sfgate.com
Lazarus, you're out of your 6th grade depths. It's a no-compete, cost-plus contract while it's former CEO is VP. Wake up and smell the corruption you ridiculous child you.
You like having your tax money wasted on towels instead of on body armour and desert boots?
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For government contractor Halliburton, it was precisely the kind of federal attention the company didn't want.
A former Halliburton employee told Senate Democrats in Washington, D.C., on Friday that the firm routinely wastes public money in Iraq. Henry Bunting, who purchased supplies for Halliburton in Kuwait last summer, said the company spent too much on supplies for the reconstruction effort, in part because it wanted to avoid seeking competitive bids from different suppliers.
For a firm with $9 billion in reconstruction contracts, the amounts Bunting discussed weren't much -- including $5.50 for each monogrammed towel when Halliburton could have spent $1.60, leases for cars and SUV's that ran up to $7,500 per month.
But his accusations came at a time when the Houston company has been accused of overcharging the government $61 million to haul oil into Iraq. Halliburton also reported last month that at least one of its employees was involved in a $6.3 million kickback scheme with a Kuwaiti firm.
Now the mounting accusations are turning Halliburton into a campaign issue.
Vice President Dick Cheney served as the firm's chief executive officer before joining George W. Bush's presidential ticket and still receives $150, 000 each year from the company in deferred compensation -- money he insists has no influence on his decisions. Democrats incensed that Cheney's former firm has scored so many reconstruction contracts have seized on Halliburton as a useful way to attack the administration.
"The Democrats are, right now, at a moment when issues like Halliburton can get a hearing, and they're going to keep pushing and pushing," said Henry Brady, a professor of political science and public policy at UC Berkeley.
For Democrats, Brady said, the very mention of Halliburton evokes two issues they hope will shape this year's presidential election: the Iraq war and Enron-style corporate scandals.
"It's a catch phrase for what is problematic with this administration," he said.
The company has denied accusations of favoritism and overcharging. Current CEO David J. Lesar even taped a television commercial defending his firm.
"We're serving the troops because of what we know, not who we know," he said.
A company spokeswoman Friday took issue with Bunting's accusations.
Halliburton can find no record of vehicle leases "approaching anywhere near this figure," according to a prepared statement from spokeswoman Cathy Gist. She said the towels Bunting mentioned, purchased for military installations in Baghdad, were bought for $3 apiece and were monogrammed in hopes that fewer would be stolen if they were clearly marked.
The company's critics, however, seized on Bunting's comments to demand further action.
"If what the company insiders say is true, overcharging and improper business practices are part of the corporate culture at Halliburton," said Rep. Henry Waxman, D-Los Angeles.
Waxman was the first to question Halliburton's prices for bringing oil into Iraq last year. He also was the first to reveal Bunting's accusations, made after Bunting and an anonymous former Halliburton employee contacted Waxman's office.
"There needs to be a full investigation of the contracts by Congress," Waxman said Friday, in a prepared statement.
The Pentagon already is looking into questions of overcharging for oil on one of Halliburton's contracts, even though the Army Corps of Engineers has defended Halliburton's actions.
Sen. Barbara Boxer, D-Calif., last week called on Defense Secretary Donald Rumsfeld to ban Halliburton from government contracts in response to the overcharging allegations. Rumsfeld, however, turned her down.
"These matters are under review as part of the ongoing audit of the contract," he wrote Boxer Thursday in a terse, four-sentence letter. "It would be better to let the process unfold in an orderly fashion."
Bunting and the other, anonymous whistle-blower charge that Halliburton supervisors wanted purchasers to buy from a list of preferred companies in Kuwait, even when those firms charged high prices. Supervisors also told their workers to keep most purchase orders below $2,500 so that the company wouldn't have to seek bids from multiple vendors.
"Remember, this is a 'cost-plus contract,' so Halliburton would get reimbursed for its costs plus a percentage," Bunting told senators Friday.
Halliburton's Gist said the company encourages competition for all purchases but only requires it above the $2,500 threshold.
"Halliburton takes any charges of improper conduct seriously," she said. She noted that Bunting had not registered his complaints with a company hot line for reporting bad business practices.
Halliburton's turn as a campaign issue may yet fizzle if the company and the government can show that money wasn't wasted, said Martin Anderson, a fellow at the Hoover Institution and a former adviser to President Ronald Reagan.
"My guess is a big company wouldn't fool around with nickel-and-diming. It doesn't make sense," said Anderson, who also serves on the Defense Policy Board. "If, in the end, the people looking into this come back with a reasonable answer, it will go away. If they don't have a reasonable case, it will become a big issue."
Chronicle news services contributed to this report.E-mail David R. Baker at dbaker@sfchronicle.com. |
