Contact l Sitemap

home industries issues reasearch weblog press

Home  » Industries » War & Disaster Profiteering

It's Time to Stop the War Profiteers

Corporate Policy Project
October 8th, 2003

Hundreds of Americans soldiers have made the ultimate sacrifice for a war that was sold to the American public through what is now clear were misleading assertions about an imminent threat from Saddam's weapons of mass destruction and ties to al Qaeda. Now American taxpayers are being asked to pay an additional $87 billion for the ongoing occupation and reconstruction of Iraq. As occupying powers, the U.S. and UK are obligated to provide for the humanitarian needs of the Iraqi people and the reconstruction of the country's infrastructure. But this doesn't mean that taxpayers should hand over a blank check with no strings attached.

There is strong reason to fear that the contracting bonanza will serve only to enrich the Bush administration's corporate cronies rather than the Iraqi people. As talks about privatizing Iraq's economy continue (before a constitutional government is established that would have the authority to make such decisions), recent news reports suggest that top Republican lobbyists like former FEMA director Joe Allbaugh and former House Appropriations Committee chairman Bob Livingston (R-LA) are lining up clients who stand to benefit. Rep. James Moran (D-VA) has complained that a company from his district was essentially told that "if they want the money they really have to go through Halliburton." If it's that bad for companies with connections to the Democrats, it's hard to imagine how much more difficult it must be for Iraqi engineers and contractors - who can't afford Allbaugh or Livingston's consulting fees -- to access the process.

Halliburton has so far racked up over $1.7 billion and stands to make hundreds of millions more (possibly billions) under a no-bid contract awarded by the U.S. Army Corps of Engineers. As Congressman Waxman (whose office has closely monitored the Halliburton handouts) put it, "the amount of money [earned by Halliburton] is quite staggering, far more than we were originally led to believe it concerns me because often the privatization of government services ends up costing the taxpayers more money rather than less."

Democratic Senate leader Tom Daschle's has uncovered examples of items in the draft appropriations request that are reminiscent of Reagan-era Pentagon hammers and toilet seats, including $200,000 per person witness protection -- nearly 20 times cost of U.S. program -- and hand-held radio and satellite phones that cost an average $6,000 each.

Cost overruns and Cheney's ongoing financial ties to Halliburton are not the only reasons that Congress should hold hearings on war profiteering. The contracts have been regularly awarded to companies with a track record of corporate crime and excessive executive compensation. Enron and Arthur Anderson were immediately suspended from all federal contracts after their accounting fraud was revealed (and before they were convicted of any crimes), but everyone seems to have forgotten that the SEC is still investigating what went on at Halliburton while Cheney was CEO. And Defense Secretary Rumsfeld has yet to reply to Waxman's April letter asking for an explanation why the Pentagon is contracting with a company (Halliburton) that is apparently using a Cayman Islands subsidiary to conduct business in Iran, a member of the President's "axis of evil."

As members of Congress to take up the $87 billion Iraq appropriations request, they should continue to be on guard for corporate war profiteering and apply the following conditions to the contracts to ensure that taxpayers are protected:

1) Full Dislosure. End all no-bid contracts like the multi-billion dollar contract awarded to Halliburton before the start of the war. All companies bidding for contracts should meet rigorous standards of accountability, and should be required to submit their history of compliance with securities, labor, environmental and tax laws as part of any contract bid.

2) Ban Corporate Tax Dodgers From the Contracts. In 2002 the President said, "we ought to look at people who are trying to avoid U.S. taxes as a problem. I think American companies ought to pay taxes here and be good citizens." Companies that move their headquarters to offshore tax havens and otherwise use offshore subsidiaries to avoid paying their fair share of taxes should be ineligible for taxpayer-funded contracts. The IRS estimates that offshore tax scams cost the Treasury $70 billion per year - almost as much as the supplemental request.

3) Stop Excess War Profits: Rein in CEO Pay. Defenders of sky-high CEO pay often argue that corporate leaders bear tremendous responsibilities and must oversee complicated business activities. But many of the companies that have received Iraq reconstruction contracts award their top executives pay packages that are 30 to 175 times as much as a U.S. army general with 20 years experience ($145,000). For example, Lockheed Martin CEO Vance Coffman receives $4.1 million in salary and bonuses, plus more than $20 million in options grants; last year he made nearly 2,000 times the pay of an entry-level soldier. Congress should keep in mind President Franklin Delano Roosevelt's sentiment in the aftermath of WWII, when he said, "I don't want to see a single war millionaire created in the United States as a result of this world disaster."

4) No Contracts for Corporate Crooks. On the same day in May that the Pentagon awarded WorldCom/MCI a contract to provide wireless service in Baghdad, the SEC announced that it was penalizing the company for the largest accounting fraud in corporate history. WorldCom/MCI has sopped well over a billion dollars in taxpayer money through government contracts since the fraud was revealed, including a $17 million contract awarded by the House in July, just as several members of Congress were trying to block the company from doing business with the federal government. The situation became so embarrassing that the General Services Administrator finally announced at the end of July that MCI would be suspended from all government contracts. But we shouldn't have to wait that long for law-breaking companies to be barred from receiving taxpayer-funded contracts.

The additional reconstruction funds should not have to come from ordinary taxpayers, but should be raised from an excess profits tax on corporations benefiting from the war and post-war privatization in Iraq, and a restored tax on the wealthiest 1% of Americans. Anyone concerned about corporate war profiteering should let Congress and the media hear their concerns.

For more information contact:
Corporate Policy Project
Charlie Cray
ccray@essentialinformation.org