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US: Halliburton Unit Risked Civilian Lives, Lawsuits Say (Update3)

by Laurel Brubaker Calkins and Margaret Cronin FiskBloomberg
September 15th, 2006

Halliburton Co. sent civilian drivers into combat zones to protect its military supply contract, according to lawsuits filed by families of employees killed or injured while driving trucks in Iraq.

The families claim Halliburton's KBR Inc. unit, the largest U.S. military contractor in Iraq, sent unarmed civilians into active combat zones in 2004 knowing they would be attacked and possibly killed by Iraqis. The lawsuits were filed in federal court in Houston last year. Families of six civilians who were killed and another dozen who were injured in Iraqi convoy attacks in 2004 are seeking millions of dollars in damages.

``Management decided it would make them look good to be seen acting with the Army that day,'' said attorney Scott Allen of a deployment in April 2004. ``Halliburton and KBR decided they were going to put their contract ahead of these men's lives.''

Halliburton, the world's second-largest oilfield-services provider, is trying to put behind it the controversy stirred by KBR's Iraq work. Critics in Congress said KBR overcharged the government for food, transportation, fuel and other services in Iraq and alleged the unit got special treatment because Vice President Dick Cheney was the former chief executive officer of Halliburton. Halliburton plans to shed KBR through an initial public offering or a shareholder spinoff.

The families' claims are scheduled to be aired at a Sept. 18 U.S. Senate subcommittee hearing, where Allen, a lawyer with Houston's Cruse, Scott, Henderson & Allen, and former Halliburton employees will testify. Halliburton and KBR deny any responsibility for the deaths and injuries, contending the U.S. military controlled all decisions governing the convoys. Attorneys for the families said internal company documents show KBR was in charge.

Halliburton Denies Allegations

``Halliburton and KBR deny any allegations of wrongdoing and fully intend to vigorously defend our position,'' company spokeswoman Melissa Norcross said in an e-mailed statement. ``KBR's priority has always been the safety and security of its employees, regardless of where they work around the world.''

Halliburton also contends the lawsuits are barred by federal law granting immunity to defense contractors whose employees are killed or injured while working in war zones.

``Defense contractors with employees in the battlefield do not have absolute immunity under any of the legal authorities cited by defendants in this case,'' said Christopher Yukins, law professor at George Washington University who reviewed the defendants' pleadings.

KBR's Iraq Contract

Halliburton's KBR unit was hired by the U.S. military to provide troop support, including preparing meals, washing clothes, transporting fuel and delivering mail. The U.S. Army said in July that it wouldn't renew the five-year contract and would put future troop service work up for bid later this year.

Shares of Houston-based Halliburton have risen nearly 200 percent since the start of the Iraq conflict in March 2003. The company's stock split this year. Shares fell 4 cents to $29.02 in New York Stock Exchange trading.

``I don't know if their image can get much more beat up,'' said Roger Read, an analyst at Natexis Bleichroeder Inc. in Houston. ``I wouldn't look for this to have a significant impact on the share price.''

The Halliburton spokeswoman said 91 KBR employees and subcontractors have been killed while working in Iraq, Kuwait and Afghanistan and almost 400 have been wounded. Desert Voice, a publication for coalition troops in the Middle East, said 16 KBR truck drivers died in Iraq between 2003 and 2004.

Lawyers for the drivers claim that on April 8 and April 9, 2004, civilian fuel convoys were sent down highways the military had declared ``closed'' because of active combat conditions. KBR committed ``homicide,'' lawyers for driver Steven Fisher said in a filing in federal court in Houston last month.

`Killing Zone'

On April 9, 2004, Fisher and another worker, Reginald Lane, were driving KBR fuel trucks in two convoys traveling in different directions on Baghdad's ``Sword'' Highway. Each man's convoy was attacked by Iraqi insurgents wielding rocket-fired grenades and machine guns in the same five-mile stretch where troops had fought for two days, according to court filings.

Several of the tankers exploded and the road became ``a killing zone,'' according to Allen. KBR continued to send additional convoys down the highway, lawyers for victims claim. Fisher, 43, was killed and Lane, now 57, sustained massive brain damage. Lane's family is seeking $30 million in medical costs, according to his attorney, Tommy Fibich of Fibich, Hampton & Leebron in Houston.

``My men weren't simply shot that day, they were slaughtered,'' Allen said. ``For one of my clients, you could fit all we were able to find of him in a matchbox.''

Aware of Danger

KBR was aware of the danger, the families argued in court filings. Internal e-mails between ``Halliburton/KBR Theatre Transportation Mission Personnel confirm that defendants exercised and retained control over the convoys before, during and after the attacks of April 9, 2004,'' attorneys for Lane said in court papers filed last month. Most evidence, including the e- mails, has been sealed under a court order Halliburton requested.

``We know that at least five, but probably 11 convoys were attacked'' in that vicinity on April 8, 2004, Allen said in an interview. ``So we know there was civilian death on this road the day before, at or near the same location where our convoy was attacked on April 9. And we know that every single convoy KBR sent out on April 9 came under enemy attack. Every single one.''

KBR's managers were required to follow military orders and send civilian convoys to deliver fuel to troops fighting enemy forces near Baghdad's airport in April and October of 2004, the company said in court filings. KBR could have faced ``liability for breach of contract, fines and possible imprisonment'' had it stopped the convoys, KBR's attorney James Hall of Jones Day in Houston said last month in a motion to dismiss Lane's lawsuit.

The company's contract, signed in December 2001, specifically forbids placing civilians in combat situations, attorney Fibich said in the drivers' Aug. 4 response to Halliburton's motion to dismiss Lane's case.

The contract also states that ``civilian contractor personnel shall not be supervised or directed by military or Dept. of the Army personnel,'' Fibich said, quoting from the contract.

Attorneys for the families said Halliburton and KBR committed fraud by misrepresenting the danger of the work in Iraq. The men were told their jobs in Iraq would be ``100 percent safe,'' according to recruiting ads posted on the Strategic Ecomm Inc. Internet job site. The truck drivers' lawyers have filed with the court copies of recruiting ads, flyers and memos that Halliburton used to hire civilians for jobs in Iraq.

``There is not one thing that we do that is worth injury to an employee,'' states a Jan. 22, 2003, memo from John Downey, a KBR unit manager in charge of the company's military support contract. ``Each of you has my personal authority to stop any activity which you believe to be unsafe,'' Downey wrote in the memo, which was distributed to job recruits in 2004, according to court filings.

Halliburton didn't deceive anyone, Norcross said. ``Not one of our employees leaves the United States for Iraq without thorough and repeated briefings on the dangers in Iraq,'' she said.

The lead lawsuit is Fisher v. Halliburton, No. H-05-1731, in the U.S. District Court for the Southern District of Texas (Houston).





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