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Hall Responds to State of the Union Address

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Location: Washington, DC


HALL RESPONDS TO STATE OF THE UNION ADDRESS

WASHINGTON, D.C. ...After watching his first State of the Union Address as a Republican Member of the House of Representatives, Rep. Ralph Hall (TX) expressed support for President Bush's vision for America.

"Tonight the President outlined for the American people a domestic and international agenda that will help us fight the War on Terrorism, continue the economic gains of the last few months, secure health care and retirement benefits for all citizens, and promote the values that have shaped American families for generations.

"While our economy has recently made substantial gains, we need to create more jobs for Americans. The President's goal of helping more Americans gain advanced skills for the workplace by investing in programs such as job-training grants for community colleges is ambitious and visionary. His proposal to make tax cuts permanent will also help sustain economic growth and allow American businesses to remain competitive in the global marketplace.

"I am particularly pleased that Congress passed a Medicare bill last year. While I don't agree with all parts of the bill, I think that it's better to pass a bill and begin the process of perfecting it than having to start over from the beginning. I support the President's proposal to provide tax credits to help the uninsured purchase coverage, as well as his push to allow small businesses to buy health insurance through association health plans. We need to do more to empower citizens to make health care and retirement choices for themselves and their families.

"I applaud the President for leading the nation during the War on Terrorism. We have made great progress, as the recent capture of Saddam Hussein illustrates, and we must continue to give our armed forces the resources they need to fight and win the war on terrorism. We also must continue to do all we can to thwart those who seek to harm our citizens by shoring up our homeland security. Dick Cheney's Halliburton

This company truly has a guardian angel: former Halliburton CEO and now Vice President Dick Cheney who looks out for its interests from the White House. The result? $8 billion in contracts "rebuilding" Iraq in 2004.

CEO: David J. Lesar
Military contracts 2005: $5.8 billion
Oil and gas-related contributions in the 2004 election cycle: $221,249*

The biggest windfall in the invasion of Iraq has most certainly gone to the oil services and logistics company Halliburton . The company, which was formerly run by Vice President Dick Cheney, had revenue of over $8 billion in contracts in Iraq in 2003 alone. And while Halliburton 's dealings in Iraq have been dogged everywhere by scandal - including now a criminal investigation into overcharging by Halliburton subsidiary Kellogg Brown and Root for gas shipped into Iraq - Vice President Cheney manages to be doing quite well from the deal. He owns $433,000 unexercised Halliburton stock options worth more than $10 million dollars.

But Halliburton 's history of benefiting from government largesse goes back a ways. From 1962 to 1972 the Pentagon paid the company tens of millions of dollars to work in South Vietnam, where they built roads, landing strips, harbors, and military bases from the demilitarized zone to the Mekong Delta. The company was one of the main contractors hired to construct the Diego Garcia air base in the Indian Ocean, according to Pentagon military histories.

In the early 1990s the company was awarded the job to study and then implement the privatization of routine army functions under then-secretary of defense Dick Cheney. When Cheney quit his Pentagon job, he landed the job of Halliburton 's CEO, bringing with him his trusted deputy David Gribbin. The two substantially increased Halliburton 's government business until they quit in 2000, once Cheney was elected vice president. This included a $2.2 billion bill for a Brown and Root contract to support US soldiers in Operation Just Endeavor in the Balkans.

After Cheney and Gribbin departed, another confidante of Cheney, Admiral Joe Lopez, former commander in chief for U.S. forces in southern Europe, took over Gribbin's old job of go-between for the government and the company, according to Brown and Root's own press releases.

In 2001 the company took in $13 billion in revenues, according to its latest annual report. Currently, Brown and Root estimates it has $740 million in existing U.S. government contracts (approximately 37 percent of its global business).

For example, in mid November 2001, Brown and Root was paid $2 million to reinforce the U.S. embassy in Tashkent, Uzbekistan, under contract with the State Department, according to the New York Times. More recently Brown and Root was paid $16 million by the federal government to go to Guantnamo Bay, Cuba, to build a 408-person prison for captured Taliban fighters, according to Pentagon press releases.

That's by no means all: Brown and Root employees can be found back home running support operations from Fort Knox, Kentucky, to a naval base in El Centro, California, according to company press releases. In December 2001, Brown and Root secured a 10-year deal named the Logistics Civil Augmentation Program (LOGCAP), from the Pentagon, which has already been estimated at $830 million.

Meanwhile independent agencies are still skeptical about claimed financial savings from contracting out military support operations. According to the Government Accounting Office (GAO), a February 1997 study showed that a Brown and Root operation in Bosnia estimated at $191.6 million when presented to Congress in 1996 had ballooned to $461.5 million a year later.

All told this former Yugoslavia contract has now cost the taxpayer $2.2 billion over the last several years. Examples of overspending by contractors include flying plywood from the United States to the Balkans at $85.98 a sheet and billing the army to pay its employees' income taxes in Hungary.

A subsequent GAO report, issued September 2000, showed that Brown and Root was still taking advantage of the contract in the Balkans. Army commanders were unable to keep track of the contract because they were typically rotated out of camps after a six-month duration, erasing institutional memory, according to the report. The GAO painted a picture of Brown and Root contract employees sitting idly most of the time. The report also noted that a lot of staff time was spent doing unnecessary tasks, such as cleaning offices four times a day. Pentagon officials were able to identify $72 million in cost savings on the Brown and Root contract simply by eliminating excess power generation equipment that the company had purchased for the operation.

Brown and Root has been also been investigated for over billing the government in its domestic operations. In February 2002, Brown and Root paid out $2 million to settle a suit with the Justice Department that alleged the company defrauded the government during the mid-1990s closure of Fort Ord in Monterey, California.

The allegations in the case surfaced several years ago when Dammen Gant Campbell, a former contracts manager for Brown and Root turned whistle-blower, charged that between 1994 and 1998 the company fraudulently inflated project costs by misrepresenting the quantities, quality, and types of materials required for 224 projects. Campbell said the company submitted a detailed "contractors pricing proposal" from an army manual containing fixed prices for some 30,000 line items.

Once the proposal was approved, the company submitted a more general "statement of work," which did not contain a breakdown of items to be purchased. Campbell maintained the company intentionally did not deliver many items listed in the original proposal. The company defended this practice by claiming the statement of work was the legally binding document, not the original contractors pricing proposal.

"Whether you characterize it as fraud or sharp business practices, the bottom line is the same: the government was not getting what it paid for," says Michael Hirst, of the United States Attorney's Office in Sacramento, who litigated the suit on behalf of the government. "We alleged that they exploited the contracting process and increased their profits at the governments expense."

*Source: opensecrets.org

Links

* Halliburton
* Project on Government Oversight
* Occupation Watch

IRAQ: Army to End Expansive, Exclusive Halliburton Deal
by Griff Witte, Washington Post
July 12th, 2006
The U.S. Army is discontinuing a controversial multibillion-dollar deal with oil services giant Halliburton to provide logistical support to U.S. troops worldwide, a decision that could cut deeply into the firm's dominance of government contracting in Iraq.
(Read CorpWatch's response.)

US: Federal contracts up 86% under Bush; Halliburton rises 600%
Raw Story
June 20th, 2006
Top contractor Lockheed got contracts larger than budget of Congress, Dept. of Interior

US: GOP Kills Bill to Police Halliburton
by Bob Geiger, AlterNet
June 20th, 2006
I suppose it's old news at this point that the Bush administration lied us into the Iraq war and that the cost of this mess will be fully realized by the next generation when Bush leaves office with the biggest budget deficit in U.S. history.

US: Halliburton sees earnings doubling in coming years
Stuff New Zealand
June 9th, 2006
Oil field services company Halliburton Co. expects net income and earnings per share to double over the next three to five years, Chief Financial Officer Cris Gaut said today.

US: Big Bonuses Still Flow, Even if Bosses Miss Goals
by Gretchen Morgenson, The New York Times
May 31st, 2006
As executive pay packages have rocketed in recent years, their defenders have contended that because most are tied to company performance, they are both earned and deserved. But as the Las Vegas Sands example shows, investors who plow through company filings often find that executive compensation exceeds the amounts allowed under the performance targets set by the directors.

US: Protestors Arrested at Halliburton Annual Meeting
by Shaun Schafer, Associated Press
May 17th, 2006
Sixteen people protesting Halliburton Co.'s role as a military contractor were arrested Wednesday outside a building where shareholders discussed spinning off the subsidiary that provides meals, clean laundry and other services to U.S. troops in Iraq.

Yes-Men Taunt Halliburton
by Brooke Shelby Biggs
May 10th, 2006

IRAQ: Documents track Halliburton battle
by David Ivanovich, Houston Chronicle
March 29th, 2006
Federal auditors castigated Houston-based Halliburton Co. repeatedly for failing to control costs and adequately justify its billings when working to rebuild Iraq's southern oil industry, newly released documents show.

US: Being Timely Was Key to Halliburton Bonuses
by David Ivanovich, The Houston Chronicle
February 28th, 2006
Houston's Halliburton Co. earned nearly $100 million from its controversial no-bid contract to repair Iraq's oilfields and import fuel into that violence-torn country, Pentagon records show.

Ports of Profit
by Pratap Chatterjee, Special to CorpWatch
February 24th, 2006
The ports of Dubai make up some of the busiest commercial hubs in the world for the "global war of terrorism." Conveniently located between the Afghanistan and Iraq, Dubai is the ideal jumping-off point for military contractors and a lucrative link in the commercial supply chain of goods and people.

Baghdad Embassy Bonanza
by David Phinney, Special to CorpWatch
February 12th, 2006
A controversial Kuwait-based construction firm accused of exploiting employees and coercing low-paid laborers to work in war-torn Iraq against their will is now building the new $592-million U.S. embassy in Baghdad.

Listen to an interview with David Phinney about this article on CorpWatch Radio.

IRAQ: Halliburton Gave Troops Foul Water, Workers Say
Reuters
January 23rd, 2006
A Halliburton Co. subsidiary provided water to U.S. troops at a camp in Iraq that was twice as contaminated as water from the Euphrates River, former employees of the company said on Monday.

US: Ex-Halliburton Iraq Worker Gets 15-Month Jail Sentence
by Matt Daily, Reuters
November 18th, 2005
A former Halliburton Co. worker was sentenced on Friday to 15 months in prison after pleading guilty in federal court in Illinois to taking more than $110,000 in kickbacks from an Iraqi company in 2004.

US: Immigrants Often Unpaid for Katrina Work
by Justin Pritchard, Associated Press
November 5th, 2005
A pattern is emerging as the cleanup of Mississippi's Gulf Coast morphs into its multibillion-dollar reconstruction: Come payday, untold numbers of Hispanic immigrant laborers are being stiffed.

US: Suspected Illegal Workers Found at Halliburton Job Site
by Griff Witte, The Washington Post
October 22nd, 2005
Federal agents have identified 10 suspected illegal immigrants working at a naval base near New Orleans where the Halliburton Co. subsidiary Kellogg Brown & Root is leading hurricane reconstruction, according to a spokeswoman for U.S. Immigration and Customs Enforcement.

US: Cheney's Halliburton Options Up 3,281% Last Year
The Raw Story
October 11th, 2005

US: Katrina work goes to officials who led Iraq effort
by Adam Entous, Reuters
October 6th, 2005
Top officials who managed U.S. reconstruction projects in Iraq have been hired by some of the same big companies that received those contracts and which are now involved in a rush of deals to rebuild after Hurricane Katrina.

Blood, Sweat & Tears: Asia's Poor Build U.S. Bases in Iraq
by David Phinney, Special to CorpWatch
October 3rd, 2005
Thousands of low-wage Asian laborers are traveling to Iraq to work for U.S. military contractors like First Kuwaiti and Prime Projects International in the hope of sending money home to their families. Trapped and exploited under inhuman conditions, many of them are now fleeing the country to save their lives.

US: Auditors investigate Katrina contracts
by Hope Yen, Associated Press
September 22nd, 2005
Government auditors are questioning whether several multimillion-dollar Katrina contracts" including one involving a subsidiary of Houston-based Halliburton Co." invite abuse because they are open-ended and not clearly defined.

Hurricane Katrina and Climate Justice
by Joshua Karliner, Special to CorpWatch
September 12th, 2005
For nearly five years George Bush has infuriated much of the world by refusing to take action on global warming. Instead, he has called for more study. In a way, he got what he wanted with Hurricane Katrina.

Halliburton, Dick Cheney, and Wartime Spoils
by Lee Drutman and Charlie Cray

When Defense Policy Board chairman Richard Perle revealed that he was getting $725,000 to help Global Crossing navigate the national security issues surrounding the sale of its assets, the press jumped all over Perle, and rightly so. There was indeed something fishy about the chairman of a board that advises the Pentagon making that kind of money to help a company that was having problems with national security issues. Perle is also on the board of Onset Technology, the leading provider of message conversion technology and a major supplier to Bechtel - one of the leading candidates for rebuilding the Iraqi infrastructure.

As the Center for Public Integrity has documented, this kind of thing is quite prevalent on the Defense Policy Board, where at least nine of the 30 members have ties to companies that have won more than $76 billion in defense contracts in 2001 and 2002. As more and more wartime contracts are announced, more and more conflicts of interest are coming to light. After all, the Bush administration is riddled with ties to the weapons, engineering, construction, and oil companies that have the most to profit from a war in Iraq. Perle's story is certainly not unusual.

However, of all the administration members with potential conflicts of interest, none seems more troubling than Vice President Dick Cheney. Cheney is former CEO of Halliburton, an oil-services company that also provides construction and military support services - a triple-header of wartime spoils.

A few weeks ago, the U.S. Army Corp of Engineers awarded a no-bid contract to extinguish oil well fires in Iraq to Kellogg Brown and Root (KBR), a subsidiary of Halliburton. The contract was granted under a January Bush administration waiver that, according to the Washington Post, allowed "government agencies to handpick companies for Iraqi reconstruction projects."

The contract, which was not announced until more than two weeks after it was awarded, was open-ended, with no time limits and no dollar limits. It was also a "cost-plus" contract, meaning that the company is guaranteed to recover costs and then make a guaranteed profit on top of that. Its value is estimated at tens of millions of dollars.

This is not the first buck that Cheney's former company has made off military conflict and likely won't be the last. KBR currently has thousands of military support personnel on the ground in Kuwait and Turkey as part of a multi-year contract worth close to a billion dollars. The engineering subsidiary was also one of a select few firms invited to bid on an initial $900 million USAID contract for rebuilding post-war Iraq. Though it didn't get that job, Halliburton says it is still in the running for subcontracts and there will likely be plenty more opportunities. After all, the American Academy of Sciences estimates the rebuilding Iraq will cost between $30 and $105 billion dollars. At a recent investor conference call, Halliburton reported a 30% increase in year-over-year revenues, to $1.6 billion, for KBR.

Cheney, who served as CEO from 1995 to 2000, continues to receive as much as $1 million a year in deferred compensation as Halliburton executives enjoy a seat at the table during Administration discussions over how to handle post-war oil production in Iraq.

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 has asked for to cover the first six months of war.

***

The Halliburton story is part of a larger dynamic that should not be forgotten in a debate over contractor responsibility. While the Halliburton contracts reek of blatant cronyism, almost all the major firms that provide this kind of work are tied to the administration.

Somebody has to do the job. However, the level of secrecy surrounding the contracts that have been given out so far is troubling, and symptomatic of a bigger problem - the very legitimacy of a reconstruction process controlled by the U.S. military and their corporate contractors. Although the United States has the obligation to pay for the costs of reconstructing Iraq, only the United Nations is the proper body to provide governance and help rebuild a new government, civil society and physical infrastructure if the current regime is overthrown, not the White House, the Pentagon and their corporate cronies.

Note: In honor of Big Business Day 2003, Citizen Works will present Dick Cheney the "Daddy Warbucks" Award for eminence in corporate war profiteering on Friday, April 4.

http://www.corpwatch.org/article.php?list=type&type=15

http://www.halliburtonwatch.org/


"Passing a national energy policy that reduces America's dependence on foreign oil is another priority that I support. The House passed the bill approved by a House-Senate conference - on which I served as a conferee - and we are waiting for the Senate to act on this vital legislation.

"In the past, it has proved difficult to pass substantial amounts of legislation in an election year. I am hopeful that we can all pull together and pass bipartisan bills that help the economy grow, protect our citizens overseas and at home, and advance the hopes and dreams of millions of Americans."

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