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May
13, 2003
Saul
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Michael
Neumann
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The Saudi Arabia Bombing
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William
Lind
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of the Day
Sy Hersh: War and Intelligence
May
12, 2003
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America's Dirty Bombs
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Sharon and Sons, Inc.
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The Devil in New England
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May
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When It's a Crime to Visit Your Son
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Z.
Partisan Protests?
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The Other "F" Word
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May
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Bill Kunstler's Last Big Speech
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May
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de Rooij
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May
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May
2, 2003
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May
14, 2003
Secret November Deal
for Iraq's Oil
The Pentagon
and Halliburton
By JASON LEOPOLD
Months before the United States military showered
Iraq with bombs and missiles, the Department of Defense was secretly
working with Vice President Dick Cheney's old company, Halliburton
Corp., on a deal that would give the world's second largest oil
services company total control over Iraq's oil fields, according
to interviews with Halliburton's most senior executives.
Moreover, classified Halliburton documents
obtained by CounterPunch over the past month prove that the war
in Iraq was as much about controlling the world's second largest
oil reserves as it did about overthrowing the regime of Iraq's
President Saddam Hussein.
The deal between the Department of Defense
and Halliburton unit Kellogg, Brown & Root to operate Iraq's
oil industry, which was hatched as early as October 2002, according
to the documents, and could ultimately be worth $7 billion, couldn't
have come at a better time for Halliburton.
Back in October of last year, Halliburton
was saddled with a multibillion-dollar asbestos liability and
the company was also suffering through a slowdown in domestic
oil production. Halliburton's stock price responded swiftly,
plummeting to $12.62 in October 2002, from a high of $22 the
year beforee, and rumors began to swirl that the company would
be forced to file for bankruptcy.
But news of a pending war in Iraq meant
that Halliburton's financial troubles would, like Saddam Hussein's
regime, be history. Classified documents from November 2002 show
that the Department of Defense recommended that The Army Corps
of Engineers award a contract to Brown & Root to extinguish
Iraqi oil well fires in addition to "assessing the condition
of oil-related infrastructure; cleaning up oil spills or other
environmental damage at oil facilities; engineering design and
repair or reconstruction of damaged infrastructure; assisting
in making facilities operational; distribution of petroleum products;
and assisting the Iraqis in resuming Iraqi oil company operations."
"The fact that the Department was
planning for the possibility that it would need to repair and
provide for continuity of operations of the Iraqi oil infrastructure
was classified until March 2003," the agency said on its
web site. "This prevented earlier acknowledgement or announcement
of potential requirements to the business community."
The Army Corps of Engineers has declassified
portions of some documents related to its deal with Brown &
Root. The deal memo can be viewed at <http://www.hq.usace.army.mil/cepa/iraq/factsheet.htm>
Since October, when Halliburton was awarded
the contract to repair Iraq's oil industry, the company's stock
has nearly doubled. On Tuesday, the stock closed at $23.90.
Publicly, when the Army Corps of Engineers
was criticized by Washington lawmakers earlier this year for
awarding the no-bid contract to Brown & Root because of the
company's strong ties to Cheney, the agency said Brown &
Root would do nothing more than extinguish oil well fires. Brown
& Root was chosen, according to the Army Corps of Engineers,
because Brown & Root could be "deployed" on short
notice.
However, according to interviews with
Halliburton executives, company employees were working out of
a hotel room in Kuwait City as far back as November assessing
the Iraq's oil infrastructure and mapping out plans for operating
Iraq's oil industry.
A report in the magazine Business 2.0
from April 2003 makes this point clear.
"From behind the obsidian mirrors
of his wraparound sunglasses, Ray Rodon surveys the vast desert
landscape of southern Iraq's Rumailah oilfield. A project manager
with Halliburton's engineering and construction division, Kellogg
Brown & Root, Rodon has spent months preparing for the daunting
task of repairing Iraq's oil industry. Working first at headquarters
in Houston and then out of a hotel room in Kuwait City, he has
studied the intricacies of the Iraqi national oil company, even
reviewing the firm's organizational charts so that Halliburton
and the Army can ascertain which Iraqis are reliable technocrats
and which are Saddam loyalists," the story says.
Halliburton, in a March news release,
said it first began working on a plan to repair Iraq's oil infrastructure
at the request of the Defense Department.
"The DoD, through its US Army Logistics
Civil Augmentation Program (LOGCAP) III contract with KBR, tapped
the company in November 2002 to develop the contingency plan.
Implementation of the plan is being executed through a separate
contract KBR now holds with the US Army Corps of Engineers,"
the news release says.
A half-dozen Halliburton employees said
that they don't believe Cheney played any role in the company
securing the lucrative contract from the government, but they
noted that the Army Corps of Engineers purposely downplayed the
company's role in repairing Iraq's infrastructure because of
Halliburton's ties to Cheney and the criticism that would likely
come from Congressional Democrats who claim the government is
playing favorites.
"Halliburton has been working with
the United States government since the 1940s," said one
executive who supplied CounterPunch with documents and requested
anonymity. "But because Vice President Dick Cheney used
to run the firm everyone automatically assumes that he had something
to do with the government contracts we now get."
Since 9-11, Halliburton's Brown &
Root division is the only company that has profited from the
so-called war on terror.
Based on its performance providing U.S.
troops in the Balkans with housing, food, water, mail, laundry,
and heavy equipment (a job for which Halliburton has been paid
$3 billion so far), the company won an unprecedented ten-year
deal in December 2001 to supply similar logistical support to
U.S. military operations around the world.
"The Pentagon's Logistics Civil
Augmentation Program pays Halliburton through what's called a
cost-plus arrangement, meaning that KBR is guaranteed to recover
its expenses, plus receive a set profit, provided the contract
terms are met. To date, KBR has received $830 million from the
program. The company is also helping to run Incirlik Air Base
and other U.S. military facilities in Turkey (where an initial
contract, set to expire in September, was worth $118 million)
and received $65 million to support bases in Afghanistan and
Uzbekistan. What's more, it earned $33 million building cells
for suspected al Qaeda members at Guantanamo Bay, Cuba. Overall,
Halliburton's backlog of government revenue expanded 40% in the
last three months of 2002 alone," Business 2.0 reported.
.
What is most troubling about the sweet
deals Brown & Root has been awarded and what has lawmakers
like Congressman Henry Waxman, D-California, up in arms is how
the company ripped off the government to the tune of $2 million
on several occasions while Cheney was chief executive of Halliburton
and the company's long history of supporting terrorist regimes-including
Iraq, Iran and Libya-despite U.S. sanctions on such countries.
Last year, KBR agreed to pay the U.S.
government $2 million to settle allegations it defrauded the
military while Cheney was chief executive of parent company Halliburton.
KBR was accused of inflating contract prices for maintenance
and repairs at Fort Ord, a now-shuttered military installation
near Monterey, Calif. The lawsuit, filed in Sacramento, alleged
KBR submitted false claims and made false statements in connection
with 224 delivery orders between April 1994 and September 1998.
KBR and Halliburton has also paid out settlements to end investigations
and lawsuits on half-a-dozen other occasions.
In 1978, a grand jury indicted KBR on
charges that it colluded with a competitor on marine construction
work. KBR paid a $1 million fine to settle the charges. In 1995,
the U.S. fined Halliburton $3.8 million for violating a ban on
exports to Libya. Four years later, a Halliburton subsidiary
opens an office in Iran, despite a U.S. ban on doing business
in that country. In 2001, Halliburton shareholders lash out at
company executives for its pipeline project in Burma, citing
that country's human-rights abuses. Also in 2001, watchdog groups
blast Cheney for placing 44 Halliburton subsidiaries in foreign
tax havens.
Halliburton's dealings in six countries
- Azerbaijan, Indonesia, Iran, Iraq, Libya and Nigeria - show
that the company's willingness to do business where human rights
are not respected is a pattern that goes beyond its involvement
in Burma..
So how does the company continue to win
such lucrative contracts with the government, as in the case
of Iraq, in spite of its shady record?
"KBR was selected for the award
based on the fact that KBR is the only contractor that could
commence implementing the complex contingency plan on extremely
short notice," Halliburton said in a March news release.
Despite Waxman's criticism of the government
awarding the bulk of the work in Iraq to Halliburton unit Brown
& Root, it appears that the company's role in the country
is getting bigger by the second. And plans to open up the bidding
to other companies appear to be a dead issue.
On Monday, the Army Corps of Engineers
said it awarded Brown & Root another $24 million contract,
this time to distribute gasoline and cooking fuel in Iraq.
The Army Corps of Engineers said the
delivery order was awarded to Halliburton subsidiary on May 4
as part of the $7 billion umbrella contract awarded to the company
in March for fire fighting services in Iraq.
The Army Corps last week said the Halliburton
subsidiary had received about $75 million in orders so far, and
the total amount would likely reach about $600 million, far less
than the worst-case figure of $7 billion estimated before the
Iraq war.
Corps spokeswoman Carol Sanders said
the new order fell under the broad terms of the original contract
and rejected criticism from Waxman, who said Halliburton now
appeared to have a more lucrative and direct role in rebuilding
Iraq's oil industry.
She said Iraqi people urgently needed
cooking oil and gasoline as they began rebuilding their country.
Given the need to boil water to prevent disease, it was not feasible
to competitively bid the work.
"We made the contract broad enough
so we could handle issues just like this," she said.
Specifically, Sanders said KBR was bringing
supplies of liquefied national gas and gasoline to regional storage
centers, where Iraqis were managing its distribution.
KBR spokeswoman Wendy Hall said the latest
contract was part of the broader contract, which aimed to maintain
"the continuity of operations of the Iraqi oil infrastructure."
Jason Leopold
can be reached at: jasonleopold@hotmail.com
Yesterday's
Features
Saul
Landau
Clear Channel Fogs the Airwaves
Michael
Neumann
Has Islam Failed? Not by Western
Standards
Uri
Avnery
My Meeting with Arafat
Steve Perry
The Saudi Arabia Bombing
Jacob
Levich
Democracy Comes to Iraq: Kick Their Ass and Grab Their Gas
William
Lind
The Hippo and the Mongoose: a Question of Military Theory
The
Black Commentator
Fraud at the Times: Blaming Blacks for White Folks' Mistakes
Stew Albert
Asylum
Hammond
Guthrie
An Illogical Reign
Website
of the Day
Sy Hersh: War and Intelligence
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