The Cheney-Halliburton story is the classic military-industrial revolving door tale. As Secretary of Defense under Bush I, Cheney paid Brown and Root services (now Kellogg Brown and Root) $3.9 million to report on how private companies could help the U.S. Army as Cheney cut hundreds of thousands of Army jobs. Then Brown and Root won a five-year contract to provide logistics for the U.S. Army Corp of Engineers all over the globe. In 1995, Cheney became CEO and Halliburton jumped from 73rd to 18th on the Pentagon's list of top contractors, benefiting from at least $3.8 billion in federal contracts and taxpayer-insured loans, according to the Center for Public Integrity.
But the Halliburton story is more than just a simple revolving door tale. Even without the Cheney conflicts of interest, serious doubts remain about whether a company with a record like Halliburton's should even be eligible to receive government contracts in the first place. This, after all, is a company that has been accused of cost overruns, tax avoidance, and cooking the books and has a history of doing business in countries like Iraq, Iran and Libya.
Cost overruns: In September 2000, the General Accounting Office (GAO) found that the U.S. Army had not taken appropriate steps to limit the $2.2 billion costs Kellogg Brown and Root charged for logistical and engineering support in the Balkans. According to the report, Army officials "frequently have simply accepted the level of services the contractor provided without questioning whether they could be provided more efficiently or less frequently at lower cost."
Questionable Accounting: The SEC recently formalized an investigation into whether Halliburton artificially inflated revenue by $234 million over four years. Halliburton switched to a more aggressive accounting method in 1998 under Cheney.
Access to Evil -- business dealings in Iraq, Iran, and Libya: News reports suggest that Pentagon is currently using the Iran-Libya Sanctions Act (ILSA) to draw up a blacklist of non-US companies that have done business in Iran. Yet, Halliburton has conducted Business in Iran through subsidiaries. When Cheney was CEO of Halliburton, he inquired about an ILSA waiver to pursue oil field developments in Iran. In 1997, Halliburton subsidiary Halliburton Energy Services paid $15,000 to settle Department of Commerce allegations that the company had broken anti-boycott provisions of the U.S. Export Administration Act for an Iran-related transaction. Halliburton recently agreed to evaluate its operations in Iran, after the Securities and Exchange Commission rebuffed the company's request to dismiss a New York City police and fire pension funds shareholder proposal for the company to examine its role in Iran.
Also forgotten is that story about how Cheney's Halliburton did business with Saddam. According to the Washington Post, "Halliburton held stakes in two firms that signed contracts to sell more than $73 million in oil production equipment and spare parts to Iraq while Cheney was chairman and chief executive officer."
Halliburton has also done business in Azerbaijan, Burma, Indonesia, Libya and Nigeria. As Dick Cheney once said, "The good Lord didn't see fit to put oil and gas only where there are democratic regimes friendly to the United States."
Tax Havens: Under Cheney's tenure, the number of Halliburton subsidiaries in offshore tax havens increased from 9 to 44. Meanwhile, Halliburton went from paying $302 million in company taxes in 1998 to getting an $85 million tax refund in 1999.
All told, the IRS loses about $70 billion a year in offshore tax sheltering by corporations and wealthy individuals - almost enough to cover the $75 billion Bush asked for to cover the first six months of war. |
