|Double trouble for Halliburton
By William Fisher
YORK - The Halliburton corporation, already the
Iraq war's poster child for "waste, fraud and
abuse", has been hit with a new double whammy. A
report from the US State Department accuses the
company of "poor performance" in its US$1.2
billion contract to repair Iraq's vital southern
And a powerful California
congressman is charging that Defense Department
audits showing additional overcharges totaling
$212 million were concealed from United Nations
monitors by the administration of President George
The new overcharges bring to $2
billion, or 42% of the contract amounts, the grand
total of questionable bills from Halliburton.
According to Representative Henry Waxman,
the top Democrat on the House of Representatives
sub-committee on government reform, "both the
amount of Halliburton's overcharges and the extent
of the information withheld from the auditors at
the UN's International Advisory and Monitoring
Board [IAMB] were much greater than previously
Waxman said the Defense Contract
Audit Agency, which monitors all Pentagon
contracts, had identified Halliburton overcharges
and questionable costs totaling $212.3 million -
double the total amount of known overcharges under
Halliburton's Iraq oil contract.
case, Waxman said, the overcharges exceeded 47% of
the total value of the task order.
Defense Department - at Halliburton's request -
withheld the new amount from IAMB, the UN audit
oversight body for the Development Fund for Iraq,
In letters to government
auditors, Halliburton subsidiary Kellogg, Brown
& Root (KBR) explained that it redacted
statements it considered proprietary or "factually
inaccurate or misleading" and gave consent for the
release of the audits to international auditors
"in redacted form". The administration then sent
the heavily edited report to the IAMB.
"The withholding of this information is
highly unusual and raises serious issues," Waxman
complained in a letter to sub-committee chairman
Christopher Shays. "The evidence suggests that the
US used Iraqi oil proceeds to overpay Halliburton
and then sought to hide the evidence of these
overcharges from the international auditors."
Waxman also renewed his request that the
sub-committee hold hearings on the
administration's "mismanagement of the Development
Fund for Iraq". Previously, Waxman disclosed that
Defense Department auditors found $108 million in
fuel-related overcharges by Halliburton for work
in Iraq under one of several Halliburton task
orders for the importation of fuel into Iraq.
He also alleged that although Halliburton
was paid in significant part from Iraqi oil
proceeds in the Development Fund for Iraq, the
administration - acting at Halliburton's request -
concealed these overcharges from the international
auditors charged by the UN with monitoring the
expenditures from the fund.
In these new
audit reports, he said, "extensive additional
information has been withheld by the
administration from the IAMB. A review of these
audits shows that references to overcharges and
other questioned costs were blacked out over 450
times in the versions of audits sent to the IAMB."
Rick Blum of the advocacy group
OpenTheGovernment.org told Inter Press Service
(IPS), "Once again, the secrecy system fails us.
They wouldn't have done it if they thought anyone
cared or would find out. If the public had known
about this earlier, we could stop it, better
protect our troops, and better use our taxpayer
dollars to make our families safer," he said.
"This should be a wake-up call to ensure more
openness to strengthen our national defense."
And Scott H Amey, general counsel of the
Project on Government Oversight, a non-partisan
government watchdog, told IPS, "If a taxpayer was
able to support only 63% of their tax return, he
or she would be brought to justice. In the case of
Halliburton, however, the government continues to
let it slide."
The State Department's
report focused on KBR, the Halliburton subsidiary
contracted to repair Iraq's southern oilfields.
The report does not provide details about what it
calls "poor performance and excess spending", but
it says the American Embassy had issued a "Cure
Notice", a threat to terminate the contract unless
KBR replaced some senior managers. It says the
government remained dissatisfied.
consequence, one of KBR's competitors, Parsons
Corp, has been asked "to execute some of the
remaining work" in the south originally meant for
KBR has previously been criticized
for excess spending in its multibillion-dollar
contract to provide logistical support for the
military and in an earlier $2.2 billion contract
for oil repairs and fuel imports that was granted
secretly as the Iraq invasion began. KBR won the
contract to work on northern oilfields.
The embassy has reallocated an additional
$832 million in planned spending away from huge
projects managed by US companies toward smaller
repairs using local businesses and the training of
Iraqis to maintain power and water systems.
Halliburton has attributed its slow
progress to attacks by insurgents, and years of
neglect and lack of investment in the country's
oil facilities. The State Department report says
Iraq's oil output of 2.1 million barrels a day in
February was lower than it was last autumn.
Halliburton - of which Vice President Dick
Cheney was formerly chief executive officer - is
the largest single contractor in Iraq. The
Pentagon has already awarded the company contracts
worth up to $18 billion for its work in the
country. Many of them were no-bid contracts that
drew widespread criticism on Capitol Hill and in
The company says it performed
well under difficult circumstances in the
aftermath of the invasion of Iraq and that cost
disputes "are part of the normal contracting
process". But former Halliburton employees have
alleged intentional and systemic waste.
Lower-than-expected oil exports are
exacerbating the Iraqi government's budget
deficit, which the report estimates could reach $5
billion this year. A quarterly update on Iraqi
reconstruction was delivered to US Congress last
A former Halliburton employee, Marie
deYoung, audited accounts for KBR. She claims
there was no effort to hold down costs because all
costs were passed on directly to taxpayers. She
repeatedly complained to superiors of waste and
fraud. The company's response, according to
deYoung, was: "We can be as dumb and stupid as we
want in the first year of a war, nobody's going to
The former US Army chaplain
produced documents detailing alleged waste even on
routine services: $50,000 a month for soft drinks,
at $45 a case; $1 million a month to clean clothes
- or $100 for each 15-pound (seven-kilogram) bag
of laundry. "That money could have been used to
take care of soldiers," she said.
former employee, Mike West, says he was paid
$82,000 a year to be a labor foreman in Iraq, but
never had any laborers to supervise. "They said
just log 12 hours a day and walk around and look
busy," he said.
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