Halliburton, Cheney, Corruption
Scott Saunders, a spokesman for the Army Corps of Engineers, confirmed the authenticity of the letter, and acknowledged that Halliburton had picked Altanmia. “Halliburton told us that only Altanmia could meet our requirements,” he said.
Experts in the Persian Gulf oil business say that the Altanmia deal looks suspicious. “There is not a reason on earth to sell gasoline at the price they did,” Youssef Ibrahim, the managing director of the Strategic Energy Investment Group, a consulting firm in Dubai, said. “Halliburton and their Kuwaiti partners made out like bandits.” A well-informed Kuwaiti source called the prices charged by Altanmia “absurd,” and said that Halliburton’s arrangement to buy Kuwaiti oil through a middleman, rather than directly from the government, was “highly irregular.” He added, “There is no way that this could have transpired without the knowledge and direction” of Kuwait’s oil minister, Sheikh Ahmad Al-Fahad Al-Sabah. Two sources told me that the oil minister’s brother, Talal Al-Fahad Al-Sabah, may have secret financial ties to Altanmia. (The brothers are also nephews of the Emir and the Prime Minister of Kuwait.) “There are calls in parliament to open an investigation,” the Kuwaiti source said. “It could shake the government.”
Halliburton, meanwhile, is contending with two new scandals. Last week, the Wall Street Journal reported that the company had overcharged the government by sixteen million dollars on a bill for the cost of feeding troops at a military base in Kuwait. And last month the company made an astonishing confession: two of its employees, it said, had taken kickbacks resulting in overcharges of $6.3 million, in return for hiring a different Kuwaiti subcontractor in Iraq. Halliburton said that the employees, whose names it declined to reveal, had been fired and the funds returned. The day after this disclosure, the Pentagon awarded yet another contract to Halliburton, worth $1.2 billion, to rebuild the oil industry in southern Iraq.
Defenders of Halliburton deny that it has been politically favored, arguing that very few other companies could have handled these complex jobs. As Cheney said last September on “Meet the Press,”“Halliburton is a unique kind of company. There are very few companies out there that have the combination of very large engineering construction capability and significant oil-field services.” Dan Guttman, a fellow at Johns Hopkins University, agrees with Cheney’s assessment, but sees Halliburton’s dominance as part of a wider problem—one that has reached a crisis point in Iraq. After years of cutting government jobs in favor of hiring private firms, he said, “contractors have become so big and entrenched that it’s a fiction that the government maintains any control.” He wasn’t surprised that Halliburton’s admission of wrongdoing in Kuwait had failed to harm its position in Washington. “What can the government say—‘Stop right there’?” Guttman said of Halliburton. “They’re half done rebuilding Iraq.”
The Vice-President has not been connected directly to any of Halliburton’s current legal problems. Cheney’s spokesman said that the Vice-President “does not have knowledge of the contracting disputes beyond what has appeared in newspapers.” Yet, in a broader sense, Cheney does bear some responsibility. He has been both an architect and a beneficiary of the increasingly close relationship between the Department of Defense and an élite group of private military contractors—a relationship that has allowed companies such as Halliburton to profit enormously. As a government official and as Halliburton’s C.E.O., he has long argued that the commercial marketplace can provide better and cheaper services than a government bureaucracy. He has also been an advocate of limiting government regulation of the private sector. His vision has been fully realized: in 2002, more than a hundred and fifty billion dollars of public money was transferred from the Pentagon to private contractors.
According to Peter W. Singer, a fellow at the Brookings Institution and the author of “Corporate Warriors,” published last year, “We’re turning the lifeblood of our defense over to the marketplace.” Advocates of privatization, who have included fiscally minded Democrats as well as Republicans, have argued that competition in the marketplace is the best way to control costs. But Steven Kelman, a professor of public management at Harvard, notes that the competition for Iraq contracts is unusually low. “On battlefield support, there are only a few companies that are willing and able to do the work,” he said. Moreover, critics such as Waxman point out that public accountability is being sacrificed. “We can’t even find out how much Halliburton charges to do the laundry,” Waxman said. “It’s inexcusable that they should keep this information from the Congress, and the people.”
Unlike government agencies, private contractors can resist Freedom of Information Act requests and are insulated from direct congressional oversight. Jan Schakowsky, a Democratic representative from Illinois, told me, “It’s almost as if these private military contractors are involved in a secret war.” Private companies, she noted, can conceal details of their missions from public scrutiny in the name of protecting trade secrets. They are also largely exempt from salary caps and government ethics rules designed to protect policy from being polluted by politics. The Hatch Act, for example, forbids most government employees from giving money to political campaigns.
Halliburton has no such constraints. The company made political contributions of more than seven hundred thousand dollars between 1999 and 2002, almost always to Republican candidates or causes. In 2000, it donated $17,677 to the Bush-Cheney campaign. Indeed, the seventy or so companies that have Iraq contracts have contributed more money to President Bush than they did to any other candidate during the past twelve years.
No comments yet.