Let’s recap:
Dick Cheney was Secretary of Defense under the first Bush administration, where Kellogg, Brown and Root, a subsidiary of Halliburton Company, received a contract to monitor troop tent cities.
KBR subsequently lost this contract during the Clinton administration because they were supposedly overcharging the government.
In 1995 Cheney goes to work for Halliburton as their CEO (for which he had no previous experience in the oil business), and by the time he left in 2000 to run as the vice presidential nominee, he had increased Halliburton’s foreign tax shelters from nine to 44.
As well, Cheney is receiving an annual compensation package from Halliburton totaling $800,000 over a five-year period, in addition to his salary and benefits package over the preceding five years.
However, concerning the $1 billion oil field contract awarded to Halliburton’s subsidiary KBR earlier this year, I’m afraid I was mistaken. After having conducted further research into Halliburton for this article, the contract awarded to KBR to help fight oil fires and rebuild the petroleum infrastructure in Iraq now has “an estimated cost ceiling of $7 billion,” according to Gen. Flowers in the Corps of Engineers.
The “actual value of the contract, awarded in March, cannot be determined because it depends on the amount of work to be done.” This $7 billion figure is based on estimated “worst-case damage to the Iraqi oil fields.”
A six billion dollar jump??? If only I had that kind of money to play around with! But wait, it gets better.
Under the conditions of the contract, the maximum potential award fee is seven percent of the costs of the work to be performed, which will be determined by the contractors’ performance. Therefore, if the costs of the reconstruction are higher than the $7 billion estimated, KBR can receive up to seven percent of the total cost of the reconstruction in addition to the original cost of the contract, however much that ultimately winds up being. Based on KBR’s past performance with the Army, those fees could easily top half a billion dollars. As one contract expert puts it, “The more money (KBR) spends, the more profitable the contract is.”
Then again, if we take an in-depth look at KBR’s past performance, as some on Capital Hill have done, we come up with a far more disturbing picture of where all those billions of (taxpayers’) dollars go.
When KBR (at the time merely Brown and Root) was handling the army’s facilities in Kosovo in the 1990’s, they provided twice the electricity needed and ordered $5.2 billion worth of furniture for the camps (which cost the Army $377,000 to merely process the order). Brown & Root routinely overstaffed operations, resulting in employees literally standing around with nothing to do.
From 1995-2000 Brown & Root billed the government for $2.2 billion in logistical supplies for Kosovo, making it the most expensive services contract in U.S. history. That was nearly one-sixth of the total spent by the military on the entirety of operations in the Balkans area.
And one reason why these numbers are so excessively high is that the General Accounting Office states that the Pentagon failed to properly manage Brown & Root’s activities.
If you can believe it, some army officers appear to have believed that the military was working for Brown & Root, describing the company as the “customer” in an internal e-mail.
This is the same subsidiary of Cheney’s old Halliburton Company that is now being given a minimum of $7 billion for a two year stint in Iraq, under the same “pay-now, review-later” policy it was operating under in Kosovo.
Now, you’ve got to keep in mind that Halliburton is one of the main companies that has been avoiding paying their taxes on gains made within the U.S.
That $70 billion figure I mentioned in my last article? That is only the figure for this past year. These companies, beginning with the health insurance companies in the early 1990’s, have been avoiding paying their taxes for years. Just think how much money has been lost to these tax shelters for the past thirteen years due to corporate “headquarter” flight, with the IRS and U.S. Congress doing nothing to stop them?
Part two of an ongoing series looking at the activities of Halliburton, the Iraq reconstruction, the management of government funds, and tax dodging by major American corporations.
