"Complaints about the $20 billion down payment that President Bush wants for the reconstruction of Iraq are going in the wrong direction. There's no question that the United States has an obligation and clear interest in rebuilding the country it invaded. The cost cannot be whittled down through political compromise or disguised as a loan.
"The real problem is that without strong legislative safeguards and oversight, billions of taxpayer dollars are sure to be wasted through insufficiently competitive contracts to politically connected firms like Halliburton and Bechtel. That has largely been the pattern until now. Congress also needs to make sure that reconstruction programs do not fritter away their resources by relying on expensive American workers and supervisors when qualified, reliable and currently unemployed Iraqis could easily do the work....
"It is clear that the White House cannot be left to manage the process on its own. The Bush administration's promises of more competitive bidding and more use of Iraqi labor are welcome, but difficult to put much faith in. It is hard to enter the debate over postwar Iraq without tripping over a business associate or political ally of the White House...." [more]
"It's official: the administration that once scorned nation-building now says that it's engaged in a modern version of the Marshall Plan. But Iraq isn't postwar Europe, and George W. Bush definitely isn't Harry Truman. Indeed, while Truman led this country in what Churchill called the "most unsordid act in history," the stories about Iraqi reconstruction keep getting more sordid. And the sordidness isn't, as some would have you believe, a minor blemish on an otherwise noble enterprise.
"Cronyism is an important factor in our Iraqi debacle. It's not just that reconstruction is much more expensive than it should be. The really important thing is that cronyism is warping policy: by treating contracts as prizes to be handed to their friends, administration officials are delaying Iraq's recovery, with potentially catastrophic consequences.
"It's rarely mentioned nowadays, but at the time of the Marshall Plan, Americans were very concerned about profiteering in the name of patriotism. To get Congressional approval, Truman had to provide assurances that the plan would not become a boondoggle. Funds were administered by an agency independent of the White House, and Marshall promised that priorities would be determined by Europeans, not Americans.
"Fortunately, Truman's assurances were credible. Although he is now honored for his postwar leadership, Truman initially rose to prominence as a fierce crusader against war profiteering, which he considered treason.
"Iraq's reconstruction, by contrast, remains firmly under White House control. And this is an administration of, by and for crony capitalists; to match this White House's blithe lack of concern about conflicts of interest, you have to go back to the Harding administration. That giant, no-bid contract given to Halliburton, the company that made Dick Cheney rich, was just what you'd expect...." [more]
"WASHINGTON - A group of businessmen linked by close ties to President Bush, his family and his administration have set up a consulting firm to advise companies that want to do business in Iraq, including those seeking pieces of taxpayer-financed reconstruction projects.
"The firm, New Bridge Strategies, is headed by Joe Allbaugh, Bush's campaign manager in 2000 and the director of the Federal Emergency Management Agency until March. Other directors include Edward Rogers Jr., who is the vice chairman, and Lanny Griffith, lobbyists who were assistants to the first President Bush and have close ties to the current White House.
"At a time the administration seeks congressional approval for $20.3 billion to rebuild Iraq as part of an $87 billion package for military and other spending in Iraq and Afghanistan, the company's Web site, www.newbridge-strategies.com, says, "The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C., and on the ground in Iraq."
"The site calls attention to the links between the firm's directors and the current and previous Bush administrations by noting, for example, that Allbaugh, the chairman, was "chief of staff to then-Gov. Bush of Texas and was the national campaign manager for the Bush-Cheney 2000 presidential campaign."..." [more]
"BAGHDAD, Iraq - Mahmoud Ali, a gap-toothed 15-year-old, worked steadily under a penetrating sun at his rather monotonous job outside the large Mansur filling station here.
"Taking turns with his two uncles, Ali waited in line in the family's 1982 Chevrolet to get a tank of cheap gasoline, which the locals call benzene, at the station subsidized by the Iraqi Oil Ministry.
"After filling up the faded white Chevy, the men pulled the vehicle to a curb. There, they siphoned the fuel into 20-liter plastic jugs to sell at triple the posted price to other drivers too frustrated to wait in lengthy lines.
"Then, one of the men drove the Chevy back to the line to sweat it out until another full tank of fuel could be secured.
"Selling fuel at three times its state-set price about 100 yards from a line of 14 working pumps would be a hard dollar to earn in another economy.
"But it works here in Iraq, because the low-octane, government-subsidized fuel sells for less than a dime a gallon.
""Benzene is cheaper than water here," local journalist Qais Al-Bashir said Friday.
"What it is costing American taxpayers is another story.
"Since the fall of Saddam Hussein's regime in April, Iraq's resuscitated oil industry has been unable to produce enough gasoline, cooking oil and other petroleum products to meet the country's needs.
"Houston-based Halliburton Co., the contractor hired by the U.S. Army Corps of Engineers to repair the dilapidated energy infrastructure, has been ordered to bring refined products into the country.
"U.S. taxpayers have spent about $562 million under the Halliburton contract to bring in gasoline and other fuels and make needed repairs to Iraq's gas distribution network, according to the Army Corps of Engineers. In fact, that effort has accounted for nearly half the $1.22 billion worth of work that Halliburton has performed in Iraq since the war.
""The benzene we sell here comes from Turkey, Kuwait and Saudi Arabia," said Majed Mohammed, 44, who manages the Mansur station for the Iraqi Oil Ministry.
""Before the war," he said, "it was 100 percent from Iraq. But now we have problems with sabotage of the pipelines. The refineries are working at far less than capacity."..." [more]
Total, ENI, Royal Dutch/Shell in development talks, but U.S. firms might get first shot.
"DUBAI (Reuters) - Iraq has begun to court several European oil company investors as it seeks to spur development of the country's massive oil reserves before Washington hands over power, a senior Iraqi official said Monday.
"As part of the process, new Iraqi Oil Minister Ibrahim Bahr al-Uloum will insist multinationals help train Iraqi engineers -- finally freed of Saddam Hussein and more than a decade of United Nations sanctions -- to international standards.
""We met a number of European companies after the OPEC meeting and invited them to present their thoughts on how to develop the oil industry of Iraq," Nabeel Musawi, a member of Iraq's OPEC delegation, told Reuters by telephone from Baghdad. An Iraqi delegation attended OPEC's Sept. 24 meeting in Vienna.
""Dr. Ibrahim's idea is to get some social development projects injected into the process... and one of the main areas is training Iraqis outside Iraq."
"European majors will be encouraged by Iraq's informal overtures, but Musawi, a deputy on Iraq's U.S.-backed Governing Council, has said U.S. firms may be given preference in Iraq's oilfields, home to the world's second-largest reserves.
"Musawi declined to name the companies with whom Uloum met in recent days. But under the rule of Saddam, European majors had their sights set on some of Iraq's biggest oilfield prospects.
"France's Total spent years negotiating for Majnoon and Bin Umar, Italy's ENI and Spain's Repsol had shown interest in Nassiryah and Royal Dutch/Shell had its eye on Ratawi.
"Multibillion-dollar deals for those prized gems will only be signed after an elected government is in place, said Musawi.
"The Governing Council instead is likely to focus on short and medium-term projects that will require $2 billion of investment in the early stages...." [more]
"The moment was a small but sweet victory for the Russian oil baron Vagit Y. Alekperov: the Getty gas station he bought in Manhattan three years ago was renamed yesterday after his own huge oil company, Lukoil, and President Vladimir V. Putin of Russia was on hand to ring in the change, coffee cup in one hand and Krispy Kreme doughnut in the other.
"Mr. Alekperov wanted American consumers to understand that they need Russian oil and that companies like his are ready to provide it. For the last two years, oil has become an increasingly powerful bond between the United States, the world's largest consumer, and Russia, among the largest producers.
"But Mr. Alekperov's trip to the United States as part of Mr. Putin's entourage may partly be in the hope that the Bush administration could help Lukoil with a crucial oil interest outside Russia: the huge West Qurna field in Iraq.
"Lukoil is among several foreign companies that negotiated contracts and memorandums of understanding with the government of Saddam Hussein to develop oil fields once United Nations sanctions were lifted. The sanctions are gone, but so is the old government. Lukoil, along with the other companies, now worry that the agreements they spent years and millions of dollars to develop will be abrogated by the new Iraqi authorities.
"People close to Mr. Putin and Mr. Alekperov said that they expected Mr. Putin to raise the question of protecting the Russian oil contracts with President Bush during their weekend meeting at Camp David.
""The Iraqi question will clearly be on the agenda of the summit," Mr. Alekperov said in an interview in New York on Thursday evening. "I think the president of a country and the government should help their own companies."
"After going it alone for so many years after the collapse of the Soviet Union, Russian companies are now finding opportunities in which American help would be invaluable. At an oil conference earlier this week in St. Petersburg, Russian oil companies talked about the need for American assistance in building more oil infrastructure to ease exports, like ports, storage facilities and pipelines. And it is widely known that ChevronTexaco and Exxon Mobil are vying to buy a large stake, perhaps as much as 25 percent, in Yukos, Russia's largest oil company...." [more]
By Dave Montgomery
Star-Telegram Washington Bureau
"WASHINGTON - The renewed uproar over billions of dollars in government work awarded to Texas-based Halliburton Co. is forcing the Bush administration to defend itself against accusations of conflict of interest and sweetheart deals as it struggles to maintain public support for U.S. involvement in Iraq.
"At the center of the controversy is Vice President Dick Cheney, who was Halliburton's chief executive from 1995 to 2000. He still holds Halliburton stock options and draws a deferred salary from the Houston energy and construction company.
"Cheney says he no longer has an active financial interest in the company and dismisses critical remarks as "political cheap shots" from Democrats.
"But his former Halliburton ties have heightened scrutiny over more than $1 billion awarded to Kellogg, Brown & Root, a Halliburton subsidiary, to aid the recovery of Iraq's battered oil industry. All told, Halliburton's government work in Iraq now totals nearly $2 billion.
""I think we ought to ask a lot of tough questions here, especially since the vice president has a deferred compensation package from Halliburton," said Rep. Martin Frost, D-Arlington, dean of the Texas congressional delegation....
"Critics, however, argue that the perception of special treatment toward Halliburton, whether accurate or not, undercuts President Bush's efforts to shore up public support for the U.S.-led military presence in Iraq. It could also complicate his request to Congress for an additional $87 billion to pay for U.S. operations in Iraq and Afghanistan.
"Some Republicans have begun to question the $20.3 billion in the package to be set aside for rebuilding Iraq. But the questions about Halliburton's deals have been raised primarily by Demo-crats and public watchdog groups.
"Halliburton's role was first questioned last year after it became clear that the company and its subsidiaries were getting millions of dollars in new government work in the wake of the 9-11 attacks.
"But the controversy has flared anew in recent days as Bush began pressing for additional funds...." [more]
"I should have known that a little digging into this Iraq contracting biz would bring me to uber-GOP-insider Haley Barbour. But I tend to be a touch naive about these things, as you can imagine.
"Barbour of course is former chair of the RNC, former chair of President Bush's campaign advisory committee in DC in 2000, and former just about everything else in the DC Republican party, as well being one of the priciest and most wired Republican lobbyists in town.
"Now, yesterday I told you how President Bush's right-hand-man Joe Allbaugh has just set up a new outfit -- New Bridge Strategies -- to help companies get the sweetest contracts in Iraq. New Bridge, as their site says, is "your bridge to success in Iraq."
"But when you look more closely at New Bridge, of which Allbaugh is Chairman and Director, you start to see that New Bridge looks an awful lot like an outgrowth of Barbour Griffith and Rogers...."
"Now comes the payback for the 26-nation "coalition of the willing" that joined the U.S.-led occupation of Iraq.
"Those countries are looking for the Bush administration to return the favor for their support. Mongolia, which has 174 troops in Iraq, wants a free-trade deal with the United States. Turkey, which is considering sending 10,000 troops, just won $8.5 billion in U.S. loan guarantees. And Poland, Serbia, Romania, Latvia and others are pushing for contracts to rebuild Iraq's infrastructure.
""They've chipped in and they want a piece of the action," said John Pike of the defense consultancy GlobalSecurity.org. "They want to wet their beaks."
"Few governments openly ask for rewards for their service in Iraq. And experts say favors from the United States, although a routine part of diplomacy, were probably not promised in advance.
"But participation of countries as small as Macedonia, population 2 million, and Estonia, with 1.4 million people, have given a valuable international stamp to a war that received no backing from the United Nations and is largely perceived as a unilateral act of the United States. The 20,000 troops supplied by coalition countries so far also ease the burden on the 130,000 U.S. soldiers in Iraq.
"For that, experts say, the United States is willing to pay...." [more]
"The US administration is facing renewed pressure to consider mortgaging future Iraqi oil production as a way to ease the financial burden of reconstructing Iraq.
"Paul Bremer, the administrator of the US-led Coalition Provisional Authority, was grilled yesterday by senators, who insisted that at least some of the $20bn in US reconstruction aid being considered should be in the form of loans.
""In the long run, Iraq will be aprosperous country," said Senator Susan Collins, a Republican. "Therefore it seems logical to many of us to come up with a way to structure part of the construction costs as a long-term loan."
"The idea, which was first raised in May by a coalition of US companies interested in investing in Iraq, was also revived yesterday by Philip Merrill, who heads the Export-Import Bank, the US government's official export credit agency.
"Addressing a conference attended by army officers, he said securitisation of oil revenues - using future income as collateral for loans - was a critical political issue that had to be decided by the Iraqis themselves.
"But Mr Bremer said yesterday that he did not favour mortgaging oil revenues until negotiations on a restructuring of Iraq's $100bn in foreign debt were concluded, which could take a year or more.
"In addition, he said, collateralising future oil revenues "has the disadvantage . . . of making it look as if we are in some way taking a lien against oil revenues, and therefore that's why we fought the war".
"Iraq's oil sector would be the one area barred to foreign investors under a new economic plan released by Iraq's governing council last weekend, though Mr Bremer said he was "encouraging the Iraqi government to change that policy". The Iraqi debt, as well as another $100bn in Gulf war reparations owed by the former Iraqi regime to Saudi Arabia and Kuwait, is emerging as a big economic and political problem for the US...." [more]
Josh Marshall has exposed an especially ugly case of what might be routinely termed "corruption" in less developed countries:
"File this one under Un-#$%@#*&-believable.
"Let me introduce you to New Bridge Strategies, LLC. New Bridge is 'Helping to Rebuild a New Iraq' as their liner note says.
"Here's the company's new blurb from their website ...
"'New Bridge Strategies, LLC is a unique company that was created specifically with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war in Iraq. Its activities will seek to expedite the creation of free and fair markets and new economic growth in Iraq, consistent with the policies of the Bush Administration. The opportunities evolving in Iraq today are of such an unprecedented nature and scope that no other existing firm has the necessary skills and experience to be effective both in Washington, D.C. and on the ground in Iraq.'
"A 'unique company'? You could say that. Who's the Chairman and Director of New Bridge? That would be Joe M. Allbaugh, President Bush's longtime right-hand-man and until about six months ago his head of FEMA. Before that of course he was the president's chief of staff when he was governor of Texas and campaign manager for Bush-Cheney 2000.
"Allbaugh was part of the president's so-called 'Iron Triangle' -- the other two being Karl Rove and Karen Hughes. And now Allbaugh's running an outfit that helps your company get the sweetest contracts in Iraq? That sound right to you? Think he'll have any special pull?... [more] [Emphasis, some links added]
* * *
Thank you, Dr. Josh, for finally setting your sites on war profiteers!
"WASHINGTON – A report by the Congressional Research Service undermines Vice President Dick Cheney's denial of a continuing relationship with Halliburton Co., the energy company he once led, Sen. Frank Lautenberg said Thursday.
"The report says a public official's unexercised stock options and deferred salary fall within the definition of "retained ties" to his former company.
"Cheney said Sunday on NBC's "Meet the Press" that since becoming vice president, "I've severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven't had, now, for over three years."
"Democrats pointed out that Cheney receives deferred compensation from Halliburton under an arrangement he made in 1998, and also retains stock options. He has pledged to give after-tax proceeds of the stock options to charity.
"Cheney's aides defended the assertion on NBC, saying the financial arrangements do not constitute a tie to the company's business performance. They pointed out that Cheney took out a $15,000 insurance policy so he would collect the deferred payments over five years whether or not Halliburton remains in business.
"Lautenberg, D-N.J., asked the Congressional Research Service to weigh in.
"Without naming Cheney or Halliburton, the service reported that unexercised stock options and deferred salary "are among those benefits described by the Office of Government Ethics as 'retained ties' or 'linkages' to one's former employer."
"Lautenberg said the report makes clear that Cheney does still have financial ties to Halliburton. "I ask the vice president to stop dodging the issue with legalese," Lautenberg said...." [Emphasis added.] [more]
"Washington - The Bush administration plans to create a special force to protect Iraq's oil industry and to deploy a rapid-reaction team to repair pipelines after terrorist attacks.
"Such attacks - including one yesterday - are costing the country millions of dollars in lost revenues every day, U.S. officials estimate.
"The incident yesterday occurred south of Tikrit, near the town of Balad, where seven Iraqis attacked an oil pumping station guarded by U.S. troops from the 4th Infantry Division. The Americans called in an AC-130 gunship, whose heavy weapons fire killed at least three Iraqis, said Maj. Josslyn Aberle, division spokeswoman...." [more]
"How about forcing the Iraqi people to take out a mortgage on their newfound freedom, using their nation's future oil revenue as collateral? A proposal to do that — making a loan out of the $20 billion the Bush administration is seeking to cover the first round of reconstruction costs — is gaining support in Congress. Of all the bad ideas that have been floated recently about Iraq's future, this is one of the worst.
"It is understandable that lawmakers from both parties are suffering sticker shock over President Bush's request for an additional $87 billion for postwar Iraq and Afghanistan. The estimated costs of occupying and rebuilding Iraq are skyrocketing, while projections for foreign contributions and potential Iraqi oil income keep shrinking. But adding $20 billion to Iraq's current foreign debt is not the answer.
"Iraq already owes tens of billions to France, Russia and others, much of which may have to be written off. Preferentially guaranteeing Iraq's debt to the United States (for funds paid out to American contractors) with future oil revenue would only reinforce suspicions around the world about our motives for going to war...." [more]
By MATT WICKENHEISER, Portland Press Herald Writer
"The University of Maine will co-sponsor a high-level conference in Scarborough exploring business opportunities in Iraq, with speakers including former Secretary of Defense Caspar Weinberger.
""Doing Business in Iraq: the Private Sector," scheduled for Nov. 13 at the Black Point Inn, is targeted at business people throughout the eastern United States. The price of admission is $1,500 per person, according to Daniel Innis, dean of UMaine's College of Business, Public Policy and Health.
"Innis said the conference will be the first in the Global Focus Series of talks, and will be "focused on business opportunities in Iraq and helping business people understand the short-term, medium-term and long-term opportunities that will exist in the Iraqi marketplace."
"The conference is sponsored by the college of business, the William S. Cohen Center for International Policy and Commerce, and the U.S.-Iraq Business Alliance...." [more] [Emphasis added] [more]
"Dick Cheney knows the Democratic long knives are out for him on the subject of Halliburton. So why does he make his critics’ job easier?
"The opposition party would have you believe the vice president somehow greased the way for his former company to receive huge contracts to rebuild post-war Iraq.
"There’s no evidence — nothing — to support that accusation, and plenty to suggest it’s wrong.
"Halliburton has done big business in Democratic and Republican administrations.
"Just look at the huge contracts, some of them no-bid, that the company won during the Clinton years. Did Cheney fix those too?
Still, on a side issue — the question of whether Cheney maintains ties to Halliburton — the Vice President has given his opponents an opening by denying any financial relationship with the company he used to run.
“Since I left Halliburton to become George Bush’s vice president, I’ve severed all my ties with the company, gotten rid of all my financial interests,” Cheney said Sept. 14 on NBC’s “Meet the Press.”
“I have no financial interest in Halliburton of any kind and haven’t had now for over three years,” he said.
"It was the kind of flat-out, categorical, definitive statement that catches the ear. “He wouldn’t have said that without having his government counsel say it’s OK to say he had severed all financial ties,” noted one Republican lawyer.
"But has Cheney really gotten rid of all his financial interests in Halliburton?
"The vice president’s financial statements show that Cheney received $147,579 in deferred compensation from Halliburton in 2001 and $162,392 in 2002. He is scheduled to receive more in 2003 and 2004. The pay was for work Cheney finished long before. Five years ago, he made a deal with Halliburton in which he would receive part of his 1999 salary over several years, instead of all in one year.
"Those payments continued when Cheney entered the vice president’s office. But since Cheney is doing nothing for the company now and has no other relationship with Halliburton, his aides argue that he has no ties to the company.
"Perhaps, but that’s not the way it works in the rest of the executive branch...." [more] [Emphasis added]
"BAGHDAD — In the marble-floored corporate offices of Al Hafidh General Trading Co., Waleed and Hani Hafidh vented the rage of many Iraqi businessmen Monday over the country's new wide-open foreign investment policy.
"Puffing furiously on imported cigarettes, the brothers asserted that the economic reform package unveiled by Iraq's recently appointed finance minister in the United Arab Emirates on Sunday will destroy the country's small yet burgeoning private sector, create a permanent "world occupation" of its economy and render the Iraqi people "immigrants in their own land."
"The policy, which won high praise from U.S. officials present, including Treasury Secretary John W. Snow, allows 100% foreign ownership of any non-oil venture in Iraq. It also treats foreign corporations the same as Iraqi companies and permits up to six foreign banks to set up shop with branches throughout Iraq...." [more]
On NewsHour tonight, Richard Perle squared off against Medea Benjamin. At this point, it's kabuki. Or Greek tragedy. Tinged with farce:
RAY SUAREZ: Medea Benjamin?
MEDEA BENJAMIN: Well, we've done miserably, Ray. Just think -- Halliburton is making $2 billion, Bechtel is making $1 billion. And they haven't been able to turn on the electricity or turn back the water supply. They can't do the job, plus they're wasting massive amounts of money. Even the governing council that was hand-appointed by the U.S. is saying that the money being spent is being wasted because it's U.S. companies in charge instead of Iraqis.
RAY SUAREZ: So you would suggest immediate turning over of authority to the U. N. Does the U. N. have a track record in these matters that's more encouraging than America's thus far?
MEDEA BENJAMIN: Well, it certainly has a track record that's more encouraging than the Americans. It's been six months since this occupation, and even the Iraqis who welcomed the U.S. with open arms and were so happy to get rid of Saddam Hussein are now extremely bitter and angry. The resentment will only grow unless the U.S. turns this over to a legitimate authority, which is the United Nations, which will have a quick time line for Iraqi self rule and that the money that is pledged by the U.S. and the international community -- and let's remember the international community will not pledge money unless it is in the hands of the United Nations -- and that money should go directly to Iraqis and not to companies like Halliburton and Bechtel that are profiteering from this war.
RICHARD PERLE: What you just heard is a tirade against American companies in the left-wing tradition that she represents. Her characterization of the situation in Iraq is not at all borne out by many conversations I've had with Iraqis, including members of the governing council she's been referring to.
MEDEA BENJAMIN: Well, I challenge to you go there with me, Mr. Perle, because I was there in July, I was there in August, I don't stay in the presidential palace, I don't go around with bodyguards and helicopters and sniffing dogs like Paul Bremer and Colin Powell. I challenge to you go with me, without any bodyguards and let's walk around the streets of the cities of Iraq and see what it looks like six months after the U.S. occupation.
RICHARD PERLE: With all due respect, your sojourns in the cities of Iraq are hardly the appropriate measure of how well we have done in restoring electricity and getting water back on track. I don't think --
MEDEA BENJAMIN: You know better sitting in Washington, D.C.?
RAY SUAREZ: Let him finish, please.
RICHARD PERLE: Let's be clear. This is a massive undertaking and very significant progress has been made, and it makes no sense for to you sit there and say nothing has been accomplished when a great deal has been accomplished.
MEDEA BENJAMIN: It's an absolute disaster, Mr. Perle, and I think you know it, but go with me and you'll see with your own eyes...." [more]
"Iraq's recently appointed finance minister on Sunday announced a radical liberalisation of the economy, but his plans surprised US allies and were attacked by Iraqi business representatives.
"The laws abolished almost all curbs on foreign direct investment except in natural resources and allowed foreign domination of the banking sector.
"Wadi Surab, a member of the Iraqi Businessman's Union in Baghdad, told the BBC Arabic service the proposed reforms would "destroy the role of the Iraqi industrialist", as Iraqi business groups could not compete in privatisation tenders.
"The measures surprised US allies. A UK Treasury official said he was unaware of them.
"The laws were signed on Saturday by Paul Bremer, head of the Coalition Provisional Authority. They limit corporate and income tax to a top rate of 15 per cent from January and impose a 5 per cent tax on most imports, abolishing other tariffs.
"A senior US official working with the CPA denied the new rules had been imposed from Washington or that they would likely to be reversed by a future democratically elected government, saying the Governing Council had been fully consulted. "Having done this today, as opposed to three months ago, before there was a governing council, fundamentally makes it have deeper roots."..." [more]
Two years ago, as the bombs began to drop, George Bush promised Afghanistan 'the generosity of America and its allies'. Now, the familiar old warlords are regaining power, religious fundamentalism is renewing its grip and military skirmishes continue routinely. What was the purpose?
John Pilger reports
"At the Labour party conference following the September 11 attacks, Tony Blair said memorably: "To the Afghan people, we make this commitment. We will not walk away... If the Taliban regime changes, we will work with you to make sure its successor is one that is broadbased, that unites all ethnic groups and offers some way out of the poverty that is your miserable existence." He was echoing George Bush, who had said a few days earlier: "The oppressed people of Afghanistan will know the generosity of America and its allies. As we strike military targets, we will also drop food, medicine and supplies to the starving and suffering men and women and children of Afghanistan. The US is a friend of the Afghan people."
"Almost every word they spoke was false. Their declarations of concern were cruel illusions that prepared the way for the conquest of both Afghanistan and Iraq. As the illegal Anglo-American occupation of Iraq now unravels, the forgotten disaster in Afghanistan, the first "victory" in the "war on terror", is perhaps an even more shocking testament to power...." [more]
"Baghdad -- Five months into its reconstruction of Iraq, Bechtel Corp. finds itself in one of the most complicated, dangerous jobs of its nearly 100-year history.
"The San Francisco corporation's $1 billion-plus repair plan to rebuild postwar Iraq has been beset by sabotage, violence, bureaucratic delays and an infrastructure in worse shape than expected.
""A lot of people thought the United States was going to come in with a dump truck of money," said Cliff Mumm, head of Bechtel's Iraq effort, in his Baghdad office. "To just walk in and start fixing Iraq -- that's an unrealistic expectation."
"So far, despite Bechtel's past success on many of the world's most daunting public works projects, progress has been slow.
"The Iraqi electrical system doesn't work. Baghdad sewage plants treat not one drop of waste. Phones knocked out during the war stay silent.
"And Iraqi anger grows.
"Since the first of Bechtel's 160 engineers in Iraq landed in April, it's been one long struggle...." [more]
"WASHINGTON -- Halliburton's contracts in Iraq have skyrocketed to $2 billion, prompting new calls from lawmakers to investigate the propriety of the deals.
"Halliburton, formerly run by Vice President Dick Cheney, began work in Iraq with a $37.5 million no-bid contract in February to put out oil fires. That deal, expanded to include pumping oil, is now worth about $948 million, according to Halliburton figures provided to the New York Daily News.
"But the oil contract alone, awarded by the Army Corps of Engineers to Halliburton subsidiary Kellogg, Brown & Root, is potentially worth up to $7 billion, the military said.
""It stinks -- that the [oil] contracting was done behind closed doors that circumvents traditional bidding procedures just stinks to high heaven," said Rep. Steve Israel, D-L.I., a member of the House Armed Services Committee.
"Israel is sponsoring legislation that would make it difficult for private military contractors like the Houston-based Halliburton to win contracts without public scrutiny. Sen. Hillary Clinton, D-N.Y., is backing a similar measure in the Senate...." [more]
Writer Joe Klein has joined Al Kamen in exposing Feith's conflicts of interest: He's "rustling up" clients for his old law firm, Feith & Zell, who "want to get in business in Iraq" building infrastructure and other reconstruction projects.
A lot of these clients apparently want to pioneer a new wireless Iraq.
And Douglas Feith's principal investment holdings include an array of telecommunications companies.
"WASHINGTON--(BUSINESS WIRE)--Sept. 17, 2003--American Family Voices [link added] will launch a television advertisement asking the government to take care of America's troops and families instead of taking care of Halliburton.
Mike Lux, President of American Family Voices said, "It is unforgivable that the government is more focused on making no bid, sweetheart deals with big businesses such as Halliburton that are cronies of this administration than they are on funding education and health care or providing benefits to our troops."
"The ad, which will begin running tomorrow in Washington, D.C., New Hampshire, Iowa, Missouri, Minnesota and Wisconsin notes the sweetheart deals Halliburton is receiving from the U.S. government while budgets for education, healthcare and even veteran's benefits are being slashed across the country. It is the first ad in a multimillion dollar ad campaign planned for the fall...." [more]
"WASHINGTON, Sept. 17 — Sabotage, looting and a more fragile infrastructure than anticipated are driving up costs in Iraq, where U.S. companies will likely reap billions of dollars in the next round of reconstruction contracts.
"The U.S. Agency for International Development this week rolled out a $1.5 billion draft tender to rebuild Iraq's infrastructure when money runs dry for a contract it gave to San Francisco construction firm Bechtel.
'"'This is forward planning and we are trying to be in a position to be prepared for the supplemental (budget request),'' said USAID spokeswoman Ellen Yount, adding she did not know yet when other tenders would be issued.
"The White House sent to Congress on Wednesday a supplemental budget request of $87 billion to fund U.S. military operations and reconstruction in Iraq, including about $20 billion for reconstruction, and officials predict some of that will cover new contracts.
"The actual cost to rebuild is being tallied from different departments, and analysts' estimates vary widely. But everyone agrees it will cost tens of billions of dollars and U.S. firms will do much of the work, with help from Iraqi and other foreign companies.
"USAID and the U.S. Army Corps of Engineers, which is restoring Iraq's oil industry, are the main government departments handing out contracts. They are waiting to see how much of the new funding goes their way...." [more]
"WASHINGTON (Reuters) - President Bush backed a controversial Air Force plan to lease Boeing Co. 767 aircraft as refueling tankers despite criticism from Congress, according to an interview published on Wednesday.
""I do support it," he said in an interview with the Seattle Post-Intelligencer and other regional newspapers.
"Senate Armed Services Committee Chairman John Warner, a Virginia Republican, and Carl Levin of Michigan, the panel's top Democrat, have asked Defense Secretary Donald Rumsfeld to consider cutting the Air Force proposal to lease and then buy 100 767s for $22.4 billion.
"Boeing and the Air Force have resolved the final sticking points on the deal, paving the way for a formal agreement to be signed. But the deal's fate is now in the hands of the Senate Armed Services Committee, the fourth and final panel that must sign off on it...." [more]
"WASHINGTON, Sept 16 (Reuters) - U.S. Vice President Dick Cheney, a former CEO of Halliburton Co. HAL.N , has received hundreds of thousands of dollars from the company since taking office while asserting he has no financial interest in the company, Senate Democrats said on Tuesday.
"The Democrats demanded to know why Cheney claimed to have cut ties with the oil services company, involved in a large no-bid contract for oil reconstruction work in Iraq, when he was still receiving large deferred salary payments.
"Senate Democratic Leader Thomas Daschle of South Dakota and New Jersey Democratic Sen. Frank Lautenberg said the revelations reinforced the need for hearings about the no-bid contracts Halliburton received from the Bush administration.
""The vice president needs to explain how he reconciles the claim that he has 'no financial interest in Halliburton of any kind,' with the hundreds of thousands of dollars in deferred salary payments he receives from Halliburton," Daschle said in a statement...." [more]
"Iraq Revenue Watch will monitor Iraq's oil industry to ensure that it is managed with the highest standards of transparency and that the benefits of national oil wealth flow to the people of Iraq. Iraq Revenue Watch complements existing Open Society Institute initiatives that monitor revenues produced by the extractive industries.
"In many parts of the world, the lack of proper stewardship over oil resources has resulted in corruption, the continued impoverishment of populations, and abuses of political power. By prompting governments to tackle these problems early, before U.S. management of the Iraqi oil industry becomes a reality, the Open Society Institute hopes to help Iraq avoid this plight....." [more]
Halliburton’s “KBR” Granted Contract Options for Up to
$7 Billion Over 5 Years
“National Security” Claimed for Withholding Justification, Approval and E-Mails Concerning “Sole Source” Contract to KBR
(Washington, DC) Judicial Watch, the public interest group that investigates and prosecutes government corruption, said today that the U.S. Army Corps of Engineers has refused to produce records, under the provisions of the Freedom of Information Act (“FOIA”), pertaining to the decision to grant “sole source” contracts to Halliburton subsidiary Kellogg, Brown and Root (“KBR”). Sole source contracts are awarded to a company without having to go through a competitive bidding process.
Vice President Richard B. Cheney was Halliburton’s chief executive and chairman from 1995 to 2000, when he stepped down to be President George W. Bush’s running mate. The Securities and Exchange Commission is currently investigating Halliburton's 1998 decision to change the way it accounted for revenue on cost-overrun projects. Last year Halliburton agreed to a $4 billion cash-and-stock deal to settle 200,000 asbestos lawsuits.
In a letter to Judicial Watch, dated September 5, 2003, U.S. Army Corps of Engineers Counsel Richard L. Frenette claimed: “Thus far, the documents that have been located include justification and approval documents, which led to the award of a sole source contract to KBR and also a number of e-mail messages, all of which are classified documents.” Under Exemption 1 of the FOIA, the government may protect “national security information” from disclosure to the public. Mr. Frenette went on to say that: “The contract is for a period of two years, with three one-year options, and the total amount of the contract cannot exceed $7 billion dollars.”
“The Pentagon is acting like it has something to hide. And the news that their Halliburton contract could go up to $7 billion far exceeds any previous numbers put out by the Pentagon,” stated Judicial Watch President Tom Fitton.
Sept. 22 issue — The Bush Administration has quietly installed a surprising figure in a high-level Pentagon post: L. Jean Lewis, the former federal fraud investigator who kicked up major controversy in the ’90s over her allegations about the Clintons’ Whitewater dealings.
ALTHOUGH THERE’S BEEN no public announcement of her return to government, Lewis has been given a $118,000-a-year job as chief of staff in the traditionally nonpartisan Defense Department’s inspector general office. With 1,240 employees and a budget of $160 million, this office is the largest of its kind in the government. It investigates fraud and audits Pentagon contracts, including the billions of dollars being awarded in Iraq to companies like Halliburton and Bechtel. As an investigator for the now defunct Resolution Trust Corp. in 1993, Lewis drafted a criminal referral alleging illegal Whitewater dealings that eventually became the basis for Ken Starr’s probe. Republicans praised Lewis as a whistle-blower; Democrats blasted her as a partisan. (In a private letter on her computer, she once called Bill Clinton a “lying bastard.”) Lewis told NEWSWEEK she got her new job last year after interviewing with top administration officials at Defense. Although they were aware of her background, she says, “I would prefer to think it was my ability and skills they were interested in.”
"Two Democratic congressional leaders say a new Bush administration request for an extra $2.1 billion to rebuild Iraq's oil industry represents a startling escalation of costs.
"Reps. Henry Waxman of Los Angeles and John Dingell of Michigan called the additional money a "radical departure" from the administration's estimate in July that the job would run to $1.1 billion -- about half as much.
"They also said that it was "inexplicable" that the new estimate was made without first consulting the U.S. Army Corps of Engineers, which is in charge of overseeing Iraq's oil field contracting. The congressmen raised their questions in a letter sent Friday to the Office of Management and Budget...." [more]
"STOCKHOLM - ''It is important that Halliburton, which has massive government contracts (including for the rebuilding of Iraq), not get away with Enron-style accounting tricks and alleged misdeeds,'' said Tom Fitton, president of the group Judicial Watch, in a statement.
"Fitton's salvo was prompted by a federal judge's dismissal this week of the group's lawsuit against Halliburton and Cheney, the company's chief executive officer (CEO) from 1995 to 2000.
"But while Judicial Watch has been stymied on one front, earlier this summer it unearthed Commerce Department documents the group says illustrate that Cheney and his cronies were eyeing Iraqi oil two years ago.
"”Opponents of the (Iraq) war are going to point to the documents as evidence that oil was on the minds of the Bush administration in the run-up to the war,” Fitton was reported to have said.
"The documents, he added, ''show the importance of the Energy Task Force and why its operations should be open to the public''...." [more]
"The Bush administration is calling for an additional $2.1 billion to repair the Iraqi oil industry, a sharp increase from previous estimates that underscores how the sabotage of pipelines and the electricity grid has throttled the flow of oil for export and into domestic refineries.
"As late as last month, the United States-led civil authorities in Baghdad and the Iraqi oil ministry said that about $1.1 billion would be needed to make crucial repairs to the oil industry by March 2004. A spokesman for the White House's Office of Management and Budget, Trent Duffy, said that the request for an additional $2.1 billion came from the office of L. Paul Bremer III, the head of the civil administration in Iraq. The sum is part of a supplemental $87 billion budget the Bush administration is preparing to seek from Congress to support American troops in Iraq and to finance the country's reconstruction.
"In a letter sent yesterday to the Office of Management and Budget, two Democratic congressmen, Henry A. Waxman of California and John D. Dingell of Michigan, called the request "a radical departure from the administration's prior estimates of the costs of oil field reconstruction." They added, "Moreover, it was apparently developed without consultation with the Army Corps of Engineers, the agency overseeing the oil field reconstruction."..." [more]
"WASHINGTON (Reuters) - Anxious to ramp up work in Iraq, the United States has alerted U.S. firms of future contracts worth at least $1.5 billion in the second phase of its Iraq reconstruction plans, a USAID official said Friday.
"The U.S. Agency for International Development also said it planned to give an additional $350 million in work to construction company Bechtel, its lead contractor in Iraq, hiking the San Francisco-based firm's project funds so far to about $1 billion.
"Funding for new work, which will be open only to U.S. firms as lead contractors, has to be appropriated by Congress and is likely to come from the $87 billion earmarked this week by President Bush for Iraq and to fight the war on terror.
""With this solicitation we are announcing phase two of the Iraq-USAID infrastructure project in Iraq," said the USAID official of a notice that appeared this week on the government's procurement web site (www.fedbizopps.gov).
"USAID came under fire for the first round of contracts it awarded to rebuild Iraq and the transparency of the process was questioned by leading Democratic lawmakers...." [more]
"NEW YORK, Sept 12 (Reuters) - Costs incurred by Halliburton Co. (nyse: HAL - news - people), the U.S. oil services contractor, in Iraq have climbed to nearly $2 billion and should continue to rise, Army spokesmen said, citing the effect of widespread looting and sabotage to the nation's energy infrastructure.
"Houston-based Halliburton currently holds two contracts, for oilfield repairs and for logistics support services, from which it earns a small percentage as income. As U.S. involvement in Iraq grows longer and more expensive, Halliburton stands to reap bigger profits.
"Earlier this year Halliburton was granted, without competition, a contract by the Army Corps of Engineers to repair and restore Iraq's oil fields. As of Sept 8, the total cost of that contract to taxpayers was just under $948 million, spokesman Scott Saunders said on Friday.
"That's about $200 million higher than projected just last month, mostly because the U.S. has been forced to import oil and fuels into Iraq, which has the world's second-largest oil reserves after Saudi Arabia. Importing oil, gasoline, diesel and propane is costing the United States about $6 million per day.
""We didn't expect to have this much trouble getting production back up, or to have pipelines blown up and power stations sabotaged," Corps spokesman Scott Saunders said.
"Halliburton, led by U.S. Vice President Dick Cheney from 1995 to 2000, receives a base fee of 2 percent of those costs, or $19 million. But profits could rise as high as 7 percent, or $66 million, with performance bonuses...." [more]
"HOUSTON -- Halliburton Corp.'s (HAL, news) U.S. government contracts to restore Iraqi oil production and provide support services to troops will cost taxpayers an estimated $2 billion and are expected to rise, Army spokesmen said.
"An Army Corps of Engineers contract to rehabilitate the country's oil fields, controversial because it wasn't competitively bid, now is valued at $948 million, more than $200 million above the level projected last month. One particularly expensive item: importing fuel to the oil-rich country, at a cost of as much as $6 million a day.
"Halliburton's separate Army Field Support Command contract, which it won in 2001, now is estimated to cost $1 billion in Iraq alone. That is up more than $ 400 million from the level in late May.
"In the Army Corps contract, fees for Halliburton subsidiary Kellogg Brown & Root could range from 2% to 7% of the total contract cost, depending on whether the company receives a performance reward of as much as 5% on top of its 2% base fee. In the field-support contract, that percentage is lower -- a 1% base fee, with a performance reward that could increase it to 3%.
"The rising price tags could renew challenges for the Bush administration because Vice President Dick Cheney previously was the company's chief executive. Halliburton's work in Iraq has become a focus of attacks from Democrats criticizing the expense of the reconstruction plans. "These costs are rocketing up, and I will be examining them closely," Rep. Henry Waxman (D., Calif) said...." [more]
"Congressional Democrats this week launched a renewed attack on the White House’s connections to the Halliburton Co., warning that the energy concern once headed by Vice President Cheney must not benefit from “excessive profiteering” from the rebuilding of Iraq.
"Democrats are trying to distinguish between the politically necessary funding of U.S. troops and ongoing military efforts in Iraq, pegged at more than $65 billion, and the proposal for more than $20 billion in reconstruction efforts, a price tag that even some key Republicans have questioned.
"“We need a plan to ensure that Halliburton and other corporations like Halliburton are not in a position to profiteer on whatever money goes into Iraq,” Senate Minority Leader Tom Daschle (D-S.D.) said Tuesday, promising relatively smooth sailing for the military portion of funds in the more than $87 billion supplemental appropriation request.
"But Daschle and Sen. Robert Byrd (D-W.Va.), ranking member of the Appropriations Committee, spelled out their intention to put up a fight over the reconstruction funds, particularly if any of that money is slated to end up in contracts for Halliburton, the company for which Cheney served as CEO before becoming President Bush’s vice presidential nominee three years ago. Democrats have long questioned Halliburton’s ties to the administration, using the firm to attack Cheney’s personal wealth, the adminstration’s approach to energy legislation and the Pentagon’s outsourcing program for many of its most basic functions in overseas work...." [more]
"Critics call it the "iron triangle" - the powerful combination of defense officials, industry lobbyists, and lawmakers. Together, they're able to push through laws and budget items to their mutual benefit. Often the nation is more secure as a result. But sometimes the means mainly justify ends measured in billions of dollars in business, campaign contributions, and election results.
"The flap in Washington this week over the Boeing Company may be a classic case.
"At issue is a replacement for the Air Force's aging KC-135 aerial tankers, those gas stations in the sky that enable bombers and fighters to attack targets halfway around the world (Afghanistan, for example) and return home without having to land.
"A lease ... and a loss?
"Boeing and the Air Force are pushing a deal to convert 100 of the aircraft company's 767-model airliners into tankers. The controversy starts with an agreement to lease - rather than buy - the big jets. This puts less of an initial dent in the Air Force budget, and it gets newer tankers into the fleet sooner. Also, Air Force officials figure buying the planes outright would save only $150 million over the life of the lease - spare change at the Pentagon.
"But according to studies by the General Accounting Office, the Congressional Budget Office and the Congressional Research Service, if the Air Force buys the tankers at the end of the six-year lease (which very likely would happen), the added cost of leasing instead of buying pencils out to at least $5.7 billion. Even in Washington, that's real money...." [more]
In an interview with Buzzflash, Paul Krugman says, "There's an enormous scandal right now involving Boeing and a federal contract, which appears to have been overpaid by $4 billion. The Pentagon official who was responsible for the contract has now left and has become a top executive at Boeing. And it's been barely covered in the press –- a couple of stories on inside pages."
In an Associated Press interview, Roche said the investigation will be done by the Defense Department's office of the inspector general, but he did not know whether it is a criminal inquiry.
"I understand that there is going to be an IG investigation," Roche said. "In other words there is an allegation and they will investigate as to whether or not it is substantiated."
A spokeswoman for the inspector general's office, Marine Corps Lt. Col. Rose-Ann Lynch, said she could not comment.
Documents released over the weekend by the Senate Commerce Committee included an April 2002 exchange between two Boeing officials that said Darleen Druyun, then principal deputy assistant secretary of the Air Force for acquisition and management, had told the company that Airbus had submitted a bid of $5 million to $17 million less per plane than the Boeing offer.
Druyun now is deputy general manager of Boeing's missile defense systems.
A Boeing spokesman, Doug Kennett, said Druyun had no comment on the issue. Kennett said Boeing is confident that no information was improperly provided and that the information from Druyun came in an Air Force briefing to Boeing three days after it was selected to do the lease.
"Boeing believes that we received no proprietary information from any official at any time on any subject throughout the entire tanker process," Kennett said.
The Air Force wants to lease 100 modified Boeing 767 aircraft to modernize its aging fleet of aerial tankers. Some in Congress have criticized it as a sweetheart deal for Chicago-based Boeing and more expensive than buying the planes outright, although three congressional committees have approved it.
The fourth and final committee that must approve is the Senate Armed Services Committee, which has scheduled a hearing on the matter for Thursday and might vote shortly afterward. Boeing and the Air Force say there remain some lease contract details to be worked out, even if the committee gives its blessing.
Roche was scheduled to testify on the matter Wednesday before the Senate Commerce Committee, whose chairman, Sen. John McCain, R-Ariz., is a leading opponent of the lease arrangement. McCain's committee has no jurisdiction on the question of whether the deal can go forward.
In the interview Wednesday in his Pentagon office, Roche defended the lease deal, which is intended to provide 100 new tankers earlier and with less up-front investment. In the long run, however, leasing would cost millions -- possibly billions -- more, depending on how the estimate is calculated.
"It's basically a wash," Roche said, since the Air Force would save in other areas that would offset the higher lease cost.
At the time of Druyun's alleged provision of Airbus information to Boeing, the Air Force already had chosen Boeing for the lease deal, but there is a question of whether the information provided by Druyun was proprietary and therefore subject to the Trade Secrets Act.
Roche confirmed that she shared the information with Boeing but indicated that he saw no wrongdoing.
"The information that was apparently shared were numbers -- I don't know whether they were public numbers that she gave them -- (but) it was information she provided after we had made the selection for Boeing," he said.
"But if something was done improper, then we'll follow it up and take the appropriate action," he added. "But it did not affect" the choice of Boeing for the lease deal.
(Copyright 2003 by The Associated Press. All Rights Reserved.)
[Thanks, Atrios, for linking to the Krugman interview. ]
By Jim Vallette and Pratap Chatterjee
Special to CorpWatch
"When unidentified saboteurs struck the vital Kirkuk-Ceyhan pipeline in northern Iraq recently, one in a number of recent attacks on the Middle Eastern nation's oil production and transport, the United States government announced that a company called Erinys would be brought in to train 6,500 Iraqis to guard oil pipelines, wellheads, and refineries, as well as water and electrical facilities.
""We are deploying Iraqi resources to protect the facilities and the military will continue to hunt down those trying to attack Iraq's interests," said a coalition spokesman.
"Erinys' yearlong $39.5 million contract to protect 140 Iraqi oil installations, for which it beat out larger and more established competitors, will start this October. The Johannesburg-based company will be also offering its protection services to contractors Bechtel and Halliburton's subsidiary Kellogg Brown and Root.
"According to Erinys' own publicity, the company is currently the exclusive providers of "guarding and protective services, secure warehousing, security escorts, visit logistics and protective escorts, transportation and logistics for land access from neighbouring countries."
Handmaidens of Occupation
"But the coalition's relationship with Erinys is not exactly transparent. The coalition apparently contracted the company through an "oil security" solicitation issued on July 17, but the details of this solicitation, and the subsequent award to Erinys, are unavailable from the Coalition Provisional Authority (the entity created by the United States government to oversee the occupation of the country)...." [more]
OUTSOURCING WAR An inside look at Brown & Root, the kingpin of America's new military-industrial complex
By Anthony Bianco & Stephanie Anderson Forest
With Stan Crock in Washington and Thomas F. Armistead in Iraq
"Early on the morning of Aug. 5, a U.S. mail convoy pulled out of the airport in Baghdad and headed north. A U.S. Army Humvee bristling with weaponry led the way, followed by three heavily loaded trucks, each driven by a civilian employee of Kellogg Brown & Root (KBR). A second military Humvee brought up the rear. Near Tikrit, Saddam Hussein's hometown, a bomb detonated under one of the trucks. The military police pried its driver, Fred Bryant Jr., from the wreckage and raced him to a military field hospital. Bryant, 39, died en route, the first KBR combat casualty since the Texas contractor was founded in 1919.
"Bryant's death underscores the U.S. military's heavy reliance on private military companies, or PMCs, to wage war in Iraq. By most estimates, civilian contractors are handling as much as 20% to 30% of essential military support services in Iraq. Scores of PMCs are active all across the country, but KBR in particular has become indispensable to the global projection of American military might in this unsettled age. "It is no exaggeration to say that wherever the U.S. military goes, so goes Brown & Root," says P.W. Singer, a Brookings Institution fellow and author of Corporate Warriors. Widely known as Brown & Root, KBR is a unit of oil-services giant Halliburton Co. (HAL ) -- Dick Cheney's old company.
"KBR and its rivals figure crucially in the increasingly clamorous debate over the size and structure of America's armed forces. To save money, the U.S. has pared its roster of active-duty troops by 32%, to 1.5 million, since 1991. But a not-so-funny thing happened on the way to the post-Cold War new world order: Terrorist networks proliferated, and long-suppressed ethnic conflicts broke out all over the globe, prompting the U.S. to intervene militarily. The Pentagon was able to maintain -- and perhaps even boost -- the potency of America's armed forces by developing an awesome array of new high-tech weaponry and replacing tens of thousands of soldiers with civilian PMC workers...." [more]
"KIRKUK, Iraq (AP) -- Saboteurs struck a critical oil pipeline in northern Iraq on Monday, the latest in a series of attacks that have halted the country's oil deliveries to Turkey at an estimated cost of $7 million a day.
"Adel al-Qazzaz, director general of the Northern Oil Co., said the line attacked Monday had carried 35,000 barrels a day from the Jabour oil field 20 miles southeast of Kirkuk to the main pipeline that originates in the northeastern Iraqi city.
"The official said saboteurs set the line afire at a valve at 10:30 a.m., sending huge flames and clouds of smoke into the air. Firefighters had the fire under control by nightfall; about 300 yards of the pipeline were damaged.
"L. Paul Bremer, U.S. civil administrator for Iraq, has estimated the country is losing $7 million daily because of damage to the pipeline that carries oil from the Kirkuk fields to a Mediterranean port at Ceyhan in Turkey...." [more]
"The Bush Administration's plan for the reconstruction of Iraq could be one of the biggest gravy trains in recent history. Reconstructing Iraq's shattered infrastructure from the ground up is going to cost billions of dollars, and most of that will go to US companies with close ties to the White House.
"But although the Bush Administration has largely excluded the United Nations from the process, there are grounds for thinking that before long self-interest will start to force the US authorities to bring in the UN once more.
"So far, however, the reconstruction project managers have even cut out America's closest allies. Britain, which did the lion's share of the fighting around Basra, was denied a chance to bid for the contract to dredge the port of Umm Qasr. The excuse was that its companies lacked the proper security clearances.
"For many US companies, faced with a stagnant economy at home and abroad, the war in Iraq adds up to a gold rush. Kellogg Brown and Root, a subsidiary of Halliburton, which was awarded a contract for repairing and operating Iraq's oil wells, recently boasted in an investors' conference call that its year-to-year revenues have leapt 30% to $1.6 billion.
"In the intense competition for campaign financing that will characterise the next US presidential elections in November 2004, it is not hard to guess which candidate these grateful companies will want to support...." [more]
"Last May, President Bush made his now-famous -- and outrageously false -- statement to a Polish television station: "We found the weapons of mass destruction. We found biological laboratories.... But for those who say we haven't found the banned manufacturing devices or banned weapons, they're wrong, we found them."
"In fact, of course, we hadn't found anything of the sort -- and pretty soon that'll be official. David Kay, the man in charge of the WMD search in Iraq, is expected to release a report this month on what the more than 1,200-member Iraq Survey Group has turned up. And the fact that the count still stands at zero won't stop Kay from trying to paint the search as a success.
"Kay is the perfect yes-man. Not only did he head up the U.N. Special Commission (UNSCOM) nuclear search team in Iraq in the early nineties, he has deep roots in the defense industry and is well connected to corporate media....
"Kay is also involved with one of the nation's major defense contractors, serving as a senior vice president for the San Diego-based Science Applications International Corporation (SAIC), which received about two-thirds of its $6 billion revenue last year from the U.S. Treasury, according to a report by Katrin Dauenhauer and Jim Lobe in Asia Times.
"Aside from homeland security projects, SAIC has already won several reconstruction contracts in Iraq, and Kay along with other former company employees are firmly planted in country. The company has headed up the Iraqi Reconstruction and Development Council (IRDC) since the Pentagon established the body was in February, according to the Asia Times report, and also runs the recently established Iraqi Media Network (IMN) project, charged with building a new information ministry, complete with television, radio and a newspaper. SAIC is also a subcontractor under Vinnell Corporation, which has been training the Saudi National Guard for a long time, and is now responsible for pulling together and training a new Iraqi army.
"So David Kay has some personal interest in keeping up U.S. appearances in Iraq, including the image that we invaded the country for legitimate reasons. That and his die-hard loyalty to the Bush administration means he'll be spinning the upcoming report as hard and as positively as he can. Unfortunately for him, he may not have much to work with. ..." [more]
IRAQ WINDFALL Corporations Benefit From Costs of Iraq Reconstruction
By Jake Tapper
"W A S H I N G T O N, Sept. 6 — Paul Bremer, the U.S. civil administrator in Iraq, has said the reconstruction there would require "several tens of billions of dollars" in just the next year.
"Americans may think this cash is all going to U.S. soldiers or the Iraqi people.
""Much of it is going to big companies like Halliburton and Bechtel, which are doing extremely well in terms of their own profitability," Chellie Pingree, president of the citizens' activist group Common Cause, told ABCNEWS. "Much of that money is just coming back to their stockholders in the company and their CEO."
'More Lucrative Than Thought'
"Apparently, it is an ever-increasing amount.
"Army documents show Halliburton will make more than previously thought — $1.7 billion for contracts ranging from hot meals to hunting for weapons of mass destruction, with much of the money generated by an exclusive, no-bid contract.
"Bechtel's contract to rebuild Iraqi infrastructure such as airports and schools had been capped at $680 million. But now it may exceed $1 billion...." [more]
Vice President Dick Cheney has long insisted that the private sector can handle some chores better and more cheaply than the military can. His habitual advancing of this cause, however, demands renewed, outside scrutiny. The need for this has grown especially acute since the appearance of conflict of interest involving Cheney and Halliburton, his former firm, and its Kellogg Brown & Root subsidiary, has escalated in the $1-billion-a-week U.S. campaign in Iraq.
New documents show that Halliburton has been awarded deals in Iraq worth more than $1.7 billion and could make hundreds of millions more under an effectively open-ended contract with the U.S. Army Corps of Engineers.
It was almost inevitable that these questions would arise. When the Cold War ended and military cuts began, Cheney, as Defense secretary in 1991, pressed the Pentagon to contract out as many services as it could. Despite concerns then about the appearance of conflicts, Halliburton's subsidiary was hired to draw up a 10-year, renewable contract — a plan dubbed the Logistics Civil Augmentation Program — for a giant contractor to provide the military with everything from facilities and base camps to billeting and food preparation. Halliburton in 1991 bid for and won this pact, which its subsidiary had drawn up. Halliburton was awarded the contract again in 2001.
Under the program — and the prevailing logic that combat situations demand utter expediency, even as taxpayer dollars get spent — Halliburton has received money to work on U.S. base camp operations in Kuwait and to build Iraqi prisoner-of-war facilities. But here's where the program causes new concern: Halliburton subcontracts most of its work, and its pact is so open-ended that it's difficult for the military to control the services delivered or costs. Just imagine dealing with a general contractor and subs on a home remodel without clearly defined spending caps and the program's flaws become apparent.
Because civilian subcontractors in Iraq are working in a war zone, insurance has been expensive and difficult to obtain, with premiums shooting up and the costs being rolled into an escalating tab. Also, if civilian employees or their companies decide a situation is too risky, they can't — unlike troops — be compelled to work.
No matter how fast the Pentagon wants to move, it doesn't make sense to allow one company to dominate this process. A better idea would have been to carve up the giant contracts so there was more competition. Others suited for this work include Fluor of Aliso Viejo, DynCorp and San Francisco's Bechtel Group, which has received a $350-million hike in its Iraq contracts.
The General Accounting Office is looking at military contracts and should pay special attention to this program and its ilk. The administration should welcome independent scrutiny to lift any suspicions hanging over Cheney and his one-time employer.
US'S 'PRIVATE ARMY' GROWS In Colombia and around the world, civilians are doing work formerly done by the military.
By Rachel Van Dongen | Special to The Christian Science Monitor
"BOGOTÁ, COLOMBIA – Flying over the vast jungle here, a joint Colombian-American crew trolls for suspicious aircraft that could be smuggling tons of cocaine onto American soil.
When their radar locks onto a suspect plane, the crew attempts to make radio contact. If there is no response, they may fire warning shots in an attempt to get the suspect plane to land. Only as a last resort may the multinational crew seek permission from the ground to shoot the plane down.
"Called the Air Bridge Denial Program, this dangerous work was abruptly terminated in April 2001 after a missionary from the United States and her baby daughter were mistakenly shot down during a similar operation in Peru. But two weeks ago, with new safeguards in place, the program was resurrected as a tool to staunch the flow of illegal drugs from the world's largest cocaine provider. The US and Peru are in the early stages of restarting interdiction over Peruvian airspace as well.
"Although US officials insist that this is a Colombian-run program, two Americans will actively participate in each operation. One will be stationed at the Colombian Defense Ministry helping to monitor planes, while the other will ride along in tracker aircraft.
"Yet the Americans involved are not active military men. Instead, they are part of the unofficial army of private US contractors working in Colombia, doing everything from spraying coca fields to training a Colombian antikidnapping squad. It's a formula the US has repeated from here to Afghanistan to Iraq: employing civilians to do jobs historically carried out by the armed forces...." [more]
"KUWAIT CITY (AP) -- While divided over the U.S.-led invasion of Iraq, Arab countries are in perfect unison about wanting a piece of the reconstruction pie.
"Many have experience doing business in Iraq, where Saddam Hussein used trade -- under a United Nations oil-for-food program -- and oil to increase or win political support from Arab neighbors in the late 1990's. But it remains to be seen if Arab countries will be able to compete now that Saddam has been ousted.
"Jordan estimates it lost $1 billion this year in interrupted trade and oil supplies which Baghdad provided at cheap prices, or as a "gift" to the Jordanian people.
"Jordan's foreign minister, Marwan Muashar, said in remarks published recently his country hopes to make up for these losses through reconstruction business, and was consulting with the occupation authority.
"Arab heavyweight Egypt also became a major trade partner of Baghdad under the U.N. program, which was an exemption from a world embargo imposed on Iraq after its 1990 invasion of Kuwait. Egypt's annual exports to Iraq before the war reached $2 billion.
"Like most Arab governments, Cairo has so far refused to recognize the U.S.-appointed Iraq Governing Council because it was not elected...." [more]
"HOUSTON - A civilian affiliated with oilfield services giant Halliburton was shot and killed Wednesday in Iraq.
"Halliburton spokeswoman Wendy Hall said the victim worked for subsidiary Kellogg Brown & Root.
"Halliburton, once headed by Vice President Dick Cheney, has major contracts for reconstruction in Iraq and Afghanistan.
"Hall declined to release the name of the victim, citing security reasons.
""The employee was fatally shot this morning in Baghdad," Hall said. "Our employee was driving a vehicle that was escorted by military personnel. The employee was evacuated to a nearby combat support hospital, where he was pronounced dead on arrival."
"The employee was assigned to the KBR's project team supporting the Army's mail delivery, Hall said...." [more]
Admitted fraud Reed Slatkin – who has confessed to running what has been described as the biggest Ponzi scheme in history -- was a company insider in the formation of an oilfield firefighting company tied to Vice President Dick Cheney. SEC documents show the company, Boots & Coots International Well Control, Inc., was created under the aegis of a 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. A unit of Halliburton now has an agreement to subcontract oil-well firefighting in Iraq to Boots & Coots.
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.
Though the physical SEC documents are definitive, the connection may not have come to light because of an inadequacy in EDGAR, the electronic SEC database which records information from financial filings. The database, which is incomplete, does not currently display Reed Slatkin’s name on the EDGAR index of the company for which he served as vice president and director: Havenwood Ventures.
Incorporated in Delaware in 1988, Havenwood was described in SEC documents 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 merger 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.
The publicly-traded oilfield firefighting company was created in a complex series of business moves called a “reverse triangular merger” in July, 1997. According to SEC documents, Slatkin – accused of bilking investors of over $200 million dollars in a fifteen-year career -- was compensated with stock in Boots & Coots IWC. Public records show that Slatkin and other founding executives were granted original stock warrants in the new company.
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 days after Cheney was elected 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 over $225 million in what has been described as the largest Ponzi-scheme in history. Slatkin, 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.
But in 1997, cash-flush Slatkin owned 20% of 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."
That compensation, in the form of stock or warrants for stock, could possibly become an issue in the Honorable Robin L. Riblet’s Santa Barbara court, where Slatkin's bankruptcy proceedings continue.
Financial victims may want to know: What happened to Reed Slatkin’s stock in Boots & Coots International Well Control?
Slatkin is due to be sentenced in criminal court on April 21, where he could face a prison term of more than a century.