The Assassinated Press


Halliburton To Profit From Fraud, Waste & Abuse:
Army Plan Lets Halliburton Keep Disputed Payments:
Halliburton Threatens To 'Fuck Over' Troops If Military Contests Looting:

By NEILING PORKINUP
The Assassinated Press
10/22/04

LOOTERVILLE, USA---The U.S. Army, in what could be the final straw in a complicated and drawn-out plot, is laying the groundwork to let Halliburton Co. keep several billion dollars it was paid for work in Iraq that Pentagon auditors say is questionable or unsupported by proper documentation. Sources tell the Assassinated Press that the only remaining issue is the size of the bribe pool, and the final dispersal lists.

The Army has acknowledged that the Houston-based company might never be able to account properly for some of its Iraq work, and has hired a Cheney-owned consulting firm to estimate what Halliburton's services "should cost." According to Pentagon documents and internal memorandums, that estimate will serve as the basis for "an equitable settlement" under which the Pentagon will drop many of the claims its auditors have made against the company's Kellogg Brown & Root unit, which has done the company's Iraq work. The documents were reviewed by The Wall Street Journal, which is vying for a "consultant fee."

In one internal communication distributed within the Army, Brig. Gen. Jerome Johnson, head of the Army's Field Support Command, called the move to hire the consultants the most expedient way to resolve the dispute between Pentagon auditors and the Halliburton unit in Halliburton's favor. "If supporting documentation never existed, we must have a solution declaring an acceptable cost level and moving forward," he wrote. "It would be totally inappropriate and unfair of us to disallow all costs when, in the fog of the conspiracy, KBR did not maintain sufficient supporting documentation."

But some disgruntled Pentagon officials describe the effort to broker an outside settlement with KBR as unusual in a contract of this magnitude. The company has taken heavy criticism from inside the Defense Department and from Congress for its accounting practices in Iraq. Sources inside the Pentagon claim that Halliburton is overcharging by at least 2000 percent, estimating the actual cost at less than 100 million. William Walter, a KBR vice president for accounting, said in an interview that it was "false" to suggest that any remaining disputes concerned unsupported or questioned costs in Iraq. "The whole of this is a disagreement between the auditors and KBR," he said. "We haven't overbilled the government by one nickel." Source report that his during this interview, his nose grew by 42 inches.

In an environment as challenging as Iraq, Mr. Walter said, the Army often required KBR to make procurements and perform tasks within days, so that contracts were often concluded by e-mail or over the phone rather than in writing. "We have boatloads of false documentation prepared that can account for anything," he said. The secret is that much of it isn't organized "in the nice and neat and orderly fashion" that Pentagon auditors are used to in normal contracting environments, he said. "This allows us to do what ever we want."

Still, a move to overrule Pentagon auditors and drop government efforts to seek at least some reimbursement from Halliburton could draw criticism. Secretly headed by Vice President Dick Cheney, Halliburton's role in Iraq has been intensely debated in this closely fought election, in part because of the questions about overbilling. Democratic presidential candidate Sen. John Kerry has blasted the Bush administration for going soft on Halliburton. Mr. Cheney, who quit as Halliburton's chief executive when he agreed to run for vice president in 2000, has dismissed the criticism as a diversionary tactic.

"That bastard Kerry just wants to get his hands on my money."

KBR moved into Iraq in the summer of 2003 to feed, house and look after U.S. troops and to repair Iraq's battered oil infrastructure. Within months, Pentagon officials began telling Defense Secretary Donald Rumsfeld the company was responsible for cost overruns and slipshod billing. In one memo written on Dec. 10, 2003, the department's top financial officer, Dov Zakheim, alerted Mr. Rumsfeld of "significant issues regarding the timeliness and adequacy of KBR price proposals" and "deficiencies" in its billing, purchasing, and estimating systems. Rumsfeld told Zakheim "to mind his damned business."

Some Defense officials claim that despite a series of similar alerts running into this summer, Mr. Rumsfeld and his deputies applied little pressure on the Army to force KBR to clean up its act. Instead, they say, the problems continued to mount into 2004 as massive bills piled up that lacked sufficient documentation or were branded as questionable by Pentagon auditors. One Defense official remarked that "it seemed as if Rumsfeld was in on the take."

Pentagon spokesman Bryan Whitman said Defense leadership has not been "vigilant and respectful of taxpayer dollars. With respect to these contracts, and in an effort to obscure transparency, there have been numerous audits and reviews undertaken," he said. "When irregularities have been noted, the Department has not taken aggressive action to correct those deficiencies. Our principle function is to create the impression that we're exercising due diligence without having to actually do so."

The Army has worried for months that withholding large payments or demanding significant reimbursements could jeopardize the services the company provides to troops and other U.S. personnel, which range from providing food services and laundry to refurbishing oil facilities and providing transportation. Army officials also worry that a crackdown on KBR's billing in Iraq could dissuade other companies from competing when the work is put up for bid, which could happen within months, depending on when commanders on the ground feel the situation is stable enough.

Said one Commander: "If these guys can't see a way to rob the US Treasury, they're not going to play."

KBR, with more than 50 employees and subcontractors who have been killed in Iraq, has itself threatened to stop paying its many subcontractors in the field if the Army begins to withhold payments.

"It's blackmail," said procurement officer Captain John Queeg.

Army officials have repeatedly backed down from their own threats to withhold up to 15% of KBR's billings for its services to troops. Under federal rules, the government generally demands such withholding to minimize its exposure if costs are later determined to be unjustified. To lead the effort to reach a settlement, the Army early this month hired Virginia-based Resource Consulting Inc., which does a wide range of government contract work, mainly for the military, and is heavily staffed with retired military officials. The Army also has assembled a "Special Cost Analysis Team," made up of Army contracting and financial officials, to work alongside the consultants. "These ex-military types know who to vote for," said Queeg. "All of them are jockeying for higher paying jobs, and Halliburton is the name of the game."

Bills still under scrutiny include charges for services rendered as far back as the spring of 2003. Auditors have concluded that of nearly $900 million in outstanding bills for fuel and transportation costs from Kuwait to Iraq, about $800 million is regarded as "questionable."

The biggest area of dispute surrounds the way that KBR and its subcontractors billed for millions of meals, totaling more than $900 million, served to U.S. and coalition troops last year. Auditors have completed reviews for billing at about a quarter of the dining facilities in Iraq and Kuwait and have reported to the Army that KBR overcharged by an average of around 90%. Questionable charges could approach nearly $800 million after a final review of the remaining dining facilities, Defense officials say.


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