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Cheney's Close Ties to Brown and Root

by Pratap ChatterjeeSpecial to CorpWatch
March 20th, 2003

Halliburton, Brown and Root's parent company, is a Fortune 500 construction corporation working primarily for the oil industry. From 1962 to 1972 the Pentagon paid the company tens of millions of dollars to work in South Vietnam, where they built roads, landing strips, harbors, and military bases from the demilitarized zone to the Mekong Delta. The company was one of the main contractors hired to construct the Diego Garcia air base in the Indian Ocean, according to Pentagon military histories.

In the early 1990s the company was awarded the job to study and then implement the privatization of routine army functions under then-secretary of defense Dick Cheney.

When Cheney quit his Pentagon job, he landed the job of Halliburton's CEO, bringing with him his trusted deputy David Gribbin. The two substantially increased Halliburton's government business until they quit in 2000, once Cheney was elected vice president. This included a $2.2 billion bill for a Brown and Root contract to support US soldiers in Operation Just Endeavor in the Balkans.

After Cheney and Gribbin departed, another confidante of Cheney, Admiral Joe Lopez, former commander in chief for U.S. forces in southern Europe, took over Gribbin's old job of go-between for the government and the company, according to Brown and Root's own press releases.

In 2001 the company took in $13 billion in revenues, according to its latest annual report. Currently, Brown and Root estimates it has $740 million in existing U.S. government contracts (approximately 37 percent of its global business).

For example, in mid November 2001, Brown and Root was paid $2 million to reinforce the U.S. embassy in Tashkent, Uzbekistan, under contract with the State Department, according to the New York Times. More recently Brown and Root was paid $16 million by the federal government to go to Guantnamo Bay, Cuba, to build a 408-person prison for captured Taliban fighters, according to Pentagon press releases.

That's by no means all: Brown and Root employees can be found back home running support operations from Fort Knox, Kentucky, to a naval base in El Centro, California, according to company press releases.

In December 2001, Brown and Root secured a 10-year deal named the Logistics Civil Augmentation Program (LOGCAP), from the Pentagon, which has already been estimated at $830 million.

Jennifer Millerwise, a spokesperson for Cheney's office, denies that there was any contact help from the White House.

"The vice president did not discuss this with anybody from Halliburton or any subsidiary of Halliburton. Nor does he comment on Halliburton's policies, since he doesn't work there any more" she told CorpWatch.

Meanwhile independent agencies are still skeptical about claimed financial savings from contracting out military support operations. According to the Government Accounting Office (GAO), a February 1997 study showed that a Brown and Root operation in Bosnia estimated at $191.6 million when presented to Congress in 1996 had ballooned to $461.5 million a year later. All told this former Yugoslavia contract has now cost the taxpayer $2.2 billion over the last several years.

Examples of overspending by contractors include flying plywood from the United States to the Balkans at $85.98 a sheet and billing the army to pay its employees' income taxes in Hungary.

A subsequent GAO report, issued September 2000, showed that Brown and Root was still taking advantage of the contract in the Balkans. Army commanders were unable to keep track of the contract because they were typically rotated out of camps after a six-month duration, erasing institutional memory, according to the report.

The GAO painted a picture of Brown and Root contract employees sitting idly most of the time. The report also noted that a lot of staff time was spent doing unnecessary tasks, such as cleaning offices four times a day.

Pentagon officials were able to identify $72 million in cost savings on the Brown and Root contract simply by eliminating excess power generation equipment that the company had purchased for the operation.

Brown and Root has been also been investigated for over billing the government in its domestic operations. In February 2002, Brown and Root paid out $2 million to settle a suit with the Justice Department that alleged the company defrauded the government during the mid-1990s closure of Fort Ord in Monterey, California.

The allegations in the case surfaced several years ago when Dammen Gant Campbell, a former contracts manager for Brown and Root turned whistle-blower, charged that between 1994 and 1998 the company fraudulently inflated project costs by misrepresenting the quantities, quality, and types of materials required for 224 projects. Campbell said the company submitted a detailed "contractors pricing proposal" from an army manual containing fixed prices for some 30,000 line items.

Once the proposal was approved, the company submitted a more general "statement of work," which did not contain a breakdown of items to be purchased. Campbell maintained the company intentionally did not deliver many items listed in the original proposal. The company defended this practice by claiming the statement of work was the legally binding document, not the original contractors pricing proposal.

"Whether you characterize it as fraud or sharp business practices, the bottom line is the same: the government was not getting what it paid for," says Michael Hirst, of the United States Attorney's Office in Sacramento, who litigated the suit on behalf of the government. "We alleged that they exploited the contracting process and increased their profits at the governments expense."



Back to main Article: Halliburton Makes a Killing on Iraq War.

Pratap Chatterjee is an investigative journalist based in Berkeley, California. He traveled to Afghanistan and Uzbekistan in January 2002 and to Incirlik, Turkey, in January 2003 to research this article.