Pentagon Finds Halliburton Overcharged on Iraq Contracts
By Douglas Jehl
The New York Times

December 11, 2003

WASHINGTON, Dec. 11 — A Pentagon investigation has found evidence of overcharging and other violations in billions of dollars worth of reconstruction contracts for Iraq that were awarded to Vice President Dick Cheney’s former company, military officials said today.
The violations by a Halliburton Company subsidiary, Kellogg, Brown and Root, could involve “potentially tens of millions of dollars” in overcharging for fuel that the company is trucking into Iraq under one of two contracts, said Michael Thibault, deputy director of the Defense Contract Audit Agency. In a draft report, Mr. Thibault said, the agency has recommended that the Army Corps of Engineers seek reimbursement from the company.

A second set of violations, in a second contract with the Army, involve unacceptable delays by the Halliburton subsidiary in providing cost estimates to the government for dozens of separate projects already under way in Iraq, Mr. Thibault said. These violations, for work that includes the construction of food, housing and other facilities for the military, could involve overcharging as well, Mr. Thibault said.

A spokeswoman for Halliburton, Wendy Hall, said in an e-mail message that “it is not the fact that K.B.R. has overcharged.” Ms. Hall said she was confident that responses being prepared by the company would satisfy the audit agency.

Mr. Thibault said in a telephone interview that a final audit report would be completed later this month, and that the Halliburton subsidiary “deserves a chance to respond to our findings.” But Mr. Thibault said the preliminary findings by auditors involved overcharging that was “potentially very substantial.”

The two Halliburton contracts are by far the largest awarded by the Pentagon for work by private companies in Iraq. Some Democrats have criticized the awarding of Iraq reconstruction contracts to the Halliburton subsidiary, saying the awards might appear to be a political payoff to a firm well connected with Republicans.

But Bush administration and Halliburton officials have denied that politics played any role in the awarding of the contracts to Kellogg, Brown and Root, whose work in Iraq includes a $7 billion contract with the Army Corps of Engineers for the restoration of Iraq’s oil sector and an $8.6 billion contract with the Army for logistical support.

Mr. Thibault would not be specific about the basis on which the auditors have found evidence that the Halliburton subsidiary has overcharged for the fuel it is providing in Iraq under the oil contract.

But government documents show that the United States is paying the Halliburton Company an average of $2.64 a gallon to import gasoline and other fuel to Iraq from Kuwait, more than twice what others are paying to truck in Kuwaiti fuel.

Copyright 2003The New York Times Company

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Big Bucks In Iraq
By Tim Shorrock
The Nation

Monday 10 November 2003 Issue

In early October, Iraq’s US-appointed Governing Council awarded the country’s first mobile phone licenses to three companies from the Middle East. The decision was widely interpreted as a signal that Paul Bremer’s Coalition Provisional Authority (CPA) was expanding its contracting base beyond US corporations like Bechtel and Halliburton to give local companies a break. In particular, analysts pointed out that the networks will be using a technology known as GSM, used widely in Europe and the Middle East, rather than the rival CDMA technology developed by Qualcomm of San Diego for North America and Asia. Qualcomm, joined by Lucent Technologies and South Korea’s Samsung, even complained to the Financial Times that the bidding process “was designed to exclude CDMA from the beginning.”
But any concerns about a US shutout from Iraq’s telecom market were grossly exaggerated. The biggest winner in Iraq’s largest foreign investment deal since the US invasion turned out to be Motorola, the US electronics giant. Motorola has had a long relationship with US intelligence and was saved from financial disaster three years ago when the Pentagon, in a deal brokered by one of Bremer’s top advisers, leased Motorola’s Iridium global satellite network; that network later became the backbone of the US military’s communications system in Iraq and Afghanistan.

Motorola has close financial ties with Egypt’s Orascom Telecom, which won the rights to serve Baghdad and central Iraq, and Mobile Telecommunications Company of Kuwait, which will build the mobile network for southern Iraq. Motorola, with the French vendor Alcatel, has agreed to invest up to $100 million in both companies and could gain up to $200 million in sales by delivering GSM equipment over the two years of the contract, said Lucy Norton, a telecom analyst with the World Markets Research Center. Siemens of Germany could win major supply contracts as well. “Motorola has positioned itself as the primary infrastructure provider for two of Iraq’s three mobile market players,” said Norton, in an e-mail interview from London. Looking beyond the next two years, Motorola could also be in the “pole position, ahead of the other global vendors, as the key infrastructure provider for one of the fastest-growing markets in the Middle East.”

The story illustrates how the financial and trade policies the Bush Administration is pursuing in Iraq are not only benefiting well-connected US corporations but are also slowly integrating Iraq into the global economy and transforming its largely state-run economy into a captive market for foreign multinationals. And it underscores Iraq’s economic importance to countries like France and Germany, which opposed the war but voted October 16 to extend US control over Iraq in exchange for vague promises that power will quickly be transferred to the Iraqi people.

The blueprint for Iraq’s economic future was unveiled by Iraq’s US-appointed finance minister, Kamel al-Gailani, on September 21. The new laws, drafted by the CPA, allow foreign investors to own 100 percent of any Iraqi asset except oil and real estate and to remit profits and royalties when they choose. They also reduce import tariffs to 5 percent and allow foreign banks to take over the country’s banking system. Iraq is now “one of the most open countries in the world,” proclaimed Gailani. But his reforms were denounced by Iraq’s leading business association, which warned that the new laws would “destroy the role of the Iraqi industrialist.”

Many observers, including even US businessmen and Iraqis who favored “regime change” in Iraq, agree. They say the shock therapy being applied in Iraq will concentrate wealth in the hands of large US and Iraqi corporations, particularly the family-owned businesses that have won the majority of subcontracts from Bechtel and Halliburton. “I like the analogy of Wal-Mart coming into a town,” says Timothy Mills, an attorney in the Washington law firm Patton Boggs who represents several US and foreign corporations that have contracted with the US government and are doing business in Iraq. “The downtown dies, Wal-Mart grows and the owners of local businesses are displaced. The effect of Iraq’s new foreign investment law for the medium and small-sized Iraqi business could be very detrimental and could result in even more concentration of capital in Iraq.” With the US Export-Import Bank providing $500 million to insure US investors, he added, “If I was an Iraqi and I was political, I’d say this was a ploy to favor US companies and let them steal the riches of Iraq.” In a similar vein, Fareed Yasseen, an adviser to Adnan Pachachi, a member of the Governing Council, says that the CPA has made its economic plans “completely out of the Iraqi context.” He worries that the CPA will sell state-owned assets to cronies of the previous regime and create a “new class of oligarchs” in Iraq. “They haven’t taken into account Iraq’s reality at all,” he says.

Not so, says a US official working with CPA. The 100 percent ownership rules are needed to attract foreign firms to a country where security and basic services are in question. “If you can’t have majority ownership, you won’t invest,” he says. “But are US firms going to get a distinct advantage? No question about it.”

The CPA’s mishmash of economic ideas is not simply a result of poor planning, as many in Congress have charged. Most of Bremer’s advisers are either veterans of Washington’s revolving door or financiers steeped in the details of corporate buyouts. Dave Oliver, one of Bremer’s senior financial advisers, recently took a leave from his consulting business to draft the budget for the Governing Council. Oliver, who was advising Northrop Grumman, Raytheon and Booz Allen before taking his position, remains on the board of Stratos Global, which does marketing for Iridium, now an independent company. In 2000 Oliver, then President Clinton’s Deputy Under Secretary of Defense for Acquisitions and Technology, brokered the $250 million deal for the Pentagon to lease Iridium’s global satellites, in which Motorola had invested more than $5 billion. (As a Stratos director, “I stayed away from Iridium because I was so close to it,” Oliver says.)

Another key figure on Bremer’s economic team is Thomas Foley, an investor and Bush campaign donor who specializes in mergers and acquisitions, a business he learned as head of Citicorp’s leveraged buyout division and, later, founder of the NTC Group, which acquired a string of US textile and manufacturing companies in the 1980s. As director of the Office of Private Sector Development, he will manage the privatization of Iraq’s 200 state-owned enterprises.

In September, someone in Foley’s office had the bright idea to invite fourteen Eastern European finance officials to Baghdad to give advice about privatization. They included the notorious Yegor Gaidar, who presided over the Russian mass privatizations of the early 1990s. Gaidar’s policies “led directly to the ruination of the Russian middle class, the collapse of industry, the loss of savings and widespread poverty,” says Stephen Cohen, professor of Russian studies and history at New York University. Not surprisingly, the Iraqis weren’t impressed. Mowafaq Mahmood, managing director of the Bank of Baghdad, rejected every suggestion about privatization. “I must say I haven’t learned any lesson from your experience,” he said, signaling that Iraqis may want to preserve parts of their socialist economy.

Bremer has already shown that he can change course when decisions go bad. After thousands protested his decision to demobilize the Iraqi military without paying them, for example, he slowed the pace of privatization and agreed to keep many employees on the payrolls of state-owned enterprises until they could be sold off to foreign buyers. That flexibility goes only so far, however; Bremer will allow dissent from the Governing Council, a US official says, “as long as it doesn’t violate one of the red lines we told them about.” That could give Iraqis little room to maneuver when confronted with unilateral decisions coming from Washington.

When ideology drives policy, as it does in Iraq, pragmatism is swept aside and generals and bureaucrats hop to the beat of the Commander in Chief. If Bush truly wants to transform Iraq’s economy into what his aides describe as a beacon of free enterprise for the Middle East, his good soldiers will go along. Unfortunately, the outcome is likely to be more bloodshed, more chaos and more deals for American companies like Motorola.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Oil Firm Linked to Cheney Gets Iraq Boost
By David Teather
The Guardian UK

Thursday 30 October 2003

Halliburton, the oil services company formerly run by US vice president Dick Cheney, yesterday reported soaring revenues from its contracts to help rebuild Iraq.

The company said sales in the third quarter were 39% higher at $4.1bn (£2.5bn).
Iraq-related work transformed the prospects of its Kellogg Brown & Root subsidiary. The division’s total revenues increased by 80% to $2.3bn, of which $900m came from Iraq and profits grew fourfold to $49m, of which $34m was Iraq business.

Boeing, the world’s largest plane maker, and defence contractor Northrop Grumman also enjoyed a war dividend. Boeing raised its revenue guidance for the full year as military systems and aircraft offset the weakness in commercial jets. Northrop, maker of the B-2 stealth bomber, turned a $59m loss a year ago into a $184m profit.

Halliburton has been at the centre of a storm over the award of post-war reconstruction contracts in Iraq.

It was given a contract in Iraq without being forced into a competitive pitch, drawing close scrutiny of its links to the Bush administration. It has already secured business worth $1.3bn under that award and another $1.4bn in a separate, competitively bid contract to provide support services to troops.

Mr Cheney ran Halliburton for five years before joining the Bush election campaign, receiving a $33m payoff when he left in 2000. He is still getting $180,000 a year in deferred income.

In the latest controversy, questions have been raised by political opponents about the price Halliburton is charging for trucking fuel into Iraq. Halliburton is charging the army $1.59 a gallon for its oil, but critics say it can be bought from neighbouring countries for as little as 98 cents.

Halliburton’s profits in the quarter fell by 38% to $58m from $94m a year earlier. The reason was a $77m charge related to a courtroom verdict against the company in a civil case which accused it of breaching confidentiality agreements in a Kazakhstan construction project. It also took a charge of $34m for discontinued businesses.

Boeing profits in the third quarter fell 31% to $256m, due to a $184m charge to cover the costs of shutting down production of its 757 commercial plane. Its defence business was strong. Sales were 12% higher at $7.3bn, prompting the company to raise its group full year forecasts to $50bn.

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Companies Winning Fat Iraq Contracts Gave Lavishly to GOP
By Charles Pope
The Seattle Post

Friday 31 October 2003

Some of the biggest contracts for rebuilding Iraq and Afghanistan were won by U.S. companies that gave generously to George W. Bush and other Republican candidates and whose executives had close and long-lasting ties to the federal government, a study release yesterday found.
The study, by the non-partisan Center for Public Integrity, found that the 70 companies that have been awarded contracts so far donated $500,000 to Bush’s campaign in 2000, far more than they gave to any other candidate over the past decade.

“Most of the companies that won contracts in Iraq and Afghanistan are political players,” said Charles Lewis, the Center’s executive director, adding that the data suggest that some of the companies won contracts even though their credentials were “thin.”

“These two wars in two years and their aftermaths have brought out the Beltway Bandit companies in full force,” Lewis said, basing his conclusion on more than six months of research into more than $8 billion in contracts that have been approved so far.

“We found numerous instances in which companies with thin or no credentials landed major multimillion-dollar contracts,” Lewis said, adding that the full scope of the postwar contracts is difficult to discern because details of all contracts are not publicly available. What is available, however, shows that the largest beneficiary is Kellogg, Brown & Root, a subsidiary of Halliburton that was headed by Dick Cheney before he resigned to run with Bush in 2000.

Kellogg, Brown & Root, or KBR, has contracts worth $2.39 billion. The Bechtel Co. collected the second-highest contract at $1.03 billion, followed by International American Products at $527 million.

In Iraq, KBR was awarded a sole-source contract to extinguish oil well fires and to help rebuild Iraq’s oil system. Although the contract is classified, the center reported that it could pay KBR up to $7 billion.

In April 2003, the U.S. Agency for International Development announced that Bechtel had won a contract worth up to $680 million to rebuild Iraq’s infrastructure such as schools, roads and sewers, as well as perform “institutional capacity building” to maintain the improvements and create “road maps for future longer term needs and investments.”

In September, AID modified the contract, providing Bechtel with an additional $350 million.

International American Products, based in South Carolina, won contracts to rebuild Iraq’s electrical system, including equipment, operations, maintenance and training Iraqi Ministry of Electricity personnel.

SSA Marine, formally known as Stevedoring Services of America, is the most prominent Washington state company to win a contract in Iraq. AID selected the Seattle company for a $14.3 million contract to operate and manage the Iraqi port of Umm Qasr.

SSA Marine defied the stereotype in one way, however, by making only $18,675 in political contributions from 1990 through 2002. The company spent far more money on lobbying, paying out $80,000 to influence Congress and the federal government in 2002 and $40,000 so far this year.

Andy McLauchlan, a senior vice president for SSA, said that the company won the contract by bidding against several companies and that the process and the company have been open about the bidding process.

“We are a very transparent company, and we play by the rules,” he said.

An AID spokesman defended the contracts, saying that the rigorous safeguards are in place to ensure that the money is spent wisely and that the best contractor is selected.

Other administration officials have said that the streamlined selection process was necessary to get the rebuilding effort under way as soon as possible. The officials also defended the sole-source contracts by pointing out that the work is so specialized that only a handful of companies are qualified to do the work.

The center’s report can be found on its Web site, PublicIntegrity.org

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Debate Rages Over Who Will Run Iraq’s Utilities
San Francisco Chronicle
by David R. Baker

June 8th, 2003

Privatization vs. public control emerges as key issue in shaping future of country

In Iraq, a country ringed by desert and often seared by 110-degree heat, no commodity matters more than water.

Its delivery to homes, businesses and fields used to be the province of Saddam Hussein’s government. Now, as U.S. forces rebuild the country, debate is growing over who should control the tap.
Should Iraq’s water system remain in public hands as a state-run utility? Or should private companies — Iraqi or foreign — run it?

The same questions hang over Iraq’s other basic utilities — its power grid and sewage system. Although San Francisco’s Bechtel Corp. is now working to repair them, all will need serious long-term investment for the country to thrive. Some experts see private management as a way to pump money into those utilities.

And yet the thought of privatizing such basic human needs raises fears that the people of Iraq will lose control over their own resources. Much like the debate over oil, arguments about utility privatization reflect fears that Iraq’s reconstruction will turn into a great grab — with a few people or corporations seizing the country’s key assets.

Federal officials, aware of the emotions this issue stokes, say a decision on Iraq’s utilities must wait until an interim Iraqi government takes charge.

“That question speaks to the very heart of how we deal with the Iraqi people,” said Ellen Yount, spokeswoman for the U.S. Agency for Overseas Development. “Obviously, the goal with all of these things is not to have top- down decisions, but decisions made by the Iraqi people.”

Battered by war and stripped by looters, Iraq’s utilities are in desperate need of repair.

Power plants still in operation supply a fraction of the electricity the country needs. A Bechtel spokesman who recently toured southern Iraq described electrical systems kept running only through the skill of Iraqi engineers forced to improvise without needed spare parts. Families have been storing water in old barrels rather than rely on water systems that sometimes don’t work.

Bechtel’s $680 million reconstruction contract covers repairs to the country’s electrical grid, water works and sewers. But what happens after those immediate repairs?

Defense Secretary Donald Rumsfeld has already said he wants to see some of Iraq’s state-run businesses sold off, although he did not specifically mention the utilities. Conservatives see privatization as a way to dismantle the vestiges of Baath Party power in Iraq, because Hussein’s government controlled most every aspect of the economy before the war.

Planners also view private utility companies as a way to make water and power systems more efficient and encourage investment in their repair.

“The point of privatization is it creates a strong incentive for the people operating these systems to get it right,” said David Dowall, a professor of city and regional planning at UC Berkeley who has consulted with several Middle Eastern governments on their utility systems.

“The downside,” he said, “is that people don’t like to pay higher prices.”

State-run utility systems typically rely on heavy public subsidies, meaning citizens don’t directly pay the full cost of the water and power they use. That is particularly true in the Middle East, where oil revenue long has funded many government services. Switching to private utility systems often means an increase in rates.

That can be a hardship for the poor. A recent report by the International Consortium of Investigative Journalists, for example, claims efforts to privatize water systems in South Africa during the late 1990s led to a cholera outbreak, as people unable to pay higher rates started drinking from polluted streams, ponds and lakes. The outbreak killed nearly 300 people.

Higher rates for water also led to a legal dispute for Bechtel in the South American country of Bolivia.

Hired to run the water system in Cochabamba, Bolivia, a Bechtel joint venture saw its contract canceled by the government after protests against price increases turned violent. Bechtel says the hikes averaged 35 percent. Some Cochabamba residents complained their bills doubled before the fee increases were revoked.

Bechtel and the Bolivian government are now locked in arbitration proceedings before an international financial panel, with the company seeking compensation for the canceled contract.

That case has raised suspicions among activists about Bechtel’s intentions in Iraq.

“Their record depicts that trend — they privatize the service, they raise the price, and only those who can afford it get it,” said Antonia Juhasz, a project director at the International Forum on Globalization think tank in San Francisco.

Bechtel insists it has no preference for whether Iraq’s utilities stay public or turn private. Company spokesman Jonathan Marshall said protesters have oversimplified a complex situation in Bolivia, a situation he says has nothing to do with Bechtel’s job in Iraq.

“Iraqi children are swimming in and drinking raw sewage, and we’re trying to fix that,” he said.

The debate about water privatization efforts even surfaced at last week’s summit of the Group of Eight major industrial nations in Evian, France. Protesters urged government officials in attendance to back off water privatization projects in developing countries.

Dowall noted, however, that the strict public and private models for water and other utilities aren’t the only choices. Governments can set up competitions among private companies bidding to run utilities at the lowest possible subsidy. They can hire companies to work with specific rates. They can turn utilities into quasi-public organizations whose core assets are still owned by the state.

“I don’t think you have to lurch from one extreme to another,” he said. “There are models in the middle that work.”

That choice, many observers insist, must be left to the Iraqis.

“If one were to define a core democratic decision a people could make, the treatment of things like water and power and media would be it,” said Benjamin Barber, author of the impending book “Fear’s Empire: War, Terrorism and Democracy.” “It’s a pretty basic part of government.”

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Profits for Halliburton: Nothing for Workers
By Bracken Hendricks and Skye Perryman
November 6, 2003

Republican allegiance to corporate interests has distorted the direction of US policies both at home and abroad. But there is a better way: it is time for a new vision on energy policy and national security. It is time for an Apollo Project that reinvests in American communities, creates jobs at home, and ends our dependence on foreign oil and its corrupting political influence once and for all.
In a victory for civic participation and government accountability, the U.S. Army Corps of Engineers announced today that it would cancel its contract with Halliburton Corporation for oil transportation into Iraq. This comes after several weeks of pressure by Democratic Congressmen Waxman and Dingell, who have led the charge to uncover the truth about Halliburton’s no-bid contract with the U.S. Government. Reports suggest that Halliburton has been charging the US government more than twice the actual cost of importing fuel into Iraq, a move that has cost millions in taxpayer dollars.

In a convenient coincidence, the cancellation of Halliburton’s contract comes just two days after House Republicans stripped the Iraq supplemental bill of an anti-profiteering provision which would have held companies holding contracts with the U.S. government criminally accountable for price gouging. Once again, the Republicans have failed to hold businesses accountable.

What exactly is Halliburton doing? Here’s the scoop, along with the complete Apollo Project report….

http://www.apolloalliance.org/strategy_center/halliburton_report.cfm

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Projected Iraq Oil Costs Up Sharply
By Stephen J. Glain
Boston Globe

Thursday 30 October 2003

WASHINGTON — The Bush administration has doubled the value of a contract to rebuild Iraq’s oil industry, to $2 billion, sharply driving up the projected cost of restoring the country’s prewar capacity.

The decision gave fresh ammunition to critics of the president’s postwar policies and came as questions surfaced about whether the franchise now held by a subsidiary of Halliburton Co., the oil giant once led by Vice President Dick Cheney, will be expanded to include the development of virgin petroleum fields. The subsidiary, Kellogg Brown & Root Services, was originally hired to help rebuild Iraq’s petroleum sector.
“Mission creep is occurring in Iraq,” said Representative Henry Waxman, Democrat of California. “The administration says its goal is to repair war damage, but its budget request shows it wants taxpayer dollars to build projects that have nothing to do with repairing war damage, such as constructing an entirely new oil refinery.”

The US Army Corps of Engineers, which is managing efforts to rehabilitate Iraq’s war-torn and sanctions-deprived oil sector, said yesterday it would issue contracts to redevelop the country’s oil grids in the north and south worth a maximum of $800 million and $1.2 billion, respectively, and a minimum value of $500,000 each. An earlier award to replace Kellogg’s contract, which was to have been issued in August, valued the projects at $500 million each but was canceled as the spiraling cost of repairing Iraq’s battered infrastructure became clear, and the full scope of the project expanded.

An Army Corps spokesman said the budget for the oil contracts was increased in line with a study of Iraq’s oil-sector needs conducted by Kellogg. In March, the Army Corps said it gave Kellogg a mandate with an initial maximum worth of $7 billion, one of a number of closed-door contracts issued by the US government. The Army Corps officials say it has always been their intention to replace the original Kellogg contract with one awarded in a competitive bid. A new award for the two 24-month contracts would be held within 30 to 60 days, according to the Army Corps.

The contracts, which have a minimum value of $500,000 each, are unrelated to the $2.1 billion included in the Bush administration’s special budget request set aside for Iraq’s oil industry.

That allotment is part of an $87 billion supplemental budget request submitted in September by the Coalition Provisional Authority — the US-led agency running occupied Iraq — to cover the rising costs of rebuilding and pacifying the country. The $2.1 billion special budget request was to cover such expenditures as upgrading seaports and protecting oil pipelines from sabotage.

The US government has already invested an estimated $1 billion to return Iraq’s daily oil production to its prewar peak capacity of about 3 million barrels.

The terms of the new contracts will be consistent with the objective of the old one — to help Iraqis upgrade and maintain existing infrastructure until the work can be transferred to the Iraqi oil ministry, said the Army Corps spokesman. Kellogg and Fluor Corp., of Aliso Viejo, Calif., are said to be among the companies interested in bidding for the new contracts.

The Kellogg contract has been a source of controversy since it was issued under emergency laws that allow the US government to hold closed and noncompetitive bids during wartime. Cheney was the chairman of Halliburton for five years until he was chosen by Bush as his running mate, and news of the Kellogg award prompted conflict-of-interest charges. Lawmakers and public-interest groups have criticized what they say is a lack of detailed information about the contract, which has gradually been uncovered by their own investigations of the deal.

The contract was originally thought to have limited Kellogg’s tasks to capping war-damaged wells, but was slowly revealed by the probes to include gas-importation and surveys of unknown cost in coordination with Iraqi oil ministry officials of the country’s neglected and damaged petroleum grids.

Recent statements by US officials suggest the franchise may have been expanded to include exploration and development of new oil and gas fields.

The White House request for supplemental funds, submitted through a 54-page document prepared by the US-led Coalition Provisional Authority in Iraq, says part of the money “will also initiate the development of new oil and gas fields,” a reference to the vast reserves discovered in Iraq more than a decade ago, oil specialists say. Developing those sources, the request estimates, could enhance Iraq’s energy output by 250,000 barrels of crude oil and 200 million standard cubic feet of natural gas per day.

On Oct. 8, Army Major General Carl Strock, the deputy director of operations for the Coalition Provisional Authority in Iraq, told the House Committee on Government Reform that money provided under the supplemental budget request would be used for “the development of the oil fields . . . and it’s also building the new refinery.”

Phone calls to Strock’s office in Washington for comment were not returned; an Army Corps spokesman in Dallas said there was nothing in the terms of either Kellogg’s existing contract or the two new contracts that would replace it that could allow for the tapping of new energy reserves in Iraq.

Developing Iraq’s virgin petroleum fields could increase its crude output to some 8 million barrels a day, according to analysts. But oil specialists say it would be premature to move on new wells, portions of which were parceled out for development under deposed dictator Saddam Hussein to non-US oil companies.

“They need to develop a legal framework,” said Fareed Mohamedi, chief economist of PFC Energy in Washington. “And who will negotiate the law? They have a lot of work to do first.”

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Halliburton Combats Accusations of Overcharging Internal Email Reveals Halliburton’s Strategy to Combat Accusations of Overcharging the Government
The Daily Mis-Leader
October 24th, 2003

Negative publicity from the Bush Administration’s award of a $7 billion no-bid contract to a Halliburton subsidiary with a history of overcharging the government has led Halliburton CEO David Lesar to direct his employees to counter with a letter-writing campaign, according to an internal company e-mail provided to The Daily MisLead.
The negative publicity has also embarrassed the administration, given President Bush’s pledge in the wake of earlier corporate scandals that “corporate leaders who violate the public trust should never be given that trust again.”1

The Halliburton subsidiary, previously known as Brown & Root, was cited at least twice in the past six years by the Government Accounting Office for inflating costs — for example, by providing more staffers and services than necessary.2 Brown & Root also paid $2 million last year to settle a criminal charge for overbilling the government.3

The subsidiary, which became Kellogg, Brown & Root with the 1998 Halliburton purchase of Dresser Industries, was given the no-bid contract to put out oil fires, import fuel and operate oil facilities in Iraq.4

One of the talking points in Lesar’s memo, sent last Friday, was that “Halliburton makes our troops more comfortable in a difficult environment by bringing shelter, supplies, clean uniforms and mail from home.” According to published reports, however, as few as 20 percent of American soldiers in Iraq have access to purified water and entire units are suffering from dysentery.5 One senior military commander wrote that soldiers were “using hoses from an Iraqi latrine stall to get water enough to maintain their hygienic needs.”6

Sources:
“The President’s Comprehensive Corporate Reform Agenda”
Contingency Operations: Army Should Do More to Control Contract Cost in the Balkans, General Accounting Office, 9/29/00
Letter from Rep. Waxman and Rep. Dingell to OMB Director Joshua Bolton, 10/15/03
“Entrepreneurial Beginnings,” Halliburton Web site
“US House set to approve President Bush’s $87 billion package for reconstruction in Afghanistan and Iraq,” NPR, 10/9/03
“Leadership and Logistical Failures Hurt Troops,” Soldiers for the Truth, 6/19/03

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Letter From Rep. Henry Waxman
Committe On Government Reform
October 16, 2003

Congressmen Waxman and Dingell reveal the prices that Halliburton has charged to import gasoline into Iraq. Oil industry experts say Halliburton’s prices are “outrageously high,” “a huge ripoff,” and “highway robbery.”
Read Rep. Waxman’s full report here….

http://www.truthout.org/docs_03/101603A.shtml

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

Six in Ten Iraqis Unemployed, but U. S. Subcontractors Hire Cheap Migrant Laborers
Daily Mislead
October 16, 2003

Even though seven million Iraqis are unemployed1, U.S. sub-contractors are rebuilding the Iraqi infrastructure with cheap migrant labor from South Asia.2 The use of Asian laborers is at odds with President Bush’s emphasis on the importance of Iraqis taking on the job themselves.
Bush has said the key to “rebuilding a democratic and prosperous Iraq is the Iraqi people themselves.”3 Paul Bremer, the Bush appointee overseeing post-war Iraq, likewise has talked of the need to turn around the country’s 60 percent unemployment rate and “to fix a very sick economy.”4

However, the head of the Iraqi Jobless Association, Kasem Hadi, is critical of the Bush Administration’s lack of progress. “Following four rounds of talks with [Bremer’s] representatives, we made no progress regarding the unemployment crisis,”5 Hadi says.

Meanwhile, U.S. Brigadier General Janis Karpinski, one of Bremer’s colleagues, has raised questions about the reliability of foreign workers. “You find [them] in out-of-the-way corners taking 15 minute naps,” she notes.6

At the same time, officials of the Iraqi Governing Council are concerned that large American contractors, including Halliburton and Bechtel, may be inflating the cost of the reconstruction projects. The Iraqi governors told members of the U.S. Congress that Iraqi companies could be doing the work at 10 percent of the cost.7

Sources:
1. “Iraq: 7 Million Jobless Persons,” Asia Africa Intelligence Wire, InfoProd, 8/27/03
2. “Contractors in Iraq Accused of Importing Labour and Exporting Profit,” Financial Times/UK, 10/14/03
3. Presidential Radio Address, 7/23/03
4. Interview of Paul Bremer by Tom Brokaw, NBC Nightly News, 7/14/03
5. “Iraq: 7 Million Jobless Persons,” Asia Africa Intelligence Wire, InfoProd, 8/27/03
6. “Contractors in Iraq Accused of Importing Labour and Exporting Profit,” Financial Times/UK, 10/14/03
7. Letter to OMB Director Joshua Bolten from Rep. Henry Waxman, 9/30/03

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