Dick Cheney- Corporate Criminal

Audit: Halliburton lost track of government property in Iraq

By John Solomon, Associated Press, 11/26/2004 20:05

WASHINGTON (AP) A third or more of the government property Halliburton Co. was paid to manage for the U.S.-led Coalition Provisional Authority in Iraq could not be located by auditors, investigative reports to Congress show.

Halliburton's KBR subsidiary ''did not effectively manage government property'' and auditors could not locate hundreds of CPA items worth millions of dollars in Iraq and Kuwait this summer and fall, Inspector General Stuart W. Bowen reported to Congress in two reports.

Bowen's findings mark the latest bad news for Vice President Dick Cheney's former company, which is the focus of both a criminal investigation into alleged fuel price gouging and an FBI inquiry into possible favoritism from the Bush administration.

The Associated Press reported Wednesday that FBI agents have extensively interviewed an Army contracting officer who last month went public with allegations that the Bush administration was improperly awarding contracts to Halliburton without competitive bidding.
Halliburton and the Pentagon deny wrongdoing, and say they are cooperating in all investigations.

Company spokeswoman Cathy Gist said Friday that KBR recently conducted a ''wall-to-wall'' review of all property it is managing for the Pentagon in war zones including Iraq and Afghanistan and produced results far better than Bowen's findings.

''We are pleased to report that this total inventory review confirmed 99.4 percent accountability of all property,'' she said. ''The facts show that KBR has adequately managed property for this mission by aggressively monitoring its property management functions above and beyond what is required.''

The U.S-backed CPA officially dissolved after a year in power in Baghdad when an interim Iraqi government took control of the country this summer. But Bowen's office continues to review how money was spent and it gave a tough assessment of KBR's performance.

KBR won a key logistics contract to manage everything from trucks and generators to computers.

Bowen reported that an audit earlier this summer found KBR had lost track of more than $18 million worth of equipment in Iraq. Investigators could not track down 52 of 164 randomly selected items in an inventory of more than 20,000 items overseen by KBR, including two electric generators worth nearly $1 million, 18 trucks or SUVs and six laptop computers.

Pentagon and Halliburton officials have been searching since the summer for the missing items and have tracked down many of them. Some were found in the hands of ''unauthorized users'' and 111 vehicles had not been returned for required check-in, they said.

Bowen's auditors found the problems extended beyond Iraq's borders. More recently, auditors sought to determine how well KBR managed the inventory and supplies of the CPA offices and warehouses in neighboring Kuwait, initially sampling 90 items from an inventory of more than 3,000.

The auditors found 30 of the 90 items could not be accounted for, and then reviewed additional documents and projected a total of 1,297 of the 3,032 property items, or 42.8 percent, could not be accounted for or were missing.

The inspector general said 108 additional items were on hand but not properly recorded in inventory. The audit projected more than 400 required hand receipts for property were not available or weren't filled out.

''This occurred because KBR did not effectively manage government property: specifically, KBR did not properly control CPA property items. Further, the KBR property records were not sufficiently accurate or available to properly account for CPA property items,'' Bowen reported to Congress.

''As a result, the CPA-IG projected that property valued at more than $1.1 million was not accurately accounted for or was missing,'' it added.

Bowen's report said the Pentagon agency that managed KBR in Iraq did not agree with all of the findings, and the agency declined to force KBR to change its inventory tracking system.

The Pentagon ''stated that the contractor has put an accurate property control system in place that is effective, and an analysis of the system does not need to be performed at this time,'' Bowen's report said.

Bowen told lawmakers the Pentagon didn't provide any information to back its conclusions. However, he said the government did agree to ''conduct a thorough review of CPA property and seek to recover the cost of missing equipment from the responsible party.''

On the Net:
Latest inspector general report:
http://www.cpa-ig.com/pdf/cpaig october 30 report.pdf
Halliburton: http://www.halliburton.com/

Auditor to Army: Dock Halliburton Pay

Wednesday November 24, 11:08 AM EST

WASHINGTON (Reuters) - The U.S. Army should withhold 15 percent of future payments to Halliburton (HAL) for work in Iraq due to billing disputes, a government auditor said on Wednesday, a move that could cost the contractor tens of millions of dollars.

Stuart Bowen, special inspector general for Iraq reconstruction, said in a memorandum to Army auditors and commanders he believed U.S. contract laws requiring a 15 percent withholding if certain conditions were not met should be imposed on Halliburton unit Kellogg Brown and Root.
Run by Vice President Dick Cheney from 1995-2000, Halliburton has been bogged down in a long-running billing dispute with the U.S. military, and government investigators are looking into whether the company overcharged for work.

The Houston-based company is the U.S. military's biggest contractor in Iraq with the potential to earn up to $18 billion for multiple contracts there, with tasks ranging from cooking meals for troops to rebuilding Iraq's oil industry.

Bowen said based on their "limited audit work," he supported military auditors' proposals last August for the Army to implement the withholding. Documents then indicated the company had not provided enough details to support at least $1.82 billion out of $4.3 billion of logistical work.
"We agree with U.S. Army Materiel Command and DCAA (Defense Contract Audit Agency) positions (on the withholding issue)," said Bowen in the memorandum.

In August, the U.S. Army backed down from a recommendation to dock some payments for KBR's massive logistics contract serving U.S. troops in Iraq and Kuwait and said it was trying to resolve billing problems with the company.

Linda Theis, a spokeswoman for Army Field Support Command in Rock Island, Illinois, said late Tuesday no decision had been taken yet on whether to withhold 15 percent.

Halliburton did not immediately respond to questions about Bowen's memorandum but in the past the company has strongly defended its work in Iraq and says it has been targeted for political reasons because of its former ties to Cheney.


Grand Juries Probe Halliburton in Nigeria, Iraq, and Iran

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Hector Igbikiowubo With Agency Reports

The legal hurdles which has attended Halliburton's over work in Nigeria, Iraq and Iran continues to mount following the company's latest filings with the Securities and Exchange Commission which disclosed that a federal grand jury is probing possible criminal wrongdoing regarding payments to secure construction work in Nigeria.

Halliburton reported for the first time that "payments may have been made to Nigerian officials" by an agent representing Halliburton and three other construction firms who are building the liquefied natural gas plant.

Another grand jury is hearing evidence in Houston about the company's dealings in Iran, and a third is meeting in Illinois to look at Halliburton's contracts with the Pentagon for work in Iraq.

The quarterly report with the SEC, filed last Friday, also disclosed that the Justice Department "and others" are investigating Halliburton's Iraq contracts.

Some of that work apparently involves allegations last month from a top civilian contracting official of improper conduct at the U.S. Army Corps of Engineers. These involved awards of multibillion-dollar contracts to Halliburton for restoring Iraq's oil production and supporting the Army's work in the Balkans.

The allegations by contracting manager Bunnatine Greenhouse are being investigated by the FBI. Halliburton again reported that its work in Iran was in compliance with sanctions barring U.S. firms from doing business with the Iranian regime.

On its Iraq contracts, the company said it has notified the Pentagon's Inspector General of possible wrongdoing by two former employees. "Halliburton's on-going investigation has still not found any evidence that supports there were any bribes paid," said Wendy Hall, a Halliburton spokeswoman.

Poe Fratt, an energy analyst with A.G. Edwards & Sons, Inc. in St. Louis, puts all three probes into the category of "headline risk" rather than financial warning signs. On Oct. 27, Mr. Fratt upgraded Halliburton shares from a hold to a buy recommendation, largely because the company seems to be emerging from a four-year struggle with asbestos exposure liabilities.

Halliburton shares hit a 52-week high on Wednesday, rising 92 cents to close at $37.31. Democratic presidential candidate John Kerry railed against the company during the campaign because of its ties to the Bush administration, and several congressional Democrats have pressed for investigations. Vice President Dick Cheney was Halliburton's chief executive officer from 1995 until 2000, when he became George W. Bush's running mate. "With the election passing, it takes an element of the politicization out of this equation," Mr. Fratt said. "It's not going to go away completely."

Ms. Hall said: "Not many companies could have successfully withstood the kinds of attacks launched against us. Our audiences; customers, shareholders, and employees, understand the attacks for what they are.

They have found strength and not weakness in our response." Rep. Henry Waxman, D-Calif., asked Wednesday for additional hearings on Halliburton's Iraq contracts by the House Government Reform Committee.

Mr. Waxman, in a letter to committee chairman Rep. Tom Davis, R-Va., sought to reopen an investigation into Halliburton's purchases in 2003 of high-priced gasoline for the Iraqi market from a Kuwaiti company.

Mr. Waxman cited State Department documents indicating the U.S. Ambassador to Kuwait, Richard Jones, intervened to direct the gasoline contract to the Altanmia Commercial Marketing Company, the Kuwaiti subcontractor.

Other documents showed Altanmia employees told U.S. embassy officials that it was "common knowledge" that Halliburton and U.S. occupation officials in Iraq "solicit bribes openly." Halliburton paid $2.64 a gallon for the fuel bought from Altanmia. A draft Pentagon audit found Altanmia overcharged for the fuel by at least $61 million.

A State Department spokesman, Kurtis Cooper, said an e-mail from Mr. Jones was sent in his capacity as deputy administrator of the Coalition Provisional Authority, the U.S. entity that ran Iraq after the invasion. Mr. Jones "reflected the growing frustration felt by CPA officials over the problem of insuring delivery of badly needed fuel for Iraqi civilians," Mr. Cooper said.

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Department officials never "participated in decision making regarding the contracts," Mr. Cooper said. Mr. Jones is a career State Department employee.

Halliburton's handling of the gasoline contract was also defended by the chief of the U.S. Army Corps of Engineers. But Mr. Waxman said the new documents "require that we examine the evidence that senior administration officials pressured career contracting officers, as well as the new allegations of kickbacks and corruption." The Associated Press contributed to this report.

U.S. Pressed Halliburton in Kuwaiti Deal

Wed Nov 10, 3:05 PM ET Top Stories - Reuters

By Sue Pleming

WASHINGTON (Reuters) - The U.S. ambassador to Kuwait and other senior U.S. officials put pressure on Halliburton (NYSE:HAL - news) to award a contract to a Kuwaiti company suspected of overcharging to bring fuel into Iraq (news - web sites), according to State Department documents released on Wednesday.

The documents, portions of which were released by Democratic U.S. Rep. Henry Waxman (news, bio, voting record), also said the State Department received information in the summer of 2003 that Halliburton officials demanded kickbacks and solicited bribes from Altanmia Commercial Marketing Company of Kuwait.

Altanmia is at the center of an investigation into whether Halliburton subsidiary Kellogg Brown and Root, or KBR, overcharged in 2003 for getting fuel into Iraq, which despite being oil-rich suffered a shortage of refined products.

A draft Pentagon (news - web sites) audit at the end of last year found evidence KBR might have overcharged by at least $61 million for bringing in fuel under its no-bid U.S. Army Corps of Engineers contract.

According to the documents, on Dec. 2, 2003, Richard Jones, the U.S. ambassador to Kuwait, sent an e-mail directing unidentified officials: "Tell KBR to get off their butts and conclude deals with Kuwait NOW! Tell them we want a deal done with Altanmia within 24 hours and don't take any excuses."

The e-mail added: "If Amb. Bremer hears that KBR is still dragging its feet, he will be livid," referring to the U.S. civilian administrator of Iraq, Paul Bremer.

The State Department did not immediately respond to questions about the documents and the department's Inspector General's office said it could not comment on them.


Halliburton has been a lightening rod of criticism by Democrats, who say the company is the U.S. military's biggest contractor in Iraq because of its ties to Vice President Dick Cheney (news - web sites), who ran the Texas-based company from 1995 to 2000.

Last month, just days before the U.S. presidential election, the Army Corps of Engineers top contracting official, Bunny Greenhouse, said deals given to Halliburton were the worst case of contracting abuse she had ever seen. Greenhouse is set to be interviewed by the FBI (news - web sites) about her allegations.

Waxman said more than 400 State Department documents provided to the House Committee on Government Reform, of which he is the ranking minority member, undermined claims Halliburton contracts were "awarded without political interference."

The California Democrat, one of the most vocal critics of Halliburton, asked Republican Rep. Tom Davis, chairman of the committee, for hearings into KBR's oil deals in Iraq.

One e-mail about an Aug. 4, 2003, meeting between U.S. Embassy officials in Kuwait and Altanmia, reported the Kuwaiti company's claim that coalition and KBR officers "are on the take; that they solicit bribes openly; that anyone visiting their seaside villas at the Kuwaiti Hilton who offers to provide services will be asked for a bribe."

In another "sensitive but unclassified" document, the wife of a senior KBR manager reportedly lost her diamond watch at the Kuwaiti Hilton, where most KBR staff were staying, and her husband demanded the hotel buy her another one.

The e-mail, sent by an unidentified U.S. official, said the KBR manager's wife was "enamored with her new timepiece," an expensive Cartier watch.

Halliburton did not immediately respond to questions about the latest documents but in the past has strongly denied wrongdoing, charging that claims of favoritism are politically motivated.

Halliburton Admits Bribes 'May Have Been Paid' in Nigeria

WASHINGTON - US oil service firm Halliburton has acknowledged that improper payments "may have been made" to Nigerian officials through a consortium of which it was a member.

In a document dated Friday and filed with the US Securities and Exchange Commission, Halliburton said the US Justice Department had expanded its investigation into potential bribes through the TSKJ consortium, a matter also under review in France and Nigeria.

"We understand from the ongoing governmental and other investigations that payments may have been made to Nigerian officials," the company said in the SEC filing.

It noted that investigators were scrutinizing the role by British lawyer Jeffrey Tesler, who has been reported to have funneled as much as 132 million dollars from the consortium, and from Halliburton's former consultant A. Jack Stanley, fired in June.

"We understand that the Department of Justice has expanded its investigation to include whether Mr. Stanley may have received payments in connection with bidding practices on certain foreign projects," Halliburton said.

TSKJ is a private limited liability company registered in Portugal comprising Technip of France, Snamprogetti Netherlands, an affiliate of the Italian group ENI, JGC Corporation of Japan, and Kellogg Brown and Root, which was acquired by Halliburton in 1998.

The company is currently under investigation in the United States for allegedly contemplating bribing Nigerian officials to win a lucrative natural gas project some 10 years ago.

The alleged payments, many of which occurred when Halliburton was being run by Dick Cheney, now the US vice president, helped a consortium including the US group to win a 12 billion dollar contract to build a gas terminal.

Halliburton has denied that its top executives were involved in any wrongdoing.

Cheney oil firm faces UK inquiry

US vice-president mired in claims of bribery and corruption against his former company in four countries

David Leigh, Rob Evans, David Pallister, and David Teather in New York
Saturday October 30, 2004
The Guardian

British authorities have opened a new front in the widening investigation into allegations of bribery at Halliburton, the American oil services business, while it was being run by the US vice-president, Dick Cheney.
The Guardian has learned that the Serious Fraud Office has joined the international effort at the request of the US Department of Justice in Washington. French and Nigerian officials are already involved in the inquiry.

Halliburton has become a political liability for the Bush administration as the US prepares to vote in presidential elections next week.

The company, one of the chief government contractors in Iraq and Afghanistan, has been dogged by controversy, which includes claims of White House favouritism in awarding the firm billions of dollars of contracts without being forced to bid and Pentagon allegations that the firm has massively overcharged for its work.

It emerged late on Thursday that the FBI had launched an inquiry into how Halliburton secured contracts in Iraq, so far worth almost $9bn (£4.9bn).

The Nigerian investigation centres on $180m in payments allegedly made by a consortium led by Halliburton to secure the contract to build a natural gas plant in Nigeria.

The cash was allegedly channelled through a US-owned oil engineering firm in London called MW Kellogg and was handled by a company executive based in Berkshire. The funds were said to have been paid into a Swiss bank by a British lawyer.

The Democratic challenger, John Kerry, has made repeated jibes at Halliburton during his campaign for the White House, suggesting that the vice-president is using his position to look after his friends. Referring to the shortage of flu vaccine in the US, Mr Kerry told a rally in Orlando last week: "If Halliburton made flu shots, you'd have more flu shots here than there are oranges in the state of Florida."

Mr Cheney ran Dallas-based Halliburton for five years before quitting to run for office in 2000. He banked $36m when he left and continues to receive deferred income from the company. There has been no suggestion that Mr Cheney had any personal knowledge of the Nigerian payments.

When Mr Kerry's running mate, John Edwards, referred to the Nigerian scandal during a televised debate earlier this month, Mr Cheney said there was "no substance" to the charges. But Halliburton admitted last month that it had found evidence that bribery was at least discussed. In June, the US company cut ties with a former senior executive, Jack Stanley, and said he had received as much as $5m in "improper personal benefits" related to the Nigerian scandal. The company has said it is cooperating with authorities.

A French judge has been inquiring into the alleged bribes for the past two years. He has been joined by a Nigerian par liamentary commission. The scandal has gathered pace in recent months as the justice department and the chief US financial watchdog, the Securities and Exchange Commission, launched investigations.

The French judge, Renaud Van Ruymbeke, has called for Halliburton's agent, London solicitor Jeffrey Tesler, to return to Paris next month for a second round of questioning. Mr Tesler has denied wrongdoing.

Malcolm Bruce, the Liberal Democrat trade spokesman who has pressed the British government to investigate the bribery allegations, welcomed the SFO inquiry but questioned why it had taken so long.

"Clearly the SFO is only about to take action, well after everyone else and only when asked by other governments who have been taking action for months. The British government appears to have a pretty supine and passive attitude to stamping out bribery in international contracts. The resources are not there, the will is not there."

Halliburton was secretly awarded a contract ahead of the Iraq invasion, then worth up to $7bn, to help repair the country's oil industry in the wake of war. Halliburton was handed the contract without bidding. It was also given an other contract on a no-bid basis to provide logistical backup to American troops.

The FBI investigation is based on claims by a senior army contracting official who claims she was frozen out of decisions when she questioned the Halliburton contracts.

Halliburton has repeatedly denied wrongdoing. "The old allegations have once again been recycled, this time one week before the election," a spokeswoman said.

The company has paid $7.5m to settle claims that it failed to disclose a crucial change in its accounting policy that allowed it to report higher profits and shore up its share price while Mr Cheney was in charge.

Army staffer: Halliburton case ‘worst abuse’ FBI widens investigation, company sees election ploy in allegations

NBC, MSNBC and news services Updated: 6:55 p.m. ET Oct. 29, 2004

WASHINGTON - An Army contracting officer who led the FBI to widen its investigation of Pentagon contracts to Halliburton told NBC News that she had never seen a worse case of contracting abuse. "It was the worst abuse of the procurement and contracting system that I have seen," Bunnatine Greenhouse, the Army Corps of Engineers’ chief contracting officer, told NBC in an exclusive interview.

Halliburton dismissed the allegations as election politics.

Sen. John Kerry's campaign has seized on the allegations to accuse the Bush administration of playing favorites.

Vice President Dick Cheney headed Halliburton before taking office.

FBI agents this week sought permission to interview Greenhouse after she alleged that her agency unfairly awarded KBR, a Halliburton subsidiary, no-bid contracts worth billions of dollars for work in Iraq. The line of inquiry expands an earlier FBI investigation into whether Halliburton overcharged taxpayers for fuel in Iraq, and it elevates to a criminal matter the election-year question of whether the Bush administration showed favoritism to Cheney’s former company.

( Related story New audit slams Halliburton work in Kuwait)

Whistle-blower protection sought

Greenhouse’s lawyers said Thursday their client will cooperate but that she wants whistle-blower protection from Pentagon retaliation. “I think it (the FBI interview request) underscores the seriousness of the misconduct, and it also demonstrates how courageous Ms. Greenhouse was for stepping forward,” said Stephen Kohn, one of her attorneys. “The initiation of an FBI investigation into criminal misconduct will help restore public confidence,” Kohn said. “The Army must aggressively protect Ms. Greenhouse from the retaliation she will encounter as a result of blowing the whistle on this misconduct.”

FBI agents also recently began collecting documents from Army offices in Texas and elsewhere to examine how and why Halliburton, a Houston-based oil services conglomerate, got the no-bid work. “The Corps is absolutely cooperating with the FBI, and it has been an ongoing effort,” said Army Corps spokeswoman Carol Sanders. “Our role is to cooperate. It’s a public contract and public funds. We’ve been providing them information for quite a while.”

The FBI declined to comment Thursday, but a law enforcement official, speaking on condition of anonymity, said the investigation does not involve anyone in the White House — including Cheney’s office.

Halliburton's response Wendy Hall, a Halliburton spokeswoman, said the company is cooperating with various investigations, but she dismissed the latest revelation as election politics. She noted Congress’ auditing arm, the Government Accountability Office, found the company’s no-bid work in Iraq was legal. “The old allegations have once again been recycled, this time one week before the election,” Hall said. “The GAO said earlier this year that the contract was properly awarded because Halliburton was the only contractor that could do the work. “We look forward to the end of the election, because no matter who is elected president, Halliburton is proud to serve the troops just as we have for the past 60 years for both Democrat and Republican administrations,” she said.

Cheney spokesman Kevin Kellems, asked if investigators had contacted the vice president or his office about the contracts, said they had not.

Democrats have tried to make Halliburton an election-year issue, and vice presidential candidate John Edwards quickly seized upon the latest development.

Sen. Frank Lautenberg, a Democrat on the Senate Governmental Affairs Committee who has been investigating Halliburton’s contracts, said his office was told the FBI recently sought documents from various government offices. The requests focused on how and why Halliburton got the Iraq contracts. “This multibillion-dollar no-bid contract to Halliburton was suspicious from Day One, and now our worst suspicions are confirmed,” Lautenberg said. “The FBI doesn’t get involved unless there are possible criminal violations.”

E-mail ties Cheney office to contract

In a formal whistle-blower complaint filed last week, Greenhouse alleged the award of contracts without competition to KBR puts at risk “the integrity of the federal contracting program as it relates to a major defense contractor.”

The contracts were to restore Iraq’s oil industry. Among the evidence cited in the complaint was an internal 2003 Pentagon e-mail that says the Iraq contract “has been coordinated” with Cheney’s White House office.

The vice president, who continues to receive deferred compensation from when he was Halliburton’s chief executive in the late 1990s, has steadfastly maintained he has played no role in the selection of his former company for federal business.

The Army last week referred Greenhouse’s allegations to the Defense Department’s inspector general.

Documents show FBI agents from Quad Cities, Ill., asked Tuesday to interview Greenhouse.

Greenhouse alleged in her complaint that after her superiors signed off on the Iraq business in February 2003, a month before the war began, and returned it for her necessary approval, she specifically asked why the work was being extended for several years. Beside her signature, Greenhouse wrote: “I caution that extending this sole-source effort beyond a one-year period could convey an invalid perception that there is not strong intent for a limited competition,” the complaint said.

The oil restoration work was given to KBR without competitive bidding through 10 separate work assignments called “task orders.” The orders were issued under an existing contract between Halliburton and the U.S. military that was awarded competitively in December 2001.

While the Corps was authorized to spend up to $7 billion for the oil restoration work, the actual cost so far has been $2.5 billion. Halliburton is still working on the oil facilities, but it is now operating under a new, competitively awarded contract.

The Associated Press contributed to this report.