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Halliburton: VP's former company challenged

by Juan Salazar, business writer

 

Halliburton is a Texas-based company that specializes in providing products and services for the oil industry. It is involved in most processes in the oil production cycle, from the manufacturing of drill bits used to reach oil reserves to the distribution of finished oil products such as gasoline. According to its Web site, Halliburton started 1919 and today is a huge multinational corporation with more than 100,000 employees working in more than 120 countries (Halliburton.com).

For the past few years,the company has been under a lot of scrutiny, largely because of the contracts awarded to it in Iraq, and its ties to Vice President Dick Cheney, who headed the company for five years before he decided to run as G.W. Bush’s vice president.

VP Dick Cheney

 

The trouble started last year when the company was awarded a contract to extinguish any possible oil fires that might be set off by retreating Iraqi troops, or terrorists. One of the many problems with the contract was the fact that Halliburton’s involvement in Iraq went beyond fighting oil fires, and included among other things importing gasoline into Iraq, operating facilities, and distributing oil products (USA Today).

One of the most outspoken critics of Halliburton’s dealings in Iraq is democrat senior member of the House Government Reform Committee, Rep. Henry Waxman, who last year criticized the involvement of Halliburton in Iraq because the contract was awarded without bidding by other companies, which implied preferential treatment for Cheney’s former company. Waxman also criticized the use of humanitarian funds for profit (USA Today, May 7, 2003).

That was only the beginning to what would become an intense evaluation of Halliburton and its involvement in Iraq and other countries in the region.

Last October, the company was accused of overcharging for oil, when Waxman and another democratic congressman, Rep. John Dingel, wrote in a letter sent to the White House Office of Management and Budget that: “Halliburton seems to be inflating gasoline prices at a great cost to American tax payers...The overcharging by Halliburton is so extreme that one expert has privately called it ‘highway robbery’” (The New York Times, Oct. 17, 2003).

The letter specified that a Halliburton subsidiary, Kellogg Brown & Root (KBR), was charging the government about 45 cents per liter of gasoline, when it could be bought in the Persian Gulf for about 19 cents and transported to Iraq for about 7 cents. Halliburton was keystoning its costs and adding its expenses, a typical business procedure, not illegal, but costing U.S. taxpayers 19 cents per liter.

However, while key- stoning may be normal business practice, the source of the money being paid to Halliburton was also suspect. Waxman, in the same letter, criticized the use of humanitarian funds to pay Halliburton for the imported fuel. He said that “Serious questions have been raised about what happened to the $1 billion in Oil-for-Food funding…It now appears that this money is being used to pay Halliburton to import gasoline into Iraq at outrageously high prices…I deplore the use of these humanitarian funds from the U.N. to enrich Halliburton” (Congress Press Release, October 17, 2003).

Despite Halliburton’s denial of any wrongdoing (Houston Business Journal, Dec. 31, 2003), the agitation against it resulted in the contract being terminated and passed on to the Pentagon’s Defense Energy Support Center, which took control of efforts to rebuild Iraq’s oil industry.

This year, more allegations of unethical behavior have surfaced. According to Forward, Feb. 6, 2004, a French court is investigating Kellogg Brown & Root and two French companies for using bribery to obtain, in the late ‘90s, a $6.7 billion contract for a liquefied natural gas project in Nigeria. Forward reported that $180 million was wired to offshore accounts, using “shell companies in Gibraltar and the Portuguese island of Madeira.” It also reported that the money may have ended up in “the hands of former Nigerian dictator Sani Abacha.”

The possibility of Halliburton facing serious charges is implicit in statements by French Judge Renaud van Ruymbeke, who is conducting the investigation regarding the involvement of Vice President Cheney, who was Halliburton CEO at the time (Forward, Feb. 6, 2004).

KBR is also being investigated by the Defense Department on charges of bribery in Iraq and Kuwait, and allegations have also been made by Waxman that Halliburton violated U.S. sanctions against doing business in countries such as Iran (Forward).

Halliburton denies any wrongdoing. CEO Dave Lesar welcomed investigations saying, “We welcome a thorough review of any and all of our government contracts” (Forward).
Editor’s note: this story was filed in late April. Since then, the U. S. government has begun investigations of both Mr. Cheney and Halliburton.

 
 

 

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