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The Haliburton affair: conflict of interest at its worst

The issue of the company Haliburton represents the worst, in terms of conflict of interest and even corruption. It shows how much people in this government can do for their own self-interest and the interest of their friends if not held in check.


"There is a fundamental difference of opinion in Washington, and it starts with folks in Washington forgetting whose money we're spending.  All that money is not the government's money; it's the working people's money." George Bush, 3 September 2001

The White House would rather you not know about the Haliburton affair. Even though Cheney was CEO of Haliburton for five years before becoming Vice President, this is not mentioned in the White House biography of Cheney (as of 7 August 2004) --see (In case the White House changes this page, here is what it looked like, without the images, on 7 August 2004).

Below, we give a brief history of Haliburton. But first we note that Haliburton favoritism has been going on (local version) in spite of the Corps of Engineers' chief contracting officer objecting to it. She refused to sign the contract. Her signature is required, but they let it go through with her assistant's signature. She was threatened with demotion after raising the issue. This information has just come to light in the last few weeks. See also this article (local version).

Brief history of Haliburton:

1. Early 1990s. Cheney, as Secretary of Defense, gives contracts to Halliburton to rebuild facilities in Kuwait that had been destroyed in the first Persian Gulf war.

2. Early 1990 to 1993. Cheney, as Secretary of Defense, commissions Halliburton to do a classified (secret) study concerning replacing the U.S. military's logistics by work done by private companies. Halliburton says, yes, a company can do the work. In August 1992, with essentially no bidding, Halliburton is selected by the US Army Corps of Engineers to do all work needed to support the military for the next five years! Thereafter, Halliburton (or its subsidiary KBR) and its military logistics business escalated rapidly. In the ten years thereafter revenues totaled $2.5 billion.

3. 1995-2000. Cheney is CEO of Halliburton. Under Cheney, Halliburton increases its offshore tax havens from 9 to 44, cutting its taxes from $302 million in 1998 to an $85 million refund in 1999. That's almost $400 million they took from taxpayers in one year.

4. During Cheney's tenure at Haliburton, Halliburton did business with countries like Azerbaijan, Indonesia, Iraq, Libya, Iran, and Nigeria even though the US had imposed strict sanctions on them. They skirted sanctions, and they lobbied against sanctions. Some of this business was illegal, and Halliburton was fined for it.

5. Spring 2000. Cheney heads Bush's Vice-Presidential Search committee --while continuing as CEO of Halliburton. He ends up picking himself as Vice President.

6. July 2000. Cheney is asked whether Halliburton or its subsidaries were trying to do business with Iraq. He says no; he had a firm policy that they wouldn't do anything in Iraq, even if it was legal. This was a blatant lie: subsidiaries sold over $73 million in oil-production parts to Iraq.

7. 2000. As CEO of Halliburton, Cheney clears $20 million in one year, after taxes.

8. July 2000. Cheney's severance package from Halliburton (as CEO) is far and above what other company officers got when they left --some say it is as high as $62 million in stocks and stock options.

9. December 2001. KBR (Halliburton subsidiary) is granted an open-ended contract for Army troops supply and Navy construction, wherever U.S. troops go, for the next 10 years (so far, Afghanistan, the Philippines, Yemen, Iraq). This unique contract has no ceiling on cost. KBR is reimbursed for every dollar spent plus a base fee of 1 percent, which guarantees profit. Plus, they can get a bonus as a percentage of company costs.

10. January 2003. Bush sends a letter to Congress exercising his authority, as president, to waive section 9007, thus removing sanctions and allowing assistance to oil-rich Azerbaijan (see point 4). This administration invites the head of Azerbaijan to the White House, even though this person was the main reason for earlier sanctions against Azerbaijan. Reason? Azerbaijan has oil.

11. September 2003. Cheney states that when he became Vice President, he severed all ties with Halliburton, as required by law. This was a lie. Government accounting offices said that the compensation he continues to receive is a conflict of interest.

12. Dec 2003. Halliburton, without competitive bidding, is given a contract to restore the Iraqi oil sector. It is billed initially as a contract for putting out oil-well fires, something in which Halliburton has little expertise. It turns out that the contract is really for the full restoration of the oil business in Iraq. It is kept secret because of the "emergency conditions". It is one of the highest military logistics contracts in history.

13. June 2004. Cheney has said all along that he had no contact with government officials who coordinated Halliburtons many contracts with the military. A March 2003 Pentagon email refutes this claim. It says that action on a no-bid Halliburton contract to rebuild Iraq's oil industry was "coordinated" with Cheney's office. This has to do with a no-bid contract given to Halliburton for rebuilding Iraq.

14. August 2004. The SEC (Security Exchange Comission) levies a fine of $7.5 million on Halliburton for illegal accounting changes in 1998, when Cheney was CEO of Halliburton. Some people think that politics may have shielded Cheney and others from being held more accountable.

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 company has been accused of cost overruns, tax avoidance, and cooking the books and has a history of doing business in government-sanctioned countries like Iraq, Iran, and Libya. Many of Halliburton's no-bid contracts are allowed because of waivers by the Bush administration that allow government agencies to handpick companies for Iraqi reconstruction projects.

This site (local version) contains a list of claims by Cheney and the real facts, which show that each claim is a lie.