Arms And The Man
Who's Making A Killing On Killing In Iraq?

Monday, June 30, 2003  


In a preliminary proxy filing to the SEC today, Boots & Coots International Well Control (WEL) announced its intention "to effect a one-for-four reverse stock split of the Company's outstanding shares of common stock." Among other reasons cited for the reverse stock split, the filing said the move is aimed at making the stock more attractive to institutional investors, who traditionally shun such low-priced stock.

[Ed.: Platts Global News Alert wire service reports the reverse split aims "to get [WEL's] penny stock back above American Stock Exchange listing requirements." WEL has been threatened with delisting before.]

Boots & Coots also revealed that four of its directors failed to file Form 4's in a timely manner. The forms, which disclose insider trading, are considered pivotal to transparency in publicly held companies. One of those directors who failed to file, hellfighter Brian Krause, has resigned unexpectedly since the company's last filing. Krause was the last remaining hellfighter on WEL's board of directors.

Today's filing announced that three new directors will be elected at the company's shareholder meeting in August.

Former Chairman of the Board and Halliburton veteran Jed DiPaolo resigned within a day or so of the company's acceptance of a risky loan from Checkpoint last December.

Former director Tracy Scott Turner resigned suddenly last month for "personal reasons" -- within a day or so of the company's paying off that risky loan.

A reverse split is also a high-risk move, but may be necessary in the long run to give the company more stock with which to secure financing. The company's critics have previously noted the increasingly large number of shares outstanding, a possible sign that Boots & Coots has been sustaining its solvency in part by paying debts with stock. According to today's report, "As of June 24, 2003, the Company had 125 million shares of authorized common stock and approximately 84.7 million shares of common stock issued and outstanding, and approximately 48.8 million shares reserved for issuance upon the exercise of securities convertible into common stock."

Fuzzy math and funny bidness, indeed.

posted by Major Barbara | 5:43 PM

San Jose Mercury News:

By Dana Hull

"UMM QASR, Iraq - The port of Umm Qasr, Iraq's sole gateway to the Persian Gulf, lies eerily quiet. Large cranes that should be lifting containers from arriving ships are idle. A blue-domed mosque for dockworkers is empty, and a grain elevator and storage silos are barren and broken.

"The waters of the narrow channel are so full of sludge, silt, sunken boats and unexploded bombs from the Iran-Iraq war that large boats can't dock there.

"Bechtel is working to fix that. The San Francisco-based engineering and construction giant is in charge of upgrading Umm Qasr, along with other key Iraqi infrastructure projects such as power stations and water treatment plants. Repairing Umm Qasr, just 10 miles west of the Kuwaiti border, is crucial to reviving the Iraqi economy, since it will sharply lower the cost of bringing goods in and out of the country, including humanitarian aid.

"The task is monumental.

"``This port hasn't been dredged in 12 years,'' Art Fletcher, a subcontractor to Bechtel, said in mid-June as he pored over a multicolored chart showing water depths. ``The water coming from the river is dirty and constantly bringing silt. It's in bad shape.''

"Bechtel, which operates all over the world, raced into action here after winning a controversial $680 million emergency contract from the U.S. government to repair critical pieces of Iraq's infrastructure. Bechtel's close ties to officials in the Bush administration raised eyebrows when the contract was announced...."

posted by Major Barbara | 4:12 PM

— By Peg Mackey

"BAGHDAD (Reuters) - Looters and saboteurs running riot in Iraq have trebled the country's oil sector repair bill, slowing efforts to restart exports needed to fund Baghdad's postwar reconstruction.

"Gary Loew, director of planning for the U.S. Army Corps of Engineers (USACE) Restore Iraq Oil, said rampant pillaging of Iraq's oil network now accounts for more than $800 million of infrastructure repair costs already in excess of $1 billion.

""We're estimating that about three quarters of the damages are due to looting," he said. "So that set us back. But we still have a schedule to get export sales and refining capacity up, and we're not that far off -- maybe three weeks to a month."

"Iraqi oilfields are now pumping about 800,000 barrels per day (bpd) versus an initial target to reach 1.5 million bpd by the end of June. But Loew hopes Iraqi and U.S. technicians can turn up the taps to hit a mid-July export target of one million bpd.

""If we just had a stable work environment everybody could work quicker," he told Reuters in an interview conducted on Sunday. "We're still in the situation where we have to send armed escorts out with the work crews."

"Iraq's oilfields -- which cranked out three million bpd before the war -- sustained only minor damage amounting to about $250-$350 million before lawlessness set in, Loew said. But costs racked up as bandits hauled away tons of tools, desks, light sockets and industrial gear.

"There's been this continuing wave of organized criminal activity where they've been going in and taking out compressors, pumps, control units -- big pieces of equipment -- things that you'd need trucks and cranes to move," he said...."

"The U.S. Congress has authorized close to $500 million for repairs but USACE has just given Washington a damage estimate of more than $1 billion.

""We had to go back and inform everybody what the price tag is," said Loew. "The policymakers in Washington are determining what sources of funds will be used for the rest of the work."

"Loew stressed the damage estimate is subject to much uncertainty.

""We know approximately what it is going to be and we'll work to make it less," he said, adding the $1 billion figure is over and above $280 million obligated to its contract with Halliburton unit Kellogg Brown & Root (KBR) to run oil facilities.

"The USACE is re-tendering the KBR deal, which was awarded in mid-March in a no-competition bidding process. It will stand until replaced by a competitive bid for a new contract.

""The KBR contract is being re-tendered as we speak," said Loew. "Basically what is available to contractors will be whatever is not done at the point that contract is awarded," he said, adding the contract award is expected in mid-October."

posted by Major Barbara | 10:55 AM

Sunday, June 29, 2003  

War is one thing, but can Iraq survive full-on assault by Wall Street?
Ed Vulliamy and Faisal Islam report

Sunday June 29, 2003
The Observer

"After the war, the corporate invasion. Bechtel, the US construction giant, now leads the rebuilding of Iraq's infrastructure with the chutzpah of a twenty-first century East India Company. Yet other invasions are planned for Iraq over the coming months - in the shape of oil concessions, health privatisation plans and even mobile phone licences.
Despite the worsening security situation, the White House and Pentagon are marshalling these corporate battalions into Iraq - insurance companies, construction firms, commercial health managers and behemoth banks - in the name of free enterprise. The project: to privatise Iraq, a country where 30 per cent of the workforce is employed by the state, and the population is used to food rations and cheap petrol.

"Paul Bremer, the US civilian administrator in Iraq, spent most of his time last week at theWorld Economic Forum in Amman, Jordan, talking economics. Bremer is a veteran of Reagan-era diplomacy. Critics wonder if he plans to bring Reaganomics to the Middle East.

"Amnesty International has warned that the 'occupying powers must make an explicit commitment to involving Iraqis in decision-making related to reconstruction. Iraqis themselves, ideally through representative institutions, ought to make decisions on rebuilding, on foreign investment, and on the selling of state assets'.

"The 'invasion' is an ideological as well as commercial enterprise. George Bush has said that he envisions a 'US-Middle East free-trade area' within 10 years, 'replacing corruption and self dealing with free markets'. Most of the US companies contracted or bidding to open up those free markets happen to enjoy direct or indirect connections to members of the Bush administration. The US has, meanwhile, drafted sweeping plans to establish a free-market economy in Iraq, including privatisation of state-owned industries and the formation of a stock market.

"In a leader article in the Wall Street Journal last month Defence Secretary Donald Rumsfeld pledged the US's determination to pursue policies that 'favour market systems' and 'encourage moves to privatise state-owned enterprises'...."

posted by Major Barbara | 7:03 AM

Thursday, June 26, 2003  

This one was overlooked yesterday:

By Sue Pleming

"WASHINGTON, June 25 — Anxious to bolster funds to rebuild Iraq, the Bush administration is considering the use of Iraq's future oil and gas revenues as collateral for loans for reconstruction projects, a key trade group said on Wednesday.

"Edmund Rice, president of the Coalition for Employment Through Exports, said his group was lobbying a proposal to use oil revenues amounting to about $3 billion a year as security to borrow money from commercial banks for projects in Iraq.

"''We have received strong support from the administration (for this proposal),'' said Rice, whose group has among its members some of the key players doing work in Iraq, such as oil giant Halliburton and engineering firm Bechtel.

"Rice said using these future revenues would help fill a gaping hole in funding from other countries to rebuild Iraq and lift some of the financial pressure off Washington.

"''There really are very limited options for sustaining the reconstruction financially,'' said Rice.

"America's Export-Import Bank said it was also looking closely at the option of using future oil revenues as collateral for the financing of reconstruction projects.

"''This is one proposal that a lot of people are interested in and a main focus of the bank,'' said Bo Ollison, the bank's spokesman, stressing no decisions had been taken.

"Ollison said such an approach would benefit both the United States, whose companies could gain access to the Iraqi market, as well as the Iraqi people.

"Democratic Rep. Henry Waxman wrote to the military this week demanding information over possible plans to mortgage Iraq's oil to pay for contracts with Bechtel and Halliburton, which was once led by Vice President Dick Cheney.

"Waxman said such a move would ''conflict fundamentally'' with the claim that Iraq's oil belonged to the Iraqi people. ..."

posted by Major Barbara | 5:19 PM


Rep. Henry Waxman (D-CA), a leading congressional critic of Halliburton and KBR's no-bid contract work in Iraq, has posed new questions to the Army over plans to "mortgage" Iraqi oil to pay reconstruction contractors. In a letter to the U.S. Army Corps of Engineers dated June 24, Waxman asked for records of all contact between the Army and non-governmental organizations about the plans.

The trade group Coalition for Employment Through Exports (CEE) -- backed in part by Halliburton, Bechtel and other contractors who stand to profit from Iraqi reconstruction -- has reportedly lobbied hard for the mortgage plan. But according to Waxman, such a mortgage seems at odds with the Bush Administration's earlier insistence that "Iraqi oil belongs to the Iraqi people."

Waxman's letter quotes the Wall Street Journal: "This group [CEE] has been 'knocking on doors throughout the Bush Administration' to promote the mortgage proposal." The plan, according the the Journal, "has the enthusiastic backing" of Halliburton and Bechtel.

In the letter to Lt. Gen. Robert B. Flowers , Waxman asked for details of the mortgage plan reported in the Wall Street Journal. That plan, Waxman observes, doesn't fit the Army's earlier declaration that "Iraqis will decide for themselves all matters relating to development, production, sale and distribution of Iraqi petroleum products."

Waxman's last request in the letter to Lt. Gen. Flowers was for "copies of all records (including telephone records, notes, and any other form of written or electronic communication" documenting all contact between the Army Corps of Engineers and non-governmental organizations such as the Coalition For Employment Through Exports.

That request could indicate that Congressman Waxman intends to continue such questioning through the House Committee on Goverment Reform, on which he is the ranking minority member.

posted by Major Barbara | 6:42 AM

Tuesday, June 24, 2003  


By Niala Boodhoo
"WASHINGTON (Reuters) - The U.S. Army has alerted potential bidders to new contracts for rebuilding Iraq's oil sector, replacing a previous contract given to a unit of Halliburton Co. HAL.N , the company once led by Vice President Dick Cheney.

"The Kellogg Brown & Root contract, awarded in March to do emergency repairs on Iraq's oil well system, was worth about $235 million as of June 20, Army Lt. Col. Gene Pawlik said.

"That controversial sole-source, noncompetitive contract, had a ceiling of $7 billion, but the limit was created in anticipation of a massive number of oil fires, which never happened.

"The new work "still covers a lot of the things that the Kellogg Brown & Root contract covered," Pawlik said Tuesday.

"Kellogg could apply for the new work but other companies like Fluor Corp. FLR.N , that recently set up a joint venture with British engineering group AMEC Plc AMEC.L , expressed interest on Tuesday.

"Privately held international construction group Bechtel, already involved in the rebuilding of Iraq, said it would look at the army proposal.

"Democratic lawmakers have complained about the more than $800 million that Halliburton has received for various work in Iraq from the U.S. military.

"Most of that money has come from a 10-year contract called the Logistics Civil Augmentation Program (LOGCAP), awarded in 2001, that California Democrat Rep. Henry Waxman has labeled "obscure and lucrative."

"The army will issue either one or two contracts, depending on the amount of work left, each with a ceiling of $500 million for the life of the contract. Each contract has a minimum of $500,000.

"The army's preference is to issue two contracts, Pawlik said...."

posted by Major Barbara | 7:02 PM

Monday, June 23, 2003  


Guess who's getting a slice of Iraqi pie? The fraud king, WorldCom

by Molly Ivins
Creators Syndicate

"AUSTIN, Texas -- My, my, my, the great Iraqi Gold Rush is on, and who should be there at the front of the line, right along with Halliburton and Bechtel, but our old friends at WorldCom, perpetrator of the largest accounting fraud in American history.

"WorldCom, shortly to become MCI, has been given a contract worth $45 million in the short term to build a wireless phone network in Iraq. I learned via The Associated Press (AP) that Washington Technology, a trade newspaper that follows computing-related sales to the U.S. government, "found WorldCom jumped to eighth among all federal technology contractors in 2002, with $772 million in government sales." And that is only counting the deals in which WorldCom is the primary contractor. It is actually getting much more as a subcontractor...."

posted by Major Barbara | 7:53 AM

Sunday, June 22, 2003  


Associated Press Writer

"KIRKUK, Iraq (AP)--Iraq re-entered the world oil market Sunday with its first shipment of crude since the war, but sabotage and looting along its largest pipeline delayed the flow of freshly pumped oil--the key to the reconstruction of an economy devastated by sanctions and war.

"In a reflection of the vulnerability of the country's decrepit oil infrastructure, a huge fire burned from a fuel pipeline west of Baghdad after an explosion the day before, apparently caused by saboteurs. South of the capital, attackers fired a grenade at a U.S. military vehicle, killing one American soldier and wounding another.

"A wave of attacks have killed 17 Americans since major fighting was declared over May 1. Opponents of the U.S.-led coalition also have targeted Iraq's gas and oil network and other infrastructure, hurting efforts to get the country's most valuable resource moving again.

"The U.S. chief administrator of Iraq, L. Paul Bremer, acknowledged Sunday to industrialists and political leaders at the World Economic Forum in Jordan that security is a prerequisite for putting Iraq on the road to recovery.

"Bremer insisted security was his ``first priority,'' blaming continuing political violence and acts of sabotage on ``a very small minority still trying to fight us'' that is loyal to deposed President Saddam Hussein.

"He also suggested that Iraqi oil revenues could be distributed directly to the country's citizens, as Alaska does with its residents, or placed in a national trust fund to pay for pensions or other social programs...."

posted by Major Barbara | 8:00 PM


Most were awarded under a 2001 pact with a subsidiary of the firm once headed by Cheney

"WASHINGTON — A unit of Halliburton Co., the Texas oil giant once led by Vice President Dick Cheney, has received more than $800 million in work orders in Iraq so far, according to military figures obtained Friday.

"Most of the orders are under a military contract awarded in December 2001 to Halliburton subsidiary Kellogg Brown & Root, which a Democratic lawmaker labeled "obscure and lucrative."

"That contract, called the Logistics Civil Augmentation Program, does not have a spending ceiling.

"By the end of May, task orders for Iraq accounted for $596.8 million of the $708 million earmarked under that deal.

"Under the contract, the Halliburton subsidiary has provided housing, recreation, laundry, power and sanitation for American troops in Iraq, said Dan Carlson, a spokesman for the U.S. Army Field Support Command in Rock Island, Ill.

"Kellogg Brown & Root has a separate contract with the U.S. Army Corps of Engineers to repair and operate Iraq's oil wells. That contract was awarded in March in a no-competition process.

"By June 13, $213 million had been budgeted under this contract to Kellogg. The contract has a ceiling of $7 billion, but that limit was formulated with the worst-case scenario in mind. The Army Corps of Engineers was expected soon to open up the contract to competitive bids.

"Several Democratic lawmakers have complained loudly about the amount of work given to Halliburton, suggesting that the company's close links to the Bush administration brought business to the oil firm, a view the administration strongly rejects...."

* * *

Thanks to the Blogiston Post for the heads up!

posted by Major Barbara | 5:30 AM



"The huge effort to restore Iraq's oil industry begins every day two hours south of the Iraq-Kuwait border, at the lavish Crowne Plaza Hotel in Kuwait City. No sooner does the lobby restaurant open at 5 a.m. than a line of middle-aged men in jumpsuits, golf shirts and identical tan caps forms at the breakfast buffet, eschewing the mezzeh and labneh for French toast, home fries and beef bacon. Outside, a couple of dozen silver S.U.V.'s are lined up, and after a quick breakfast the men are off in a swift northbound convoy, each car marked with the sideways V of duct tape that designates American and British vehicles. The road knifes across a packed pebble desert as flat as a griddle, with hardly a plant or a rock gentling the view to a hazy 360-degree horizon. But nobody's minding the scenery.

"The men in the S.U.V.'s are all talking at once, handing clipboards and calculators back and forth, trying to make 10,000 impossible things happen in Iraq's oil fields in exactly the right order. A couple are getting in last-minute calls to headquarters in Houston before leaving Kuwaiti cellphone coverage. Though they speak with the drawling soft consonants of the Texas-Oklahoma oil patch, these are truly citizens of the world -- or at least the petroleum-producing corners of it.

"For they are the legions of Kellogg Brown & Root, subsidiary of the oil-services giant Halliburton, which in March won an open-ended Army contract to restore Iraq's oil fields to working order. Most have spent years toiling in the raw, scraped and sometimes violent places where oil lurks, and each hews to the oilie's ethic: no place is a hardship. How were your 12 years in Algeria? ''Not bad.'' Your six years at Prudhoe Bay? ''Not bad.'' Your 14 years in Nigeria? ''Not bad.'' Southern Iraq -- searing, bleak, lawless -- is an assignment like any other. Also, they are very well paid.

posted by Major Barbara | 5:24 AM

Saturday, June 21, 2003  


Looting, vandalism could add millions to Bechtel's contract

David R. Baker, Chronicle Staff Writer

"The Iraqi power plants and waterworks that Bechtel Corp. is trying to fix are under attack.

"Sometimes they're hit by looters, who strip the stations of copper wire and other valuables after Bechtel departs. Sometimes they fall prey to saboteurs, trying to break whatever the American engineers fix.

"Attackers even fired a rocket-propelled grenade into an electrical transformer in Fallujah Friday, setting the machine ablaze. Although that particular facility was not under Bechtel's care, the incident marks an escalation in the attacks on Iraqi infrastructure.

"Outbreaks of violence and vandalism could complicate the San Francisco construction giant's effort to rebuild Iraq, and add to the cost. So far, none of the company's engineers has come under fire. But the power stations and transmission lines they patch back together have. That requires another round of repairs.

""It certainly makes a very tough job tougher," said Bechtel spokesman Michael Kidder.

"Fallujah's broken transformer notwithstanding, the worst anti-allied violence in Iraq has focused on the military, not reconstruction engineers. One U.S. soldier died Thursday in an attack on a military ambulance. Another was killed Wednesday by a sniper.

"Although their own people have not yet become targets, Bechtel and the other companies at work in Iraq take few chances. Soon after winning the reconstruction contract, Bechtel hired a private security firm to supplement the company's own guards.

"Halliburton, whose Kellogg Brown & Root subsidiary is repairing Iraqi oil facilities, also hired extra protection...."

posted by Major Barbara | 3:15 PM

Thursday, June 19, 2003  

Security Issues Delay Rebuilding

By Jackie Spinner
Washington Post Staff Writer
Friday, June 20, 2003; Page E01

"To get the lights back on and the air conditioning humming again in Iraq, U.S. construction firm Bechtel National Inc. needed a giant tool called a crimper to repair and reconnect high-voltage power lines. But three days after the San Francisco-based company shipped in an 80-pound crimper last month, the $15,000 tool disappeared, stolen in a ripple of looting that has become a major challenge for aid workers and private contractors operating in Iraq.

"The rebuilding effort also has been hampered by security concerns, according to government and contractor reports from the field. On Monday, as the port of Umm Qasr opened again to commercial traffic, the U.S. Agency for International Development issued a report saying security there remains "a major problem" and "has become even more problematic" in recent weeks.

"Last week, men armed with pistols and grenades carried away bags of flour from a humanitarian ship docked at the docks, the agency said, while three days ago a looter was electrocuted trying to make off with part of the recently repaired power grid.

"Contractors said similar security problems are evident around the county, raising unease about personal safety and, in some cases, creating delays at a time when the U.S. government is anxious to show signs of progress.

"Ross W. Wherry, USAID's senior reconstruction adviser for Asia and the Near East, said the concerns have increased security costs "substantially."..."

posted by Major Barbara | 9:24 PM



"BAGHDAD, Iraq, June 19 — The United States will focus on emergency repairs rather than on major reconstruction of Iraq's crumbling electricity, water and sanitation systems, the top American aid administrator said here today.

""You won't see a lot of new buildings," said Andrew S. Natsios, director of the United States Agency for International Development, in an interview here. "We are going to take existing infrastructure and repair it."

"Mr. Natsios said that the problems in Iraq are more complicated than he had initially expected, but he predicted that the United States would not increase the size of its $2.4 billion aid package for Iraq this year.

"His comments suggested that the Bush administration may be at odds with British officials, who are overseeing reconstruction efforts in southern Iraq and who favor a more ambitious effort to rebuild a good part of the country's dilapidated power and water systems.

"Bechtel Group, the American contractor that has a contract to oversee repairs to Iraq's infrastructure, is also proposing a more comprehensive — and expensive — series of water, sewage and electricity projects over the next several years...."

posted by Major Barbara | 9:18 PM


By Khaled Yacoub Oweis

"BAGHDAD (Reuters) - A top U.S. aid official said the United States is pouring money into rebuilding postwar Iraq, but Iraqi firms will get only half of initial contracts, rather than most of them as earlier expected.

"Andrew Natsios, head of the U.S. Agency for International Development (USAID), said Bechtel, the U.S. company awarded a $680 million contract to rebuild Iraq's infrastructure, would subcontract half the work to Iraqi firms, a level significantly lower than Bechtel predicted two weeks ago.

""Around 50 percent of the subcontracts will go to Iraqi firms with Iraqi employees," Natsios told Reuters in an interview on Wednesday.

"A senior Bechtel executive told Reuters two weeks ago the firm planned to award 90 percent of engineering work to Iraqi companies and would try to see that Iraqis got a similar proportion of general contracting work...."[Emphasis mine]

posted by Major Barbara | 6:21 AM

Wednesday, June 18, 2003


By Shane Harris

"The U.S. official leading the reconstruction of Iraq “is sitting on a bank account of $7 billion” in various funds, including assets of the former Iraqi regime, and exerts significant influence on the scope of rebuilding projects and decisions on which ones receive funding, according to a senior Pentagon official.

"The Baghdad-based Office of the Coalition Provisional Authority (OCPA), led by Ambassador Paul Bremer, gets its money from a variety of sources, according to Raymond DuBois, a member of the Defense Department’s Iraq policy group, who spoke at a reconstruction conference in Washington Tuesday evening.

"About $3.1 billion in Iraq funds has come directly from Congress, DuBois said. Another $1 billion has been placed as a “down payment” into a development fund being set up for projects that will eventually absorb monies from the U.N. oil-for-food program, which will end in six months.

"But much of the money is drawn from billions of dollars in assets of the former Iraqi regime. The U.S. now controls those assets, DuBois said. Defense officials have said they include about $800 million in seized assets that coalition forces found in Iraq, some in the form of American currency squirreled away inside the walls of official buildings.

"In addition, the U.S. government has frozen $1.7 billion in so-called “vested” assets, funds once controlled by Saddam Hussein’s regime that now are being used for development work in Iraq. All this money is under Bremer’s authority, DuBois said.

"More money will flow into Bremer’s account as the Iraqi oil industry revs up, DuBois said. Oil sales will fund much of the future work and should be tapped to pay Iraq’s foreign debts, according to development experts and government officials.

"While Bremer’s office is directly connected to the Pentagon policy group, Bremer retains authority to control funds. Some of the money under his purview is exempt from federal acquisition regulations, so it can be awarded to contractors without full competitions...."[Emphasis mine]

posted by Major Barbara | 8:08 PM

Tuesday, June 17, 2003  



Associated Press Writer

"WASHINGTON (AP) - The Army would ignore the votes of 99 senators if it were to renege on plans to open competition for companies to restore Iraq's oil production, the Senate sponsor of competitive bidding legislation said Tuesday.

"The job currently is being done by a subsidiary of Halliburton, the company formerly led by Vice President Dick Cheney.

"Sen. Barbara Boxer, D-Calif., said the Army Corps of Engineers would contradict its own timetable if it should fail to end the lucrative monopoly given to Halliburton.

"Cheney's office has said repeatedly that the vice president has severed ties with the company and had no role in awarding the work to Halliburton's KBR subsidiary.

"Boxer was reacting to an Associated Press story last week that said Halliburton's work was likely to last longer than estimated as costs to the government escalated. The government had approved $213.7 million in payments to KBR as of last week, up from $184.7 million the first week in June.

"Boxer said a delay would be ``a direct rebuke of the will of the United States Senate,'' which voted 99-0 on May 22 to force the Army to award a competitive replacement contract by Aug. 31 or explain the delay. The amendment was added to the Senate version of the defense authorization bill, which is headed to a House-Senate conference. The Senate Armed Services chairman, John Warner, R-Va., co-sponsored the amendment.

"Lt. Col. Eugene Pawlik, a spokesman for the Corps of Engineers, said, ``We generally don't reply directly to statements from any of our elected representatives. We certainly try to comply with directions we receive from Congress. If we have a requirement to report back to Congress on the contracting, and provide background on why the process has gone the way it has, we certainly will do that.''..."

posted by Major Barbara | 5:24 PM

Monday, June 16, 2003  


The Associated Press
6/16/03 9:45 AM

The Wall Street Journal

"DUBAI, United Arab Emirates -- Mac McClelland did some quick math as he steered his Lincoln Navigator through chaotic Dubai traffic.

"He'd just learned of a contract to supply food to 12,500 U.S. soldiers in Iraq. If he won it, he'd be a subcontractor to a subcontractor on a deal that originally went to Kellogg, Brown & Root, which provides support services to the military overseas.

""Twelve thousand five hundred mouths," he mused. "That's about 40,000 meals a day." He figured if he could clear 10 cents profit on each meal, he could make as much as $4,000 a day. "That's real money," he said to himself.

"Rebuilding Iraq will take billions of dollars, and dozens of entrepreneurs such as Mr. McClelland are angling for a share of that money. These businesspeople -- mostly retired military or diplomatic personnel who spent their careers in the Middle East -- act as middlemen for hire. They do everything from rounding up local suppliers for construction projects to helping companies set up branch offices in the region.

"Mr. McClelland, a retired Marine Corps major, figures he's got three dozen deals cooking right now related to Iraq reconstruction. In the past month, he's rounded up local companies to bid on a contract to supply automobiles to the new Iraqi police force. He's signed on as a consultant to help 3M Co. and a company that makes X-ray-scanning equipment break into the Iraq market. And he's set up a deal with a scrap-metal company based in Houston that wants to bid for the remains of Iraqi tanks blown up by U.S. bombs. On the side, the 47-year-old Mr. McClelland is trying to persuade some key members of the royal family here to let him organize a Dubai jazz festival -- the U.A.E.'s first.

"Mr. McClelland describes himself as a "bit player" in the Iraq gold rush. But even for the bit players, there's the potential for big money. "If 10 percent of the projects come through, I'll have made enough to retire twice over," he says. A couple of big ones, such as the food contract, could make his year.

"Middlemen and go-betweens with strong military contacts always appear wherever there's a war and wherever there's money to be made supplying the U.S. armed forces. What makes Iraq different is the size of the rebuilding effort the U.S. has taken on and the huge number of U.S. troops involved. The U.S. government is spending several billion dollars a month on troop support, fuel, equipment and, to a lesser extent, reconstruction.

"Rather than bid out each individual project, the U.S. government has awarded large contracts to a handful of corporations, including Bechtel Group Inc. -- which won a $680 million deal to coordinate the rebuilding effort -- and Halliburton Corp.'s Kellogg, Brown & Root, which has taken in about $425 million of U.S. Army work, much of it related to supporting troops with food and housing in Iraq and the Gulf. Those big players then offer hundreds of subcontracts to other companies. Bechtel, for instance, is subcontracting about 90 percent of its work...."

posted by Major Barbara | 11:08 AM


By Monica Perin
Houston Business Journal

"Jun. 16 — A pair of Houston pest control contractors are among hundreds of American and foreign workers being recruited by a division of Houston-based Halliburton to work on the rebuilding of Iraq.

"The recruitment operation is headquartered at the Wyndham Greenspoint Hotel and the Holiday Inn Intercontinental on John F. Kennedy Boulevard.

"KBR, formerly Kellogg Brown & Root, is recruiting a wide array of workers from all over the world and bringing them to Houston for orientation, background checks, training and deployment.

"They are being sent primarily to Kuwait, Iraq and Afghanistan.

"KBR's Web site last week listed 60 job openings in Iraq, 90 in Kuwait and 50 in Afghanistan.

"But the recruitment operation is being kept under tight wraps, apparently due to continuing political controversy over Halliburton's role in the lucrative post-war work.

"The recruits are required to sign an agreement pledging not to talk to the media, according to one of the pest control contractors, who asked that his name not be used....."

posted by Major Barbara | 6:57 AM

Sunday, June 15, 2003  

Reconstruction work is being funneled to local firms by Bechtel and others, but some are calling for a mandatory preference program.

By Warren Vieth, Times Staff Writer

"AL MAT BRIDGE, Iraq — Beneath a bombed-out highway overpass in Iraq's western desert, Ibrahim Jassem is doing his best to head off the next invasion.

"The 53-year-old road-grader operator was hired early this month to help build a bridge bypass, under one of the first reconstruction subcontracts awarded to an Iraqi firm. If prime contractor Bechtel Group Inc. had not made a point of picking a local company, Jassem's job might have gone to a foreigner, perhaps from Jordan.

""Many people are looking for jobs — engineers, equipment operators," said Jassem, who went without work for two months and has a wife and eight children at home. "Why should Iraq depend on outsiders? We have our own."

"Jassem's employer, Baghdad-based Al-Bunnia Trading Co., was chosen under what amounts to a preferential hiring program for subcontractors. San Francisco-based Bechtel says it expects 90% of the work done under its $680-million prime contract to go to subcontractors, and it plans to steer two-thirds of that business to Iraqi firms.

"Some prominent Iraqis say that's not good enough. Voluntary efforts like Bechtel's are a start, they say, but what is really needed is a preference program with teeth. They want the U.S.-led coalition to require foreign investors and business owners to become partners with Iraqis as a condition of doing business here. Otherwise, they say, Iraqi firms may get left at the postwar starting gate.

""Iraqi companies need to come first," said Hareth Zahawi, an Iraqi-British businessman whose Al-Zahawi Group landed a subcontract from Halliburton Co. to provide labor and procurement services for allied authorities in Baghdad. He's hiring only Iraqis, and so far has put about 400 on his payroll.

"Zahawi is helping organize a coalition of business and industry associations to lobby for reconstruction work, pressure contractors to hire Iraqis, and promote a proposal to require 51% Iraqi participation in new business ventures.

""Iraqis can't stand up to Kuwaiti and Saudi contractors," he said. "Some of them will go belly-up. They'll remain nobodies, while the big fat cats of the [Persian] Gulf who have had a 40-year head start will eat them alive."..."

posted by Major Barbara | 12:03 PM

Friday, June 13, 2003  

USAID Enlists Help With Its Biggest Effort

By Jackie Spinner
Washington Post Staff Writer
Saturday, June 14, 2003; Page E03

"The government agency running the $1.7 billion U.S. effort to rebuild Iraq has asked another government agency for help in overseeing its largest contract.

"The U.S. Agency for International Development will pay the Army Corps of Engineers $3 million under an existing contract to keep track of Bechtel National Inc.'s $680 million construction contract over the first year, a USAID spokeswoman said yesterday.

""They're bringing their technical expertise, which will help us be on time and on budget," Portia Palmer said. She said the agreement was signed "in the field" within the last 30 days.

"The Bechtel project is the largest of the eight initial reconstruction contracts USAID has awarded since February. It includes rebuilding and restoring roads, airports, sewage and irrigation systems, schools and power plants.

"A spokesman for the Corps of Engineers said it has acted as an "owners representative" for "other agencies in the past."

""Having an owners representative is not unusual," said Howard N. Menaker, a spokesman in Bechtel's Washington office.

"Steven L. Schooner, co-director of the Government Procurement Law Program at the George Washington University Law School, said it was a "smart idea" for USAID to turn to the Corps of Engineers for help. "USAID is understaffed for this and in over their heads," he said. "The Army Corps has more expertise. This is a responsible and mature decision."..."

posted by Major Barbara | 7:49 PM

Agence France Presse:


"It's to stop the Americans taking the oil out to Turkey"

"An Iraqi oil pipeline was burning after being sabotaged as the country's crude was set to return to the world market, and despite an offensive by US-led forces against opponents of their occupation regime.

"Fires blazed on the major pipeline from Iraq's northern oilfields after what residents said were twin bomb attacks aimed at sabotaging exports through Turkey.

"An AFP correspondent saw two separate fires on the pipeline, 15 kilometers (nine miles) from the key refinery town of Baiji, close to the main highway between Baghdad and the northern regional capital of Mosul.

"Local residents said the pipeline had been attacked by Iraqis using explosives around 8:45 pm (1645 GMT) Thursday, the same day Iraq awarded its first post-war oil export contracts.

""It's to stop the Americans taking the oil out to Turkey," said Khidr Aziz....

"Less than an hour's drive north of Saddam Hussein's native city of Tikrit, the region around Baiji was considered a stronghold of his Sunni-dominated regime.

"On Thursday, Iraq's US-led administration awarded a raft of contracts to international oil companies to lift crude, the first since the war which ousted Saddam in April.

"A coalition spokesman said the contracts were for exports from the southern oilfields around Basra and the lifting of crude already in storage at the Turkish Mediterranean port of Ceyhan.

"Four European companies, a Turkish firm and the US company ChevronTexaco were awarded contracts to buy 9.5 million barrels of Iraqi oil, returning it to the international market after a three-month suspension, industry sources said.

"Oil revenues are expected to play a major role in Iraq's economic restoration after decades of dictatorship and war...."

posted by Major Barbara | 9:00 AM


By Larry Margasak, Associated Press

"WASHINGTON (AP) Halliburton's contract to restart Iraq's oil production has doubled in cost over the past month, and the no-bid work may last longer than expected, the Army says.

"The expanded role awarded to Vice President Dick Cheney's former company cost taxpayers $184.7 million as of last week, up from $76.7 million a month ago, the U.S. Army Corps of Engineers confirmed this week.

"The Corps, which issues noncompetitive work orders under the contract, initially had estimated that a replacement contract would be awarded through competitive bidding by August. It now is backing off that estimate.

"There may be no second contract if the oil restoration mission is completed before another company can take over, or if the Iraqis make their own arrangements for additional help, the Corps said...."

posted by Major Barbara | 8:16 AM

Thursday, June 12, 2003  


The Associated Press


Halliburton's no-bid work to revive Iraq's oil industry is likely to last longer than originally estimated, the Army has acknowledged, and the cost to the government has more than doubled in the past month.

The U.S. Army Corps of Engineers this week backed off estimates that a fully competitive replacement contract would be awarded by August.

There will be no second contract if the oil restoration mission is completed before another company can take over, or if the Iraqis make their own arrangements for additional help, the Corps said.

"We're not going to try to discuss a specific timetable," a Corps spokesman, Lt. Col. Eugene Pawlik, said. Asked about the Corps' earlier August estimate, Pawlik said, "I would be very surprised if that would be in the timetable, with all the requirements that are out there."

While the Army delays its decision, the government cost of the noncompetitive work awarded to Vice President Dick Cheney's former company is ballooning. The total as of last week was $184.7 million, up from $76.7 million a month ago, shortly after the assigned work expanded significantly.

Several members of Congress have invoked Cheney's name to raise the hint of favoritism in a contract originally described as a bridge between emergency repair and longer-term assistance to restore full oil production.

Cheney's office repeatedly has said he had no role in the award, which was given to Halliburton's KBR subsidiary. Cheney left the company in August 2000.

Halliburton's spokeswoman Wendy Hall said, "KBR is proud to assist with the restoration of Iraq's oil infrastructure, which is the fuel for the country's economic recovery."

The Houston firm's oil industry assistance in Iraq is only part of the more than $600 million in military work received by Halliburton in connection with the wars in Iraq and Afghanistan.

As the Army's sole provider of troop support services, KBR has received work orders totaling more than $500 million under a 10-year contract with no spending ceiling.

Rep. Henry Waxman, D-Calif., the chief House critic of the Halliburton oil contract, reminded the Corps in a letter last week that the Army expected to advertise for bids by the spring or early summer.

Writing to Lt. Gen. Robert B. Flowers, the Corps commander, Waxman asked whether the Corps "has done an about-face and is poised to give additional benefits to Halliburton under its no-bid contract."

Waxman cited a Dow Jones news story in which Gary Loew, planning director for the Corps oil restoration project, said there might not be time to award a second contract and still meet deadlines for restoring the industry.

Flowers responded that the Corps was moving ahead with plans for a replacement contract "if needed."

He also said the Iraqis had the choice of obtaining services elsewhere. "The competitively awarded contracts will be one of the many sources available to the Iraqi management team; the Iraqis will not be required to make use of the contracts," Flowers said.

Flowers contended KBR was the only practical choice when, in February, the Corps was given the prewar contingency mission of keeping the Iraq oil industry afloat after fighting ended.

"With only weeks to be prepared to execute, full and open competition was not feasible," Flowers said.

* * *

Congressman Waxman's site has a page devoted to this issue, complete with an outstanding "fact sheet" about the Administration's contracts with Halliburton.

posted by Major Barbara | 1:53 PM

Wednesday, June 11, 2003  

Companies from around the world are converging on Washington to bid for work rebuilding Iraq - but are finding many obstacles in their way.

By Steve Schifferes
BBC News Online, Washington

"Hundreds of corporate representatives have been meeting in Washington this week at a Defence Weekly conference aimed at explaining how they can take part in the Iraq reconstruction process.

"Companies from as far afield as Turkey, the United Arab Emirates, Latvia and Britain - as well as many US firms - are finding the process is still fraught with difficulty.

"The inability to bring the private sector fully into the Iraq reconstruction effort will make it more difficult to mobilise the resources needed for the huge task ahead.

"Former Assistant Secretary of Defence Richard Perle warned the conference that bureaucratic obstacles could delay the full exploitation of Iraq's resources, and that the process would be speeded up once the Iraqis were in charge of their own country.

"But he admitted that, because the war moved so quickly, the US was "ill-prepared for the task of reconstruction" and had planned mainly for a humanitarian catastrophe that never materialised, with many stockpiled tents and emergency food rations.
..." [Emphasis mine.]

posted by Major Barbara | 6:49 PM



Bottom line: Getting there first.

No one needs reminding how important that it is; it’s the be all and end all of everything from mountain climbing to moon landings.

It’s also absolutely vital in the oil field. And that’s why big ol’ Halliburton’s “alliance” with little Boots & Coots is so very important: Those deals – overseen by CEO Dick Cheney – have given the big company leverage in winning the first contracts in any given fiery, war-torn, oil-producing country. Iraq, for example.

Reporters have shied away from talking about this necessary element of Halliburton’s winning that lucrative oil infrastructure work in Iraq -- jobbed out under Halliburton subsidiary KBR’s pre-existing LOGCAP contract. It’s a complicated business, after all. Not light reading.

While preparing this entry, I reviewed an LATimes article from April 6, by Mark Fineman and Dana Calvo, two reporters who’ve been covering Halliburton for some time. The writing is clear and accurate – but it’s remarkable in its timidity and oversights on two of the biggest elements of the story: Dick Cheney’s involvement with the “alliance” – and the way profits can be inflated under LOGCAP’s unregulated, unbid subcontracting process.

In the article, Fineman and Calvo flat-out exonerate Cheney of involvement in forming the pivotal alliance: “There is no evidence that he was involved in the deal.”

We disagree.

* * *

Whatever distinguished accomplishments Dick Cheney boasted on his resume before being chosen as CEO of Halliburton – and there are many – chief among them had to be his success in masterminding Operation Desert Shield and Operation Desert Storm as Secretary of Defense. In a long career as a public servant, that was a jewel of enormous worth in the service of his country. Cheney had overseen the large-scale deployment, and masterminded an unqualified victory.

But Halliburton? Before being named CEO, Cheney had absolutely no experience in the oil business. Still, both parties knew what they wanted: Cheney, a long-time public servant with a handful of heart attacks and a family, wanted to make the most of his time in the business world; Halliburton wanted to grow its business with Cheney’s rolodex, and his inside knowledge of the political game controlling its new frontiers.

In the August 10, 1995 press release “Halliburton Names Dick Cheney Chief Executive Officer,” the company touted its new leader’s credentials with a couple of key phrases: “responsible for shaping the future of the U.S. military” and “he directed the nation’s largest military campaigns in recent history.”

Dick Cheney knew more than anyone in the world about a tremendous business opportunity for Halliburton and its subsidiary, Brown & Root (now KBR): privatizing the military. In 1992, Brown & Root did a classified study for Cheney’s Defense Department that reportedly claimed that hundreds of billions of dollars could be saved by privatizing the logistics of much of the military’s work – by contracting the work to companies just like Brown & Root.

Soon thereafter, Brown & Root won its first competitively-bid logistics (LOGCAP) contract. For over a decade now, KBR has worked under such contracts.

So in August of 1995, when Dick Cheney was named CEO of Brown & Root’s parent company, Halliburton, he was uniquely qualified to grow the corporation -- despite the fact he'd never worked in the oil business before. He commissioned the very study that created the new market for defense contracting from which KBR was so qualified to profit.

It’s no great stretch to see that Cheney could bring together a very profitable synergy between the oil services parent and its construction-oriented subsidiary in the event of another war with Iraq. Halliburton could work the oil fields. KBR could rebuild Iraq. Dick Cheney could position the company to seize the opportunity.

Less than two months after taking the job, CEO Cheney ushered in an “alliance” in clear harmony with that strategy. In an October press release, Halliburton boasted of its new “alliance for total well control on a global basis” with a months-old private company: International Well Control.

Cheney didn’t sign the contract, dated September 19, 1995 – but he’d been on the job for well over a month. At that time, IWC was a little company only a few months old itself. It strains credulity that Executive Vice President W. J. Zeringue signed the contract for Halliburton without Cheney’s authority: This was a bold maneuver, and despite the deniability afforded by Zeringue’s signature, the buck stops with the CEO on this sort of an alliance. It may not have called for a vote of the Board of Directors, but it almost certainly required the authority of the CEO.

During 1991’s Desert Storm, Cheney oversaw the work of many of the IWC oil well firefighters when they made their reputations under legendary Red Adair. Cheney understood that in a future war with an oil producing country -- say, Iraq -- having firefighting teams at the ready would be very advantageous to lead contractors. In Kuwait, Cheney witnessed the scramble to assemble hellfighters to put out the oil well fires. Then he saw Bechtel supply the firefighters and the wells, and go on to win the enormous contract to rebuild the oil infrastructure -- overseeing 10,000 workers. Dick Cheney knew the advantage posed by being first on the scene when it came to winning subsequent contracts.

With the new “alliance,” Cheney’s Halliburton was positioned to cut out the competition, to establish itself in the oil fields – and in the command centers – before anyone else was on board. The alliance made International Well Control all but in-house. Together, the two companies advertised “WELLCALL,” a one-stop solution for everything from “blowout control, oil and gas well firefighting” to “contingency planning and other specialty services.”

Thanks to a little-known aspect of the LOGCAP contract that allows subcontractors to be hired without any competition or oversight from the U.S. Army Corps of Engineers, Cheney’s Halliburton had done what was necessary to reap an enormous harvest from a war with Iraq and later rebuilding efforts. Brown & Root – whose LOGCAP contract would almost certainly be used at first because of time and security constraints – would be the contractor from the start; Brown & Root could then hire Boots & Coots to put out the fires, and Halliburton Energy Services to supply the efforts and rebuild the wells. With those resources in place, KBR would be in a prime position to take the main contract for rebuilding Iraq.

If that strategy sounds like a stretch, consider the money to be made.

This was to be a very profitable arrangement: Under LOGCAP, KBR gets 3-5% of the total contract in Iraq – worth up to $7 billion; Halliburton and its subsidiaries and allies, meanwhile, can bill premium rates as subcontractors without concern for competition. The parent company gains from both revenue streams.

Though Halliburton is an enormous corporation, the extra business would have more than enough margin to make it worth chasing. Hundreds of millions of dollars, perhaps billions, would be funneled through Halliburton.

* * *

While CEO, Cheney didn’t stop his political work. In fact, one angle of that work dovetailed very profitably with his strategy at Halliburton: PNAC, Project for a New American Century.

Soon after Bill Clinton won re-election – when the possibility of one or more Democratic presidential terms loomed large in the future -- Cheney signed onto the new political venture, along with Donald Rumsfeld, Paul Wolfowitz, Richard Perle, James Woolsey and other influential conservatives.

In June of 1997, Cheney signed a now-famous "statement of principles" with the other conservatives to make their new organization known.

Meanwhile, Saddam Hussein grew more and more defiant in dealing with U.N. Arms Inspectors – so much so that by November, he was fodder anew for two Dave Letterman Top Ten Lists.

And in January 1998, PNAC wrote President Clinton a letter advocating war against Saddam Hussein.

All the while, International Well Control was executing a series of mergers and acquisitions to add more hellfighters to the stable – by going public and giving them stock. In July 1997, IWC bought the assets of Boots & Coots – including the company name – and executed a reverse shell merger to give all the hellfighters a piece of the new venture: Boots & Coots International Well Control, Inc.

The process took very little time. Instead of going public with a time-consuming IPO that would expose the company to perhaps unwelcome scrutiny from the SEC, the players opted to public through the backdoor with a reverse triangular merger. Immediately after the shell merger, the company was up and running and ready for big business.

An IPO might have taken eighteen months. But the shell merger meant the company was ready for any stunt Saddam Hussein might pull at any minute.

That shell company, as readers of this site now know, was a Pandora’s Box.

It was owned in part by the biggest fraud in history, Reed Slatkin. And despite the reputation reverse shell mergers have for involving shady players, Halliburton’s due diligence raised no impediment to the deal. It probably didn’t seem important; shady, if not illegal, business moves are made all the time.

After all, in 1997 Reed Slatkin – who co-founded Earthlink -- was one of the hottest businessmen in America, thanks to the explosive growth of the internet access company.

Making a business deal with Slatkin, Scientologist minister or no, wouldn’t have seemed like much of a political liability.

Because no one would have guessed that Dick Cheney would be elected Vice President.

* * *

All right: Maybe someone would have guessed Dick Cheney would be elected Vice President.

Maybe that’s why Dick Cheney didn’t sign the alliance contract with IWC – specifically because he wanted to preserve deniability in case he reentered high-visibility politics.

Regardless, the strategy that was at play in these business moves – signing the alliance, expanding the alliance – and later, Halliburton’s sinking $5 million and a raft of executives into struggling Boots & Coots – is evident.

Halliburton invested a lot in Boots & Coots IWC, a little feast-or-famine company with very little ability to generate substantial income or business for its much bigger partner.

Except in the event of war with Iraq.

So war was declared. Halliburton’s strategy was executed. It was successful: A little company on the verge of bankruptcy got the hellfighting task order – and KBR and Halliburton got the rest.

Still, if you believe reporters, “There is no evidence that [Cheney] was involved in the deal.”

We disagree.

posted by Major Barbara | 12:01 PM

Tuesday, June 10, 2003  

Brian Whitmore The Boston Globe Wednesday, June 11, 2003

"WARSAW What is the best cure for Poland's anemic economic growth and skyrocketing unemployment? Many here are hoping the solution will be found in Iraq.

"Nearly one in five Poles is out of work, and the nation's economy grew by a paltry 1.3 percent last year. But with potentially lucrative contracts on the horizon for Polish companies to rebuild Iraq's devastated infrastructure, hopes are rising that the Polish economy will strengthen.

"Due to its strong support for Washington on Iraq, Poland has already reaped some handsome rewards, including the prestige of commanding a peacekeeping force in Iraq and a visit by President George W. Bush last week.

"Poland - which approved a referendum over the weekend to join the European Union - now hopes the country will get what it needs most of all: a share in Iraq's reconstruction. Analysts say that could help the country's faltering economy.

"Miroslaw Zielinski, deputy minister of the economy, labor and social policy, was quoted by the English-language newspaper The Warsaw Voice as saying he hoped that "when Polish companies apply for contracts, their bids will meet with more favorable treatment than those from other countries, though it's necessary to remember that business criteria are more important."

"Washington has asked non-American companies hoping to participate in rebuilding Iraq to form consortiums with American counterparts. Hundreds of Polish companies are preparing bids, including some of the nation's biggest oil companies...."

"Officials in Warsaw announced last week that the state-owned fuel company, Nafta Polska, had formed a joint venture with Kellogg, Brown Root, a Texas-based subsidiary of Halliburton Co. , where Vice President Dick Cheney worked as chairman until his election in 2000. KBR has been awarded contracts to assess damage to Iraq's oil fields...." [Emphasis mine.]

posted by Major Barbara | 7:59 PM

The Hill:

By Alexander Bolton

"Democrats in Congress are accusing Republicans of turning a blind eye to contracts worth billions of dollars that the Bush administration has granted to companies with strong GOP ties as part of the effort to rebuild Iraq.

"In the absence of any Republican investigations, the nonpartisan General Accounting Office, the investigative arm of Congress, is looking into the matter.

"Two of the biggest contracts have gone to a subsidiary of Halliburton, which Vice President Dick Cheney served for five years as CEO, and the Bechtel Group, which counts a former Republican cabinet official and a member of President Bush’s export council among its executives.

"A number of the contracts, such as the one to Halliburton, have been awarded without competition, creating the appearance that the government may be granting special favors or not spending its reconstruction funds efficiently, Democrats say.

"Republicans and Democrats stood together for the most part during the invasion of Iraq, but partisan conflict is beginning to brew over reconstruction.

"The charges also signal growing Democratic frustration over the laissez-faire stance Republican investigators have adopted toward the Bush White House, a marked contrast to their activity during the Clinton administration.

"Then, Republicans on the government oversight committees energetically scrutinized improprieties they suspected Democrats of committing.

"“I think there is already the appearance of the administration using the Iraq War to reward some of the companies that have been close to them politically,” said Rep. Henry Waxman (Calif.), ranking Democrat on the House Government Reform Committee.

"“I don’t think the Republicans are doing any oversight on what this administration is doing,” he said. “We’re failing to live up to the responsibilities of the legislative branch.”..."

posted by Major Barbara | 6:09 AM

Monday, June 09, 2003  


Widespread Looting Leaves Iraq's Oil Industry in Ruins

"ASRA, Iraq, June 6 — Standing under the merciless sun outside his office, surrounded by employees shouting angrily about pay, Jabbar Ali al-Leaby, the director general of the South Oil Company, lost the little patience he had left.

""Be satisfied with what you got," he told the men. "Do you know what I went through to get even this money for you?"

"It was only three hours into the workday, but Mr. Leaby's frustrations started, as they do every morning, when he arrived around 8 to the lone refurbished office in a complex of buildings so thoroughly ransacked that birds dart through the upper stories. Employees of South Oil, Iraq's leading oil producer before the war, are now idle because looting has brought most of the company to a standstill.

""The other day, there was looting and sabotage at the North Rumaila field," Mr. Leaby said. "The day before that, at the Zubayr field. For three months, I've been talking, talking, talking about this, and I'm sick of it."

"This is now the state of the Iraqi oil industry, custodian of the world's third largest oil reserves — an estimated 112 billion barrels — and the repository of hope for the United States-led alliance and the Iraqi people themselves. Money from oil, the Bush administration has said repeatedly, will drive Iraq's economic revival, which in turn will foster the country's political stability. Many Iraqis agree.

"Yet from the vast Kirkuk oil field in the north to the patchwork of rich southern fields around Basra, Iraq's oil industry, once among the best-run and most smartly equipped in the world, is in tatters.

"Looting, sabotage and the continued lack of security at oil facilities are the most recent problems the industry and its American overseers must address in order to get petroleum flowing again, especially for export...."

posted by Major Barbara | 9:33 PM



"WASHINGTON, June 9 — The U.S. government awarded a $157.1 million contract to rebuild Iraq's educational sector with essentially no bidding competition, a U.S. senator said on Monday after reviewing an internal investigation of the deal.

"Although the U.S. Agency for International Development invited five contractors to bid on the education contract, only one -- Creative Associates International (CAI) of Washington, D.C. -- submitted a proposal, the USAID Inspector General's office said in a June 6 memo released on the agency's website.

"''The inescapable conclusion is that there was essentially no competitive bidding at all,'' Sen. Joseph Lieberman, a Connecticut Democrat, said in a statement...."

posted by Major Barbara | 5:44 PM

Slatkin sentencing postponed -- again -- until July 28...

Stay tuned for more.

posted by Major Barbara | 4:01 PM

Ponzi-schemer Played Inside Role In Cheney's Halliburton Alliance

Today, June 9, admitted fraud Reed Slatkin – who has confessed to running what has been described as the largest Ponzi scheme in history -- is due to be sentenced to federal prison for fleecing investors of as much as $600 million or more. Slatkin faces a maximum 105 years in prison, but is expected to serve ten to fifteen years.

Among many wide-ranging schemes, Slatkin was a key company insider in the formation of an oilfield firefighting company instrumental in the Halliburton "alliance" which put out oil well fires after the invasion of Iraq. SEC documents show the company, Boots & Coots International Well Control, Inc., was created under the aegis of the contractual “alliance” with Halliburton in 1997. At that time, Vice President Richard Cheney was Halliburton’s CEO – responsible for overseeing such operations on behalf of the Board of Directors. Recently, Halliburton subsidiary KBR was granted a controversial secret contract to put out Iraqi oil well fires and rebuild the Iraqi oil production infrastructure. The firefighting work was subcontracted to Boots & Coots, allegedly with no competitive bidding, even though the company teetered on bankruptcy.

Slatkin was defrauding investors for years before participating in the formation of Boots & Coots IWC. A bankruptcy judge in Santa Barbara ruled in January that Slatkin's written agreement last year to plead guilty to fraud, conspiracy and money laundering establishes clearly that his investment empire was a scam from its beginning in 1986.

At the time Boots & Coots IWC was created by a "reverse shell merger" in 1997, SEC records show that Reed Slatkin was vice president and director of Havenwood Ventures, incorporated as a "blind pool" in Delaware in 1988. In SEC documents, Havenwood was described as a “development company” aiming to build a theme park in the Sedona, Arizona desert. The project, dubbed the Sedona Spirit Theater, planned entertainment featuring interactive animatronic American Indians. Tracts of desert land were purchased, but the park was never built.

By 1997, Havenwood had "no assets", no "revenues," "no backlog," and "made no expenditures" (1996 SEC report). In March of that year, Havenwood president Mark Leibovit signed a “letter of intent” to merge his company with U.S. Liquids, a waste management company based in Houston, Texas specializing in nontoxic oilfield and commercial waste, such as cooking oil. Though Leibovit was compensated (SEC 10-Q, USL, 11/15/99) as a consultant for U.S. Liquids with stock warrants, the merger never took place.

Instead, publicly-owned Havenwood was targeted in a complex series of business moves to create the new company, publicly-owned Boots & Coots International Well Control, Inc. Both Boots & Coots and International Well Control had been separate, privately held concerns. A "reverse triangular merger" created the publicly held company in July 1997.

Public records show that Slatkin and other company insiders were compensated for their roles in the merger with stocks, and/or warrants for stock. Records provided by Slatkin's bankruptcy court indicate that he profited from the sale of at least some of that stock before its value plummeted in 1998.

Attorney John Reitman, who represents Slatkin's trustee in bankruptcy court, recently declined to answer questions regarding the trustee's possible possession of Slatkin's Boots & Coots stock and/or warrants for stock.

As CEO of Halliburton, Cheney’s responsibilities included overseeing operations and ensuring the Board of Directors had sufficient, up-to-date information to execute its strategies. That included a new "total solution for well control on a global basis" touted in a press release only weeks after Cheney was named CEO in 1995. The strategy was executed, in part, through a new “alliance” with recently-formed International Well Control, a company led by seasoned hellfighters who did a large portion of the oilfield firefighting in Kuwait in 1991.

Two years later in 1997, Halliburton’s “alliance” absorbed even more of the limited pool of experienced firefighters – many of whom learned their trade under legendary Red Adair – in that reverse triangular merger. The moves merged distinct companies into a new corporate identity, Boots & Coots International Well Control, Inc. It is unique: the only stand-alone, publicly traded oilfield firefighting company in existence.

Slatkin is accused of bilking investors of as much as $600 million in what has been described as the largest Ponzi-scheme in history. Slatkin, formerly a Scientologist minister, used a garage in his Santa Barbara home to oversee a financial scheme that will take years to unravel in legal proceedings. Investors are trying to recover their losses in bankruptcy court, from both Slatkin and the wealthy investors who apparently made money: Among others, Fox News personality and Scientologist Greta van Susteren, actor Peter Coyote and actress Cheryl Tiegs all made a profit on their investments with Slatkin. But the overwhelming majority of investors lost big. Tens of millions – if not hundreds of millions -- of dollars are still missing.

But in 1997, Slatkin had a very different reputation. As a co-founder of Earthlink, Slatkin’s wealth mushroomed explosively. The dial-up Internet access company quickly boomed to become the second largest provider in the country. Cash-flush Slatkin was viewed by many to be one of the most successful businessmen in America. An SEC investigation began in 1999. He pled guilty to fraud charges in October, 2002.

However in 1997, cash-flush Slatkin was a partner in Havenwood Ventures, and openly participated in the reverse triangular merger that formed Boots & Coots International Well Control. SEC documents show that the three stockholders in Havenwood – investment guru Mark Leibovit, Alice Leibovit and Slatkin – were compensated with stock in the newly formed company when they resigned their previous posts.

Slatkin and Mark Leibovit teamed up in at least one other venture, Lizardhead Partners, with which they intended to "buy and sell stock." Later, Slatkin did business as Lizardhead. That company's assets have yet to be fully analyzed and published.

Those assets, in the form of stock or warrants for stock, could become an issue in the Honorable Robin L. Riblet’s Santa Barbara court, where Slatkin's bankruptcy proceedings will continue indefinitely.

posted by Major Barbara | 5:46 AM

Sunday, June 08, 2003  


In March of 1991, Bechtel led the charge to put out 650 oil well fires in Kuwait set by retreating Iraqi troops” (from article below).

While coalition troops fought Saddam Hussein for weeks, oil well firefighters battled the well fires for months. Almost every available hellfighter in the world was put to work. Bechtel, the general contractor, had a force of 10,000 employees on the job to control the fires and rebuild the oil fields.

In the end, the war had no “mother of all battles.” The fires were extinguished quickly after all. It was a well-run march to victory.

Secretary of Defense Dick Cheney masterminded an unqualified success. And if you ask Bechtel, so did they.

That was then.

This is now: In the most recent war with Iraq, Halliburton -- not Bechtel -- led the charge. And though Bechtel was selected for the big rebuilding contract, Halliburton squeezed them out for the work in the oilfields -- which had the potential, if Iraq's oil fields had been set ablaze, to dwarf the scope of the work in Kuwait.

So how did seasoned, successful Bechtel lose out?

How did Halliburton and its subsidiary, KBR (formerly Kellogg Brown & Root), sew up the first, best contracting job in this war with Iraq?

It was no accident, to be sure.

It was just business.

* * *

Bechtel, a private company, couldn’t – or wouldn’t – ever do something that proved very important in getting that contract to put out oil well fires in Iraq: pay their employees with stock in the company.

Particularly hellfighters.

But that’s exactly what helped get the ball rolling in Halliburton’s direction.

We posed a gimmicky question a few weeks back:

Who’s in cahoots with Boots & Coots?

It was more than rhetorical. It was a trick question.

The real lively question isn’t who is in cahoots – although there’s been some very shadowy stuff happening at the company of late -- but rather who was in cahoots with Boots & Coots, a few years ago, when the company went public through the backdoor. When a bunch of hellfighters were made part-owners in the company, and a crew of money men took the rest. With Halliburton holding a contract giving them everything they needed.

That was when the business strategy that bested Bechtel was nailed down.

So, you ask, who was in cahoots with Boots & Coots?

One answer, of course, is Dick Cheney, the CEO of Halliburton. He was responsible for overseeing Halliburton’s contractual “alliance” with Boots & Coots. And the whole thing happened on his corporate watch.

Another is Reed Slatkin, the biggest fraud in history -- the ex-Scientologist-minister-cum-Ponzi-schemer who bilked victims out of over $600 million. He was a partner in the “blind pool” that was developing a theme park in the Sedona, Arizona desert, featuring animatronic American Indians.

That, as this site explained once before, is just how quickly it happened. As if by magic, Reed Slatkin’s tin indian Havenwood Ventures became hellfighting Boots & Coots International Well Control, Inc.

Lots of folks were in cahoots with Boots and Coots to make that deal happen, and happen fast: firefighters, underwriters, finders, market makers.

But these two men – Cheney and Slatkin, the future vice president and the yet-to-be-indicted mega-fraud -- by coincidence or design -- were guiding authorities in the shady “reverse shell merger” that created Boots & Coots International Well Control, Inc.

So that’s the most interesting answer to our question:

Dick Cheney and Reed Slatkin were both in cahoots with Boots & Coots.

* * *

Tomorrow, June 9, Reed Slatkin is due to be sentenced in Santa Barbara Federal Court, to a maximum of 105 years.

Day after tomorrow, June 10, some newspaper somewhere may, or may not, report much of anything about Reed Slatkin and Dick Cheney.

But you can read about the business deal that made them bedfellows here, tomorrow: more details on the strategy -- and the reverse shell merger -- that changed from contractual asset to political liability when Dick Cheney was elected -- and Reed Slatkin was convicted.

posted by Major Barbara | 12:25 PM

Knight Ridder Newspapers

"WALNUT CREEK, Calif. - (KRT) - Bechtel's mobilization into Iraq over the past three weeks to begin repairing frayed roads and power lines looked and felt more like an embrace between two old friends than an adventure into uncharted territory.

"The San Francisco construction conglomerate, which has supervised massive public and private building projects around the globe for more than 100 years, worked in Iraq right up until Saddam Hussein's army invaded Kuwait in August 1990.

"In fact, a few of the 80 Bechtel workers now making their way into Iraq from Bechtel's project headquarters in Kuwait City worked directly on those projects, and one, Jim Roach, was even taken hostage for six months during the first Gulf War and forced to serve as a human shield.

""It's quite an emotional trip," said Mike Kidder, a Bechtel spokesman monitoring the work from Kuwait. Brushes with the past are everywhere. Most conspicuously, Bechtel is erecting makeshift camps on the grounds of its old client's palaces. It will use Saddam's homes as staging points for work on the $680-million, 18-month infrastructure repair contract it won from the U.S. Agency for International Development (USAID) in April.

"Bechtel's current efforts represent its second job repairing devastation wrought by wars in the Persian Gulf. In March of 1991, Bechtel led the charge to put out 650 oil well fires in Kuwait set by retreating Iraqi troops. Bechtel's army of engineers restored pumping capacity within eight months to 200 million barrels a day...."[Emphasis mine.]

posted by Major Barbara | 11:56 AM

Saturday, June 07, 2003  

Statement about Halliburton rejected

Copyright 2003 Houston Chronicle Washington Bureau

"WASHINGTON -- The Army Corps of Engineers is backing away from comments suggesting the Pentagon is considering handing Houston-based Halliburton Co. another exclusive contract to repair Iraq's dilapidated oil sector.

"For weeks, critics have hammered the corps for failing to seek bids from other players when awarding the initial contract to put out fires, repair pipelines and refineries and get oil flowing again from Iraq's fields.

"The corps has tried to defuse the criticism by arguing the contract was awarded to Halliburton subsidiary KBR, formerly known as Kellogg Brown & Root, on an interim basis. Corps officials have told lawmakers they hoped to award a new contract on a competitive basis by the end of August.

"That decision was highly controversial, because Vice President Dick Cheney is the former head of Halliburton.

"But then earlier this week, Dow Jones News Service reported the corps might not be able to execute a competitive-bid contract and keep up with the timetable for resuming oil production in Iraq.

""There may not be time to actually award a second contract and get them in here," Dow Jones quoted Gary Loew, planning director for the corps' Restore Iraqi Oil project, as saying. Loew, who is in Baghdad, spoke to Dow Jones by telephone.

"That prompted Rep. Henry Waxman, D-Calif., a frequent critic of the Halliburton contract, to question whether the corps has done "an about-face."

"On Friday, corps spokeswoman Carol Sanders said the corps still plans to seek competitive bids for the next phase of the project. Loew, she said, "just misspoke."..."

posted by Major Barbara | 8:27 AM

Friday, June 06, 2003  

Asbestos Legislation May Help Halliburton
By Carolyn Koo
"NEW YORK (Reuters) - Halliburton Co. HAL.N on Friday said it expects to delay the bankruptcies of two units until the third quarter, a move that could enable the company to pay less money than expected to settle asbestos lawsuits under a proposed U.S. Congressional bill....

"Jim Wicklund, an analyst at Banc of America Securities, said the delay in the bankruptcy filings could benefit Halliburton by reducing the amount of money it needs to pay out to asbestos victims, to $450 million from $4 billion.

"A reduced payout would result from U.S. Senator Orrin Hatch's efforts to pass asbestos legislation to set up a $108 billion trust fund to pay asbestos injury claims over the next 25 years to 30 years...."

posted by Major Barbara | 3:47 PM

SFChronicle: 43 Held Protesting Bechtel's Iraq Deals

by Joe Garofoli, David R. Baker, Chronicle Staff Writers

"San Francisco -- Police arrested 43 protesters during a peaceful demonstration outside Bechtel Corp.'s San Francisco headquarters Thursday, as activists intensified their push for greater scrutiny of federal contracts to rebuild Iraq.

"Police said all those arrested were cited for misdemeanor infractions such as trespassing and were released. No injuries were reported at the demonstration, which at its peak early in the day drew around 200 activists and dozens of police outside Bechtel's Beale Street offices.

"The activists are hoping to keep a spotlight trained on Bechtel as the company chooses subcontractors for its $680 million federal contract to rebuild Iraq's infrastructure. They also want the government's bidding process to be revamped.

posted by Major Barbara | 6:28 AM

Thursday, June 05, 2003  

A very critical short study, from CorpWatch:

Why the Corporate Invasion of Iraq Must be Stopped

By CorpWatch, Global Exchange, Public Citizen
Collaborative Report

"Introduction and Executive Summary
On March 20 and 21, 2003, two days after the U.S.-led invasion of Iraq, the people of San Francisco organized a massive protest to shutdown the world headquarters of the Bechtel Corporation. Many Americans may be unaware of the connection between the Bechtel Corporation and the U.S.-led war in Iraq. Bechtel employees like George Shultz not only used their political influence to help bring this war about, but key Bechtel board members and employees with advisory positions to the Bush administration helped ensure that Bechtel would receive one of the most lucrative contracts for rebuilding what they had helped to destroy.

"On April 17, Bechtel received one of the first and largest of the rebuilding contracts in Iraq. Worth $680 million over 18 months, the contract includes the rebuilding, repair and/or assessment of virtually every significant element of Iraq's infrastructure, from power generation facilities to electrical grids to the municipal water and sewage systems. The contract was granted in backroom deals without open and transparent bidding processes and the content remains hidden behind a veil of secrecy. The contract has not been publicly disclosed to American taxpayers, who will be paying the majority of the bill. While there is no doubt that Bechtel has experience in these areas, it is an experience from which the people of Iraq should be spared.

"War profiteering and political cronyism is just part of this story.
"This report provides case studies from Bechtel's history of operating in the water, nuclear, energy and public works sectors. These case studies reveal a legacy of unsustainable and destructive practices that have reaped permanent human, environmental and community devastation around the globe...."

posted by Major Barbara | 8:20 AM

Wednesday, June 04, 2003  

Anti-Iraq-war groups target Bechtel headquarters

By Andrea Orr

"SAN FRANCISCO (Reuters) - International construction giant Bechtel Group Inc., which is playing a key role in rebuilding Iraq, has become the object of renewed protests this week with demonstrators threatening to close down the privately held company's headquarters for a day.

"Groups of protesters who fanned out across churches, yoga studios and subway stations in San Francisco in recent days, will culminate their "week of action against Bechtel and the corporate invasion of Iraq" Thursday with a demonstration outside of the company's corporate headquarters.

"Direct Action to Stop the War, the San Francisco group leading the protests, says Thursday's demonstration will be peaceful but will be aimed at shutting down the Bechtel office, which employs about 1,000 people...."

posted by Major Barbara | 9:32 PM

Space-Enabled Warfare Fuels Satellite Makers
By Andrea Shalal-Esa

"WASHINGTON (Reuters) - The Iraq (news - web sites) war proved how essential weather, communications and targeting satellites are to the U.S. military, and that is good news for a U.S. space industry still reeling from a devastating slump in the commercial market, analysts and defense officials said.

"Over the next decade, top satellite makers like Boeing Co., Lockheed Martin Corp. and Northrop Grumman Corp. will vie for multibillion dollar orders as the U.S. military upgrades or replaces nearly all its satellites.

"Satellite launchers could also see a lift, given strong military demand and a modest recovery in commercial demand expected in two to three years, the analysts said.

""Space is not on the margins of fighting wars anymore," Maj. Gen. Robert Dickman, Air Force deputy secretary for space, told satellite and aerospace executives on Tuesday at a conference sponsored by U.S.-based Inmarsat Ltd...."

posted by Major Barbara | 10:48 AM

Tuesday, June 03, 2003  


Last week, Halliburton settled shareholder lawsuits that at one point threatened to be a significant political liability to Dick Cheney.

No more. Now that the case is settled, all that Arthur Andersen stuff is old news.

Next week, the former Scientologist minister who ran the biggest Ponzi scheme in history will be sentenced for scamming over $600 million. Reed Slatkin is off to the pokey on June 9.

And his business dealings with Dick Cheney's alliance will be news no more.

Coming: A report on the "reverse shell merger" that ushered the biggest fraud in history into Dick Cheney's Halliburton alliance.

While it still matters.....

* * *

Scroll down to read about Halliburton's other "shell games"....

* * *

Thanks to for linking!

posted by Major Barbara | 1:48 PM

Monday, June 02, 2003  

From today's Financial Times:

"Italian newspaper Finanza & Mercati reported Friday that Fiat has agreed to sell its aerospace unit to Finmeccanica Spa, Italy's biggest defense company, and Carlyle Group, Inc., a U.S. buyout fund, for 1.55 billion euros. Fiat stock rose 5 percent to 6.94 euros Friday, and rose to 6.97 euros by 11:50 a.m. London time today...." [Emphasis mine.]

* * *

From the April 8 Guardian:

Carlyle homes in on Fiat aerospace

Mark Milner
Tuesday April 8, 2003
The Guardian

"Italian automotive group Fiat is planning to sell its aerospace business to the secretive US private equity group Carlyle, which has links with George Bush Sr. The move could presage a wider shake-up of the European defence industry....

"Fiat Avio, which employs more than 5,000 people, last year reported revenues of €1.534bn and an operating income of €210m.

"It produces engines for both the civil and military markets and provides maintenance services.

"As well as its aviation work it also produces gas turbines for ships and is involved in space technology, producing the booster and separation rockets for the Ariane 4 and 5 spacecraft.

"Its acquisition will double the Carlyle group's investment in the defence industry since 1987.

"One of its recent investments, at the end of last year, was a near 34% stake in defence and technology research business Qinetiq which it bought from the British government.

"Traditionally Carlyle has held its investments in the sector for between four and six years." [Emphasis added.]

posted by Major Barbara | 6:29 PM

Oil Companies Put Off Visiting Iraq
Security issues may set back crude-production goals

By Carola Hoyos

"June 2 — International oil companies are postponing visits to Iraq because of continued insecurity there, potentially setting back by weeks or even months the timing of reconstruction of the country’s oil production and exports.

"With every day the sector’s recovery is delayed, the country loses millions of dollars of revenue it needs to get back on its feet. Meanwhile, looters cause more damage as they steal oil and smuggle it across the Gulf.

"“We are still looking to get people on the ground, but we are not going to put anyone in there before we do a full-scale security audit,” said one official from a large oil company looking to get involved in the refining sector. “We were perhaps a bit too optimistic at first.”..."

posted by Major Barbara | 6:22 AM