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US: Katrina work goes to officials who led Iraq effort

by Adam EntousReuters
October 6th, 2005

Top officials who managed U.S. reconstruction projects in Iraq have been hired by some of the same big companies that received those contracts and which are now involved in a rush of deals to rebuild after Hurricane Katrina.

A review of company statements and documents show that two former directors of the Projects and Contracting Office in Baghdad are now working -- either directly or indirectly -- with major Iraq contractors.

Top officials from the Army Corps of Engineers and the Pentagon's inspector general office have also joined companies that are benefiting from Katrina contracts and subcontracts in what is expected to be one of the world's biggest reconstruction efforts, worth as much as $200 billion by some accounts.

Some lawmakers and watchdog groups complain that contractors like Shaw Group Inc., Bechtel National Inc., and Halliburton Co. subsidiary Kellogg Brown and Root are using inside connections to win lucrative deals.

Scott Amey, general counsel for the Project on Government Oversight, accused the government of "throwing money to the usual suspects" and warned that the "revolving door compounds the problem of the government steering contracts with little, or no competition, to non-responsible contractors."

House Democratic leader Nancy Pelosi said on Thursday: "Under the Bush administration, the revolving door is spinning out of control;" Acting FEMA Director David Paulison said federal contracts for Hurricane Katrina recovery efforts that were handed out with little or no competition would be rebid.

FROM BAGHDAD TO BATON ROUGE

Pentagon audits released by Democrats in June showed $1.03 billion in "questioned" costs and $422 million in "unsupported" costs for Halliburton's work in Iraq. Vice President Dick Cheney is a former head of the company.

About six months ago Charles Hess stepped down as head of the Projects and Contracting Office in Baghdad, which oversees multibillion-dollar reconstruction projects in Iraq. In September, after Katrina struck, he was hired by Shaw Group.

A Baton Rouge-based construction and engineering firm with more than $100 million in contracts in Iraq, Shaw has landed two separate $100 million federal contracts since Katrina hit, one with the Army Corps of Engineers and one with the Federal Emergency Management Agency.

Shaw spokesman Chris Sammons said Hess -- who has held top jobs at both the Army Corps of Engineers and FEMA -- was hired to oversee "all aspects" of its contract with FEMA to set up temporary housing for people displaced by Katrina.

"Hess had no direct contact or involvement in our work in Iraq," said Sammons. "There is absolutely no conflict here."

He said Hess was hired because of his "experience and expertise" in the field of disaster response and reconstruction.

Shaw Group already employs Joe Allbaugh, President George W. Bush's former campaign manager and FEMA director, as a lobbyist.

Another former head of the Projects and Contracting Office, David Nash, is now president of BE&K Government Group, which was recently hired by Kellogg Brown and Root and Bechtel National Inc., a unit of San Francisco-based Bechtel Corp., as a subcontractor for projects in Louisiana and Mississippi funded by the Defense Department and FEMA.

POSTWAR CONTRACTS

Kellogg Brown and Root and Bechtel won some of the biggest -- and most controversial -- postwar reconstruction contracts in Iraq.

"Although Dave served in a management position during the initial reconstruction effort in Iraq, he had no authority to award contracts. There is no connection between the hurricane-related work we are doing in Mississippi and Louisiana and Nash's involvement in Iraq," said Susan Wasley, a BE&K spokeswoman.

Another official from the Projects and Contracting Office, Amy Burns, joined Nash at BE&K Government Group earlier this year as vice president of business development, but Wasley said she resigned last month.

Nash also recently joined the board of defense contractor EOD Technology, which has contracts with the Contracting and Projects Office in Baghdad, as well as with the Army Corps of Engineers and the Navy.

Another top official involved in Iraq's reconstruction, former Army Corps of Engineers chief Robert Flowers, now runs the federal contracts subsidiary of HNTB, an engineering company recently hired by Louisiana as a subconsultant for emergency repairs to bridges over Lake Pontchartrain.

Under federal "revolving door" prohibitions, Flowers was not allowed to deal directly with Corps officials for a specified period on matters under his control when he was Chief of Engineers.

But that period has now passed, an HNTB spokesman said. "It is his job to help us win work," said the spokesman.

Flowers recently hired as vice president Robert Vining, who oversaw the Army Corps' $4.6 billion annual civil works program.

The Pentagon's inspector general, Joseph Schmitz, also recently stepped down to take a top job at the parent company for Blackwater USA, one of the largest private security firms in Iraq. Blackwater has also been active since Katrina.

A spokeswoman said Schmitz would abide by rules that temporarily restrict his involvement in matters related to the Pentagon.





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