said that in early 2003 the Corps had violated procedures when it secretly awarded a five-year, potentially $7 billion contract for oil field repairs to a Halliburton subsidiary, Kellogg Brown & Root.
Among other things, the same company had been secretly hired months earlier to draw up a plan for the job, she said. She also said that even if the urgency of war required dispensing with competitive bidding, the duration of the contract should have been shorter. She objected again in December 2003, when officials granted a waiver to Kellogg Brown & Root, approving the high prices it had paid to import fuel from Kuwait. Other Pentagon agencies said the company had paid tens of millions of dollars too much, without offering any justification for the payments.
In her e-mail message, Ms. Norcross said, "KBR will continue to work with our customers and the appropriate government agencies to demonstrate, once and for all, that KBR delivered vital services for the U.S. troops and the Iraqi people within the appropriate bounds of government contracting and at a fair and reasonable cost, given the circumstances."
Army to End Expansive, Exclusive Halliburton Deal. Logistics Contract to Be Open for Bidding. By Griff Witte. Washington Post, July 12, 2006.
The Army is discontinuing a controversial multibillion-dollar deal with oil services giant Halliburton Co. to provide logistical support to U.S. troops worldwide, a decision that could cut deeply into the firm's dominance of government contracting in Iraq.
The choice comes after several years of attacks from critics who saw the contract as a symbol of politically connected corporations profiteering on the war.
Under the deal, Halliburton had exclusive rights to provide the military with a wide range of work that included keeping soldiers around the world fed, sheltered and in communication with friends and family back home. Government audits turned up more than $1 billion in questionable costs. Whistle-blowers told how the company charged $45 per case of soda, double-billed on meals and allowed troops to bathe in contaminated water.
Halliburton officials have denied the allegations strenuously. Army officials yesterday defended the company's performance but also acknowledged that reliance on a single contractor left the government vulnerable. The Pentagon's new plan will split the work among three companies, to be chosen this fall, with a fourth firm hired to help monitor the performance of the other three. Halliburton will be eligible to bid on the work.
The decision on Halliburton comes as the U.S. contribution to Iraq's reconstruction begins to wane, reducing opportunities for U.S. companies after nearly four years of massive payouts to the private sector.
Of the more than $18 billion Congress allocated for reconstruction in late 2003, more than two-thirds has been spent and more than 90 percent has been contractually obligated, according to the inspector general's office overseeing reconstruction work. The rest of the money, which is collectively known as the Iraq Relief and Reconstruction Fund, needs to be obligated by the end of September.
Army spokesman Dave Foster said in a written response to questions that funding for 11 contracts covering various aspects of reconstruction -- including transportation, communications, water distribution and the electric grid -- will expire this fall. While the contractors will be allowed to finish any work previously requested, no new work can be ordered after September.
Among those contracts is another Halliburton deal, for up to $1.2 billion to restore oil services in southern Iraq. As with the others, it will not be extended.
"The Iraq reconstruction is winding down . . . so there is no need for new contracts to replace the existing," Foster said.
Instead, the Iraqi government will have to find its own contractors to do the work, which includes tackling a large number of projects left undone by the United States.
"This is the year of transition for Iraqi reconstruction. The U.S.-funded projects are being completed and transferred to Iraqi management and control," said James Mitchell, spokesman for the inspector general's office.
That office has repeatedly warned of a "reconstruction gap" between what the United States promised in rebuilding the country after the spring 2003 invasion and what it has delivered. For instance, a contract aimed at building 142 new health centers across Iraq instead produced 20 before the program ran out of money.
The heavy involvement of U.S. contractors in Iraq has been one of the defining features of the American presence there, with private companies called on for duties as varied as guarding supply convoys and analyzing intelligence.
No contractor has received more money as a result of the invasion of Iraq than Halliburton, whose former chief executive is Vice President Cheney.
The logistics work is performed through a subsidiary, Kellogg Brown & Root Services Inc. Last year, the Army paid the company more than $7 billion under the contract, according to a search of government contracting data by Eagle Eye Inc., a private consulting firm. The number this year is expected to be between $4 billion and $5 billion, according to Randy King, a program manager with the Army.
The company maintains that its billing disputes with Defense Department auditors have been resolved and that its work has received rave reviews from the military. "By all accounts, KBR's logistical achievements in support of the troops in Iraq, Kuwait and Afghanistan have been nothing short of amazing," said company spokeswoman Melissa Norcross in a statement.
King, the Army official, agreed yesterday. "Halliburton has done an outstanding job, under the circumstances," he said. He added that Pentagon leaders ultimately decided they did not want to have "all our eggs in one basket" because multiple contractors will give them better prices, more accountability and greater protection if one contractor fails to perform.
Halliburton initially won the contract in December 2001. At the time, the deal was relatively modest in size, but stubborn insurgencies in both Iraq and Afghanistan have stretched U.S. troops and kept Halliburton busy trying to meet their needs.
Known formally as the Logistics Civil Augmentation Program, or LOGCAP, the contract "has expanded beyond what anyone could have imagined," said Dov S. Zakheim, the Pentagon's comptroller from 2001 until 2004 and now a vice president at consulting firm Booz Allen Hamilton Inc. "The KBR people themselves would point out that the challenges they had coming out of Iraq, over and above everything else they had to do, were taxing their systems. You're really asking too much of one firm to be able to manage all of this."
The original contract included one base year with nine option years. The Army says it will not pick up the next option year and instead plans to put out a new request for proposal by the end of the month. It expects to announce winners in November.
The bidding on the new contract is likely to attract some high-profile suitors, including weapons makers Lockheed Martin Corp. and Northrop Grumman Corp.
"These are huge contracts. They are among the biggest government services contracts that have ever been created," said Loren Thompson, chief operating officer of the Lexington Institute, a defense research organization in Arlington. "Most of the big, integrated defense contractors recognize that new sales of military hardware are going to be hard to come by in the years ahead. There's a general migration to services. And no contract on the horizon is bigger in services than LOGCAP. It's just too big to ignore."
Rep. Henry A. Waxman (D-Calif.), a frequent Halliburton critic, said he would like to see even more companies included as winners in order to increase competition as work arises. But he welcomed the move away from the exclusive contract with Halliburton as a good first step. "When you have a single contractor, that company has the government over a barrel," Waxman said. "One needs multiple contractors in order to have real price competition. Real competition saves the taxpayer money."
Chosen by Sanpo Land Industrial to be prime contractor for the $8 billion luxury resort near Nagoya, Japan (Hoover's Handbook of American Business 1993, p. 311).
Halliburton paid Army $6 million for taking kickbacks for awarding Kuwaiti company contract to supply US troops in Iraq (Reuters, Feb 11, 2004; Wall Street Journal, Jan 23, 2004).
Inquiry focuses on Iraq fuel-delivery deal, Associated Press, MSNBC, Feb 16, 2004.
When Reagan ordered economic sanctions against Libya in 1986, Brown & Root moved its $100 million contract on Libya's Great Man-Made River Project to its British subsidiary in order to continue operation in Libya (David Korten, When Corporations Rule the World, p. 127, citing "U.S. Companies Use Affiliates Abroad to Skirt Sanctions," New York Times, Dec. 27, 1993, pp. A-1, D3).
Brown & Root has operations in Labuan, Malaysia; also Gearhart Malaysia (Who Owns Whom 1990: Australia & Far East).
MILITARY CONTRACTING / SUBSIDIES / CORRUPTION
Brown & Root has had extensive military construction contracts in war zones such as Somalia, Haiti, and Bosnia. Some of the contracts were awarded while Dick Cheney was U.S. Secretary of Defense (1989-1993). In 1995, Cheney became CEO of Halliburton. In March 1996 the U.S. GAO reported that Brown & Root was the primary source of $327 milion in cost overruns in Bosnia. The Hungarian government and the U.S. have also had a dispute about whether Brown & Root should pay taxes or be considered part of U.S. Army deployment (John Diamond, Construction Company Headed by Cheney Gains Extra Millions in Bosnia, Seattle Times, Mar. 24, 1996, p. A1-A2).
Cheney Led Halliburton to Feast at Federal Trough from Center for Public Integrity (August 2000)
California:In February 2002, Halliburton paid $2 million in fines "for defrauding the government of millions of dollars by inflating prices for repairs and maintenance for work." (New York Times, June 13, 2002).
USA: In Tough Times, a Company Finds Profits in Terror War, By Jeff Gerth and Don Van Natta Jr., New York Times, July 12, 2002.
Cheney's Links Eyed in Military Contract, Washington Times, August 5, 2002."Since Richard B. Cheney became vice president, a subsidiary of his former company was chosen the exclusive contractor for overseas Army troop support and Navy construction despite being under federal investigation for fraud. The Navy construction contract went to the Halliburton Co. subsidiary, Brown & Root Services, though the auditing arm of Congress recommended that new bids be solicited. That recommendation was ignored. The Army deal is unusual because its stretches 10 years and has a payment structure that critics say encourages Brown & Root to spend whatever it takes to keep the troops happy. Halliburton officials say Mr. Cheney played no role in the selection of Houston-based Brown & Root for the two contracts, potentially worth billions of dollars over the next decade. Mr. Cheney, a former secretary of defense with experience in Congress and at the White House, headed Halliburton from 1995 to July 2000, when George W. Bush picked him as his running mate. "Cheney steadfastly refused to engage in any activities to sell Halliburton's or its subsidiaries' services to the government during his tenure with the company," Halliburton spokeswoman Zelma Branch said. "Halliburton has made no attempt to ask for his assistance in obtaining federal contracts since he left the company." Both Army and Navy contracting officials say they were unaware, when the contracts were awarded, that federal officials in California were investigating assertions that Brown & Root had defrauded the government on another defense contract. The investigation ended in February when the subsidiary agreed to pay the government $2 million to settle charges that it inflated contract prices for maintenance and repairs at Fort Ord, a now-closed military installation near Monterey, Calif. Even had the Army known about the investigation, officials said, it would not have affected the decision to award the troop-support contract to Brown & Root. "They did not admit to any wrongdoing, and the government did not find them guilty of any wrongdoing, so legally we could not use that," said Gale Smith, spokeswoman for the Army Operations Support Command. The contract makes Brown & Root the Army's only private supplier of troop-support services over the next decade. There is no ceiling on spending, because the contract is designed to provide rapid troop support wherever and whenever U.S. forces move into action overseas. Under similar contracts, the Army paid Brown & Root $1.2 billion from 1992 through 1999 to support U.S. troops, mainly in the Balkans. An extension of that contract from 1999 through 2004 is projected to cost $1.8 billion. "It is close to unprecedented for the government to have given so much of the solution to one contractor," said Steven Spooner, a George Washington University professor who specializes in federal contracting. Mr. Spooner said government contracts for services almost never exceed five years, while the Army's deal with Brown & Root is renewable for a decade. He said the contract also is structured so that the more the company spends to support the troops, the more it earns. "But it's hard to criticize it, because they've convinced the Army from the bottom up that they're taking care of the troops," he said. "To the extent that they are making money hand over fist, they're taking care of the people who have the [worst] job on the planet." The Army has paid Brown & Root $13.7 million since the contract began Feb. 1 to provide food, laundry and other support services to U.S. troops in the former Soviet republics of Georgia and Uzbekistan. The Army will not disclose other locations where the contract has been used. The $300 million, five-year Navy contract was awarded to Brown & Root in April 2001, three months after Mr. Cheney became vice president. It followed a November 2000 recommendation from the General Accounting Office that upheld a protest of the original Navy decision in June 2000 to give the Halliburton subsidiary the contract. The GAO arbitrator questioned the criteria used by the Navy in evaluating the bidders, as well as the Navy's cost analysis, and recommended that new bids be solicited. Instead, the Navy decided to re-evaluate the original bids "with requested changes in criteria and the result was the same," Navy spokesman John Peters said. The Navy has given Brown & Root $53 million in work orders in the past 15 months, including $37.3 million to build 816 detention cells at Guantanamo Bay, Cuba, where terrorist suspects captured in Afghanistan are held. Both contracts enable the Army and Navy to use Brown & Root for their troop-support or construction services, without having to seek out bids from other companies." (Source: Cheney's links eyed in military contract, Associated Press, Washington Times, August 5, 2002).
Balkans: US General Accounting Office report 1997 "billed the Army for questionable expenses for work in the Balkans, including charges of $85 per sheet of plywood that cost $14. A year 2000 follow-up report on the Balkans work that found inflated costs, including charges for cleaning some offices up to four times a day." (Associated Press, Dec 12, 2003).
Whistle-blower targets Halliburton's KBR: Army agrees to Pentagon probe of contracts in Iraq, Balkans. Associated Press/MSNBC.com, Oct. 25, 2004. The Army has agreed to a Pentagon investigation into claims by a top contracting official that a Halliburton subsidiary unfairly won no-bid contracts worth billions of dollars for work in Iraq and the Balkans, according to Army documents obtained Sunday.
The complaint alleges that the award of contracts to KBR, the Halliburton subsidiary, without competition to restore Iraq’s oil industry and to supply and feed U.S. troops in the Balkans puts at risk "the integrity of the federal contracting program as it relates to a major defense contractor."
It also asks protection from retaliation for the whistle-blower, Bunnatine Greenhouse, chief contracting officer of the Army Corps of Engineers.
The Iraq contract with Halliburton has been a focus of the presidential campaign because of Vice President Dick Cheney’s past ties to the company. Cheney was chief executive officer of Halliburton and continues to receive deferred compensation from the company.
In a letter to Greenhouse’s lawyer, an Army attorney said that the matter is being referred to the Defense Department’s inspector general for "review and action, as appropriate." It also said the Corps had been ordered to "suspend any adverse personnel action" against Greenhouse "until a sufficient record is available to address the specific matters" in her complaint.
Copies of the letter and complaints, documents which were provided to some members of Congress, were obtained Sunday by The Associated Press.
Halliburton spokeswoman Wendy Hall said from Houston, where the company is headquartered, "KBR doesn’t have any information on what Bunny Greenhouse may or may not have said to other Pentagon officials in early 2003. Certainly we can’t address any threatened legal action she may be considering against her employer."
"On the larger issues, the old allegations have once again been recycled, this time one week before the election," Hall said.
She emphasized that a report earlier this year by the Government Accountability Office, the auditing arm of Congress, concluded the Iraq contract had been properly awarded and she said the Balkans issue "was fully dealt with and resolved several years ago ... (and) since that time KBR has received high marks from the Army on our Balkans support contract."
Michael D. Kohn, who is Greenhouse’s lawyer, in a letter to acting Army Secretary Les Brownlee, charged that in the Balkan contract a deputy assistant secretary of the Army had ordered changes in documents to legitimate the contract "for political reasons."
Kohn’s complaint said contracts were approved over Greenhouse’s reservations, handwritten on the original contracts, and extensions were awarded because underlings signed them without her knowledge and in collusion with senior officials.
After her superiors signed off on the Iraq contract and returned it for her necessary approval, the complaint said, Greenhouse wrote beside her signature: "I caution that extending this sole-source effort beyond a one year period could convey an invalid perception that there is not strong intent for a limited competition."
The contracts under investigation grew out of a $7 billion multiple-year award to Halliburton’s KBR subsidiary to rehabilitate Iraq’s oil industry after the U.S.-led invasion last year; and an 11-month extension, which cost $165 million, of a $2 billion services contract the Army awarded in May 1999.
The Iraq contract was awarded in February 2003, less than a month before the invasion, under a clause specifying no-bid contracts in cases of "compelling emergency." The complaint said Greenhouse objected to the five-year term, asking why the certainty that the emergency would continue for five years.
Kohn said Sunday that he still wants an independent investigation and will ask Attorney General John Ashcroft to appoint investigators to conduct their own probe to ensure the investigation is complete, independent and fair to his client.
"This needs to be done by an outside agency," Kohn said. "From past experience, we are uncomfortable with the DOD-IG handling this investigation by themselves."
According to the complaint, in January 2002 Greenhouse sent an investigative team to examine the Balkan operation. Afterward, she reported: "The general feeling in the theater is that the contractor (KBR) is ‘out of control"’ and was able to manipulate Corps of Engineer officials.
The Balkan contract was to have expired no later than May 27 of this year but was extended, without Greenhouse’s knowledge, after a hunt for other contractors was stopped. Whereas it originally was awarded as a compelling emergency, the extension was awarded under the exception that KBR was the "one and only source."
Greenhouse questioned why the reason for extension was changed. While she never was officially provided the answer, the document said, "two individuals" told her in her office that Tina Ballard, deputy assistant Army secretary for policy and procurement, was telephoned during a meeting on the matter and ordered the change for "political reasons."
Halliburton Contracts Bypassed Objections, By T. Christian Miller, Los Angeles Times, Oct 29, 2004.
U.S. Army Corps of Engineers commanders awarded a lucrative contract extension to Halliburton Co. this month by circumventing the organization's top contracting officer, who had objected to the proposal, according to documents obtained by the Los Angeles Times.
Bunnatine Greenhouse, the Corps of Engineers' chief contracting officer, questioned a decision by commanders to award a contract extension to Halliburton, the oil services company run by Dick Cheney until he became vice president, without the competitive bidding designed to protect U.S. taxpayers.
The FBI is seeking to question Greenhouse, her lawyer said Thursday, marking an expansion of the bureau's ongoing investigation of other Halliburton contracts.
"I cannot approve this," Greenhouse wrote on one version of the proposal that is filled with her handwritten scrawls such as "Incorrect!"; "No! How!"; and "Not a valid reason."
Greenhouse, who was threatened with demotion after raising objections to the Halliburton contract, sent her complaints to acting Army Secretary Les Brownlee. Portions of her letter to Brownlee were obtained by Time magazine last week.
The Times has obtained previously undisclosed documents describing the nature of her objections to the Halliburton contract and e-mail discussions among Army Corps officials.
Despite Greenhouse's objections, the Army Corps on Oct. 8 awarded Halliburton the $165-million extension allowing Halliburton's subsidiary KBR to continue providing logistics services to troops stationed in the Balkans.
The final approval did not carry Greenhouse's signature, as normally required by contracting regulations. Instead, it was signed by her assistant, Lt. Col. Norbert Doyle, according to the documents.
The FBI is seeking to question Greenhouse on her allegations that Army Corps commanders deliberately sidestepped her contracting authority. The FBI's query expands an existing investigation into another Halliburton contract to supply fuel to Iraq, according to the documents and Greenhouse's lawyer, Michael Kohn.
Top Army Corps commanders criticized by Greenhouse for ignoring federal contracting rules declined to be interviewed, citing the investigation.
However, the e-mails suggest that the commanders felt Greenhouse's objections were unnecessarily delaying vital services for U.S. troops.
"To ensure that a fair investigation can proceed, the Army Corps will not provide further comment on the specifics of the matter," said Carol Sanders, an Army Corps spokeswoman.
Halliburton officials blamed politics.
"On the overall issues, the old allegations have once again been recycled, this time one week before the election," said Wendy Hall, a Halliburton spokeswoman, in a statement.
Halliburton has become an election-year issue, with Democratic candidate Sen. John F. Kerry criticizing the billions of dollars' worth of work in Iraq awarded to Halliburton without competitive bidding.
But the previously undisclosed documents are part of a growing body of evidence indicating unusual treatment was given to government contracts won by the Houston-based firm.
Career civil servants repeatedly raised objections to contracting decisions that benefited Halliburton, only to be overruled by higher-ups.
A no-bid contract worth as much as $7 billion awarded in secret to Halliburton to protect Iraq's oil assets has been the subject of the most sustained criticism by government employees.
In fall 2002, a group of top Pentagon civilian officials began meeting to plan how best to prevent the destruction of oil wells and infrastructure in the days after an invasion.
They decided to give Halliburton a job worth $1.9 million as part of an existing contract to draw up a plan to protect the oil infrastructure. An Army lawyer at the time objected to the decision, saying it was outside the scope of the contract.
The lawyer was overruled by a higher-up in the Pentagon's Office of General Counsel. But the Government Accountability Office, Congress' investigative arm, later determined the lawyer was correct, according to testimony given before Congress.
Once Halliburton had drawn up the plan, the Army Corps decided in March 2003 to award Halliburton the contract to carry it out. Greenhouse objected, saying it was against usual contracting procedures to award a job to the company that had drawn up plans for it, Kohn said.
Greenhouse also objected to the presence of KBR officials at meetings where Army Corps officials were discussing the award of the contract, according to the documents. Later, she objected when the government proposed making the "sole-source" contract — awarded without bidding — for five years instead of a more limited period.
Once Halliburton entered Iraq, it became clear that little damage had been done to the oil wells. Instead, the purpose of the contract shifted so that Halliburton was required to truck in gasoline, kerosene and other fuels for Iraqis to use in their daily lives.
Over time, contracting officials grew concerned that Halliburton was paying too much for the gasoline, which was being supplied by a Kuwaiti company called Altanmia Commercial Marketing Co. Halliburton replied that Kuwait's oil company was preventing it from buying oil from other suppliers.
In December, an Army Corps contracting official said she had located at least two other companies that could supply the fuel, potentially allowing for better prices. Halliburton, however, asked her to allow it to continue buying only from Altanmia.
"Since the U.S. government is paying for these services, I will not succumb to the political pressure from the [Kuwaiti government] or the U.S. Embassy to go against my integrity and pay a higher price for fuel than necessary," wrote Mary Robertson, an Army Corps contracting officer, in a December 2003 letter to KBR obtained by The Times. State Department officials have denied applying undue pressure on the contract.
Pentagon auditors reviewing the fuel contract later determined that Halliburton may have overcharged as much as $61 million. Both the Pentagon's inspector general and the FBI opened criminal investigations into the matter.
The most recent controversy concerns another KBR contract, which was for supplying food, fuel and logistics to U.S. troops stationed in Kosovo, Macedonia, Bosnia and Hungary for peacekeeping missions.
The contract was originally competitively awarded to KBR in 1999 and expired in May. The Army Corps was in the middle of a competition to award a follow-up contract when it abruptly canceled the process this summer. The reasons are unclear.
Instead, Army Corps commanders decided to award an extension to Halliburton to continue the services until April 2005, a decision that had to be justified by a contracting officer.
In July, William Ryals, the Army Corps' director of contracting, decided that Greenhouse, as chief contracting officer and his superior, should review the proposal to justify the extension because of the political sensitivity surrounding Halliburton, according to an e-mail obtained by The Times.
The e-mail expressed concern about the political sensitivity of renewing a Halliburton contract without competitive bidding a few weeks before the election.
"If it had been any other firm, we would have done this and moved forward without any further consideration. We would not send it to" Army Corps headquarters, Ryals wrote. "Given that this firm is [KBR] and that we are in an election year and coming up to the peak in the election season soon, I sent it to [Greenhouse at headquarters] for concurrence."
Once she saw the proposal, Greenhouse objected, according to the documents. The extension would have dramatically increased the size of the contract to cover all of Europe, instead of just the Balkans.
Greenhouse also sharply questioned why the competitive bidding process had suddenly been stopped, and by whom.
"Why has five years not been long enough?" to conduct a competition for the contract, she asked in the margins of an early version of the proposal, dated Aug. 2.
Greenhouse and contracting officials traded several other versions, with Greenhouse objecting each time to the proposed justification for the extension. Finally, on Oct. 6, Greenhouse learned that Ryals had altered the proposal without consulting her. She protested to Lt. Gen. Carl Strock, the commander of the Army Corps.
Strock acknowledged her concerns, but warned that the proposed extension had to be approved.
"If we do not get it approved by tomorrow there is a risk that our support of deployed soldiers could be interrupted. That is absolutely unacceptable," Strock wrote.
One day later, Army Corps commanders attempted to demote Greenhouse from her position as chief contracting officer, her lawyer Kohn said. The day after that, they awarded the contract to KBR.
Greenhouse since has received assurances that her job would be protected, Kohn said. The Army has referred her complaints to the Pentagon's inspector general for further investigation.
Top Officer Objected to Halliburton Deal, Associated Press/ABCNews.com, Oct 30, 2004.The Army extended a Halliburton Co. troop support contract over the objections of a top contracting officer, even contending and then withdrawing a claim that U.S. forces faced an emergency if the company didn't get the extra work.
"I wrote directly on the document the weaknesses ... so that all could clearly see," contracting official Bunnatine Greenhouse wrote a top general this month in questioning the extended troop support contract in the Balkans.
Greenhouse has had problems with the $2 billion contract at least since January 2002, when she wrote, "There is little or no incentive for the contractor to reduce or keep cost down."
The contracting officer has gone public with allegations of favoritism toward the company once headed by Vice President Dick Cheney. On Saturday, Democratic presidential candidate John Kerry kept up his assault on Halliburton.
Promising to make a "fresh start" in Iraq, where Halliburton also does major contract work, Kerry said: "We'll get the money to the Iraqis, not to Halliburton."
Greenhouse complained, in writing, Oct. 5 to Lt. Gen. Carl Strock, commander of the Army Corps of Engineers, that the Corps should not have halted plans to let companies compete for a successor Balkans contract. She is the Corps' top contracting officer.
Corps officials initially justified stopping the bidding by concluding that a "compelling emergency" would exist if Halliburton's work were to be interrupted.
When Greenhouse challenged the justification and sought an explanation of the emergency, however, Corps officials changed their reasoning. The new explanation was that Halliburton subsidiary KBR was the "one and only" company that could do the job.
Greenhouse wrote Strock that "the truth should be clearly explained" about the reason for halting competition.
She not only complained there was no explanation of what drove officials to cite an emergency, but, referring to the second justification, added: "It is not reasonable to believe that only one source responded to the solicitation."
Greenhouse, who has said she was frozen out of decisions on Halliburton, went public last weekend with allegations that Army officials showed favoritism to the company.
The FBI has asked Greenhouse's lawyers for an interview with her. The bureau has launched a criminal investigation of Halliburton's no-bid work.
The Associated Press has obtained dozens of documents that Greenhouse intends to provide to investigators.
The Balkans contract was to have ended May 27 but has been extended through next April.
The extension was so politically sensitive that a Corps official, William Ryals, sent a memo to Corps headquarters in July seeking high-level approval.
"The reason for sending it to (headquarters) for approval is because this is so controversial in regard to this firm," the memo said. "If it had been any other firm, we would have done this and moved forward without any further consideration. Given that the firm is KBRS (the Halliburton subsidiary) and that we are in an election year and coming up to the peak in the election season soon, I sent to (headquarters) for concurrence."
Halliburton spokeswoman Wendy Hall said, "This is very old information. The issue mentioned about the Balkans was fully dealt with and resolved several years ago, and since then KBR has received high marks from the Army on our Balkans Support Contract."
In a letter to Corps employees on Friday, Strock said the Army is investigating Greenhouse's allegations and therefore would not respond to the allegations "to ensure that a fair investigation can proceed."
The Army has cited severe problems with Halliburton's work in the Balkans, many documented in the Jan. 4, 2002, report by Greenhouse, who reviewed findings of investigators known as a "tiger" team.
"The general feeling in the theater is that the contractor is `out of control,'" she wrote.
Greenhouse said it appeared the Halliburton subsidiary "makes the decisions of what is constructed, purchased or provided and it appears that oftentimes the products and services delivered reflect gold-plating since the contractor proudly touts that they provide the very, very best."
Greenhouse said Army contracting officials must work as a team because "divided the contractor will `eat our lunch.'"
Cheney Faces Prosecution: Report, Sydney Morning Herald, December 21, 2003.
Halliburton admitted bribing Nigerian officials in 2002 (Dallas Morning News, Jan 9, 2004).
Bush Family Lawyer James Doty Hired to Conduct Internal Probe of Halliburton Involvement in Nigeria Payments, Corporate Crime Reporter, Feb 16, 2004.
Halliburton Under Investigation for Nigeria Bribery Accusations, New York Times, June 11, 2004.
Feds Probe Halliburton Nigerian Payments, Reuters, ABCNews.com, June 11, 2004.
Halliburton Severs Link With 2 Over Nigeria Inquiry, By Simon Romero, New York Times, June 19, 2004.
The Cheney Connection: Tracing the Halliburton Money Trail to Nigeria, by Doug Ireland, LA Weekly, June 18-24, 2004.
Halliburton uncovers bribe plan. Reuters, CNNMoney.com, Sept 2, 2004. Internal probe shows natural gas plant heads discussed bribing Nigerian officials for contracts. "Halliburton Co., once run by U.S. Vice President Dick Cheney, said an internal probe found information suggesting that members of a consortium it helps lead considered bribing Nigerian officials to win business. The world's No. 2 oilfield services company, which is also fighting accusations it overcharged on contracts in Iraq and Afghanistan, said late Wednesday the probe concerns the multibillion dollar TSKJ Bonny Island liquefied natural gas plant project. Halliburton said it hasn't found evidence that officials from the TSKJ consortium ever made payments to Nigerian officials. But it said the consortium entered into several "agency agreements" related to the project, beginning in 1995. Talks of bribes took place at least 10 years ago, it said... In a statement, Halliburton (HAL: Research, Estimates) said the conduct being probed "appears to relate to conduct that took place almost entirely" before its 1998 purchase of Dresser Industries Inc., whose M.W. Kellogg unit was part of the consortium. Kellogg later merged with Brown & Root to form Kellogg Brown & Root, which has a 25 percent stake in TSKJ. Other members of the Portugal-registered consortium are France's Technip SA, the Snamprogetti Netherlands affiliate of Italy's Eni SpA and Japan's JGC Corp... The company has previously said the SEC is formally probing payments related to Bonny Island, and the Justice Department is also investigating. Published reports have said Jeffrey Tesler, a TSKJ agent, is under investigation by a French magistrate. Halliburton in June severed ties with former KBR Chairman Jack Stanley, accusing him of receiving "improper personal benefits" related to TSKJ and Nigeria. Stanley had retired as chairman in December 2003. According to the Journal, Halliburton said its lawyers discovered notes written between 1993 and 1998 that suggest consortium executives discussed bribing Nigerian officials to ensure TSKJ won the plant contract. Questions have arisen about whether TSKJ created a $140 million slush fund funneled through Tesler, a British lawyer, the newspaper said. Tesler declined to discuss his role, and through his lawyer denied any wrongdoing, it said."
In 1985, Brown & Root settled out of court for $750 million for its mismanagement of the South Texas Nuclear Project (Hoover's Handbook of American Business 1993, p. 311).
"I n November 2001 Brown & Root won a $100 million order from the Philippines to convert the former ship repair facilities of the U.S. Navy in Subic Bay into a modern commercial port facility" (Cheney's Former Company Wins Afghanistan War Contracts, by Pratap Chatterjee, CorpWatch, May 2, 2002).
"In September 2001, the company signed on to a $283 million project for Russia's Defense Threat Reduction Agency to eliminate liquid-fueled ICBMs missiles and their silos" (Cheney's Former Company Wins Afghanistan War Contracts, by Pratap Chatterjee, CorpWatch, May 2, 2002).
"Brown & Root is no stranger to the business of war. From 1962 to 1972 the Pentagon paid the company tens of millions of dollars to go to South Vietnam, where they built roads, landing strips, harbors, and military bases from the demilitarized zone to the Mekong delta" (Cheney's Former Company Wins Afghanistan War Contracts, by Pratap Chatterjee, CorpWatch, May 2, 2002).
Halliburton Deals Recall Vietnam-Era Controversy, National Public Radio, All Things Considered, Dec 24, 2003.
The World According to Halliburton from Mother Jones.
Doing Business With The Enemy. CBS 60 Minutes, Jan. 25, 2004.
Stop Halliburton's War Profiteering in Iraq! from Global Exchange.
Halliburton profile from Disinfopedia
Windfalls of War from Center for Public Integrity.
Yahoo links on Halliburton
Cheney Led Halliburton to Feast at Federal Trough from Center for Public Integrity (Aug 2000)
Briody, Dan. The Halliburton Agenda : The Politics of Oil and Money. Wiley, 2004.
Rodengen, Jeffrey L. Legend of Halliburton. Write Stuff Syndicate, 1996.
Root, Jonathan. Halliburton, The Magnificent Myth: A Biography. Coward-McCann, 1965.
Tappan, Sheryl Elam. Shock and Awe in Fort Worth. Pourquoi Press, 2004.
CorpWatch, Houston, We Still Have A Problem: An Alternative Annual Report on Halliburton, May 2005. Discusses military contracts, oil & gas contracts, ongoing investigations against Halliburton, and corporate welfare & political connections.