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Halliburton and Vice President Continue to Face Questions - 2004-02-26

Texas energy giant Halliburton is earning billions of dollars in helping to rebuild Iraq - including the restoration of Iraq's oil sector - one of the biggest military logistics contracts in history. Critics argue the company is overcharging the government for work they say Vice President Dick Cheney - a former Halliburton executive - helped them win. Mr. Cheney has denied any involvement - and many others agree. VOA's Brent Hurd examines the nexus of the vice president's corporate and public interests and what observers consider a troubling trend in Washington.

Halliburton is one of the largest oil-field services companies in the world - and is becoming a well-known name. It has earned the lion's share of multi-billion dollar contracts in Iraq since the U.S.-led military intervention. But the company is in the spotlight for another reason as well: Vice President Dick Cheney ran Halliburton for five years before joining the Bush presidential ticket.

Now both Halliburton and Mr. Cheney are under fire from critics, including Democratic lawmakers like Californian Senator Barbara Boxer. The latest accusations against Halliburton - including price gouging, bribery, and accounting fraud - were the focus of a Senate hearing held February 13. “We have learned that Halliburton has overcharged the American taxpayers $61 million through September 2003 for gas deliveries,” she said. “Halliburton has admitted to the Pentagon that two of their employees took kick-backs worth up to $6 million in return for rewarding a Kuwaiti-based company a contract to supply U.S. troops in Iraq. Halliburton, through its network of subcontractors, billed for 42,000 meals a day but served 14,000 meals a day. That's a new low in wartime profiteering.”

Halliburton has responded by agreeing to suspend billing while Pentagon auditors investigate the charges. The company says, however, this should not be interpreted as a sign of misconduct. The firm defends the price it paid for gas and has welcomed an independent examination by the Kuwaiti parliament on its business practices.

Halliburton has consistently said all its dealings have been in line with the U.S. laws and strongly denies any wrongdoing, except in the case of two former employees who accepted kick-backs of six million dollars.

Halliburton has also come under scrutiny by a number of federal departments and is defending itself on the national airwaves. In one ad, the chief executive officer of the company, David Lesar, says "Criticism is OK. We can take it. Criticism is not failure. Will things go wrong? Sure they will. It's a war zone. But when they do, we'll fix it. We always have - for 60 years for both political parties. We're serving the troops because of what we know, not who we know."

Meanwhile, Halliburton continues to restore Iraq's oil sector and support U.S. troops in Iraq by building bases, cooking food, washing clothes, delivering mail and providing other basic services. Observers agree the firm operates under some of the toughest conditions and has provided much needed services in war-torn Iraq.

But critics say this does not entitle the company to massive profiteering and sloppy accounting of U.S. taxpayers' money. The opposition Democratic Party considers the company's conduct and possible ties to the Bush administration a serious campaign issue. Bill Allison of the Center for Public Integrity - a Washington investigative non-profit organization - has analyzed Halliburton's fortunes. He says with an election around the corner, the issue has become politically charged. “In Congress, it is always going to be about politics and ethics only matter when the other guy is doing something wrong. Yes, the Democrats will try to make as much about as they can, but that does not mean there is not some underlying reality to some of these charges that does need to be looked into very carefully.”

One of those charges is that the vice president continues to receive money from Halliburton. New Jersey Democratic lawmaker Frank Lautenberg, member of the Senate Committee of Government Affairs and former top corporate executive, said: “Several months ago, I learned that Vice President Cheney - who was the CEO of Halliburton before his election - continues to receive income from the company that actually exceeds his salary as vice president. Now it is deferred compensation. The non-partisan, congressional research service determined the payment constitutes an ongoing financial relationship.”

The report concluded that under federal ethics standards the Vice President still has a financial interest in Halliburton. Mr. Cheney denied this on the television network NBC's program "Meet the Press" last September. “Since I left Halliburton to become George Bush's vice president, I have severed all my ties with the company,” he said. “I've gotten ride of all my financial interest. I have had no financial interest in the last three years. And as vice president I have no influence of, involvement of, knowledge of any contracts led by the corps of engineers.”

Steven Kelman, professor of public policy at Harvard University and a former U.S. government procurement specialist, says it is highly unlikely the vice president could have exerted any pressure on U.S. military contracting officials. “Contracts are awarded within the agency that is awarding the contract. So the vice president's office is not in on the decision-making loop for awarding a contract out of the U.S. Army. The vice president has no authority to become involved. These decisions go through well-documented and procedure-laden process that is dominated if not completely controlled by career civil servants.”

Most observers also doubt this kind of direct pressure. But Bill Allison of the Center for Public Integrity suggests a more indirect influence. Dick Cheney's term as secretary of defense in the first Bush administration ended in 1989. With no previous business experience, he was hired as top executive at Halliburton. This is commonly referred to as the 'revolving door' of public and private interests. Today, many public servants are enticed by large salaries to join the private sector with their inside knowledge of the workings of government contracting. The facts show that during Mr. Cheney's five-year tenure, Halliburton nearly doubled its U.S. government contracts.

Bill Allison says “it becomes a conflict when he is the CEO of Halliburton, and that company starts bidding on these government contracts, and again you've got Mr. Cheney who knows everyone in the department of defense who is important. And he can get his phone calls returned when his company is bidding for this contract. You wonder how much influence should he bring to bear on his old colleagues who are still in the department of defense.”

Bill Allison points out that Halliburton troop support operations flourished, not under the Bush administration, but during the Clinton years when company employees supported troops in Somalia, Haiti and the Balkans. Furthermore, he says a 'revolving door' is common practice for both Democrats and Republicans. “Since we started tracking this kind of infomation, we've seen as many Democrats do this as Republicans,” he says. “When we looked at the Clinton administration, we found that 35 of the top 100 officials of that administration which was democratic, representing interests that they used to regulate in the government. It is very lucrative to leave the government and go to work for these private firms that are eager to have the government experience because they are trying to influence government policy or get government contracts.”

Some analysts are concerned about this blurring of public service with private business. Since a large amount of the defense budget goes to military contractors - nearly $150 billion a year - analysts say companies need to be held more accountable and bidding should be more transparent.