Dick Cheney- Corporate Criminal

Cheney's ties to Halliburton draw more scrutiny
By Dave Montgomery
Star-Telegram Washington Bureau

Vice President Dick Cheney warned about the threat posed by Iraq during a speech to the Conservative Political Action Conference on Jan. 30. Cheney has stock options and draws a deferred salary from Halliburton Co., which is helping to rebuild Iraq.

WASHINGTON - The renewed uproar over billions of dollars in government work awarded to Texas-based Halliburton Co. is forcing the Bush administration to defend itself against accusations of conflict of interest and sweetheart deals as it struggles to maintain public support for U.S. involvement in Iraq.

At the center of the controversy is Vice President Dick Cheney, who was Halliburton's chief executive from 1995 to 2000. He still holds Halliburton stock options and draws a deferred salary from the Houston energy and construction company.

Cheney says he no longer has an active financial interest in the company and dismisses critical remarks as "political cheap shots" from Democrats.

But his former Halliburton ties have heightened scrutiny over more than $1 billion awarded to Kellogg, Brown & Root, a Halliburton subsidiary, to aid the recovery of Iraq's battered oil industry. All told, Halliburton's government work in Iraq now totals nearly $2 billion.

"I think we ought to ask a lot of tough questions here, especially since the vice president has a deferred compensation package from Halliburton," said Rep. Martin Frost, D-Arlington, dean of the Texas congressional delegation.

Kellogg, Brown & Root, the engineering and construction arm of Halliburton, has considerable experience with big projects in energy and construction. The company has performed billions of dollars of work for the U.S. military since it won its first defense contract in 1940.

It is believed to be the biggest U.S. government contractor in postwar Iraq. In addition to the oil field contract, the Halliburton subsidiary provides a broad range of military logistics, from building bases to serving chow and delivering the mail to the troops.

Halliburton has a work force in Iraq of more than 4,500 people. But company spokeswoman Wendy Hall countered assertions that the contracts grew out of political influence or ties to the administration.

"Certainly, it's easier to assign devious motives than to take the time to learn the truth," she said. "Our Halliburton people are sharing the hardships and the risks."

Three Halliburton workers, she said, have been killed, including one mail handler who died in an explosion and another caught in a crossfire. The third died in a car wreck.

Critics, however, argue that the perception of special treatment toward Halliburton, whether accurate or not, undercuts President Bush's efforts to shore up public support for the U.S.-led military presence in Iraq. It could also complicate his request to Congress for an additional $87 billion to pay for U.S. operations in Iraq and Afghanistan.

Some Republicans have begun to question the $20.3 billion in the package to be set aside for rebuilding Iraq. But the questions about Halliburton's deals have been raised primarily by Demo-crats and public watchdog groups.

Halliburton's role was first questioned last year after it became clear that the company and its subsidiaries were getting millions of dollars in new government work in the wake of the 9-11 attacks.

But the controversy has flared anew in recent days as Bush began pressing for additional funds.

"The situation in Iraq is challenging enough without the bureaucrats causing additional problems by awarding a contract to the vice president's former company," said Tom Fitton, president of Judicial Watch, a public watchdog group that supports Bush's Iraq policy but has long sparred with Cheney.

Judicial Watch won a court order last year forcing the administration to release documents relating to an energy task force run by Cheney. Also last year, Judicial Watch filed suit accusing Cheney and Halliburton of misleading investors. The suit was dismissed this month.

Halliburton's presence in Iraq evolved from a broad-ranging Pentagon contract that the company has held intermittently since 1992, according to officials with Halliburton and the Army. The contractor provides the Army with virtually every conceivable logistical need in hot spots around the globe.

The oil field contract has drawn the most controversy because it was awarded on a no-bid basis with a ceiling of $7 billion over two years. Kellogg, Brown & Root has fulfilled five postwar work orders totaling $1.2 billion since receiving the contract March 8, just before U.S. troops invaded Iraq.

Lt. Gen. Robert Flowers, commander of the Army Corps of Engineers, has said that military planners gave the oil-repair job to Kellogg, Brown & Root because the Texas company held the wider Pentagon contract and "was already very familiar" with operational plans.

At that point, he said, U.S. plans to rebuild Iraq's oil infrastructure were classified, and conducting a bid competition would have undercut both speed and secrecy.

But Rep. Henry Waxman of California, senior Democrat on the House Government Reform Committee and a frequent critic of the administration, said a staff inquiry into the contract suggests that the Halliburton subsidiary received favorable treatment from the Pentagon because it got the job without competition.

The contract reimburses Halliburton for its expenses, plus a fee based on 7 percent of the total cost of the job. The terms give the company little incentive to control costs, Waxman said.

"They have, I fear, given Halliburton a blank check," he told the Star-Telegram last week.

Officials with the Army Corps of Engineers, which is overseeing oil field renovation, said the no-bid contract was a transitional step to get the work started. The Corps is soliciting bids for two new contracts, totaling $1 billion, which will phase out the existing contract held by Kellogg, Brown & Root. Companies in more than 20 countries are eligible to compete for the contracts, to be awarded in mid-October.

Although Waxman has avoided suggestions that Halliburton landed the contract because of the company's ties to Cheney, others have shown no such hesitancy. Democratic leaders in Congress as well as some of the 10 Democratic presidential candidates are hammering away at Cheney's Halliburton connections to bolster a pet theme that the Bush administration is a captive of big corporations.

Cheney, a former defense secretary and Republican congressman from Wyoming, headed Halliburton for five years until he was tapped to become Bush's running mate in 2000. The 84-year-old company was based in Dallas before moving its headquarters to Houston in midsummer.

The vice president told NBC's Meet the Press on Sept. 14 that he had no influence on Halliburton's current contracts in Iraq, never lobbied the Defense Department on behalf of the company and has no financial interest in the company.

But the Congressional Research Service, a nonpartisan arm of Congress that provides research for members, said in a report released Thursday that Cheney's deferred salary and stock options constitute a "financial interest" under federal ethics standards. The report was released by Sen. Frank Lautenberg, D-N.J., one of the most vocal critics of the Halliburton contracts.

The vice president's aides say Cheney received $147,579 in deferred compensation in 2001 and $162,392 in 2002 under a binding arrangement he made with Halliburton in 1998. The annual payments, which can vary, will continue through 2005.

Cheney has said he has sought to avoid the appearance of a conflict of interest by taking out an insurance policy guaranteeing that the deferred salary would continue, regardless of what happened to Halliburton. The intent was to free Cheney from being tied to Halliburton's fortunes so he would have no interest in trying to protect the company through his government position.

Cheney also holds 433,333 Halliburton stock options, but his office says that the options are controlled by an administrator and that after-tax profits go to charities.

"The vice president has no financial interest in Halliburton, and the allegations are irresponsible and baseless," said Cheney's spokeswoman, Cathie Martin.

Cheney took over at Halliburton after serving as defense secretary during the Persian Gulf War in 1991 and led the company through substantial growth. The Center for Public Integrity, a watchdog organization in Washington, reported in 2001 that Halliburton nearly doubled its government contracts during Cheney's tenure, to $2.3 billion, from $1.2 billion.

With 96,000 employees working in more than 120 countries, Halliburton is the world's largest supplier of products and services to the petroleum and energy industries, and it has a widening expertise in military logistics.

Kellogg, Brown & Root specialists have installed and maintained bases in Bosnia, Somalia and Haiti, often deploying within 72 hours of notification.

Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Va., said Halliburton's skills in energy and construction give the company an edge over many competitors.

"It's very hard for outsiders to evaluate the criteria that led to some of the Iraq reconstruction awards," Thompson said. "There are only a handful of large international construction companies that have the skill to do these kind of large reconstruction jobs."

Cheney made the same point during the NBC interview, while emphasizing that he had "no idea" why Halliburton got the no-bid oil field repair contract.

"There are few companies out there that have the combination of the very large engineering construction capability and significant oil field services," he said.

Post a Comment