Contact l Sitemap

home industries issues reasearch weblog press

Home  » Campaigns » Current Campaigns » War & Disaster Profiteers Campaign

Halliburton Hearing Unearths New Abuse

by Pratap ChatterjeeSpecial to CorpWatch
June 27th, 2005

cartoon by Khalil Bendib

Every morning 120 trucks line up at the Kuwait-Iraq border to deliver gasoline from Kuwaiti refineries. The drivers, mostly poor South Asian men from India, Pakistan and Bangladesh, must cross at dawn because if they wait too long, the managers from Kellogg, Brown and Root (KBR), a subsidiary of Texas-based Halliburton, who operate the border post during the day, will subject them to rigorous checks that effectively shut down the deliveries.

"The only way we can cross the border is to arrive before KBR," says Alan Waller, the chief executive officer of Lloyd Owens International (LOI), a British company which manages 700 trucks from five different sub-contractors.

"For the last eleven months we provided fuel to all of southern Iraq. We have only lost one truck to theft and not one driver has been killed in hostile action. We have responded to civil uprisings in Najaf, Hilla, Karbala, Kut and Nasariya within 24 hours to provide fuel to the public. Our role has become instrumental in normalizing relationships between Iraqi authorities, the population and coalition forces."

All that changed on June 9th, 2005, when a convoy of LOI trucks, on its way to deliver construction materials for a Halliburton dining facility to a United States army base near Fallujah, Iraq, came under attack. Three drivers, two Egyptians and one Turk, were presumed killed and six trucks were abandoned.

When the survivors limped into the Al Taqaddum military base, they were expected to receive support from the Halliburton staff. Instead they got the cold shoulder. When the drivers tried to leave the country, they hit a roadside bomb and another Bosnian staff member was killed.

Reading from an email, apparently sent by a Halliburton manager, Waller said that the company staff were ordered not to help them: "Many people volunteered to help but were told no by management." He also noted that Halliburton had failed to inform them that two other convoys had been attacked in the same area in the previous week.

Waller and his business partner, Gary Butters, a former London police detective, were speaking at an oversight hearing on "Waste, Fraud, and Abuse in U.S. Government Contracting in Iraq" conducted by Senator Byron Dorgan of North Dakota, chairman of the Democratic Policy Committee in the United States Senate on June 27th. The two men flew to the United States to testify after they were twice refused an audience with the United States embassy in Iraq to resolve the situation.

When asked by CorpWatch why Halliburton throws roadblocks in their way at every step, Waller refused to speculate. He simply stated that Halliburton managers say that his company does not have a contract with the United States military and thus they do not qualify for preferential treatment at the border.

He did mention that that his company is now doing work for a seventh of the price that Halliburton did one year ago, when the circumstances were much less dangerous.

Via a sub-contractor called Altanmia Commercial Marketing Company, Halliburton delivered gasoline in late 2003 at an average price of $2.65 per gallon. In spring 2004, shortly before the country was handed over to the Iraqis, the contract was canceled by the US military. The new Iraqi government then awarded an identical gasoline supply contract to LOI and their partners, Geotech Environmental Services of Kuwait, who charged just 18 cents per gallon to supply the same sites.

Waller also told the hearing that he had encountered only one Halliburton worker in the last year of his work in southern Iraq (the Texas company still holds contracts to repair oil field infratructure in Iraq). Meanwhile, he said that every fuel distribution station set up provide gasoline to the Iraqi public -- even those that Halliburton was supposed to have fixed -- was in disrepair.

"As Lloyd-Owen delivers fuel to nearly every refinery or depot in southern Iraq, we find ourselves frequently encountering examples of poor equipment, no equipment or complaints from Iraqi staff," said Waller.

Asked to respond to the LOI testimony by CorpWatch, Cathy Gist-Mann, a Halliburton spokesperson, emailed this brief statement: "KBR does not control ANY borders in the Middle East or any other country."

Billion Dollar Overcharges

The LOI testimony was not the only new evidence offered against Halliburton workmanship in Iraq. Henry Waxman, a California member of the House of Representatives, kicked off the proceedings by presenting a new study gleaned mostly from confidential reports done by the Defence Contract Audit Agency (DCAA).

The study estimates that Halliburton has received roughly 52 percent of the $25.4 billion that the Pentagon has paid out to so far to 77 private contractors in Iraq.

This is divided into two major kinds of contracts. Under the first, known as LOGCAP, logistical support like cooking and cleaning are outsourced to civilian workers, Halliburton has so far received $8.6 billion. The company is reimbursed for its actual costs and then paid a premium of 1 percent to 3 percent, depending on performance.

The second contract, known as RIO, was for the repair of Iraqi oil fields in the immediate aftermath of the 2003 invasion and for imports of consumer fuels. This project is now complete and cost the Pentagon $2.5 billion. A second RIO contract is now underway.

The new evidence, released Monday afternoon, shows that Hallliburton:

* overcharged or presented questionable bills for close on $1.5 billion, almost four times the previous amount disclosed.
* lost 12 giant pre-fabricated bases worth over $75 million destined for the troops. The bases could have housed as many as 6,600 soldiers.
* billed $152,000 to provide a movie library for 2,500 soldiers
* billed inconsistently across the board. Video cassette players, for example, were said to cost $300.00 in some instances, and $1000 in others. Likewise, the company charged $2.31 for towels on one occasion and $5 for the same units on another.

Gist-Mann dismissed the Waxman report. "The only thing that's been inflated is the political rhetoric which is mostly a rehash of last year's elections," she said.

"It's DCAA's job to ask questions and it's our job to provide the answers which we have done,” she continued. “Audits are part of the normal contracting process and it is important to note that the auditors' role in the process is advisory only."

"Many of these questions have already been resolved. The figure represented in today's hearing stems from an aggregation of many reviews over a three-year period and the amount is a gross mischaracterization of the true facts," she added.

Spoiled Food and Leftovers

A third witness at the hearing was Rory Maryberry, a former Halliburton
contractor who worked at the dining facilities in Camp Anaconda. Located just north of Baghdad, near the town of Balad, Anaconda is the largest United States military base in Iraq.

Mayberry worked for Halliburton in Iraq from February to April 2004. He claims the company charged the Army for 20,000 meals a day when it was only serving 10,000 during his tenure. Subsequenttly he says he was punished for speaking to auditors by being banished to the more dangerous outpost of Falluja.

In a video-taped deposition shown during the packed hearing, Mayberry
explained how the company would sometimes supply food that was over a year past the expiration date or had spoiled due to inconsistent refrigeration. When the United States military occasionally refused the spoiled food, Halliburton truckers were instructed to take them to the next base in the hope that they would escape scrutiny.

Worst affected were the non-American workers. Mayberry says that Halliburton was supposed to feed 600 Turkish and Filipino meals. "Although KBR charged for this service, it didn't prepare the meals. Instead, these workers were given leftover food in boxes and garbage bags after the troops ate. Sometimes there were not leftovers to give them," said Mayberry.

"Iraqi drivers of food convoys that arrived on the base were not fed. They were given Meals Ready to Eat (U.S. military prepackaged rations), with pork, which they couldn'teat for religious reasons. As a result, the drivers would raid the trucks for food," he added.

"KBR's priority has always been providing the troops the best possible food, shelter and living conditions while they serve in Iraq," said Gist-Mann, in response to Mayberry's allegations.

"KBR is not responsible for purchasing food to serve at its dining facilities throughout Iraq. KBR's dining facilities are thoroughly inspected every month by the Army's Preventive Medicine Services division, and one of the main things they check is the expiration dates on various food products. If at any point food is deemed unfit to serve, KBR follows the government-approved processes and procedures to destroy it," she added.

No Bid Contracts

The witness who invited the most attention at the hearing, however, was
Bunnatine Greenhouse, a former mathematics teacher from Louisiana, who rose to become the highest ranked civilian in the Army Corps of Engineers. As the person responsible for signing contracts, she spoke out repeatedly against superiors who she says forced her to sign no-bid contracts with Halliburton on the eve of the invasion of Iraq.

Greenhouse blew the whistle on the non-bid contracts in October 2004 when the Army tried to demote her. She filed a complaint for harassment on racial and gender grounds (she is African-American) but the harassment has not stopped. On June 24th, three days before the hearing, Pentagon lawyers met with her to try to persuade her not to testify.

"I have agreed to voluntarily appear at this hearing in my personal capacity because I have exhausted all internal avenues to correct contracting abuse I observed while serving this great nation as the United States Army Corps of Engineers senior procurement executive. In order to remain true to my oath of office, I must disclose to appropriate members of Congress serious and ongoing contract abuse I cannot address internally," said Greenhouse.

"I can unequivocally state that the abuse related to contracts awarded to KBR (Kellogg Brown and Root) represents the most blatant and improper contract abuse I have witnessed during the course of my professional career."

Members of Congress, who attended the hearing, called for a bipartisan
commission to review the Halliburton contracts. "This testimony doesn't just call for Congressional oversight -- it screams for it," said Senator Dorgan.