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Today's
Stories
July
14, 2005
Jeffrey
St. Clair
Sticky Fingers: the Making of Halliburton
July
13, 2005
Brian
Cloughley
Cold Blooded Murders in Iraq
George
Galloway
We Can't Separate the London Bombings
from the Political Backdrop
Carlos
Fierro
A Supreme Waste of Time
Sarah
Knopp
Hate on the Border
Norman
Solomon
"Isolated Pockets of Problems": the Fake Optimism of
Washington's Warriors
Mickey
Z.
Water on the Brain
Jim
Minick
The Right Tree in the Right Place
Pat
Williams
American Indian Education for All
Andrew
N. Rubin
Life Behind the Wall: "We are
No Longer Able to See the Sun Set"
Website
of the Day
"London's Burning": the Mikey Mix
July
12, 2005
Laith
al-Saud
Voices of Resistance: an Interview with
Dr. Mohammed al-Obaidi of Iraq's Peoples' Struggle Movement
Kara
N. Tina
"This is How We Do It": Report
from the Gleneagles Battlefield
William
A. Cook
The London Bombings: Why Has It Come to This?
Jack
Bratich
2 Live Cruise: Tom Cruise v. Big Pharma
Amina
Mire
The Problem with Speaking in the Name of Others
Dick
J. Reavis
Lessons from the Christian Jihadists:
the Virtues of Burning Crosses and Colored Smoke
Kevin
Zeese
Depleted Uranium: States Take Action to Protect Their Vets
Paul
Craig Roberts
No-Think Nation
Website
of the Day
Coke Gags Indian Artist
July
9 / 11, 2005
Alexander
Cockburn
After the Bombings
Uri
Avnery
War of the Colors in Israel
Sheldon
Rampton
Blaming Galloway: Rhetoric vs. Reality
in London
Bill
Christison
Hiroshima's 60th Anniversary and Nukes in Iran: an Opportunity
or Just More Hand-wringing from the Peace Movement?
Robert
Fisk
Blair's Alliance with Bush Bombed
Stephen
Winspear
Collateral Damage in London?
Saul
Landau
Mission Accomplished: Iraq is Broken
Behrooz
Ghamari
Thomas Friedman's Muslim Problem
Karl
Beitel
False Promises and Real Debt Relief
Brian
Concannon, Jr.
Throwing Gasoline on Haiti's Fires
Fred
Gardner
Sentencing Season
John
Whitlow
And What Does the Market Say?
Niranjan
Ramakrishnan
The London Blasts: Who's Being Transformed, Them or Us?
Lila
Rajiva
Witches and Bastards
Laura
Carlsen
CAFTA: Deepening the Inequities
Jackie
Corr
Ted Turner and Jiminy Cricket
Dave
Lindorff
"My Brother Went Over There Gung Ho; Now He's Just Bitter"
N.
D. Jayaprakash
Why the CIA Tried to Kill Chou En Lai at the Bandung Conference
Seth
Sandronsky
Meet the "Truth Tour": Rightwing Radio Hosts Go to
Iraq
Norman
Madarasz
The Choking of Brazil's Worker Party
Ben
Tripp
The Inevitability of George W. Bush
Poets'
Basement
Louise, Albert, Landau, Davies and Engel
Website
of the Weekend
The Mother of All Enemies Lists
July
8, 2005
Paul
Craig Roberts
Blowback Hits Britain: Londoners
Pay Heavy Price for Blair's Deception
Tariq
Ali
The London Bombings: Why They Happened
Monica
Benderman
One Soldier's Fight to Legalize Morality
Rick
Jahnkow
Beyond Opt-Out: the Counter-Recruitment Movement
Christopher
Brauchli
Dear Vet: If You Want to Eat While You Recuperate, You Gotta
Pay Extra
Kim
Peterson
Bombs in the Underground: Terror Begats Terror
Joshua
Frank
Leakers and Liars: Inching Toward Indictments?
Norman
Solomon
Messages from the Carnage
Website
of the Day
An Interview with Ray McGovern
July
7, 2005
Cockburn
/ St. Clair
Judy Miller: the Luckiest Martyr
John
Walsh
More Hawkish Than Bush: Dems in Full
Battle Cry
Mike
Marqusee
Message from London
Gilad
Atzmon
London's Burning
Nicole
Colson
Showdown at the Supreme Court
Jack
Random
Judith Miller, Anti-Hero
Norman
Solomon
Judith Miller, Drum Majorette for
War
Len
Colodny
Is Bob Woodward Still Protecting Al Haig?
Cockburn
/ St. Clair
Judy Miller: the Luckiest Martyr
July
6, 2005
Elaine
Cassel
Political Necrophilia in Florida:
Jeb Bush and Terri Schiavo, a Strange Affair
Sean
Donahue
Why the G8 Debt Relief Plan Won't
Help Nicaragua's Poor
Jeremy
R. Hammond
State Sponsors of Terrorism, Applying the US Standard
Joshua
Frank
Will Rove be Indicted?
Ali
Khan
The "Gift" of US Democratization
Michael
Dickinson
Billy Graham's Final Crusade: Blessed are the Warmakers
Norman
Solomon
How to Plunge Deeper into a Quagmire: Withdrawal and US Credibility
Dave
Zirin
Triumph of the Shrill: Tony Blair's Olympiad
Gary
Leupp
Accusing Ahmadinejad
Website
of the Day
Humiliation in Baghdad: "Not Something We Would Do"
July
5, 2005
Behrooz
Ghamari
What's the Matter with Iran?: How
the Reformists Lost the Presidency
Elaine
Cassel
Why This Progressive Will Miss Sandra
Day O'Connor
Ron
Jacobs
Robert and Mabel Williams's Great Fight for Justice
Bob
Libal
The Right's Assault on Academia
Dr.
Peter Rost
Mea Culpa from a Big Pharma CEO
Mark
Engler
The Big Debt Deal: Where's the Jubilee?
Gideon
Levy
They Broke the Public's Heart
Dave
Zirin
The Great Olympics Scam
Sameer
Dossani
The Trouble with Gleneagles
July
2 / 4, 2005
Alexander
Cockburn
"Bomb Teheran!" Urges
Jilted Condi?
Lenni
Brenner
Jefferson, God and the Fourth of
July
Laura
Carlsen
Zapatista's Red Alert
James
Petras
The Pretensions of Neoliberalism: Six Myths About the Benefits
of Foreign Investment
William
A. Cook
Kings of Serpents
Brian
Cloughley
Quagmire of the Vanities
Saul
Landau
The Mass Media, Symbols and Ownership
Tom
Crumpacker
Who Has What to Hide About Luis Posada Carriles?
Greg
Moses
Dylan's America
Dr.
Susan Block
My Adelphia Story: a Tale of Censorship, Fraud, Christian Family
Values and Really Lousy Cable Service
Fran
Shor
Disassembling Bush's Iraq War: Liberated into a No Man's Land
Fred
Gardner
Study: Smoking Marijuana Does Not Cause Lung Cancer
Moshe
Adler
The New London Case: Corporate Giveaways That Destroy Communities,
But Don't Create Jobs
David
Model
The Downing Street Memo: So What's New?
Seth
Sandronsky
California Spying, Schwarzenegger-Style
Ramzy
Baroud
Managed Democracy in the Middle East
Suzan
Mazur
Frank Carlucci the First: the "Sublime Prince" of Scranton
Ben
Tripp
Voltaire, I Can Dig Your Rap
Justin
Taylor
Faux Biography and the Pleasures of "Lint"
Brendan
Bailey
Mesh Caps, Vice Magazine and the Trouble with Irony
Poets'
Basement
Albert, Engel and Louise
Website
of the Weekend
Radical Reference
July
1, 2005
Christopher
Brauchli
With Friends Like These: Bush Buddies
Karimov and Musharraf
Pat
Williams
What
Real Westerners Think About Bush's Pseudo-Cowboy Palaver
Gary
Leupp
Summer Surprise?
John
Stauber
Mad Cow in America: the USDA Continues to Lie
John
Chuckman
The Blessings of Canada
Justicia
y Paz
Colombia's Disappeared: Their Names,
At Least!
Cockburn
/ St. Clair
It's Put Up or Shut Up for Bush and the Dems on the Supreme Court
June
30, 2005
Kathy
Kelly
An Open Letter to Carl Levin: Compassion
for Iraqis
John
Stauber
Oprah Not the "Only" Mad
Cow in America
Virginia
Rodino
All Roads Lead to Baghdad: Unity in the Anti-War Movement
Jason
Leopold
Meet the New Chair of the FERC: James Kelliher, the Man Who Invited
Enron to Write Bush's Energy Policy
Dave
Lindorff
What Was Bush Thinking?
Greg
Moses
Racism at Cape Cod
Norman
Solomon
Memo to the Iraq War
Joshua
Frank
Israel's Theocrats
Alexander
Cockburn
The Political Function of PBS
June
29, 2005
Mike
Schaefer
How the Washington Post Lied About
Its Own War Poll
Roger
Burbach / Paul Cantor
Bush's Big Democratic Hoax in Iraq
Sharon
Smith
Democrats Shift into Reverse
Sam
Husseini
A Quick Way to End the Insurgency
John
Stauber
Put a Photo of Mad Cow #2 on a Milk Carton
Ahmad
Faruqui
Is Militarism Irreversible in Pakistan?
Linda
S. Heard
Bush's Speech: the View from Cairo
Stew
Albert
Chet Helms: a Rock and Roll Hero
Ray
McGovern
Bush at Ft. Bragg: Stay the Crooked
Course
June
28, 2005
Paul
Craig Roberts
A Defeat Bred in Deceit
Landau
/ Hassen
Bush's Meddling in Internal Syrian
Politics
John
A. Murphy
Keeping Nader Off the Ballot: an Analysis of Political Profiling
in Pennsylvania
Mike
Whitney
More Lies from Rumsfeld: Those "Meetings"
with Insurgents
CounterPunch
News Service
JFK on Staying in Vietnam: Is Bush Reading
from Kennedy's Playbook?
Dave
Zirin
Pining for the Pistons
Dave
Lindorff
Showtime in Washington
Patrick
Cockburn
Iraq: a Bloody Mess
June
27, 2005
Paul
Craig Roberts
Blood Sacrifices for Empty Slogans
Mike
Marqusee
G8: Who are the Hijackers?
Mark
Scaramella
When a Corporate Raider Claims
Economic Hardship: the Court-Approved Lies of Charles Hurwitz
Leigh
Saavedra
Press Apologists for Torture
Kathy
Kelly
Where is the UN?
June
25 / 26, 2005
Alexander
Cockburn
The Supreme Court's Jackboot
Liberals
Jennifer
Van Bergen
America's Parallel Legal Systems
George
Corsetti
This Land is Their Land: Condemnation
for Corporations
Mark
Chmiel / Andrew Wimmer
Let's Open the Gulag: a People's Mission
to Gitmo
Kevin
Zeese
Counter-Recruitment: How to Keep
the Military From Getting their Hands on Your Kids
P.
Sainath
Russian Roulette in Vidharbha
John
Stauber
How to Bury a Mad Cow
Scott
Handleman
Gay in the Third World
Tom
Barry
The Politics & Ideologies of
the Anti-Immigrationists
John
Walsh
Looking for Peace in All the Wrong
Places
Justin
E.H. Smith
The Hairless Apes of Kansas vs.
the Reality-Based Community: Why Progressives Have a Stake in
the War on Evolution
Alan
Wallis
The Story of Pinky: the Drug Trade
in My Neighborhood
Ben
Tripp
Negative Space: an Artful Lesson
Frederick
B. Hudson
Songs to Lose Your Loneliness By:
the Raised Voices of Sweet Honey in the Rock
Poets'
Basement
Gaffney, Engel, Davies, and Albert
June
24, 2005
Ray
McGovern
The Downing St. Fixation: Fixing
to Fix "Fixed"
Jorge
Mariscal
"They Only Call Us Americans
When They Need Us for War": the Paradox of Mexican Americans
in Iraq
Desiree
Hellegers
Portland vs. the FBI
Zeynep
Toufe
What Do the American People Know and
When Did They Know It?
Joshua
Frank
Call Him Senator Con Job
David
Lindorff
Which Flag Would Jesus Burn?
Michael
Neumann
Victory and Recruitment
Website
of the Day
Gagging
Dr. Dean
June
23, 2005
Christopher
Brauchli
Thomas Griffith and Rule 49:
He Practiced Law Without a License; Now He's a Federal Appeals
Court Judge
Clay
Conrad
Killing Off the Jury with Tort Reform
Standard
Schaefer
A Retort to Military Neo-Liberalism
P.
Sainath
Vidharbha: No rains and 116F, But
It Does Have "Snow" and Water Parks
Mark
Engler
CAFTA Deserves a Quiet Death
Norman
Solomon
Voluntary Amnesia in America
Cockburn
/ St. Clair
Frank Calzon
Kathy
Kelly
Where You Stand Determines What You
See
June
22, 2005
Kevin
Zeese
The Bush Administration's Psy-Ops on
the American Public: an Interview with Col. Sam Gardiner
William
S. Lind
Afghanistan: the Other War
Arsalan
Iftikhar
Patriots Against the PATRIOT Act
Dan
Nagengast
Give Populism a Chance: From
France to Kansas
David
Krieger
To the Graduates: We Live in an Interdependent
World
Kathleen
& Bill Christison
Tempest in Santa Fe: Confronting
Israeli Myth-making
June 21, 2005
Brian Cloughley
Destroy
the Unbelievers!
Mike Whitney
President
Disconnect
Dave Lindorff
Who Needs Big Bird, Anyway?
Mark Weisbrot
Bush's Lonely Campaign Against Hugo Chavez
Matthew R.
Simmons
The Coming Saudi Oil Crisis
Dave Zirin
The Crass Slipper Fits: Ron Howard's Terrible "Cinderella
Man"
Virginia Rodino
The Anti-War Movement and Impeachment
Paul Craig
Roberts
A
War Waged by Liars and Morons
June 20, 2005
Alan Maass
The
GM Job Massacre
Tariq Ali
To
the Gates of the Gleneagles Hotel!
Mickey Z.
WMDs American-Style: It's 60 Years Since Alamogordo
William Blum
Some Things You Need to Know Before the World Ends
Gary Leupp
Old News Indeed: In 1999, Bush Craved Chance to Attack Iraq
Jason Leopold
Someone Tell Bush Iraq Wasn't Behind 9/11, Before He Starts Another
War
Dave Lindorff
Why the Media Should be Schiavo'd
Alan Maass
The
GM Job Massacre
Uri Avnery
Condi and Hamas
Website of
the Day
Crimes Against Poetry
Hot Stories
Alexander Cockburn
Behold,
the Head of a Neo-Con!
Subcomandante
Marcos
The
Death Train of the WTO
Norman Finkelstein
Hitchens
as Model Apostate
Steve Niva
Israel's
Assassination Policy: the Trigger for Suicide Bombings?
Dardagan,
Slobodo and Williams
CounterPunch Exclusive:
20,000 Wounded Iraqi Civilians
Steve
J.B.
Prison Bitch
Sheldon
Rampton and John Stauber
True Lies: the Use of Propaganda
in the Iraq War
Wendell
Berry
Small Destructions Add Up
CounterPunch
Wire
WMD: Who Said What When
Cindy
Corrie
A Mother's Day Talk: the Daughter
I Can't Hear From
Gore Vidal
The
Erosion of the American Dream
Francis Boyle
Impeach
Bush: A Draft Resolution
Click
Here for More Stories.
|
Bastille Day
July 14, 2005
"I no longer see anything
in the State but misery, pride and paper".
Saint-Just
A CounterPunch
Special Report
Sticky Fingers
The Making
of Halliburton
By
JEFFREY ST. CLAIR
There's no more pungent symbol of the
corrupt nature of the Bush administration's invasion and occupation
of Iraq than Halliburton, the Houston, Texas-based oil services
conglomerate, which has made billions from the war even in the
face of charges of massive overbilling, shoddy work, official
bribery and political influence-peddling.
The remarkable thing is that
Halliburton's looting of Iraq and the US treasury happened in
broad daylight, right under the nose of the press, the Democrats
and Michael Moore, who made Dick Cheney's former company the
bete noir of his film "9/11." Nothing deterred the
company from capitalizing on the war it helped orchestrate.
Even the Pentagon's own team
of auditors, who nailed Halliburton red-handed for bilking the
government for $108.4 million in overcharges for only "one
task order" of its work in Iraq, found their report languishing
in a kind of bureaucratic netherland for many months.
The damning investigation by
the Defense Contract Audit Agency was completed in early October
of 2004 and shipped up the line to Pentagon's dark triumverate,
Douglas Feith, Paul Wolfowitz and Donald Rumsfeld. And there
it sat. The Pentagon's civilian leadership mothballed the explosive
report for more than five months, until after the election, the
inauguration, the State of the Union Address and the Defense
Department budget request had all safely transpired.
Even congress was denied a
peak at the report's findings until mid-March 2005. The Pentagon
rejected 12 separate requests from Congressman Henry Waxman,
the California Democrat who has spearheaded the ad hoc congressional
inquiry into Halliburton's contract abuse, seeking to examine
the internal audits of Halliburton's $2.5 billion contract for
fuel supplies and other services to the US military and occupation
government in Iraq.
Waxman charged that the Pentagon
withheld the damaging reports at the behest of the office of
Vice President Dick Cheney, the former CEO of Halliburton.
The Halliburton audits were
also concealed from a team of investigators from the United Nations,
which is probing profiteering from oil contracts in Iraq. More
than $1.5 billion of Halliburton's $2.5 billion deal was funded
by Iraqi oil sales overseen by the UN.
"The evidence suggests
that the Pentagon used Iraqi oil proceeds to overpay Halliburton,"
says Waxman. "And then the company and the Pentagon sought
to hide the evidence of these overchages from the international
auditors."
Call it the Oil-for-Contracts
scandal. But you didn't hear daily drumbeats about the outrageous
rip-off on FoxNews.
When someone finally leaked
the audit to Waxman's office, the documents disclosed a thick
wad of Halliburton billings that the Pentagon bookkeepers deemed
"illogical."
The most peculiar billing found
in this limited series of transactions was a $27.5 million charge
for shipping cooking gas and heating fuel that the Pentagon auditors
valued at $82,000. This single invoice amounted to an overcharge
of more than 335 times the value of the liquified natural gas
delivered by Halliburton's subcontractors.
The auditors examined only
a single task order in Halliburton's scandal-plagued contract
with the Army Corps of Engineers, yet their report lambasted
nearly every aspect of the deal, from the no-bid award to the
cost-plus nature of the contract to the almost total lack of
supervision of the work orders and the subcontractors.
From May 2003 to March 2004,
Halliburton sent the Corps of Engineers bills totalling more
than $875 million for supplies of fuel to US operations in Iraq.
For this task order alone, the Pentagon auditors estimated that
Halliburton overbilled the government by at least $108.4 million.
That's real money, even by Pentagon standards.
But that's only a rough opening
bid for the true scale of the looting, in large part because
the company's indefatigable stonewalling. The auditor's report
accuses Halliburton of misleading the government inspectors at
nearly every turn. For example, the auditors allege that Halliburton
simply refused to hand over any information on its subcontractors
in Kuwait. "Halliburton failed to demonstrate its prices
for Kuwait fuel were 'fair and reasonable'", the auditors
wrote in their report.
Similarly, Halliburton kept
the Pentagon investigators in the dark about the prices it paid
for purchasing fuel from Turkey and Jordan.
The Defense Contract Audit
Agency report comes on top of previous investigations tagging
Halliburton, and its Kellogg, Brown and Root subsidiary, for
more than $442 million in "unsupported" billings for
its work in Iraq, including charges for meals that were never
served, $45 cases of pop, unnecessary heavy equipment, tailoring
fees and $152,000 for movie screenings. In all a report prepared
by the Democratic Policy Committee estimates that Halliburton's
overcharges in Iraq alone exceed $1 billion.
Okay, the Pentagon learned
a billion-dollar lesson the hard way, right? Wrong. In July,
the Pentagon discreetly let slip that it had awarded Halliburton
a fat new contract for yet more logistics work in Iraq. How fat?
Try $5 billion. In fact, the contract was secretly handed to
Halliburton in May, but the Pentagon kept it underwraps for more
than a month. Why? "The Army didn't consider it necessary"
to reveal the terms of the deal, a Pentagon spokesman explained
to Reuters.
In the ever-expanding universe
of Pentagon contracting, cost is never the problem, public exposure
is.
* *
*
Halliburton, the signature
corporation of the Bush-Cheney onslaught on Iraq, didn't start
its corporate life on the government dole. In fact, the company
patriarch, Erle P. "Red" Halliburton, despised the
federal government. His distaste for Uncle Sam was matched only
by his ferocious hatred of Mexicans, blacks and labor unionists.
In 1919, Red Halliburton started
the New Method Oil Well Cementing Company from his home in Wilson,
Oklahoma, a hardscrabble town in the oil patch. Halliburton's
big innovation was something called the Cement Jet Mixer. When
the oil boom hit Texas, the wildcatters and other drillers quickly
began experiencing problems with their deep shafts. The steel
pipe funneling the oil up from the Permian basin and other reservoirs
of crude would sooner or later develop cracks, allowing groundwater
to contaminate the crude. In some cases, the pipes would even
explode.
Halliburton's solution, which
he unveiled in the oil town of Burkburnett, Texas, was to seal
the well-pipes in a sheath of concrete, protecting the pipes
from corrosion and precious loads of crude from contamination.
He was soon in demand across the oil fields of Texas and Oklahoma.
Erle changed the name of the company to Halliburton and raked
in millions from his patent. Halliburton continues to garner
millions from its drilling technology, from Saudi Arabia to the
Amazonian rainforest.
Meanwhile, in that same crucial
year of 1919, the other half of Halliburton was also beginning
to take shape as two friends from San Marcos, Texas, Herman Brown
and Dan Root, formed a road paving company that would eventually
become one of the world's largest construction firms. The Brown
& Root Company shared Halliburton's antipathy toward organized
labor, but realized early on that there was a fortune to be made
through outsourced government work.
Brown & Root also understood
that government contracts are a lot easier to get if you have
a politician on retainer.
* *
*
In the late winter of 1937,
the imperious Texas Congressman James P. "Bucky" Buchanan,
chairman of the House Appropriations Committee, suddenly died
in office. Buchanan departed the living with some unfinished
business of extreme importance to his political cronies. The
congressman, who controlled the federal purse, was in the midst
of pushing through congress the Lower Colorado River Project,
a scheme to build a network of dams across the Texas hill country
that would bring water to the people and millions in federal
funds to favored contractors. The centerpiece of this enterprise
was the Marshall Ford Dam outside Austin and the company that
had won the contract to build the dam was none other than Brown
& Root.
The $10 million dam deal was
the biggest Brown & Root contract to date. But there were
two problems left by Buchanan's ill-timed passing: the money
for the dam hadn't yet been approved by congress and the land
at the dam-site wasn't owned by the federal government. What
had suddenly looked like a sure thing, now found Brown &
Root on the unnerving verge of bankruptcy. The company had gone
into debt by more than $1.5 million in order to purchase the
equipment needed to build the dam.
Brown & Root decided there
was no turning back. They began construction on the dam before
getting any federal funds and before the feds had actually acquired
the land from the state of Texas.
But the company had an ace
in the hole in the shape of Lyndon Baines Johnson, the lumbering
former schoolteacher who was vying to replace the departed Buchanan.
In the spring of that year, young LBJ met several times with
Herman Brown, vowing to make congressional approval of the dam
project his top priority. Brown sluiced cash into LBJ's campaign
and he sailed to victory in a special election on May 13, 1937.
LBJ lived up to his obligations. A little more than a week after
having arrived in DC, the freshly hatched congressman had engineered
congressional approval for both the appropriation and the land
purchase.
The Marshall Ford Dam deal
launched LBJ's career a can-do politician without parallel in
American politics and it set Brown & Root on course to become
one of the federal government's favorite contractors. The apex
political fixer Thomas "Tommy the Cork" Corcoran later
observed that "LBJ's whole world was built on that dam".
So too was Brown & Root's.
LBJ had the good fortune to
land on the congressional committee overseeing the operations
of the US Navy as it prepared for World War II. When LBJ's fortunes
rose on the Hill, so did Brown & Root's. As a brawny member
of the Naval Affair Committee, the ambitious congressman, a key
southern supporter of FDR's New Deal and therefore confident
of the backing of the White House for almost any pet project,
steered as many big contracts to his political financiers as
possible.
It was courtesy of LBJ, and
his privileged position in the congress, that Brown & Root
got into the Pentagon contracting business in a big way. In 1940,
the former road paving firm won a huge contract to build the
Corpus Christi Naval Air Station, a complex of runways, hangars,
barracks and command centers  sprawling across 2,000 acres
of swamp and scrubland on the gulf coast of Texas. It was a model
for things to come.
The Corpus Christi Naval Air
Station was one of the first "cost-plus" contracts,
a sweet deal where the government simply pays every bill the
contractor submits. The initial price-tag was pegged at $23.5
million, with Brown & Root guaranteed a profit of $1.2 million.
But within a year, the cost had soared to more than $45 million,
with Brown & Root pocketing more than $2.4 million in profits.
It was an early lesson in the demented logic of Pentagon contracting:
the bigger the cost-overruns, the juicier the profits. In the
end, the Naval Air Station cost the Pentagon more than $125 million.
The Corpus Christi deal initiated
Brown & Root into the risk-free fraternity of favored Pentagon
contractors. The company that had prospered through the Great
Depression thanks to federal dam projects was poised to make
a killing from World War II, with most of the deal coming courtesy
of the US Navy and its congressional overlord LBJ and the powerful
congressman from Houston, Albert Thomas. Working together, LBJ
and Thomas convinced the Navy to give Brown & Root a lucrative
shipbuilding contract, even though, as investigative reporter
Robert Bryce notes, up until that point the company "had
never built so much as a canoe."
But over the next five years,
Brown Shipbuilding, a huge operation on the Houston Ship Channel,
would build 355 ships for the Navy, specializing in sub chasers
and escorts for destroyers. The company made a cool $500 million
from the deal.
As the war drew to a close,
Brown & Root went from building ships to melting more than
20,000 surplus airplanes they bought on the cheap from the War
Assets Administration. They were soon one of the big players
in the aluminum business, much of which they sold right back
to the feds, making tens of millions in profits. This neat trick
was followed by a huge cost-plus contract to build the US military
base on Guam in the south Pacific, a deal that started out with
a price tag of $25 million but soon ballooned to more than $250
million.
Never say that Brown &
Root wasn't grateful. They knew that their fortunes rode on the
backs of their political benefactors and they did their best
to keep them happy. Unlike many others in Congress during the
1940s, Johnson wasn't rich. He and Lady Bird fretted about money
during the early years of their marriage. Then, in the mid-1940s,
opportunity came calling when KTBC, Austin's first radio station,
went on the market. Using money from Lady Bird's inheritance
and generous infusions of cash from Brown & Root, the Johnsons
bought the station, made major upgrades in its operations and
squeezed federal broadcast regulators into allowing it to expand
its output and change its location to a more central place on
the dial. Soon the Johnsons were rich. As LBJ said, "Finally,
I was a millionaire".
For Johnson, money was the
route to political power. From his early days running the Texas
branch of FDR's National Youth Administration, LBJ had set his
eyes on landing a seat in the US senate. LBJ got the NYA position,
at the age of 29, through the intervention of Alvin Wirtz, the
lead attorney for Brown & Root and a noted fixer. As for
LBJ, he later said that Wirtz was "like a daddy to me".
Brown & Root harbored similar ambitions for their man. They
owned a few congressmen, but an obedient senator was the key
to a higher order of riches.
* *
*
LBJ's first shot at the senate
came in 1941, after Texas Senator Morris Sheppard keeled over
from a brain hemorrhage. Running as a New Dealer and fueled by
cash from Herman Brown, Johnson embarked on a fabulously corrupt
campaign against the populist governor of Texas, W. Lee "Pass
the Biscuits, Pappy" O'Daniel, a flour magnate and the state's
most popular radio personality. He ran on an anti-union and anti-FDR
platform that appealed to rural Texas voters.
Ballot boxes were bought by
both campaigns. Johnson bought them in San Antonio and southern
Texas, while O'Daniel, called the greatest campaigner in Texas
history, purchased them throughout east Texas. With 97 per cent
of the votes counted, Johnson led the race and seemed assured
of victory. Then more ballots mysteriously materialized, and
O'Daniel claimed victory by 1,311 votes. The final fix may have
been made by a cabal of Texas oil men and ranchers who wanted
O'Daniel out of Austin. They figured he could do them less damage
in Washington.
Johnson vowed to learn the
lessons of his defeat. He shed much of his New Dealer image and
reemerged as a Southern populist, touting his votes against an
anti-lynching bill, against Truman's bill to outlaw the poll
tax, and for the union-busting Taft-Hartley Act. He also courted
cash from every corporation and mogul he could find, promising
to return their investment tenfold.
When he ran again in 1948,
Johnson almost certainly lost the vote, but stole the election,
abetted by Brown & Root, the company's lawyer Alvin Wirtz,
and newspaper tycoon Charles Marsh.
Once again, Johnson faced a
popular and reactionary governor for the Texas senate seat, vacated
when Pappy O'Daniel (grew bored of living in DC. This time his
opponent was Coke Stevenson, rancher, bigot and anti-communist.
In the Democratic primary, Stevenson steamrollered Johnson by
more than 70,000 votes; yet in a crowded field, the governor
didn't top 50 per cent, forcing a run-off election in the fall.
It would become the most expensive political campaign waged in
Texas until George W. Bush, underwritten by the descendents of
LBJ's backers, defeated Anne Richards in the fierce 1994 gubernatorial
campaign.
Stevenson was a wildly popular
figure in Texas, but LBJ had an equalizer: a nearly bottomless
reservoir of campaign money provided by Brown & Root and
Wirtz's client list of oil barons, including H.L. Hunt and Sid
Richardson. LBJ also enjoyed free access to a DC3, courtesy of
Brown & Root, which would rush him across the vast Texan
plains for as many as 10 appearances in a single day.
Fifty-two years later, Halliburton
offered its corporate jets for use by George Bush and his campaign
team during the 2000 campaign and subsequent tumultuous Florida
recount. For those flights, the Bush campaign reimbursed Halliburton
only the cost of one first class ticket.
In 1948 it was also this same
DC-3 that made emergency flights to Austin and Dallas in search
of cash from the accounts of Brown & Root. The money was
delivered in $100 bills stuffed into grocery bags. The bagman
was none other than John Connolly, the future governor of Texas
and Halliburton board member. Each haul would net between $40,000and
$50,000 for the Johnson campaign.
Johnson also prevailed upon
the Bell Helicopter Company, which would soon relocate to Texas,
to loan him a chopper for his campaign. One of the first politicians
to use the newfangled machine, Johnson would descend upon his
campaign venues with the "Yellow Rose of Texas" blaring
from loudspeakers attached to the landing gear a prelude
for the Wagner-screaming choppers in Apocalypse Now.
All of this got LBJ close,
but quite not close enough, to assure him of an outright victory.
The 1948 election needed to be both bought and stolen.
As the polls closed in the
Texas senate race of 1948, the margin was razor thin, with Coke
Stevenson running slightly ahead of LBJ. Over the next few days,
precincts across the vast state counted and recounted their votes.
Five days after the election, an amended return came in from
Jim Wells County in the southern outback of Texas. It seems that
a certain Luis Salas, following the suggestion of a Brown &
Root lawyer, began scouring the courthouse for a missing box
of ballots. He chanced upon the infamous Box 13 from the hamlet
of Alice, Texas, which contained 220 votes, all for Johnson,
which was enough to push LBJ into the lead by 87 votes. (A later
analysis by Johnson biographer Robert Caro showed that 220 names
had been added to the voters' list after the polls had closed.)
Stevenson rushed to the courts
for relief. He won round one. He got a state judge in Texas to
place an injunction against the ballots from Alice. Again, the
race was ultimately decided by the U.S. Supreme Court by the
intervention of a single justice, Hugo Black. Black was a New
Dealer elevated to the high bench by FDR. With time running out,
LBJ's lawyers Abe Fortas (whom LBJ ultimately rewarded by putting
him on the Supreme Court) and Alvin Wirtz, who was also Brown
& Root's lead corporate counsel, arranged a secret meeting
with Black in his chambers at the Supreme Court. At this ex
parte conclave, Wirtz impressed upon Black the importance
of LBJ's election to the senate, saying that many New Deal programs
(he presunmably did not mention the gross topic of Pentagon
contracts) hinged on the outcome.
On September 29, 1948, Black
came through. The justice issued an order overturning the state
judge's injunction and also put the brakes on a parallel investigation
into vote fraud in Jim Wells County. LBJ was pronounced the winner
of the primary by 87 votes and then went on to crush his Republican
opponent in November.
True to form, Johnson never
tried to conceal the role his corporate sponsors played in securing
the 1948 election. Indeed, he bragged about his prowess at securing
powerful and deep-pocketed backers, saying that his rise to the
senate had been "Brown & Root funded."
Once again, it didn't take
LBJ long to pay back his political investors with interest. In
the spring of 1949, only months after claiming his senate seat,
LBJ, the former New Dealer, launched an assault on Leland Olds,
the chairman of the Federal Power Commission. Olds, a former
muckraking reporter, was appointed by FDR to head the commission,
which set power rates and regulated natural gas prices. His
term expired in 1948, and Harry Truman had just announced his
intention to reappoint him to the position, enraging the oil
and gas industry. On Olds' advice, Truman had vetoed a bill that
would have deregulated the natural gas industry.
In addition to Brown &
Root, the Brown family also owned the Texas Eastern Transmission
Corporation, then the nation's biggest natural gas pipeline company.
The Browns were furious at Olds's rulings and pleaded with Johnson
to defeat his renomination. LBJ did more than that. He destroyed
the man in a set of hearings that would lay the groundwork for
the show trials of the McCarthy era.
With the help of his pals Sam
Rayburn and Senator Robert Kerr, Johnson, a freshman senator,
got himself appointed chairman of the committee overseeing the
Federal Power Commission. From this position, he launched into
an onslaught on Olds, smearing the former supporter of Herbert
Hoover as a "communist" who "travels with those
who proposed the Marxian answer." LBJ, who only a few years
earlier had used his political muscle to secure the vast public
hydropower projects on the Little Colorado with the goal of providing
cheap power to the citizens of the Hill Country, now accused
Olds of "plotting a course toward confiscation and public
ownership".
LBJ's ambush of Olds was scripted
by none other than Brown & Root's lawyer, Alvin Wirtz. After
this grilling, Olds was rejected by the senate on a vote of 53-15
and left the government a broken man. Johnson, however, flew
back to Houston the night after his destruction of Olds on a
private jet owned by Brown & Root. A company limousine met
him at the airport and whisked away to the Brown & Root suite
at the Lamar Hotel, where a victory party was in full swing featuring
whiskey, women and the richest oil men in Texas men who
were primed to get a lot richer.
* *
*
As the partnership between
LBJ and Brown & Root propelled both the company and the politician
to new heights of power and wealth, Halliburton was taking a
different track: capitalizing on the globalization of the oil
industry.
During World War II, Halliburton
was called upon to help build the infrastructure for the oil
fields of Saudi Arabia, launching a profitable relationship with
the petro-kingdom that persists to this day. While the US oil
companies were later given the boot by the Saudi royal family,
Halliburton continued to prosper, constructing pipelines, refineries
and oil terminals.
Soon there were other summonses
from the Middle East. In late 1940s, Halliburton began doing
business in Bahrain, followed by an equally lucrative contract
with the royal family of Kuwait to manage that kingdom's oil
fields.
The big prize in the 1950s
was Iran, where Halliburton enjoyed tens of millions in contracts
which were suddenly placed in jeopardy with election of Mohammed
Mossadegh, who had campaigned on a pledge to nationalize Iran's
enormous oil reserves. Needless to say, this prospect didn't
sit well with Halliburton and the consortium of British and American
oil companies exploiting Iran's petroleum wealth.
When Mossadegh moved forward
with his plans, the oil companies appealed to President Eisenhower
to intervene, who turned the matter over to his National Security
Council. As it happened, Halliburton had a man on the inside
to press its case in the person of Dillon Anderson. Anderson
was a partner in the Houston law firm of Baker Botts, the family
firm of James A. Baker, III, which had represented Halliburton
for many years. Soon after Eisenhower's election, Anderson, who
had funneled more than $200,000 into the Eisenhower-Nixon campaign,
was invited to join the administration as a consultant to the
National Security Council.
The NSC, with judicious prodding
from Dillon Anderson, quickly sanctioned a CIA plan, devised
by Kermit Roosevelt, to overthrow Mossadegh. And so it came to
pass. On August 19, 1953, the CIA launched its coup. Mossadegh
was arrested and thrown in to jail and Reza Pahlavi was re-installed
on the Peacock Throne as the Shah of Iran.
In return, the Shah soon signed
over control of Iran's oil resources to a consortium of western
oil companies, lead by Exxon, Mobil and Texaco. Halliburton was
also back in Iran. Over the next 25 years, the company cashed
in on more than $10 billion in contracts with Iran.
As for Dillon Anderson, Ike
soon elevated the Yale-trained lawyer from Texas to the position
of National Security Adviser, where he served until 1957.
* *
*
In 1962, Herman Brown died
and his brother, George, began searching for possible corporate
suitors who might take over the company. In the summer of that
year, George Brown worked out a strange deal with Halliburton,
which was looking to diversify its operations. Halliburton agreed
to acquire Brown & Root for the bargain basement price of
$36.7 million, far below the market value of the company. But
in exchange, Halliburton executives agreed to let Brown and his
colleagues run the new Brown & Root subsidiary as a quasi-independent
arm of Halliburton.
Of course, the acquisition
of Brown & Root had another great advantage for Halliburton.
The fiercely Republican oil services company, which prospered
under Eisenhower, now found many familiar doors in Washington
shuttered under the Kennedy administration.
Brown & Root, though, was
riding higher than ever thanks to its old political fixer, LBJ,
now Kennedy's vice president. At the time of the merger, Brown
& Root had just been handed one of its biggest federal contracts,
the multi-billion dollar deal to build NASA's Manned Space Center
outside Houston-a complex that would later be renamed the Johnson
Space Center.
But the most majestic profits,
as always, were to be made during wartime and LBJ gave them a
big one. During World War II and Korea, Brown & Root made
billions building bases and ships in the US. But Johnson's Vietnam
War forever changed the role of Pentagon contractors, and Halliburton's
Brown & Root subsidiary lead the way.
For the first time, the Pentagon
began to privatize construction and logistics operations during
wartime in the war zone. In 1965, Halliburton formed a consortium
with the Idaho-based firm Morrison-Knudsen to manage big construction
projects for the Pentagon in Vietnam. Over the next five years,
the contracts would fatten to more than $2 billion. They also
followed a familiar contour: the contracts were awarded without
competitive bidding and on a cost-plus basis with a guaranteed
profit built-in.
Soon Halliburton employees
were a common sight across South Vietnam-- digging wells, building
latrines, managing commissaries, excavating harbors and constructing
barracks-- from Da Nang to Cam Rahn Bay.
The biggest project by far
was its $220 million contract to build the mammoth Air Force
Base at Phan Rang, which Halliburton constructed on top of some
the most beautiful Cham temple complexes in Vietnam. Phan Rang,
from which US bombers pounded North Vietnam and later Cambodia,
gained a little notoriety in December 1967, when Bob Hope brought
his Christmas show there featuring a sultry performance by Raquel
Welch that nearly caused a riot on the base.
The cost overruns in Vietnam
quickly swelled and soon caught the attention of auditors with
the General Accounting Office. In 1967, a GAO report on Halliburton's
operations in Vietnam skewered the company for abandoning "normal
management controls" and for wasting millions of dollars.
The GAO disclosed that Halliburton "could not account for
the whereabouts of approximately $120 million worth of materials
which had been shipped from Vietnam to the United States."
The GAO audit should have given
the company a black eye and caused the government to reconsider
the outscourcing of wartime logistics work, but the prophetic
report was buried by the Pentagon and ignored by the press. As
a result, Halliburton flourished. Over the course of the Vietnam
war, Halliburton's annual revenues nearly tripled and it emerged
from the war as the world's second largest construction firm,
trailing only Bechtel.
***
In the fall of 1979, the Iranian
revolution led to the expulsion of Halliburton from the lucrative
sinecure it had enjoyed under the Shah's dictatorship.
Not to worry. Halliburton quickly
moved to replace those revenues with an equally rich stream from
Iran's neighbor and blood enemy, the Baathist republic of Iraq,
now under the grip of Saddam Hussein.
Like many other US companies
that choose to turn a blind eye to the regime's more sanginary
manifestations, Halliburton had been working in Iraq since the
early 1970s, even though the Ford and Carter administrations
had both refused to recognize the socialist government.
In 1973, Halliburton won a
$120 million contract to build Iraq's two mammoth oil terminals
in the Persian Gulf off the coast from Umm Qasr. This contract
was to prove immensely profitable over the next three war-plagued
decades. For one thing, those big terminals, the Mina al-Bakr
and the Khor al-Amaya were inviting targets. With the outbreak
of the prolonged Iran/Iraq, those oil terminals, Iraq's main
source of getting its crude to global markets, were hit time
and time again by Iranian saboteurs. Each time they were bombed,
Halliburton was called in to repair the damage. Then thirty years
after they were constructed, Halliburton was hired by the Pentagon
to take control of the two terminals and get them into working
condition in the earliest days of the US invasion.
Because the offshore terminals
were such easy targets for Iranian gunboats, in 1981 Saddam signed
a $2.5 million contract with Halliburton to build a feeder pipeline
from the terminals out into the Gulf where the crude oil could
be safely sluiced into wary tankers.
Two years later Saddam hired
Halliburton once again. This time the Iraq government contracted
with the Houston firm to build a long oil pipeline, that would
skirt Iranian bombs, running from Basra to Yanbu on the Red Sea
in Saudi Arabia. The deal was worth $2 billion. The pipeline
won the approval of the US Undersecretary of State Lawrence Eagleburger,
who would later land a spot on the Halliburton board.
Halliburton would continue
to work on a variety of projects in Iraq right up until the first
Gulf War. Indeed, a few weeks before Saddam sent his tanks into
Kuwait, the Iraqi government had paid Halliburton $57 million
for its work on the Mina Al-Bakr terminal and a seismographic
project to help the Iraqi Oil Exploration Company enhance its
exploration technology.
* *
*
In 1990, Halliburton was picked
by the Pentagon to put out 300 oil well fires in Kuwait, while
its subsidiary, Kellogg, Brown & Root, grabbed the big contract
to reconstruct the ravaged buildings of Kuwait City.
In 1992, Halliburton won a
$3.9 million contract from the Pentagon in the waning days of
the George H.W. Bush administration to a develop a scheme for
outsourcing to private corporations much of the logistics and
construction work previously handled by the US Army Corps of
Engineers. The plan came to be known as LOGCAP and Halliburton
soon got an additional $5 million to flesh out the details.
The LOGCAP deal was sanctioned
by none other than Secretary of Defense Dick Cheney. Under the
initial contract, Halliburton established a plan for housing
and feeding 20,000 troops in various hot spots around the globe.
In a scenario that would be reprised in the Iraq war, Halliburton
soon won the contract to implement the LOGCAP plan that it had
devised. First stop Somalia, where Halliburton set up shop providing
fuel, food, laundry services and even morticians for US troops.
Then in 1995, at the same time
Cheney was taking over the reins at Halliburton, the Pentagon
handed the company a $550 million contract to provide logistical
support for US and NATO's IFOR forces in Bosnia, Croatia and
Hungry. Halliburton won another $6.3 million contract to service
US troops stationed at the air base in Aviano, Italy, from which
US jets launched bombing raids on Yugoslavia.
The contract was another of
the notorious cost-plus deals, where Halliburton simply faxed
over receipts to the Pentagon and got fully reimbursed, along
with a guaranteed 1 percent profit and performance bonuses that
went as high as 8 percent of the total costs. It's the contract
that keeps on giving.
While Defense Secretary, Cheney
defended this kind of military outsourcing as an efficient way
to control spiraling costs. In reality, of course, the privatization
of military logistics operations was neither cost-conscious nor
particularly efficient. But it was politically expedient since
it allowed civilian officials in the Pentagon to steer billions
into the coffers of favored contractors, such as Halliburton,
Lockheed and DynCorp. Far from being the path toward a leaner
military, the General Accounting Office pegged the LOGCAP program
as an adventure in "high risk government spending."
In 1997, the renewal of the
LOGCAP contract was finally put up for competitive bid and, lo
and behold, DynCorp snatched the golden egg of Pentagon contracts
away from Halliburton. But even the Clinton administration showed
mercy to the Republican firm. It cushioned the blow by awarding
Halliburton a $405 million no bid deal to provide support for
US troops in Bosnia. Two years later, Halliburton won the 5-year
renewal of this deal, valued at $180 million.
Then in 1999 Halliburton struck
gold once again in the Balkans when Clinton went to war against
Serbia over Kosovo. Halliburton got a $200 million cost/plus
contract to work in Kosovo. But before the year had ended that
contract, covering everything from road construction, vehicle
maintenance and power generation to food services, latrines and
mail delivery, had generated nearly a billion dollars in revenues
for Halliburton.
Of course, the deal had sublime
benefits for the Clinton administration as well. By outsourcing
most of the logistics work in Kosovo, the Pentagon was able to
reduce its deployment by around 8,000 troops, helping Clinton
and Albright to sell an unpopular war at home.
The company's Kosovo operations
were rife with fraud. Halliburton charged the US Army $85.98
for each sheet of plywood it used in construction projects during
Clinton's war on Serbia and its aftermath. A later probe found
that the company had bought the plywood for $14 per sheet. A
GAO investigation also revealed that Halliburton was billing
the Pentagon for cleaning offices in US bases the Balkans four
times a day. One former Halliburton employee said that the company
had inflated costs on 224 different projects in Kosovo.
There were also numerous allegations
of human rights violations by Halliburton workers, including
mounting claims of racial discrimination and sexual harassment
in the Balkans. Halliburton, which employed thousands of foreign-born
subcontractors, even went so far as to operate segregated dining
facilities and "Americans Only" bathrooms.
In Iraq, LOGCAP would be a
recipe for rampant fraud over the basic of services. For example,
Halliburton sent the Pentagon a bill for $240 million in dining
hall charges for feeding 4,700 troops each day. But a review
by Pentagon auditors found that the bill was inflated by nearly
200 percent, since the company never served more than 2,500 soldiers
on any single day.
The Clinton years were very
good to Halliburton right to the final days. In the fall of 2000,
Halliburton won a $300 million contract to build a massive prison
at Guatanamo Bay in Cuba. This prison, which serves as the torture
and interrogation center for Bush's wars, was originally designed
to hold Haitians and, according to some sources, Cubans, in the
event of the collapse of the Castro government. Two years later,
Halliburton would land the contract to build the other big torture
center at Bagram Air Base in Afghanistan.
* *
*
In 1995, Halliburton hired
Dick Cheney as its CEO. Cheney swiftly announced two goals for
the company: make it the top Pentagon contractor and greatly
expand its contractual relationships with foreign governments.
Speaking of Halliburton's logistics work for the Pentagon in
the Balkans, Cheney said, "the first person to greet our
soldiers as they arrive and the last one to wave good-bye is
one our employees." Halliburton: the Alpha and Omega of
Pentagon contractors.
Cheney didn't have much experience
in the corporate world before becoming Halliburton's chieftain
and his tenure there shows it. But Cheney was no mere figurehead.
At least he didn't see himself that way. Almost immediately,
Cheney began poking his fingers into the Halliburton corporate
machine, with, it must be said, less than glamorous results.
Old hands at Halliburton remember Cheney as arrogant and inept,
a clumsy autocrat.
Of course, Cheney did deliver
some morsels for the shareholders. Most notably, Halliburton's
US government contracts bulged from $1.2 billion to $2.3 billion
under Cheney's reign as CEO. Moreover, US government financing
for Halliburton projects in the Third World soared soon after
the Wizard of Wyoming took control of the company, ballooning
from $100 million in the five years prior to Cheney's arrival
to more than $1.5 billion during his time at the helm.
Of course, Cheney didn't wrest
these deals from the feds alone. When Cheney went to Halliburton
he took along some of his old pals at the Pentagon with him,
most notably Admiral Joe Lopez, a top Cheney aid during the Bush
I regime. In 1999, Cheney urged Lopez to leave the Pentagon and
join Halliburton. He rewarded him with the plum position of vice
president for governmental operations-in other words, Halliburton's
top lobbyist.
Another Cheney veteran worked
along side Lopez to keep the government contracts flowing to
Houston. Dave Gribbin, one of Cheney's closest aides, left his
position as Assistant Secretary of Defense for Legislative Affairs
for a slot as one of Halliburton's top lobbyists. He later served
as a key figure on the Bush-Cheney transition team.
Yet, even the most forgiving
analysis of the Yale dropout's leadership of Halliburton must
admit that the Cheney years were marked by a series of staggering
false moves and financial missteps that nearly crippled the company.
Indeed, it's fair to say that the only life-support for the company
during those five years was the nearly inexhaustible tide of
cash coming from Halliburton's Pentagon contracts. Nearly every
other venture racked up huge levels of debt and legal liabilities
Witness Cheney's disastrous
decision to acquire Dresser Industries, another oil services
and engineering company. Cheney pursued a company that no one
else really wanted and to compound his blunder he paid an outrageous
price for it. Halliburton acquired Dresser for $7.7 billion,
which proved to be at least 16 percent more than the company's
actual value. In the end, Dresser's workers paid the price. In
the immediate wake of the Dresser acquisition, Cheney fired 10,000
of the company's employees.
There was an even uglier problem
with the Dresser deal that somehow escaped Cheney's notice. When
Halliburton bought Dresser, it also acquired the company's enormous
asbestos liability, a burden which Cheney assured company stockholders
would be resolved "without material effect." It's the
kind of casual lie covering a metastasizing problem that would
become a Cheney signature as vice president.
At the time of the takeover,
Dresser was facing more than 66,000 claims for asbestos-related
health problems from its subsidiary Harrison-Walker. These claims
eventually totaled something on the order of $5.5 billion, an
amount that threatened to bankrupt Halliburton.
Yet, instead of firing of
Cheney for this calamitous mistake, the Halliburton board, now
ornamented by the rotund figure of former Secretary of State
Lawrence Eagleburger, awarded its chieftain a $1.5 million
bonus for his decisive role in the doomed acquisition.
Cheney also approved a legally
dubious scheme to set up dozens of offshore shell corporations
designed to exploit Enron-style accounting hijinks in order to
make Halliburton's bottom line seem more robust than it really
was. These scams didn't lead to an indictment of Halliburton
executives, but the SEC did ding the company with a $7.5 million
fine for its deviant accounting practices--a slap on the wrist,
to be sure, but a black eye for the moral hypocrite Dick Cheney.
Evidence of the systematic
accounting fraud at Halliburton during the Cheney years has now
been marshaled into a class action suit by Halliburton shareholders
that may even yet doom the company.
But those off-shore subsidiaries
weren't merely a way of hiding money from corporate auditors,
the SEC and the IRS. They were also designed to help Halliburton
evade government prohibitions against US-based companies doing
business with unsavory regimes.
In 1995, the State Department
hit Cheney's Halliburton with a $3.8 million fine for violating
the trade embargo with Libya. A similar investigation by the
Department of Justice was launched in 2004 into Halliburton's
operations in the second-leg of the axis of evil, Iran. Using
a subsidiary corporation set up in Cheney time in the Cayman
Islands, Halliburton had been doing business with the Mullahs
of Iran since 1997, in flagrant violation of the US trade embargo.
In a way then, it's not surprising
that Cheney's official biography, posted on the White House's
website, forsakes all mention of his career as the commander-in-chief
of Halliburton. But Cheney does have the quaint habit of taking
this modesty too far. In 2003, he was asked about his financial
ties to Halliburton. The vice president demurred, as if the very
name of the company was unfamiliar to him. "I have no financial
interests in Halliburton of any kind," Cheney said flatly.
In fact, at that precise moment Cheney enjoyed options on 43,300
shares of Halliburton stock and was pocketing $162,392 a year
in deferred compensation from the company.
* *
*
On February 26, 2003, less
than a month before the invasion of Iraq, a meeting was convened
in the inner sanctum of the Pentagon. The purpose of this conclave
was to devise a project that would come to be known as RIO or
Restore Iraq Oil. Gathered around that table just down the hall
from the office Douglas Feith were ranking officials from the
State Department and the US Agency for International Development
(USAID), as well as the Pentagon. The meeting was chaired by
Lt. General Carl Strock, a ranking official at the US Army Corps
of Engineers.
The top priority on that February
morning was to decide which US company would receive the juicy
contract to put out the expected oil field fires and to rebuild
and manage Iraq's oil infrastructure, from the wellheads to the
pipelines to the big oil terminals off the coast near Basra.
In a way, this meeting in the
bowels of the Pentagon was all for show, a kind of mating ritual
between the government and its favorite contractor. There was
little doubt about who was going to land the deal. So little
doubt, in fact, that a Halliburton executive had been invited
to attend the secret conclave.
Indeed, a few months earlier
Halliburton had already been paid $1.9 million to draft a plan
for how to implement RIO. The company had essentially written
its own job description, a scenario that would make that initial
payment mushroom into the billions.
There were several other companies
that could have done the job that was given to Halliburton. Fluor-Daniel,
Parsons and GSM Services were all were just as qualified for
the task. Yet, none of these firms were invited to submit a bid
or a plan of action. Instead, Lt. General Strock steered the
cost-plus contract into Halliburton's hands without the faintest
whiff of competition. When his own contract auditors objected,
Strock sought to silence them by saying he had determined that
"the compelling emergency" in Iraq dictated swift and
unilateral action.
Of course, this decision had
been set in motion much earlier and by figures far loftier in
the power hierarchy of the Bush administration than lowly Lt.
General Strock from the bureaucratic outback of the Corps of
Engineers.
An Army Corps of Engineers
email, uncovered by Time Magazine, disclosed that the initial
decision to have Halliburton draft the RIO plan had been "coordinated"
with the office of Vice President Dick Cheney. Over the course
of the fall of 2002 and the early winter of 2003, Halliburton
executives met on several occasions with Cheney's staff at the
White House and at the Pentagon.
At an October 2002 meeting,
Michael Mobbs, an assistant to Undersecretary of Defense Douglas
Feith, parlayed with Cheney's chief of staff Lewis "Scooter"
Libby to personally deliver the jubilant news that Halliburton
had gotten the RIO planning contract.
Cheney, as is his natural inclination,
continues to deny any involvement, direct or implicit, in the
Pentagon deals that have sent billions in no bid contracts to
his former company, at the very same time Halliburton continued
to sweeten his bank accounts with more than $140,000 a year.
There was another curious hitch
to the Halliburton RIO deal. Instead of being administered by
Douglas Feith's office at the Pentagon (as were almost all of
the other Iraq contracts), the Halliburton RIO contract was pawned
off on the Corps of Engineers, a remote outpost of the Pentagon
known, to the extent that it is known at all, for the management
of locks and dams on American rivers.
Then an unexpected thing happened.
Despite a lot of baiting from the US military and the most bellicose
voices of in Bush administration, Saddam didn't ignite the Basra
oil fields.
For a moment, it looked as
if Halliburton might be left out in the cold. But no. As if they
were rerouting an river in the Smokey's, the quick-fix generals
at the Corps of Engineers simply reconfigured the terms of the
Halliburton contract, changing it from putting out oil well fires
to hauling fuel for US military operations.
* *
*
When it came time to select
a space for its corporate offices to oversee the new Iraq contracts,
Halliburton decided not to bunker down inside the Green Zone
in Baghdad. Instead, the company opted for posh offices at the
Khalifa resort on the beaches of the Persian Gulf a few miles
from Kuwait City. The spot was sunny, safe and expensive. Halliburton
spent more than $73 million a year just to house its executives
in Kuwait--that's $73 million a year billed to the Pentagon,
plus a two percent profit tacked on for good measure.
It turns out that there wasn't
much for these managers from Houston to manage. That's because
nearly all of Halliburton's work in Iraq was farmed out to subcontractors.
The tricky part was trying to find the right subcontractor. Not
necessarily the company that would do the best job, but the one
that would charge the most for the work, since Halliburton's
built-in profits came as a fixed percentage of the costs. The
higher the costs, the bigger the profits.
Several of the subcontracts
in Iraq were doled out accompanied by the judicious application
of cash bribes. Even here Halliburton benefited. As Halliburton
executives and managers dispensed and received millions in kickbacks,
the company itself simply wrote the dispensations directly onto
the invoices submitted by the subcontractors. Often these bills
exceeded the true costs of the projects by 300 or even 400 percent--with
Halliburton snagging a built-in profit from the bribe-bloated
contracts.
Apparently, Halliburton views
these kickbacks and bribes as a kind of a priori cost of doing
business across the globe. A pungent example: A team of French
investigators unearthed a robust Swiss bank account harboring
$5 million, which reportedly derived from bribes involving Halliburton
contracts in Nigeria. In June 2004, the company eased out Jack
Shanley, chairman of its Kellogg, Brown & Root subsidiary,
for having received "improper benefits" from this very
account.
A Department of Justice investigation
charged that Halliburton bribed the Nigerian officials in order
to win a billion-dollar construction contract. Halliburton later
discreetly disclosed that it may have paid upwards of $180 million
in bribes.
A parallel probe was launched
by the Securities and Exchange Commission into an admission by
Halliburton that one of its managers slipped $2.4 million into
the pockets of another Nigerian official in order to secure illegal
tax-breaks for its business in the impoverished African nation.
* *
*
In southern Iraq, much of Halliburton's
logistics work ended up in the hands of a Kuwaiti firm called
La Nouvelle, which handled meals, sanitation facilities and laundry.
Before La Nouvelle picked up the subcontract to do the laundry
at a US military base near Basra, the monthly cleaning bill had
averaged around $62,000. A few months after La Nouvelle took
over, the tab soared to $1.2 million a month. La Nouvelle billed
$108 for each 15-pound bag of laundry at this base, $80 a bag
more than the very same company charged at another base.
Pentagon auditors concluded
that La Nouvelle was overbilling for its laundry services alone
by at least $1 million a month, with Halliburton enjoying its
slice of the profits without even having had to break a sweat.
They were quite literally laundering money.
While millions were splurged
on opulent accommodations for its executives, bribes and kickbacks
and scandalously inflated laundry bills, Halliburton skimped
on the maintenance of its vehicles, which were transporting fuel
and supplies on the dangerous desert roads from Kuwait to the
US bases in Iraq. Only six months into the occupation of Iraq,
Halliburton's fleets of trucks began to breakdow |
