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Context of 'January 2005-April 2005: Halliburton Employee Discovers that Unsafe Water is Provided to US Troops'

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Kellogg Brown & Root, a subsidiary of Halliburton, wins a 10-year no-bid contract to provide the Pentagon with support services in Iraq—everything from fighting oil-well fires to building military bases to feeding and housing soldiers. Vice President Dick Cheney is the former CEO of Halliburton. When he was defense secretary under George H. W. Bush, Cheney had pushed to outsource many of the military’s logistical and support functions to private contractors, part of what Vanity Fair will later term “a broader effort to transfer government functions of all kinds to the private sector.” [Vanity Fair, 2/2009]

Entity Tags: US Department of Defense, Halliburton, Inc., Richard (“Dick”) Cheney, Kellogg, Brown and Root

Timeline Tags: Events Leading to Iraq Invasion

The US Army Corps of Engineers awards Halliburton subsidiary, Kellogg, Brown & Root (KBR), a sole-source monopoly contract to repair and operate Iraq’s oil infrastructure. The contract is awarded in secrecy without any competing bids from other qualified companies. Halliburton will eventually charge the government $2.4 billion for its work. The Defense Contract Audit Agency will find that about $263 million of these costs are either questionable or unsupported. Despite this, the US Army will pay Halliburton all but $10.1 million, or 3.8 percent, of the disputed costs. [New York Times, 2/27/2006; US Congress, 3/28/2006, pp. 3-4 pdf file]

Entity Tags: Defense Contract Audit Agency, Halliburton, Inc., US Army Corps of Engineers

Timeline Tags: Iraq under US Occupation

Halliburton issues a press release declaring that it has won a contract from the US Army Corps of Engineers to extinguish oil well fires and do emergency repairs to Iraq’s oil infrastructure in post-invasion Iraq. The firefighting work will be subcontracted to Houston-based companies Boots & Coots International Well Control, Inc. and Wild Well Control, Inc. [Halliburton, 3/24/2003]

Entity Tags: Halliburton, Inc.

Timeline Tags: Iraq under US Occupation

In a letter to US Congressman Henry A. Waxman, the Commanding Lieutenant General of the US Army, Robert B. Flowers, says that the contract awarded to Halliburton subsidiary Kellogg, Brown & Root (KBR) also includes work concerning the “operation” of Iraqi oil facilities and “distribution” of Iraqi oil products. [Flowers, 5/2/2003 pdf file]

Entity Tags: Henry A. Waxman, Halliburton, Inc.

Timeline Tags: Iraq under US Occupation

The Pentagon’s Defense Contract Audit Agency sends a draft audit report to Halliburton subsidiary Kellogg, Brown, & Root (KBR) claiming that the firm overcharged the US military as much as $61 million for fuel deliveries into Iraq. The report says that KBR charged an average of $2.64 per gallon, more than twice the price others were paying. The DCAA also says the company has been slow to provide cost estimates for its projects in Iraq. KBR has given the US government estimates for only 12 orders. As of this date, 69 are overdue. [New York Times, 12/12/2003]

Entity Tags: Defense Contract Audit Agency, Halliburton, Inc.

Timeline Tags: Iraq under US Occupation

The US Army Corps of Engineers (US ACE) issues a waiver relieving Halliburton of the obligation to provide the government with “cost and pricing data” for the fuel it sells to the US military. The company was recently accused of overcharging the military as much as $61 million for fuel deliveries into Iraq (see December 5, 2003). The waiver will make it difficult for auditors to determine whether Halliburton or its Kuwaiti subcontractor overcharged the US government. [US Congress, 1/6/2004 pdf file]

Entity Tags: Halliburton, Inc., US Army Corps of Engineers

Timeline Tags: Iraq under US Occupation

Compounding effect of multiple tiers of subcontractorsCompounding effect of multiple tiers of subcontractors [Source: News Observer] (click image to enlarge)Despite the fact that the Logistics Civil Augmentation Program (LOGCAP) contract explicitly prohibits Halliburton and its subcontractors from subcontracting security services, Halliburton subcontractor ESS hires the firm Blackwater USA to provide security through Regency Hotel, another subcontractor. Each of the subcontractors involved in this arrangement will charge a substantial mark-up for the security personnel. Blackwater pays its security guards $600 per day and charges Regency $815 per day plus overhead costs, while Regency charges ESS between $1200 and $1500 per day for each security guard. It is not known what ESS charges Halliburton or what the final bill is for the taxpayer. Halliburton refuses to disclose this information to Congress. Congressman Henry Waxman, in a letter to Secretary of Defense Donald Rumsfeld, will suggest that Halliburton’s invoice to the US government for these services was not legal and should not have been paid. [Regency Hotel & Hospital Company, 3/12/2004 pdf file; News & Observer, 10/24/2004; News & Observer, 10/28/2006; US Congress, 12/7/2006 pdf file]

Entity Tags: Regency Hotel, Halliburton, Inc., Blackwater USA, ESS

Timeline Tags: Iraq under US Occupation

Ben Carter, an employee for Halliburton subsidiary Kellogg, Brown, & Root (KBR), serves as the foreman of the water purification unit at Camp Ar Ramadi, a US military base also known as “Junction City.” At the base, both potable and non-potable water is supplied for different purposes. Non-potable water, despite not being used for drinking, is expected to meet certain safety standards so that US troops can use it for bathing, showering, shaving, laundry, and cleaning. After another KBR employee discovers larvae swimming in a toilet bowl, Carter does a test and discovers that there is no chlorine present in the non-potable water. When he tests the non-potable water tank, he is shocked to find out that “the water in the tank tested negative for chlorine; that the access lid of the tank was not in place, let alone secure, and the air vents to the tank were turned upward and left unscreened; leaving the water supply vulnerable to contamination from dust, insects, rodents or even enemy attack.” He reports his findings and urges the military to chlorinate their water tanks. But he is told by the KBR site commander that the water is not his concern. Carter is frequently hindered by higher-ups in his attempts to make sure that the water is properly purified and eventually leaves Iraq in frustration. [Democratic Policy Committee, 1/23/2006, pp. 6-8 pdf file]

Entity Tags: Halliburton, Inc., Ben Carter

Timeline Tags: Iraq under US Occupation

Bunnatine H. Greenhouse, the highest ranking contracting official at the US Army Corps of Engineers (USACE), testifies before the Democratic Policy Committee. She criticizes how the Restore Iraqi Oil (RIO) contract was awarded to Halliburton subsidiary Kellogg, Browning, & Root (KBR). “I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have witnessed during the course of my professional career.” She notes that there were several irregularities in the USACE’s contract with KBR to restore Iraqi oil:
bullet The independence of the USACE contracting process was severely compromised. The Office of the Secretary of Defense (OSD) controlled “every aspect of the RIO contract,” even after responsibility for the contract was delegated to the US Army.
bullet She questioned why the Defense Department had delegated executive agency authority for the RIO contract to the Corps when it has no competencies related to oil production. Such work was outside the scope of its congressionally-mandated mission.
bullet The Defense Department paid KBR to prepare for oil production restoration work before the RIO contract was even awarded. The payments were made under the already operational Logistics Civil Augmentation Program (LOGCAP), the scope of which did not include such work. Greenhouse said that the US government should have signed a new contract with KBR for this work. When she questioned the legality of these payments, she was incorrectly told that a new contract was being issued. [Democratic Policy Committee, 6/27/2005 pdf file]

Entity Tags: Bunnatine H. Greenhouse, Democratic Policy Committee, US Army Corps of Engineers, Halliburton, Inc.

Timeline Tags: Iraq under US Occupation

Bunnatine H. Greenhouse, who earlier criticized the US Army Corps of Engineers’ sole-source contract with Halliburton at a public hearing (see June 27, 2005), is demoted from her position as Principal Assistant Responsible for Contracting (PARC). Greenhouse, who was known for her steadfast adherence to regulations enforcing fair competition, received high performance ratings at the beginning of her tenure, which began in 1997. But after she began objecting to the contracts being awarded to Halliburton subsidiary Kellogg, Brown, & Root (KBR), her reviews became negative. [New York Times, 8/29/2005; Democratic Policy Committee, 9/16/2005, pp. 8-9 pdf file]

Entity Tags: US Army Corps of Engineers, Bunnatine H. Greenhouse, Halliburton, Inc.

Timeline Tags: Iraq under US Occupation

The Department of Homeland Security awards a contract to Halliburton subsidiary Kellogg, Brown & Root to establish what the $385 million contract describes as “temporary detention and processing capabilities.” Journalist Christopher Ketcham will comment: “The contract is short on details, stating only that the facilities would be used for ‘an emergency influx of immigrants, or to support the rapid development of new programs.’ Just what those ‘new programs’ might be is not specified.” [Radar, 5/2008]

Entity Tags: Kellogg, Brown and Root, US Department of Homeland Security, Halliburton, Inc.

Timeline Tags: Civil Liberties

Federal prosecutors attempt to determine just how much corruption, fraud, and theft has occurred among government contracts handed out to corporations for their work in Iraq. The preliminary answer: a great deal. The US Justice Department chooses to center its probe into war profiteering in the small town of Rock Island, Illinois, because high-ranking Army officials at the arsenal there administer KBR’s LOGCAP III contract to feed, shelter, and support US soldiers, and to rebuild Iraq’s oil infrastructure. KBR, formerly Kellogg, Brown, & Root, is a subsidiary of oil-construction giant Halliburton. The reported violations are rampant (see February 20, 2008, October 2005, October 2002, April 2003, June 2003, and September 21, 2007). [Chicago Tribune, 2/20/2008] The investigation is under the aegis of the National Procurement Fraud Task Force, formed by the Justice Department to detect, identify, prevent, and prosecute procurement fraud by firms such as KBR. The Task Force includes the FBI, the US Inspectors General community, the Executive Office for United States Attorneys, and others. [PR Newswire, 7/13/2007]
Multiple Prosecutions Underway - The Justice Department prosecutes four former supervisors for KBR, the large defense firm responsible for most of the military logistics and troop supply operations in Iraq. The government also prosecutes five executives from KBR subcontractors; an Army officer, Pete Peleti, has been found guilty of taking bribes (see February 20, 2008). Two KBR employees have already pleaded guilty in another trial, and about twenty more people face charges in the ever-widening corruption scandal. According to recently unsealed court documents, kickbacks, corruption, and fraud were rampant in contractual dealings months before the first US combat soldier arrived in Iraq. Not only did KBR contractors receive handsome, and illicit, payoffs, but the corruption and fraud endangered the health and safety of US troops stationed in Iraq and Kuwait. One freight-shipping subcontractor has already confessed to bribing five KBR employees to receive preferential treatment; five more were named by Peleti as accepting bribes. Prosecutors have identified three senior KBR executives as having approved deliberately inflated bids. None of these people have yet been charged. Other related charges have been made, from KBR’s refusal to protect employees sexually assaulted by co-workers to findings that the corporation charged $45 for a can of soda.
Pentagon Slashed Oversight - The overarching reason why such rampant fraud was, and is, taking place, prosecutors and observers believe, is that the Department of Defense outsourced critical troop support jobs while simultaneously slashing the amount of government oversight (see 2003 and Beyond).
Lack of Cooperation - Kuwait refuses to extradite two Middle Eastern businessmen accused of LOGCAP fraud. And KBR refuses to provide some internal documents detailing some of its managers’ business dealings. KBR says it “has not undertaken an exhaustive search of its millions of pages of procurement documents” to determine whether other problems exist. [Chicago Tribune, 2/20/2008; Chicago Tribune, 2/21/2008]

Entity Tags: US Department of the Army, National Procurement Fraud Task Force, Kellogg, Brown and Root, Federal Bureau of Investigation, Defense Contract Audit Agency, Pete Peleti, US Department of Defense, US Department of Justice

Timeline Tags: Iraq under US Occupation

Halliburton Co agrees to pay a $559 million fine to end an investigation of its former KBR subsidiary if the US government approves the settlement. KBR, formerly Kellogg Brown & Root, has long been accused of violating anti-bribery laws by paying kickbacks to Nigerian officials in return for “sweetheart deals” involving Nigeria’s oil and natural gas fields. The fine, if paid, will be the largest penalty in history against a US company for violations of the Foreign Corrupt Practices Act (FCPA); the settlement would allow Halliburton to avoid having a government monitor put in place, but would require the company to hire an independent consultant to assess its compliance with anti-bribery laws. Halliburton would pay $382 million to the Department of Justice and $177 million to the Securities and Exchange Commission in “disgorgement.” KBR, which has become independent of Halliburton since the incidents in question, refuses to comment on the settlement. The government’s probe of Halliburton/KBR goes back over 20 years, to the construction and expansion of a gas liquefaction facility at Bonny Island, Nigeria. Halliburton has admitted that its agents probably bribed Nigerian officials, and former KBR CEO Albert Stanley has already pled guilty to charges stemming from the Bonny Island bribery scheme. Former Vice President Dick Cheney was Stanley’s immediate supervisor when Cheney was CEO of Halliburton. [Reuters, 1/26/2009]

Entity Tags: Foreign Corrupt Practices Act, US Department of Justice, Kellogg, Brown and Root, Richard (“Dick”) Cheney, US Securities and Exchange Commission, Albert Stanley, Halliburton, Inc.

Timeline Tags: Iraq under US Occupation

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