Details the myriad illegal, immoral, and unethical activities of Dick Cheney when CEO of Halliburton, his obstruction of justice, and lies to the American public since his appointment as Vice President. For information on an equally corrupt politician, see link to Tom DeLay-Corporate Whore. Be sure to visit our cavernous vault of archives.

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Aug. 29, 2004, 12:43PM
Cheney at Halliburton: A mixed record as CEO
He revitalized the company but also left the oil-service giant with some major headaches

DAVID IVANOVICHCopyright 2004 Houston Chronicle Washington Bureau

W ASHINGTON - Dick Cheney served as Halliburton Co.'s chief executive for five years. Not that you'd know it from the official White House Web site.

Vice President Cheney's biography notes his place of birth, Lincoln, Neb., refers to his many jobs in government, famous and obscure (assistant director at the Cost of Living Council, congressman from Wyoming, defense secretary) and describes his "distinguished career as a businessman and public servant."

The word "Halliburton" never appears.

The White House may downplay the connection, but Cheney's ties to Halliburton have become a huge political liability — for the company.

The billions spent on Halliburton's military contracts have come under constant attack. Indeed, the very name "Halliburton Co." has become a Democratic catchphrase suggesting cronyism.
So were Cheney's contributions to the company worth all the subsequent political fallout?
As chief executive officer of Halliburton from 1995 to 2000, Cheney piloted the company through some huge difficulties: a crash in oil prices, the Asian economic crisis and a painful wave of cost-cutting that saw Halliburton slash 9,000 jobs.

Under Cheney's watch, Halliburton also acquired a financial albatross — Dresser Industries and its huge asbestos liability. The company signed a major fixed-price contract that later proved costly, and it failed to clue investors in on a significant accounting change.

Indeed, four years after Cheney's departure, those missteps still plague the company's bottom line and stock performance.

Overall, Cheney wins above-average marks for his performance from some analysts, despite being a newcomer to the industry.

"I give him a B," said James Wicklund, managing director of energy research for Banc of America Securities in Houston.

Dave Lesar, who served as president of Halliburton under Cheney and is the company's current CEO, is more emphatic. Cheney, he says, was "an excellent CEO for Halliburton."
Others are less forgiving.

"The guy didn't do a great job," concludes one industry analyst who asked not to be named for fear of alienating the company. And after all, the analyst noted, Cheney is "the vice president of the United States."

Cheney declined to comment for this story.

The former colleagues, business associates and industry experts interviewed for this story differ on how much to hold Cheney responsible for the company's troubles.

But they paint a consistent portrait of a famous individual, willing to leave his ego aside to learn a business he knew little about.

Recruited for the jobCheney was recruited for the job by his predecessor in Halliburton's corner office, Thomas Cruikshank. While he could boast little experience in the private sector, he had run an organization as colossal as the Pentagon.

And, of course, he was known around the globe. "He had a lot of doors open to him," Cruikshank said in an interview. Halliburton officials hoped that would be especially true in the Middle East.
Government officials and company executives, after all, are human. And few could pass up the chance to shake hands with a man largely responsible for ousting Saddam Hussein from Kuwait.
"There's a natural curiosity if you have a bit of a celebrity CEO," noted Input/Output CEO Robert Peebler, who served for several years under Cheney after Halliburton purchased Landmark Graphics. "When you got in the meeting, it was about business."

It remains unclear, however, whether Halliburton landed deals the company would not have won if Cheney were not there shaking those hands.

"People assume that nobody in the oil patch had heard of Halliburton before Vice President Cheney came along. We'd been in business for nearly 80 years when he became our CEO," Lesar said.

Once at Halliburton, then based in Dallas, Cheney proved to be a "quick study" and a "decisive individual," Lesar said.

"One of his really strong attributes, for an individual who had been in very high government offices and also a CEO for a major corporation, he didn't have a very big ego," Lesar said.
"I think he understood what he knew and understood what he didn't know and didn't pretend to understand if he didn't," Lesar said.

Asbestos liabilityWhile heading up the oil-service giant, Cheney had to grapple with an energy market that saw oil prices dive below $10 a barrel and an engineering and construction industry racked by a currency crisis that began in Asia and ricocheted around the world.

One of the company's most successful moves while Cheney was at the helm was the purchase of Landmark Graphics, a high-tech operation whose advanced software is used to improve the odds of drilling for oil and gas.

Overall, Cheney gave new life to a company that was "on the cusp of really slipping into obscurity," argued Matthew Simmons, chief executive officer of Simmons & Co. International, a Houston-based energy investment banking firm.

"Cheney really did a fabulous job of revitalizing what had really been one of the greatest franchises in the oil field," Simmons said.

But many of Halliburton's biggest headaches today are the result of decisions made during Cheney's tenure.

In perhaps the most important event of Cheney's tenure, Halliburton acquired Dallas-based rival Dresser Industries in 1998. That move propelled the company to the top echelon of the oil-service sector with a broad array of products and services.

But the Dresser merger also saddled Halliburton subsidiary KBR with a staggering asbestos liability. Eventually, KBR had to seek bankruptcy court protection. Cost: a whopping $4.2 billion.
Wait and seeMost company observers are loathe to fault Cheney for not perceiving the potential flood of litigation filed by those exposed to asbestos.

After all, Dresser had spun off the company fighting those suits years before. The sales contract even included a clause that most thought would block any claims on the former parent company.
But Dresser retained a joint insurance policy with the operation, which enabled plaintiffs to seek damages against Halliburton.

Even at those companies where executives were aware of an asbestos exposure, few foresaw the impact asbestos litigation would have on American industry.
"I can't see how that tail could be pinned on anybody," Peebler said.

Lesar argues that 10 years from now, investors will look back and conclude the Dresser merger was a real plus.

"We're going to say we are absolutely glad we did it," Lesar said. "We got great people, great technology and great capability and are a stronger company."

Investors, however, aren't used to waiting so many years for a merger to turn out to be a positive. Indeed, the company's asbestos liability amounts to nearly eight times Hallilburton's 2003 earnings.

To cope with hard times in the oil business, Halliburton experimented with winning clients by offering a different approach to pricing major construction projects. The company agreed to be paid for major oil-field service contracts in a lump sum rather than typical reimbursement for costs, plus a profit margin.

Such turnkey contracts, which required Halliburton to eat cost overruns, also required it to keep a tight lid on costs and schedules. Changes to any plan required negotiations with the customer, which sometimes created more delays and cost overruns.

Not without riskHalliburton wasn't alone in offering such deals. The company's competitors were trying similar approaches.

But a big offshore project in Brazil known as Barracuda-Caratinga showed the dangers of such projects.

Cost overruns and delays on that project have forced Halliburton to take charges that reduced its earnings three times, including a $173 million pretax hit last quarter.

As Halliburton was signing these new kind of contracts, the company also adopted a new way to account for cost overruns.

This new method for accounting for cost overruns was permissible under generally accepted accounting principles. But Halliburton didn't tell shareholders about the change, even though the switch kicked up the company's pretax income for 1998 by 46 percent with no significant change in its operations.

Earlier this month, the Securities and Exchange Commission fined Halliburton $7.5 million for failing to notify investors of the change.

The SEC also slapped two former company executives, the one-time chief financial officer and the one-time controller.

A shareholder lawsuit over the accounting change appeared close to settlement this month. Attorneys for the Archdiocese of Milwaukee, however, have asked a judge in Dallas to reconsider, arguing their investigation suggests accounting problems were more widespread.
The SEC took no action against Cheney, noting that he had cooperated with the probe.

Still, that leaves the vice president on that unenviable list of top corporate executives who have to claim they were unaware of the accounting sleights of hand performed by subordinates.
As Cruikshank sees it, Cheney's performance can best be summed up by the stock price. During his tenure, amid volatile times in the industry, Halliburton's share price, accounting for a stock split, rose from less than $20 a share to $54.

That doesn't take into account the troubles he left behind. Today, Halilburton's stock is trading near $29 a share.

 
The Thief of Baghdad
By Pratap Chatterjee, AlterNet. Posted August 23, 2004.

Missing: one-third of the Pentagon's equipment and $1.9 billion of Iraqi money. Guess who has it?

ALSO IN WAR ON IRAQ
Firing BackRichard Muhammad
Empire FallsJonathan Schell
Motor City, BaghdadHazem al-Shara
Fables of ReconstructionChristian Parenti
Ordered to Just Walk AwayMike Francis
More stories by Pratap Chatterjee

Missing: One giant generator owned by the United States military. Estimated cost: $734,863
Last seen: Somewhere in Iraq.

While much of the media is focused on the pitched battle over the control of the holy shrine in Najaf, a bigger scandal is brewing in Iraq that may well have an equally important effect on the future of the U.S. occupation.

A team of auditors was dispatched to Iraq in late January this year after a string of internal reports showed that the military was wasting billions of dollars of taxpayer money. They have issued eleven reports since June 25, almost all of which have pointed to the misuse of the money allocated for reconstruction, be it Iraqi or Congress-appropriated funds.

According to two of these reports issued in late July by Stuart Bowen, the auditor-inspector general of the Coalition Provisional Authority (CPA), not only have a full one-third of the items purchased by the Pentagon gone MIA (including the pricey generator), but a whopping. $1.9 billion or more of Iraqi oil revenue has also mysteriously disappeared.

Embarrassed military authorities did eventually track down the missing generator and much of the money, both of which seemed to have ended up with none other than Halliburton. As it turns out they weren't missing after all; it's just that Dick Cheney's former employer had misplaced or conveniently forgotten to turn in the receipts to the correct people.

But the Pentagon was not able to explain just how Halliburton gained possession of Iraqi funds when neither the United States Congress nor the Iraqi government authorized their transfer to Halliburton in the first place. Worse yet, the man who authorized the allocation – CPA chief Paul Bremer – had already quietly left Iraq just as the reports were being released.

Yet days after the much-touted "transfer of sovereignty," the White House revealed an even more startling detail about the reconstruction effort: In over a year, the CPA had managed to spend just 2 percent of the $18.4 billion earmarked for the immediate reconstruction of Iraq. And not a penny was spent on the two areas where the Iraqi people were suffering the most: healthcare or water and sanitation.

So what is really going on? Is the United States spending too much or too little money in Iraq?
To answer that question, we need to separate the apples from the pears and the oranges.

Other People's Money

There are three treasure chests that the Occupation authorities are allowed to dip their hands into. The $87 billion appropriation that Congress granted to the Bush administration in September 2003 was divided into two funds: the bigger chunk, some $65 billion, for military operations and $18.4 billion for reconstruction. The Development Fund of Iraq (a.k.a. the revenues accrued from the sale of Iraqi oil) is the third treasure chest.

Treasure Chest No. 1 was quickly spent after the invasion on hiring Halliburton to supply the soldiers. In fact, the Pentagon has reportedly exceeded this allotment by an estimated $12 billion. This appropriation has been the source of most of the money spent in Iraq. It is also the money that has been subjected to a series of careful audits by the Defense Contract Audit Agency, the General Accounting Office (the investigative arm of Congress), and Stuart Bowen's team of auditors in Baghdad – all of whom have fiercely criticized Halliburton for its pricing and spending practices.

The CPA barely touched the $18.4 billion allocated by Congress for reconstruction (Treasure Chest No. 2)because of stringent bidding and oversight requirements to prevent fraud or waste. Many of the reconstruction bills were instead paid for with revenue from the sale of Iraqi oil (Treasure Chest No. 3). Some of this money was spent on Halliburton for the repair of the oil infrastructure; some was simply handed out in cash to local people by soldiers in return for favors such as rebuilding offices or building football fields.

A New York Times article in late June 2004, described the lax oversight of this money thus:
"The teams have become famous in Iraq for the way they have spread across the country, commissioning repairs and paying for them from satchels bulging with $100 bills shipped by plane from a Federal Reserve vault in East Rutherford, New Jersey. At least $1 billion has been distributed in this fashion – by some estimates more than $2 billion. 'The military commanders love that program, because it buys them friends,' said an administration official, referring to the cash distribution. 'You want to hire everybody on the street, put money in their pockets and make them like you. We have always spent Iraqi money on that.'"

So here is what it all means:

One, the U.S. taxpayers spent a lot of money on the soldiers, but the Pentagon paid Halliburton to do the work. The company billed the military top dollar knowing that the brass would look the other way. The gravy train finally ground to a halt when two brave members of Congress inquired about the results of the internal audit.

Two, almost none of the money that American taxpayers provided for reconstruction was spent because the rules were too stringent for the CPA's taste.

And three, we dished out Iraqi money to companies like Halliburton like it was going out of style because the United States government knew that neither Congress nor the United Nations would ask us difficult questions about what we were doing with other people's money. Equally importantly, Bush officials were worried that the new Iraqi government might ask us difficult questions about their money once they gained any modicum of power. So they were eager to spend the money while they could.

In other words, despite access to billions of dollars for reconstruction, the CPA has done little to serve the interests of either the American taxpayer or the Iraqi people. The reconstruction effort has, however, been a cash bonanza for companies like Halliburton.

The Billion-dollar Corporate Expense Account

Halliburton has been the biggest beneficiary of the CPA and Pentagon's liberal spending policies – the company alone got $3.9 billion last year to repair oil fields and provide food, laundry, sanitation and transportation services to the military.

Where did the money go? Whistle-blowers from the company have sent testimony to Congress detailing the many wasteful practices: paying $100 for a bag of laundry; abandoning $85,000 trucks for the lack of a spare tire. Meanwhile, other companies like Science Applications International Corporation of San Diego were shipping armored Humvees for company executives on specially chartered jets and paying themselves $200 an hour to run a U.S. propaganda television station that no one was watching.

An internal Pentagon audit completed two weeks ago and reported in the Wall Street Journal earlier this month found that Halliburton failed to adequately account for "more than $1.8 billion" it has received so far for providing logistical support to troops in Iraq and Kuwait.
When challenged by military auditors to account for its missing equipment and receipts, the Houston-based Halliburton told the Pentagon that it did not have enough staff to keep track of the $400 million it was spending in Iraq – an explanation that the Defense Department was surprisingly quick to accept. Linda Theis, a spokeswoman for the Army Materiel Command, told reporters, "It was the pace. It was the magnitude of this contract."

In statements to the press, on the other hand, Halliburton flatly denies any problems with its accounting procedures. Randy Harl, president of Kellogg, Brown and Root, the Halliburton subsidiary that conducts the work in Iraq, said, "In general, we have found that the subcontractors are properly billing on the basis provided in the subcontracts. We are operating in a remote, hostile and ever-changing environment in Iraq. In such an environment, there are bound to be challenges. Any issues related to billings will not only be resolved quickly and responsibly, but also resolved in such a way that it will not affect any services provided to our soldiers."

But in written testimony submitted to Congress, Halliburton's own auditor, Marie de Young, revealed that the company's internal auditors (nicknamed the "Tiger Team") were not doing their job properly. De Young, who was hired in December 2003 to help oversee Operation Iraqi Freedom contracts, told Congress:

When the Tiger Team examined a subcontract, they just checked to make sure that all the forms were in the file. ... They didn't assess the reasonableness of the price or consult with site managers. The team's sole purpose was to close as many subcontracts as possible, under the mistaken assumption that everything that was closed prior to the arrival of the government audit team would be exempt from further scrutiny.

De Young also made clear the company's intentions: "I had been advised by subcontract administrators who quit the company that employees get moved around when they get too close to the truth. ... Ironically, other previous managers who tolerated bad practices were promoted to better paying jobs in Iraq or Houston or Jordan."

The final touch of irony: Halliburton housed the Tiger Team at the five-star Kempinski Hotel in Kuwait, paying each of them a whopping $10,000 per month for their troubles. At the time, U.S. soldiers were required to live in tents at a cost of $1.39 a day. When the military asked Halliburton employees to move into the tents, they refused.

Crimes and Consequences

The audit reports have produced little real action on the part of the Pentagon thus far. Last Monday, Halliburton announced that the Pentagon had told the company that it plans to withhold 15 percent ($60 million) of its monthly payment until they find all the missing receipts. But the Pentagon reversed its decision the very next day, announcing that it will give the company more time to find the missing paper work and prove their costs before imposing the penalty. Halliburton has already been granted extra time twice.

The audits may also not have much effect on the future of the reconstruction effort, which remains grim. Bremer's departure in June was only one in an exodus of occupation officials and contractors, derisively labeled by a U.S. soldier as "The League of Frightened Gentleman," fleeing the dangerous situation in Iraq. The German engineers hired to repair the Daura power plant in Baghdad left behind enormous disassembled machines strewn across the plant floor. "They didn't contact me," said Bashir Khalif Omir, the plant director at the time. "They took their luggage at midnight and they left."

When Bremer caught his jet plane out of Iraq, two heavily armed Blackwater private military watched his back, rifles pointed menacingly at camera crews. There were no flowers from an adoring Iraqi public, not even anything similar to the dramatic lift-off from the roof of the U.S. embassy in Saigon marked the occasion – just a quiet, top-secret escape to freedom (and a lucrative book contract). But Bremer left behind a nation that was not just more dangerous but also poorer for his efforts.

 
How Dick Cheney Got Away With $35 Million Right Before the Government Launched a Probe into Halliburton
by Jason Leopold

It’s obvious that no mainstream news reporter has the gumption to seriously question Vice President Dick Cheney’s ethics when he was chief executive of Halliburton, the oil-field services company that is currently embroiled in a scandal with the Pentagon due to its questionable accounting practices related to its work in war-torn Iraq.

Pity those journalists because this is the stuff Pulitzer’s are made of. What’s even more remarkable is that there’s reams of documents in the public domain showing how Cheney cooked the books when he was CEO of Halliburton, which makes the vice president look like Ken Lay’s twin brother. The evidence is beginning to collect dust. To tell the story of how Cheney’s Halliburton used accounting sleight of hand to fool investors all you need to do is connect the dots, which is what this story will do.

Let’s start with a bit of old news. A couple of weeks ago Halliburton agreed to pay a $7.5 million fine to settle a U.S. Securities and Exchange Commission probe related to a 1998 change in the way Halliburton accounted for construction revenue.

The commission says the undisclosed accounting change caused Halliburton's public statements regarding its income in 1998 and 1999 to be materially misleading, boosting Halliburton’s profits on paper by $120 million.

“In the absence of any disclosure, the investing public was deprived of a full opportunity to assess Halliburton's reported income - more particularly, the precise nature of that income, and its comparability to Halliburton's income in prior periods,” according to the commission.
Cheney was CEO of Halliburton from 1995 to 2000. The SEC said Cheney cooperated with the agency’s investigation and as such he wasn’t penalized for his role in the charade. No big surprise there. All five of the SEC commissioners were appointed by President Bush. Dozens of the administration’s crimes have gone unpunished in the past three years. But dig a little more and you’ll see just how deep the rabbit hole goes.

Cheney has said publicly that he was unaware of Halliburton’s accounting machinations while he was CEO of the company. His Sgt. Schultz defense has been used before by the likes of Gary Winnick of Global Crossing, Dennis Kozlowski of Tyco, John Regas of Adelphia and Ken Lay of Enron, all of whom have been prosecuted by the Justice Department for cooking the books at their respective companies.

A story in the July 22, 2002 issue of Newsweek sets the record straight and proves that Cheney knew full well that Halliburton was engaging in accounting trickery to boost its stock and standing on Wall Street and he should be held accountable just like those other corporate evildoers.

In an interview with two of Newsweek’s reporters, Halliburton CEO David Lesar defended his company’s bookkeeping and said that former CEO Dick Cheney was aware of the firm's accounting methods. Lesar says “Cheney knew that the firm was counting projected cost-overrun payments as revenues, “The vice president was aware of who owed us money, and he helped us collect it,” Lesar told Newsweek.

Wendy Hall, a spokeswoman for Halliburton, said at the time that “the vice president was aware we accrued revenue on unapproved claims in accordance with generally accepted accounting principles.”

By the way, those “generally accepted accounting principles” is what Enron used to cook its books and is why the company’s top two leaders have been charged with a whole of range of crimes by the Justice Department.

Just as disturbing is the fact that Cheney had now defunct auditor, Arthur Anderson, which unraveled in 2002 after the company was found guilty of obstruction of justice for destroying documents related to its role in the Enron debacle, approve Halliburton’s accounting methods. Cheney was so grateful to Anderson that he agreed to appear in a promotional video for Anderson and spoke glowingly about the company for going above and beyond routine audits for Halliburton.

“One of the things I like that they do for us is that, in effect, I get good advice, if you will, from their people based upon how we're doing business and how we're operating, over and above the, just sort of the normal by-the-books audit arrangement,” said Cheney in the 1996 tape.

In a separate but equally corrupt act of corporate malfeasance, a French judge is pouring over evidence to determine whether Cheney may have been responsible under French law for at least one of four bribery payments exchanged between a Halliburton subsidiary and Nigerian officials to obtain contracts for liquefied natural projects. Under French law, “the head of a company can be charged with 'misuse of corporate assets' for bribes paid by any employee - even if the executive didn't know about the improper payments.” The U.S. Justice Department is also investigating the issue.

As if that weren’t enough to toss the vice president and his boss out of office, the Justice Department is also investigating whether Halliburton violated sanctions that prohibit U.S. corporations and businesses from engaging in commercial, financial, or trade transactions with Iran while Cheney headed the company. For the record, Cheney personally lobbied Congress in 1996 to lift those sanctions and when Congress denied the request Halliburton opened a Cayman Island subsidiary so it could do business in Iran by skirting U.S. law.

In July 2004, a federal grand jury issued a subpoena to Halliburton seeking information about its work in Iran. Government officials told the Washington Post such cases are referred to Justice only when there is evidence "intentional or willful" violations have occurred.

The Washington Post summed up Cheney’s tenure at Halliburton this way on July 16, 2002 following revelations that the vice president made a $35 million windfall from his sales of Halliburton stock, right before the company’s share price crashed on the announcement that it was being investigated by a grand jury related to the company overbilling the federal government for its work at Fort Ord in California (which also took place under Cheney’s watch), an issue that is identical to current charges that the company has overbilled the government for its work in Iraq.

“The developments at Halliburton since Cheney's departure leave two possibilities: Either the vice president did not know of the magnitude of problems at the oilfield services company he ran for five years, or he sold his shares in August 2000 knowing the company was likely headed for a fall.”

Either way, the more evidence that surfaces related to Cheney’s role at Halliburton the more it becomes clear that the vice president is unfit to serve a second term in the White House.
Jason Leopold is the former Los Angeles bureau chief of Dow Jones Newswires where he spent two years covering the energy crisis and the Enron bankruptcy. He just finished writing a book about the crisis, due out in December through Rowman & Littlefield.

 
Cheney Speaks to the Reptile Brain
by Thom Hartmann

"I am not unaware of the effect of the ridicule cast on this instrument of defence by those who wished for engines of offence."- Thomas Jefferson, letter to James Madison referencing damage done to morale by jokes about the US Navy, May 21, 1813

It's Willie Horton all over again. The Bush family is subjecting Americans to psychological operations, only the level of sophistication and deception is an order of magnitude higher than it was in 1988. And it could turn the election, if not used effectively in rebuttal.

Here's how it works, and how Dick Cheney just used it masterfully:
We humans, being the product of a long evolutionary process, really have three brains. And, as the Bush psy-ops folks know, politicians who win campaigns do so because they speak to all three of those brains.

First there's the most primitive of our brains, sometimes referred to as the "reptilian brain" because we share it in common with reptiles like alligators and komodo dragons. The reptile brain has a singular focus: survival. It doesn't think in abstract terms, and doesn't feel complex emotions. Instead, it's responsible for fight-or-flight, hunger and fear, attack or run. It's also non-verbal - you can stimulate it with the right words, but it operates purely at the level of visceral stimulus-response.

The second brain is one we share with the animals that came along after reptiles - mammals. The mammalian brain - sometimes referred to as the Limbic Brain because it extends around and off of the reptilian brain in a dog-leg shape that resembles a limb - handles complex emotions like love, indignation, compassion, envy, and hope. Anybody who's worked with animals or had a pet knows that mammals share these emotions with humans, because we share this brain. While a snake can't feel shame or enthusiasm, it's completely natural for a dog or cat. And, like the reptile brain, the mammalian brain can also be stimulated indirectly by words, and is also non-verbal. It expresses itself exclusively in the form of feelings, although these are more often felt in the heart than the gut.

The third brain - the neocortex ("new" cortex) - is something we share with the higher apes, although ours is a bit more sophisticated. Resting over the limbic brain (which is, in turn, atop the reptilian brain), our neocortex is where we process abstract thought, words and symbols, logic and time.

When Dick Cheney recently took John Kerry's comment about sensitivity in the war on terror out of context and spun it for his audiences, he was performing a psychologically masterful bit manipulation of all three brains.

Only ridicule with a subtext of fear has this power.

"America has been in too many wars for any of our wishes, but not a one of them was won by being sensitive," Cheney said, firing first the thinking brain ("too many wars") and then the limbic brain ("for our wishes[/hopes/ideals]"). And then he went for the reptile brain: "...but not one of them was won by being sensitive."

The comment brought an instant response of laughter - an emotional and involuntary response, as Freud pointed out, that's the result of the neocortex thinking it's moving logically along in one direction (a discussion of too many wars) and then suddenly getting derailed ("but not one of them was won by being sensitive") from that thought. This sudden derailment - known among comedians as the "punch line" - causes the thinking brain to be momentarily confused and triggers a response known as laughter that comes involuntarily from the limbic mammalian brain. (This is why comedy almost always involves misdirection, like in the old Red Skelton classic, "I just flew in from Chicago...and, boy, are my arms tired!")

But then, in a brilliant coup de grâce, Cheney spoke directly to his listener's reptilian brain, the part that most powerfully controls our behaviors because it constantly is vigilant to maintain our survival. "Those that threaten us and kill innocents around the world," he said, arousing the reptilian awareness of threat, "do not need to be treated more sensitively, they need to be destroyed."

To reinforce this message to his listener's most primitive instincts, Cheney continued to invoke the word "sensitive" a half-dozen more times, always wrapping it in surprise and survival.
Not only is this among the most sophisticated of psychological warfare operations, in this case it was also one of the most immoral, since Cheney was quoting Kerry out of context and, thus, basing his entire premise upon what was essentially a lie.

But the deed was done, because all three brains had been touched.

No matter how much the Kerry campaign tried to argue to the thinking neocortex that his words meant we should be sensitive to the needs and values of our allies and not sensitive to our enemies, his response never reached the limbic or reptilian brains of his or Cheney's listeners. Kerry's response - "It's sad they can only be negative" - was one that only reached the thinking neocortex. It didn't provoke a laugh, driving it into the limbic brain, and it didn't address Bush/Cheney failures to keep Americans safe, the main issue of the reptilian brain.

The simple reality is that issues framed in intellect will never trump issues framed in emotions. And to have maximum power, those emotions must include the limbic brain feelings of hope and idealism as well as the reptilian brain instincts for survival and safety.

Of course, issues must make sense to the thinking brain, but if presented in a way that misses the other two of our brains, they will never motivate people to walk into a polling place and pull a lever or mark a ballot.

Interestingly, the most powerful tool to hit all three brains simultaneously is good-natured ridicule, because there is no possible way to respond to it. Ridicule touches the thinking neocortex by referencing an issue, but also touches the limbic and reptilian brains, where our most lasting impressions are stored and feelings are anchored.

The only possible response to ridicule is logic, which only touches a third of our brains and thus always fails to undo the ridicule's emotional impact.

Even God is not immune, as Mark Twain wrote: "No God and no religion can survive ridicule. No political church, no nobility, no royalty or other fraud, can face ridicule in a fair field, and live." History demonstrates well the truth Czech author Milan Kundera wrote: "Mockery is a rust that corrodes all it touches."

In 1948, one of the most well-publicized moments of the campaign between Truman and Dewey was just after Dewey had given a speech calling for "national unity" and Truman supporter and superstar Tallulah Bankhead went on national radio to ask, "Will all the candidates who are for disunity please stand?" She then dug the knife in deeper (all the way to the reptilian brain), implying Dewey wasn't really up to handling the post-WWII survival issues America faced, by adding, "The next thing we know he'll be endorsing matrimony, the metal zipper, and the dial telephone."

More recently, Reagan's famous, "There you go again," even though inaccurate, blasted through all three minds of the national audience watching his debate with Jimmy Carter, reducing Carter to a caricature of himself. Michael Dukakis was defeated by the Bush campaign portraying him as Rocky the Flying Squirrel in a tank, and by images of a black murderer Dukakis had never even heard of shown in Bush campaign commercials. Four years later, Dana Carvey's parodies of George H.W. Bush helped diminish Bush the Elder to an ineffectual buffoon in viewer's minds. And Dubya is doing it again with the "intelligence" ad when, after a clip of Kerry saying he wants to revamp our national intelligence systems, the voiceover announcer sarcastically intones, "Oh, really?"

Hitting all three brains with put-down humor is both relatively easy and can be devastating. When mixed with positive "vision" messages, it can be unstoppable.

John Edwards, for example, has crafted a message that speaks simultaneously to a voter's intellect (neocortex), heart (limbic brain), and survival needs (reptilian brain) with his "two Americas" frame. If his ticket is to win, John Kerry must do the same with every single issue in this campaign, while at the same time using "light hearted humor" (dripping sarcasm, like Teresa's "they want four more years of hell," is dangerous) to highlight Bush's failures and incompetence.

And if ever there was a candidate whose flip-flopping, fear-mongering, military desertion, and incompetence was ripe for ridicule it's George W. Bush. (A reality not lost by websites like www.whitehouse.org.) Handled correctly, an advertising campaign that lightly ridicules Bush while clearly and accurately pointing out his failings could be devastating.

The Bush campaign makes extensive use - as conservatives have for decades (remember Newt's "word list") - of NLP, framing, and other sophisticated psychological techniques to take control of issues and influence the electorate. They've been known and used in advertising for a half century, and were first used in a big way in politics in the campaigns of Reagan and Bush the Elder.

If the Kerry campaign doesn't quickly figure out how to use ridicule to make these sorts of essential framing and piercing issues work properly, we may be in for a replay of the Bush/Dukakis meltdown. Which would terrify our reptilian brains, sadden our limbic brains, and short-circuit our neocortexes.

Thom Hartmann (www.thomhartmann.com), a former psychotherapist, NLP Trainer, advertising agency CEO, and guest psychology faculty member at Goddard College, has provided training and consulting to a wide variety of groups and agencies. The Project Censored award-winning, best-selling author of 7 books on psychology and 5 books on democracy (among others), he does a nationally syndicated daily progressive radio talk show. His new book "The Edison Gene" contains a detailed explanation of how our brains are formed, and his most recent books on democracy are "Unequal Protection," "We The People," and "What Would Jefferson Do?"

 
CHENEY FLIP-FLOPS—BIG-TIME! A phony man pulled a major flip. But will pundits dare to discuss it?

TUESDAY, AUGUST 17, 2004

CHENEY FLIP-FLOPS—BIG-TIME: We all know how our Big Pundits hate flip-flops! But are they prepared to report Cheney’s flip? Last week, the dissembling veep kept telling voters that Kerry recommended “sensitivity” toward terrorists. Everyone knows that this claim is pure bunk, but pundits hid beneath their desks, too afraid to challenge Cheney’s fake statement. Result? By Saturday, the veep was playing the rubes extra hard. He played them in Elko, Nevada:

CHENEY (8/14/04): Senator Kerry has also said that if he were in charge he would fight a “more sensitive” war on terror. (Laughter.)
America has been in too many wars for any of our wishes, but not a one of them was ever won by being “sensitive.” (Applause.)
President Abraham Lincoln and General Grant did not wage sensitive wars. President Roosevelt and Generals Eisenhower and MacArthur did not wage a sensitive war. A “sensitive war” will not destroy the evil men who killed 3,000 Americans on the morning of 9/11, and who now seek chemical, nuclear and biological weapons to kill hundreds of thousands more. The men who beheaded Daniel Pearl and Paul Johnson will not be impressed by our sensitivity. (Applause.)
As our opponents see it, the problem isn't the thugs and the murderers we face, but it is somehow our attitude. Well, the American people know better. They know that we are in a fight to preserve our freedom and our way of life, and that we are on the side of right and justice in this battle. Those who threaten us and kill innocents around the world do not need to be treated more sensitively. They need to be destroyed. (Applause.)

Shocking, isn’t it? According to Cheney, Kerry thinks the problem is us, not the terrorists. They won’t be impressed by sensitivity, he said, implying that Kerry had said something different. What a truly remarkable slander—a slander acceded to by your “press corps,” who cower and hide behind their chairs when Cheney plays games like this with the rubes. And by the way, is the following statement accurate? “America has been in many wars, but not a one of them was ever won by being ‘sensitive.’” Readers, did we learn nothing from watching Patton? Every American war has involved diplomacy—“sensitivity” to allies’ interests. But those voters—laughing, applauding—didn’t know Cheney had played them for fools. And pundits were simply too afraid to notice the plain and the obvious.

And that’s where Cheney’s flip-flop comes in! On Thursday, the VP spoke with conservative talk host Hugh Hewitt (click here, then scroll down for transcript). He started with the week’s prescribed drivel about how “the two words don’t really go together, sensitive and war.” But moments later, Hewitt asked about the current stand-off in Najaf. And wouldn’t you know it? Surprise of surprises! Accidentally telling the truth, Dick Cheney flip-flopped—big-time:

HEWITT (8/12/04): Will the Najaf offensive continue until that city is subdued even if that means a siege of the Imam Ali shrine?

CHENEY: Well, from the standpoint of the shrine, obviously it is a sensitive area, and we are very much aware of its sensitivity. On the other hand, a lot of people who worship there feel like Moqtada Sadr is the one who has defiled the shrine, if you will, and I would expect folks on the scene there, including U.S. commanders, will work very carefully with the Iraqis so that we minimize the extent to which the U.S. is involved in any operation that might involve the shrine itself.”

Good God! As Cheney dumbly but honestly noted, the army hasn’t taken that mosque due to “sensitivity” about cultural issues. Dumbly, Cheney used the very word he had just trashed Kerry for using. Dumbly but honestly, Cheney showed how utterly fake his week-long assault has really been.

But then, the U.S. army has been “sensitive” to allies and potential allies in every war it ever has fought. And Bush and Cheney have pursued the same sort of “sensitive war” for which they’ve assaulted Feckless Kerry. Yes, Cheney has played the voters for fools in his ugly trashing of Kerry. But now, this fake man has flip-flopped—big-time. We know how our pundits just hate those big flips. Will they dare mention this one from Cheney?

IT’S TIME FOR THE “PRESS CORPS” TO ACT: We know! Washington pundits get very scared when faced with the Bush Admin’s endless faking. But this latest example is so extreme and absurd that it simply must be reported. For the past week, Bush and Cheney—and Cheney’s wife—have trashed Kerry over this gimmicked-up scandal. They have baldly misstated what Kerry said—and they’ve played the voters for fools in the process. And now here he is, the great Dick Cheney, expressing the very same view he’s been mocking, even using the very same language! But will your frightened, startled-deer pundits dare discuss what the great man has said? The answer to that is perfectly clear; unless they’re forced, they won’t likely act. They’ll micro-nitpick Kerry’s statements—but run in fear from Cheney and Bush. Your Washington pundits—your Sangers; your Simons; your Meachams, your Kornbluts—these foppish scribes become scared rabbits when it comes to telling the truth about power. You’re going to have to scream and yell if you want them to talk about Cheney’s big flip. They’re very frightened, and weak (more below). You’re going to have to scream and yell if you want your weak pundits to act.

 
Harkin calls Cheney a 'coward' and criticizes 'backdoor draft'

By The Associated Press

DES MOINES -- Sen. Tom Harkin called Vice President Dick Cheney a "coward" for avoiding service in Vietnam and called on President Bush to end the "backdoor draft."The Iowa Democrat was responding Friday to the call-up of a Des Moines police officer who has already completed his eight-year military commitment.Harkin echoed comments earlier this week by Des Moines Police Chief William McCarthy, who said the military's treatment of Des Moines Police Officer Rodell Nydam was "evil."

Nydam, 26, is being called back to Iraq despite finishing his National Guard commitment in April. He's being called up under the military's "stop loss" exemption, which can extend duty in wartime.

Harkin, who served as a jet pilot in the Navy, said the exemption wasn't intended for situations like the war in Iraq. He said first responders like Nydam are needed to protect the community."The part of the U.S. code that provides for this anticipates major wars, major national emergencies," Harkin said. "That is not what we're confronting right now. You think about using this law only in (extreme cases), only when we're really in dire, dire need."

Harkin also shot back at Cheney, who said in a visit to Iowa on Tuesday that presidential candidate John Kerry lacks a basic understanding of the war on terrorism and cannot make America safer.He noted that Cheney had several student deferments that allowed him to skip serving in Vietnam."When I hear this coming from Dick Cheney, who was a coward, who would not serve during the Vietnam War, it makes my blood boil," Harkin said. "Those of us who served and those of us who went in the military don't like it when someone like a Dick Cheney comes out and he wants to be tough. Yeah, he'll be tough. He'll be tough with somebody else's blood, somebody else's kids. But not when it was his turn to go."

David James, a spokesman for the Republican National Committee, dismissed Harkin's attacks."His shrill negative attacks did nothing to get Howard Dean elected or get the nomination during the caucuses," James said, referring to Harkin's endorsement of the former Vermont governor before the Iowa caucuses."

 
ECONOMICS REPORT - Halliburton's Legal Troubles

By Mario Ritter Broadcast: August 13, 2004
This is Gwen Outen with the VOA Special English Economics Report.

Investors in a company have some control over how it operates. Shareholders can vote on some issues. They can also go to court if they believe their interests are being harmed.

Last week, investors brought legal action against the energy services company Halliburton. The investors accuse four former or current top officers of misleading them.

The latest legal action says that Halliburton lost a legal case in Texas in September, two thousand one. A court ordered the company to pay one hundred thirty million dollars. The decision was kept secret. At the time, Halliburton told investors that the case had gone well. But three months later, the company’s stock price dropped forty-two percent on the day that news of the judgement became public.

Four former Halliburton employees also told legal investigators that the company did not keep honest records of its sales and costs from nineteen ninety eight to two thousand one. They said the company claimed to collect more money than it received. They said workers were expected to change records to make the company appear more profitable. The charges cover two years when Vice President Dick Cheney was its chief executive officer. He was not named in the case.
In a statement, Halliburton said the latest legal action is an attempt to turn public opinion against the company. Halliburton said a federal court in Dallas, Texas, approved a settlement of twenty similar cases on June seventh. The company agreed to pay six million dollars. Halliburton said the court ordered that no more shareholder cases be brought against the company.

On August third, Halliburton reached a settlement with the Securities and Exchange Commission. The S.E.C. said the company had secretly changed its method of financial record-keeping in nineteen ninety-eight and nineteen ninety-nine. The new method made Halliburton’s earnings appear almost fifty percent higher. Halliburton paid seven million five hundred thousand dollars without admitting any wrongdoing.

Halliburton faces other problems. The Justice Department is investigating Halliburton’s projects in the Balkans and in Nigeria.

Halliburton is based in Houston, Texas. It is the world’s second largest oil services company. The largest is Schlumberger Limited.

This VOA Special English Economics Report was written by Mario Ritter. This is Gwen Outen.

 
Obtaining Cheney Rally Ticket Requires Signing Bush

By Jeff Jones Journal Staff Writer

Some would-be spectators hoping to attend Vice President Dick Cheney's rally in Rio Rancho this weekend walked out of a Republican campaign office miffed and ticketless Thursday after getting this news: Unless you sign an endorsement for President George W. Bush, you're not getting any passes. The Albuquerque Bush-Cheney Victory office in charge of doling out the tickets to Saturday's event was requiring the endorsement forms from people it could not verify as supporters.

State Rep. Dan Foley, R-Roswell, speaking on behalf of the Republican Party, said Thursday that a "known Democrat operative group" was intending to try to crash Saturday's campaign rally at Rio Rancho Mid-High School. He added that some people were providing false names and addresses and added that tickets for the limited-seating event should go to loyal Bush backers.

However, some who left the office off Osuna NE without tickets on Thursday said they're not affiliated with an operative group and should have a right to see their vice president without pledging their allegiance to Bush. "I'm outraged at this. I'm being closed off by my own government.

It's crazy," said East Mountains resident Pamela Random, who added that she is an unaffiliated voter.

John Wade of Albuquerque said he initially signed the endorsement but was having second thoughts before he even left the office. Wade, a Democrat, said he returned his tickets and demanded to get his endorsement form back. "It's not right for me to have to sign an endorsement to hear (Cheney) speak," Wade said. "I'm still pissed. This just ain't right."

Yier Shi, a spokesman for the Republican National Committee, which is putting on Saturday's event, confirmed that those interested in seeing Cheney were asked to sign an endorsement form if they couldn't be verified as Bush-Cheney supporters. He said campaign workers got such verification by checking to see whether, among other things, someone has contributed money or volunteered for the campaign. When asked whether workers were also checking the party affiliation of those asking for tickets, he said that was a possibility.

John Sanchez, chairman of the Bush-Cheney '04 re-election effort in the Southwest, said he wasn't aware of the endorsement matter, adding, "I would be surprised" if it was happening. However, he said he works directly for the Bush-Cheney campaign and the rally is a Republican National Committee event.

An endorsement form provided to the Journal by Random says: "I, (full name) ... do herby (sic) endorse George W. Bush for reelection of the United States." It later adds that, "In signing the above endorsement you are consenting to use and release of your name by Bush-Cheney as an endorser of President Bush."

A Journal reporter, who is a registered Democrat, called to inquire about a ticket Thursday afternoon. He was asked for his name, address and driver's license number but was not told over the telephone that he would need to sign any endorsement form. He got the news after arriving at the Bush-Cheney office.

Random and Wade said they were also not informed of the requirement until they showed up at the office. Another Journal employee, who is a registered Republican, visited the office Thursday morning and got a ticket without being asked to sign the form.

The John Kerry/John Edwards campaign on Thursday issued a news release that asked, "Shouldn't all New Mexicans have the right to see their VP?" Ruben Pulido Jr., a spokesman for that campaign, said the Democratic Party has no screening requirements for those interested in seeing Kerry or Edwards.

When Kerry visited Albuquerque earlier this month, a contingent of Bush supporters were in the crowd. The Associated Press has reported that the group chanted "Viva Bush!" during the event. The AP added that Kerry urged the crowd to tolerate the Bush supporters.

Moses Mercado, head of the Kerry-Edwards campaign in New Mexico, was in Boston on Thursday for the Democratic National Convention. He challenged Republicans to open their event "to all New Mexicans." "I love when they come to New Mexico, but I wish they'd talk to New Mexicans and let New Mexicans hear their plan," Mercado said. "Because I think they (New Mexicans) really are hungry. They want answers."

Foley countered that Republicans weren't invited to Kerry's nomination-acceptance speech Thursday evening at that convention. "This is a political event— just like (Thursday night)," Foley said of Cheney's upcoming visit.

Shi said the Rio Rancho event is intended to "energize" Bush-Cheney supporters, and organizers don't want it disrupted. "We've received dozens and dozens of calls from Kerry-Edwards (supporters) who have used deceitful tactics to try and get in and disrupt this event," he said. "Our supporters have worked too hard to have an event like this get disrupted."

Security for Cheney's visit is exceptionally tight. There will be no parking at the school where he is to speak: Rally participants will instead be shuttled to the event. Those without tickets, including protesters, are to be in a designated area across from the school.

Jim Tillery, a Rio Rancho teacher, signed the endorsement form when he came to the office Thursday afternoon. But he said he sees no problem with having Bush detractors in the crowd. Tillery said there was a "mixed crowd" when Cheney made a visit to Rio Rancho in October 2000, and Cheney deftly handled questions from those detractors. This time around, "my guess is they probably just wanted a rally of support rather than having the diggers or bashers mixed in with them," he said.

 
Kerry assails Cheney, corporate influence

By Mary Dalrymple, Associated Press.
Tribune news services contributed to this report
Published August 4, 2004

BELOIT, Wis. -- Democrat John Kerry, in a veiled swipe at Vice President Dick Cheney, said Tuesday that he won't dole out special favors to corporations if elected president."My vice president of the United States will never meet secretly with polluters who want to rewrite the environmental laws," the presidential nominee told a cheering crowd packed into a hockey arena.

The barb referred to Cheney, who met with industry officials while drafting proposals for new energy laws. Democrats want more information about those meetings and have argued that Cheney, the former head of the Halliburton Co., had allowed the loosening of clean air and water rules at the behest of corporations.The meeting was billed as an opportunity for Kerry to talk about the economy and his plan to balance the budget.

Kerry wants to roll back President Bush's tax cuts for families earning more than $200,000 annually and rid the tax code of what Kerry calls narrow tax breaks that help powerful corporations that contribute to political campaigns.

Kerry said he counts $65 billion that goes to corporations "for no really good reason at all.""You go through those pages, ladies and gentlemen, and there's gobbledygook that is hard to interpret," he said. "The only people who can interpret it are the people who paid for it with the campaign finance system."

Responding to Kerry's remarks, the Bush-Cheney campaign said the comments on corporations was a personal attack on Cheney. "This is part of his bizarre, personal diatribe that he issued at the convention during his acceptance speech," spokesman Terry Holt said."

John Kerry's economic plan would derail this economic recovery by raising taxes on those who create jobs in this country," he said.Kerry also promised to cut the federal deficit in half over four years.

To do that, he said, he wants the power to veto individual spending decisions made by Congress and to enforce budget caps with automatic spending cuts.

The White House last week said it expected this year's federal deficit to reach $445 billion. That's less than the White House budget office previously estimated, but it would still be a record in dollars.

At a Monday night rally in Milwaukee, Kerry's wife, Teresa Heinz Kerry, introduced her husband. At times their speeches were interrupted by chants from Bush supporters using a megaphone on a nearby street to shout, "Four more years."Heinz Kerry responded, "They want four more years of hell." The candidate threw back his head with a laugh, and the partisan, pro-Kerry crowd roared its approval, chanting, "Three more months, three more months," referring to the time remaining before the Nov. 2 election, with Heinz Kerry joining in.

When it was his turn to speak, Kerry said of his wife, "She speaks her mind, and she speaks the truth--and she's pretty quick on her feet too."

Kerry's two-week campaign trip through battleground states takes him from Wisconsin to Iowa. His bus caravan may cross paths with Bush on Wednesday as both candidates are scheduled to appear in Davenport, Iowa, around the same time.

Bush lost Iowa to Al Gore by fewer than 5,000 votes in 2000.

The Kerry tour left Boston on a bus, crossed Lake Michigan on a high-speed ferry, and planned to take a train west from St. Louis later this week after Kerry reunites with his running mate, John Edwards, who has been campaigning in Southern states.

 
U.S. authorities didn't keep track of Iraq reconstruction spending, audit says

By Matt Kelley, Associated Press, 7/30/2004 11:42

WASHINGTON (AP) U.S. authorities in Baghdad spent hundreds of millions of Iraqi dollars without keeping good enough records to show whether they got some services and products they paid for, government investigators said.

Officials of the former Coalition Provisional Authority did not have records to justify the $24.7 million cost for replacing Iraq's currency, according to the report from the authority's inspector general. The report also said the authority paid nearly $200,000 for 15 police trucks without knowing if the trucks were delivered.

The report, released in Washington late Wednesday, is the first formal audit of contracting procedures under the authority, which oversaw billions of dollars in reconstruction spending that critics say was doled out without proper controls.

The agency's defenders say it did the best it could given the pressure of operating in a war zone and trying to get reconstruction going quickly.

In a report to Congress being released Friday, the authority's inspector general, Stuart W. Bowen Jr., said his teams found several management problems. Bowen's office is investigating 27 possible criminal cases and has closed or referred for prosecution 42 others.

One example was poor control over an oil pipeline repair contract that resulted in more than $3 million in overcharges, including billing for work not done. Also, the assistant to the U.S. military coach for an Iraqi sports team gambled away part of the $40,000 allocated for team travel to tournaments.

Officials have seized $29,000 in an investigation of counterfeiting in Iraq, the report to Congress said.

The report did not say if any investigations had resulted in criminal charges but noted that at least two Americans had been fired and returned to the United States. Iraqi prosecutors are handling the case of an Iraqi who took payoffs while falsely claiming to be with the Education Ministry, the report said.

The general overseeing reconstruction contracts in Iraq said in response to the audit that the lack of documentation did not prove the money was wasted.

''We believe the contracts awarded with Iraqi funds were for the sole benefit of the Iraqi people, without exception,'' Army Brig. Gen. Stephen M. Seay wrote to the inspector general.

The authority ran Iraq from May 2003 until the United States handed over power to an interim Iraqi government on June 28. The authority used seized funds from Saddam Hussein's government and oil revenues to pay for 1,928 contracts worth about $847 million, the inspector general's report said.

An authority rule from last August called for following international law and U.N. regulations while spending Iraqi money. But the authority did not issue standard operating procedures or develop effective contract review, monitoring and evaluation, the report said.

Seay said the authority's contracting office was overworked, understaffed and under constant threat of attack.

The investigators reviewed 43 contracts and found 29 had incomplete or missing documentation. For each of the 29, ''We were unable to determine if the goods specified in the contract were ever received, the total amount of payments made to the contractor or if the contractor fully complied with the terms of the contract,'' investigators wrote.

For example, the official overseeing a contract for 15 double-cab pickup trucks for an Iraqi police department paid $87,500 before the trucks were delivered and an additional $100,000 without getting written records that the trucks arrived at the police department, the report said. The report did not say whether the trucks were ever delivered.

The report also criticized the contract for exchanging Iraqi currency, which had been cited as a key success by the authority's former administrator, L. Paul Bremer.

The Defense Contract Audit Agency reviewed the proposed contract in August 2003 and identified $5 million in possible savings. But the authority awarded the contract at the original amount and has no documentation showing any further review of costs, the inspector general's report said.

Seay said the authority and the new organization overseeing contracts, the Project and Contracting Office, had made changes to fix problems such as the lack of review and monitoring.
The authority's inspector general released a report this week saying that the company responsible for the largest logistics contract in Iraq had lost track of more than $18 million worth of equipment including vehicles and electric generators.

The report said investigators could not track down 52 of 164 randomly selected items in an inventory of more than 20,000 items overseen by KBR, a subsidiary of Halliburton. The missing items included two electric generators worth nearly $1 million, 18 trucks or sport utility vehicles and six laptop computers.