WASHINGTON -- Halliburton Co. has told the Pentagon that two employees took kickbacks valued at up to $6 million in return for awarding a Kuwaiti-based company with lucrative work supplying U.S. troops in Iraq.
The disclosure is the first firm indication of corruption involving U.S.-funded projects in Iraq and raises new questions about Halliburton's dealings there. The company's work already is being scrutinized because of accusations that the U.S. government was overcharged for gasoline under another controversial contract.
Halliburton has strenuously defended its Iraq work as fairly priced and free of taint. A discovery of kickbacks could expose the company to hefty fines and other punishments such as potential fraud charges. At the least, contracting experts say, Halliburton will be required to reimburse the money.
The latest revelation, though, is sure to increase the already intense scrutiny Halliburton has received from congressional Democrats, some of whom charge that the Houston-based company benefited from political favoritism in securing lucrative work in Iraq. The news also is likely to further raise suspicions abroad that Iraq reconstruction work is largely benefiting U.S. companies and their employees.
Vice President Dick Cheney, who was chairman of Halliburton until he left in 2000, defended the company Wednesday in a Fox Radio Network interview. "They get unfairly maligned simply because of their past association with me," he said.
The Pentagon has had to reject two huge proposed bills from KBR, including one for $2.7 billion, because of myriad "deficiencies," the memo says. "We consider [the company's] estimates in the area of subcontracts to be inadequate," the memo says. The agency is now auditing proposed KBR bills totaling $2.1 billion, the memo says.
Pentagon auditors last month said that KBR's Kuwaiti supplier, Altanmia Commercial Marketing Co., was charging the U.S. almost double the market price for gasoline. Auditors said the overcharging amounted to $61 million through September, and as much as $20 million a month since then.
The Army Corps defended the company's hiring of Altanmia in a lengthy Jan. 6 report. The report said KBR had "urgent and compelling needs" to use the Kuwaiti supplier, even at significantly higher prices than other potential suppliers.
Still, Pentagon officials are likely to home in on the circumstances under which KBR hired Altanmia. The Army Corps report says KBR picked Altanmia on May 5 after making phone calls to just two other bidders. Officials say there is no indication of kickbacks involving Altanmia.
A number of anonymous whistleblowers have come forward in recent weeks with often-detailed allegations of KBR wrongdoing in Kuwait, including accusations of paybacks from companies that received lucrative subcontracting work from KBR, according to U.S. officials and congressional sources. These reports in turn have been taken up by the Pentagon's IG office.
"They get unfairly maligned simply because of their past association with me," Cheney says, apparently unaware that he himself is one of the greatest examples of "conflict of interest" in American history — a CEO who resigns to become vice president and then to wage a war based on fake evidence to provide multibillion no-bid contracts to his company.
Correction: Halliburton is fairly maligned because of their past association with Cheney.
Note also the magnanimous depth of the gratitude Kuwait shows the United States for our role in supporting its monarchy, thanks to not one but two Bush Gulf wars.