"Man, This is War a Go-Go..."

(channelling Country Joe there)

$1.9 Billion Of Iraq's Money Goes To U.S. Contractors

Halliburton Co. and other U.S. contractors are being paid at least $1.9 billion from Iraqi funds under an arrangement set by the U.S.-led occupation authority, according to a review of documents and interviews with government agencies, companies and auditors.

Most of the money is for two controversial deals that originally had been financed with money approved by the U.S. Congress, but later shifted to Iraqi funds that were governed by fewer restrictions and less rigorous oversight.

For the first 14 months of the occupation, officials of the Coalition Provisional Authority provided little detailed information about the Iraqi money, from oil sales and other sources, that it spent on reconstruction contracts. They have said that it was used for the benefit of the Iraqi people and that most of the contracts paid from Iraqi money went to Iraqi companies. But the CPA never released information about specific contracts and the identities of companies that won them, citing security concerns, so it has been impossible to know whether these promises were kept.

The CPA has said it has awarded about 2,000 contracts with Iraqi money. Its inspector general compiled records for the major contracts, which it defined as those worth $5 million or more each. Analysis of those and other records shows that 19 of 37 major contracts funded by Iraqi money went to U.S. companies and at least 85 percent of the total $2.26 billion was obligated to U.S. companies. The contracts that went to U.S. firms may be worth several hundred million more once the work is completed.

That analysis and several audit reports released in recent weeks shed new light on how the occupation authority handled the Iraqi money it controlled. They show that the CPA at times violated its own rules, authorizing Iraqi money when it didn't have a quorum or proper Iraqi representation at meetings, and kept such sloppy records that the paperwork for several major contracts could not be found. During the first half of the occupation, the CPA depended heavily on no-bid contracts that were questioned by auditors. And the occupation's shifting of projects that were publicly announced to be financed by U.S. money to Iraqi money prompted the Iraqi finance minister to complain that the "ad hoc" process put the CPA in danger of losing the trust of the people.

Early on, the Administration claimed that the CPA couldn't be audited because it wasn't a government agency. Right - all it did was commit funds appropriated by Congress!

Here's the latest from the always valuable Col David Hackworth's "Soldiers for the Truth":

One of the Biggest Heists in History

In Iraq, $8.8 billion is MIA. Serious dough even for the big spenders in Washington, D.C.

A pal in Iraq slipped me a draft Coalition Provisional Authority (CPA) Inspector General (IG) report dated July 12, 2004, that blisters the CPA for giving the missing billions to Iraqi ministries without appropriate controls.

The IG report concludes: “The CPA did not provide adequate stewardship of over $8.8 billion in DFI (Development Fund for Iraq) funds provided to Iraqi Ministries through the national budget process. Specifically, the CPA did not establish and implement adequate managerial, financial, and contractual controls over the funds to ensure they were used in a transparent manner.”

Offshore bankers must be burning the midnight oil these days with all the new secret accounts pouring out of Baghdad!

And small wonder that L. Paul Bremer went to ground in June after he turned the running of Iraq over to the Iraqis, closed down the CPA and flew home for an attaboy lunch with President Bush at the White House.

From an archived article (no link):

Washington Post, February 10, 2004

Iraqi Contractors Frustrated

By Jackie Spinner, Washington Post Staff Writer

The Iraq Governing Council's top representative in Washington yesterday criticized the U.S.-led occupation authority for passing over Iraqi firms in awarding billions of dollars worth of reconstruction contracts.

Rend Rahim Francke, the U.S. appointed council's ambassador-designate to the United States, said the Coalition Provisional Authority (CPA) is not making good on its pledge to employ Iraqis, which is seen as a key to stabilizing the country.

"Ultimately, American companies can come and build bridges and power plants. But these companies will be gone," she said during speech at a conference in Washington on reconstruction in Iraq. "We need to build capacity" for Iraqi firms, she said. "Jobs for Iraq will create stability and peace . . . and curb terrorism."

...the CPA and U.S. agencies awarding contracts do not make it easy for Iraqi firms to compete. For example, the bid packages are only printed in English and not published in print so Iraqi firms without Internet access can review them.

"The challenges you face with the CPA is they don't get out of the Green Zone," he said, referring to the fortified compound where the authority is headquartered. "They don't get out in Iraqi businesses. It seems to me an initiative needs to be taken by the U.S. government to publish the bids where they can be read in a language [in which] they can be [understood]."

How well are our selfless contractors doing?

Contract Figures Show Halliburton's Startling Growth

Halliburton, the giant services firm formerly run by Vice President Dick Cheney, saw a sixfold increase in earnings from contracts with the Defense Department last year, making the Houston-based company the nation's seventh largest defense contractor.

Halliburton received Pentagon contracts worth $491 million in 2002; that figure shot up to $3.1 billion in 2003.

Data on the top 200 federal contractors was compiled for Government Executive by Eagle Eye Publishers Inc. of Fairfax, Va., from information collected by the General Services Administration. A full list of top contractors will be published in the magazine's Aug. 15 issue.

The bulk of Halliburton's 2003 federal revenues derived from two sole-source contracts let by the Army to Halliburton's engineering and construction division, Kellogg, Brown and Root, before the invasion of Iraq. Under one contract, the Logistics Civil Augmentation Program, which ultimately could be worth up to $5.6 billion, the company provides logistical support to troops, such as cooking, laundry, housing and other services. The other agreement, known as the RIO contract, worth $2.5 billion, was to fight oil-field fires that U.S. commanders anticipated before the start of the war and to restore Iraq's oil infrastructure during reconstruction.

Both contracts have been controversial. David Walker, the head of the Government Accountability Office, told the House Government Reform Committee in June that a GAO audit showed that the LOGCAP contract was poorly managed.

In particular, Walker criticized a $1.9 million task order issued under the auspices of the contract by the Army Field Support Command in November 2002. The task order directed KBR to develop a plan to repair and restore Iraq's oil infrastructure should Iraqi forces damage or destroy it. GAO determined that the task order fell outside the scope of the LOGCAP contract and should not have been issued. The Army Corps of Engineers awarded Kellogg, Brown and Root the RIO contract four months later on the basis of work performed under the questionable task order.

(also note the article linked from the above article "GOP blocks war-profiteering amendment")

In fiscal year 2002, Halliburton was only #37. And the six contractors above them on the new list all make things for DOD - Halliburton just does things. According to Bloomberg.com last February:

• Lockheed Martin Corp. $21.9 B
• Boeing $17.3 B
• Northrop Grumman Corp. $11.1 B
• General Dynamics Corp. $8.2 B
• Raytheon Co. $7.9 B
• United Technologies Corp. $4.5 B

Whoops - did I describe Halliburton as "selfless"?

New York Times, January 30, 2004

The Halliburton Shuffle

By Bob Herbert

Can you spell Halliburton? R-i-p- o-f-f.

War-torn Iraq has been a gold mine for Halliburton, yet another treasure trove of U.S. taxpayer dollars for a company that has no peer in the fine art of extracting riches from the government.

But if you go through some of Halliburton's filings with the Securities and Exchange Commission over the past several years, as I have, you'll see a company that goes to great lengths — literally to the ends of the earth — to escape paying its fair share of taxes to the government that has been so good to it.

Annual reports filed with the S.E.C. since the mid-90's — when Dick Cheney took over as chief executive and wrote the game plan for garnering government goodies — showed Halliburton subsidiaries incorporated in such places as the Cayman Islands, Bermuda, Trinidad and Tobago, Panama, Liechtenstein, and Vanuatu.

Vanuatu? Who knew?

Vanuatu is a mountainous group of islands in the South Pacific. Its people support themselves mostly by fishing and subsistence farming. "Additional revenues," according to the Columbia Encyclopedia, "derive from a growing tourist industry and the development of Vila [the capital] as a corporate tax shelter."

Halliburton, in an S.E.C. filing in 2000, duly noted that it had a subsidiary incorporated in Vanuatu called Kinhill Kramer (Vanuatu) Ltd.

The company adamantly denies that its offshore subsidiaries are used to shift income out of the U.S. But it's indisputable that somebody is doing a dandy job of limiting Halliburton's tax liability. When I asked how much Halliburton paid in federal income taxes last year, a company spokeswoman, Wendy Hall, said, "After foreign tax credit utilization, we paid just over $15 million to the I.R.S. for our 2002 tax liability."

That is effectively no money at all to an empire like Halliburton. Less than pocket change. Dick Cheney must be having a good laugh over the way his old company, following his road map, is taking the U.S. for such a ride.

In the early 90's, when Mr. Cheney was defense secretary under the first President Bush, he hired the Halliburton subsidiary Brown & Root to determine what military functions could be outsourced to private profit-making companies. Brown & Root came up with myriad ideas in a classified study and was handed a lucrative contract to implement its own plan.

Mr. Cheney took over as chief executive of Halliburton in 1995, and the defense contracts just kept on coming. When he returned to government as vice president in 2001, no firm was better positioned than Halliburton to cash in on the billions of dollars in contracts that resulted from the war on terror and the conflict in Iraq.

Halliburton is bound so intimately to the defense establishment it might as well be an adjunct to the military. (Mr. Cheney still receives deferred compensation from Halliburton but insists he has no role in the awarding of contracts.)

Halliburton is an organization that has the reach of a multinational and the eyes of a Willie Sutton. Through its subsidiaries, it has done work with countries the U.S. has accused of supporting terror. It was accused of overcharging the U.S. government for work done in the 1990's, and in 2002 it agreed to pay a $2 million settlement in response to accusations that it had defrauded the government.

So, Halliburton was given incredibly lucrative contracts for which they drafted the specs? Does this remind anyone of how a certain Vice President got his current job?

Overall, I'd say the Administration is serving the Iraqis' interests in much the same way the FCC and media giants are serving (as mandated) the public's interest - by lining the pockets of the already well-connected. That is to say, damn little.

Further reading:

What did the Vice-President do for Halliburton?

Making Money on Terrorism

Rep Henry Waxman and The Committee on Government Reform