IT'S WHO YOU KNOW

KELLOGG, BROWN AND ROOT (KBR)/HALLIBURTON

Halliburton is primarily an oil fields services company with extensive contracts from offshore drilling and pipeline construction. In the last five years, however, the company has seen a boom in its work with the U.S. military's "global war on terrorism" - for which is has billed over $20 billion. (68) Most of which is derived from providing logistical support for the United States military in Iraq such as cooking meals and cleaning toilets. This work is conducted by its Kellogg, Brown and Root (KBR) subsidiary, whose history of work for the military dates back to the Second World War. (69) The company was part of the major consortium that built U.S. military bases in Vietnam and today is the main architect for new bases from Afghanistan to Guantanamo Bay.

Indeed Camp Delta in Guantanamo Bay was built by KBR in 2002 to host prisoners from Afghanistan, under a special open-ended contract with the U.S. Navy called Contingency Construction Capabilities (CONCAP) with low-paid imported Philippino labor. (70) When Hurricane Katrina struck, the Navy turned to KBR to help clean up its three bases in Mississippi under this very same special open-ended contract. (71) The frantic U.S. Army Corps of Engineers, which did not have a similar plan in place, used this "contract vehicle" to drain Plaquemines Parish. (72)

Yet Halliburton has the dubious distinction of being accused of using low-wage labor and presenting astronomical bills for work done for many military projects. During the Vietnam War, the GAO reported that the company lost accounting control of $120 million and that its security was so poor that millions of dollars worth of equipment had been stolen. (73)

At the time, Donald Rumsfeld - then a Republican member of the House of Representatives from Illinois - demanded to know about the "30-year association, personal and political, between Lyndon B. Johnson as congressman, senator, vice president and president" (who won on the Democratic party ticket) and the company's chairman, George R. Brown of Houston, who "had contributed $23,000 to the President's Club while the Congress was considering" whether to continue another multimillion-dollar Brown & Root project. "Why this huge contract has not been and is not now being adequately audited is beyond me. The potential for waste and profiteering under such a contract is substantial," Rumsfeld said in 1966. (74)

It is somewhat ironic, therefore, that the company now gives money to Rumsfeld's party, but perhaps understandable, because his party controls the purse-strings today. Between the years 1990-2002, KBR gave $2,379,792 in political contributions, almost exclusively to Republicans. In 2002, $120,784 was contributed to various Republican causes. The same party enjoyed 96 percent of 2000's contribution of $168,277 while Democrats picked up four percent, according to figures from the Center for Responsive Politics, a non-partisan, non-profit research group based in Washington, D.C. that tracks money in politics and its effect on elections and public policy. (75)

The company also still has friends in the White House Rumsfeld's colleague, Vice President Dick Cheney, was the Chief Executive Officer of Halliburton from 1995 to 2000, during which time the company, almost doubling the corporation's government contracts from $1.2 to $2.3 billion. (76) Indeed, Cheney continues to receive a large deferred salary from the company until this day, worth almost as much as his government salary. This deferred salary and the 433,333 stock options in the company that he owns was judged by the Congressional Research Service (CRS) to be a conflict of interest. (77) Lest it be forgot, the company has also been accused of overcharging for cleaning up military bases as recently as the 1990s. 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." (78)

-Pratap Chatterjee