Cheney, Halliburton ties facing more questions
By JAMES ROSEN BEE WASHINGTON BUREAU
Published: October 14, 2003, 05:51:55 AM PDT
WASHINGTON -- Between 1995 and 2000, while Democrat Bill Clinton ran the country and Republican Dick Cheney ran Halliburton, there was no talk of favoritism or political ties as the Houston-based company billed the government $2.2 billion for its work in Kosovo.
Now, six months after the United States toppled Saddam Hussein, there is mounting scrutiny of Halliburton's Iraq contracts, which total $3.1 billion and grow by the day. The contracts look suspect to some critics, given Halliburton's past overcharges to the government, its ties to Cheney and the absence of competitive bidding for a $1.4 billion oil fields contract.
At the same time Cheney, vice president since January 2001, faces renewed criticism for getting nearly $368,000 in deferred salary from a company that is profiting so handsomely from a war he helped launch.
Not surprisingly, many of the critics are Democrats. Sen. Frank Lautenberg of New Jersey, brandishing a Congressional Research Service report that he said proves the vice president's ongoing financial ties to Halliburton, urged Cheney on Sept. 25 to come clean.
"I ask the vice president to stop dodging the issue with legalese and acknowledge his continued financial ties with Halliburton to the American people," he said.
Rep. Henry Waxman, a Los Angeles Democrat, wrote White House budget director Joshua Bolten on Tuesday to inquire about "waste and gold-plating" in Iraq.
"Too much money appears to be going to Halliburton and Bechtel while costing the U.S. taxpayer millions and imperiling the goal of Iraqi reconstruction," Waxman wrote.
Bechtel, a San Francisco-based engineering and construction company, has a $1 billion contract from a State Department agency to rebuild Iraqi infrastructure apart from the oil industry. That contract also is likely to grow.
Beyond Bechtel, a number of other companies have landed smaller contracts. But Halliburton is so dominant that it is hardly a stretch to call it the general contractor of the war in Iraq and its aftermath.
Spending not capped
Kellogg Brown & Root, a Halliburton subsidiary, has received $1.7 billion so far under a broad-based, competitively bid Pentagon contract signed in December 2001 for an array of military support services in and around Iraq. The contract, which is annually renewable through 2011, has no cap on spending.
Under a separate contract awarded in March -- without seeking bids from other companies -- the Army Corps of Engineers is paying Halliburton $1.4 billion to rebuild Iraq's oil industry. Halliburton is one of four firms competing for a massive oil services contract that the corps expects to announce any day.
Scott Saunders, a spokesman for the Corps of Engineers, said there is no reason to think Halliburton has the inside track.
"We've never really done something like this before -- gone in and tried to fix a country while it's still being terrorized," he said. "We wouldn't have competitively bid the contracts if we didn't think there was more than one firm in the world that could do the job."
Cheney and his aides vigor- ously reject allegations of wrongdoing in the awarding of Halliburton contracts or the receipt of Halliburton money. The vice president has nothing to do with deciding which companies get government contracts, they say, and his payments from Halliburton since taking office are for 1999 salary that he chose to defer long before taking office.
Cheney served as a Wyoming congressman in the 1980s, then as defense secretary under the elder George Bush, helping lead the 1991 Persian Gulf War. Three years after Bush lost to Clinton in 1992, Cheney took over Halliburton, running it until August 2000.
"Since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company," Cheney said last month on NBC's "Meet the Press."
The president and vice president are exempt from recent government ethics rules, but Cheney's personal lawyer, Terry O'Donnell, said that before Cheney took office in January 2001, he directed O'Donnell to handle his Halliburton affairs as if he were covered by the laws.
O'Donnell said Cheney told him to do everything possible to sever all ties to the firm and avoid conflicts of interest.
O'Donnell said one step was giving an outside administrator control over 433,333 Halliburton stock options that Cheney owns and designating three charities to receive any profits from exercising those options.
A recent rise in Halliburton's stock price -- which is up 50 percent since Bush began talking about war in Iraq 18 months ago -- has pushed the value of Cheney's options to more than $10 million. It is not known whether his administrator has exercised any options this year.
None was exercised in 2001 or 2002, according to Cheney's tax returns.
Cheney aide Cathie Martin said Cheney decided in December 1998 -- 25 months before taking office -- to receive his 1999 salary in five annual payments from 2001 through 2005. "He had no idea he was going to be nominated or elected vice president," Martin said. "He was just making a choice about deferred compensation for his 1999 salary."
For its part, Halliburton is no stranger to controversy when it comes to dealings with the fed- eral government. In 1978, the company paid $1 million to settle grand jury charges that it and a competitor had colluded on construction work. The government fined Halliburton $3.8 million in 1995 for making illegal exports to Libya.
The company also settled a lawsuit last year, filed in Sacra- mento, agreeing to pay the government $2 million over charges of contract inflation for maintenance and repairs at Ford Ord, a now-closed military base near Monterey, between 1994 and 1998. Cheney was Halliburton's chief executive officer during most of that time.
Kosovo services unnecessary
And a September 2000 report by the General Accounting Office, the investigative arm of Congress, found that Brown & Root, the subsidiary, had overbilled the government millions of dollars for excessive electric-ity, overstaffing and unnecessary furniture in Kosovo.
Despite the outcry among some Democrats on Capitol Hill, polls show the Halliburton controversy barely registering with the American public.
Benjamin Barber, a University of Maryland political science professor and author of "Fear's Empire," a new book about the war on terrorism, said many Americans don't care about the Cheney-Halliburton questions because of broader changes in public thinking that began nearly a quarter-century ago.
Under an ideological revolution introduced by Ronald Reagan, Barber said, government was branded as bulky and inefficient and many public functions were shifted to the private sector.
The result, according to Barber, is a blurring of the tradi-tional line between public service and private work.
"When the government is the problem and the market is the solution, it no longer is corruption," he said. "It becomes efficiency."
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