Halliburton won 60 percent of Iraqs fund

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Registered: 08-05-2004
Halliburton won 60 percent of Iraqs fund
1
Tue, 10-12-2004 - 1:30pm
Here's the original link: http://www.halliburtonwatch.org/news/iraq_revenue_watch.html

Halliburton won 60 percent of Iraq's reconstruction funds

30 Sept. 2004

WASHINGTON, Sept. 30 (HalliburtonWatch.org) -- The U.S. Coalitional Provisional Authority (CPA), which governed Iraq until last June, gave Halliburton's KBR subsidiary 60 percent of $1.5 billion in reconstruction contracts financed by Iraqi oil revenues, a new report shows. The George Soros-backed Iraq Revenue Watch (IRW) issued the report, which criticizes the CPA for awarding most of the reconstruction contracts to non-Iraqi companies and without competitive bidding.

The CPA governed Iraq from May 2003 through June 2004 and has been widely criticized for mismanaging Iraq's oil revenues and contracts.

For months, the CPA rejected repeated demands by independent auditors and the United Nations to disclose the names of companies that received the $1.5 billion. But last August the CPA's inspector general issued a report disclosing the names.

According to IRW's analysis of the inspector general's report, U.S. companies received 74 percent of the $1.5 billion in contracts allocated for reconstruction; U.S. and British companies received 85 percent. But local Iraqi firms received only 2 percent. IRW director, Svetlana Tsalik, said Halliburton "benefited at the expense of Iraqi companies whose workers badly need jobs."

When Congress appropriated reconstruction funds for Iraq in October 2003, it specifically required competetive bidding on all future contracts. It made this requirement after finding problems with Halliburton's Iraq contracts, including potentially-fraudulent overcharges for gasoline importation. A criminal investigation by the U.S. Justice Department continues today.

But the CPA found a way to circumvent the new competitive bidding requirements imposed by Congress. It decided to award contracts through local Iraqi oil revenues, which are not subject to U.S. contract laws and were not part of the aid package enacted by Congress in 2003. The result was that 73 percent of the $1.5 billion in Iraqi funds were used to finance sole-source contracts that were not competitively bid.

Moreover, by using local Iraqi oil revenues to finance reconstruction contracts, the CPA was able to avoid strict accounting regulations required for U.S.-funded contracts. The CPA's inspector general wrote a scathing report, accusing the CPA of failing to provide adequate stewardship of over $8.8 billion in Iraq oil revenues. He said the CPA's accounting books contained numerous problems. For example, they showed that 74,000 guards were paid for work even though the actual number could not be validated. Another 8,206 guards were listed as employees even though only 603 people could be found doing any work.

In another example, Custer Battles - a nine-month old firm founded by two Army rangers - won a subcontract from Washington Group International to provide security. Custer Battles hired 700 security guards after six months of work and charged the Pentagon $20 million. But it paid the guards less than $200 per month. The company pocketed roughly $19 million of the $20 million earned over the six month period.

"The bulk of contracts paid for with Iraqi oil money went to Halliburton subsidiary Kellogg, Brown, & Root with no competition," IRW reported. It concluded, "The Iraqi interim government appears to be following the poor example set by the CPA, making public next to no information about since the transfer of power."

More Information:

Iraq Revenue Watch report (pdf)

Summary of IRW's report

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Registered: 08-05-2004
Tue, 10-12-2004 - 1:36pm
Panel to Probe Use of Iraq Oil Revenues

Here's the orginial link: http://www.sunherald.com/mld/sunherald/news/local/9842835.htm?template=contentModules/printstory.jsp

Panel to Probe Use of Iraq Oil Revenues

LOLITA C. BALDOR

Associated Press

WASHINGTON - A House subcommittee investigating Iraq's oil-for-food program expanded its probe to the Bush administration Tuesday, agreeing to subpoena documents on the U.S. postwar management of oil revenues and, if necessary, audits on contracts for reconstruction projects, including one given to Halliburton Co.

Democrats on the House Government Reform subcommittee on national security said there should be a full investigation into the Bush administration's refusal to release audits of Halliburton's $1.5 billion, noncompetitive contract to repair oil production facilities. The Houston-based oil services company was formerly headed by Vice President Dick Cheney.

Failure to release the information, said Rep. Henry Waxman, D-Calif., would appear hypocritical and arrogant, and "reinforce the image that our primary goal (in Iraq) was to seize control of the oil."

Congress, said Democrats, needs to know what happened to oil revenues when the United States took over their management between May 2003 and June 2004. Since then, management has switched to the interim Iraqi government.

Bowing to pressure, panel chairman Rep. Christopher Shays, R-Conn., agreed to issue a subpoena to the Federal Reserve Bank of New York for information on management of oil revenues, and to send a letter to Defense Secretary Donald Rumsfeld seeking audits on noncompetitive contracts.

"While I don't agree with the argument on why the information is needed, I think there is merit in getting this information," said Shays. "My expectation is that the secretary will provide the documents. If he doesn't, we will follow up with a subpoena."

The letter and subpoena are expected to go out this week.

The agreement came as the committee continued to investigate allegations of corruption in Iraq's oil-for-food program, and whether companies monitoring the program were hamstrung by allied-endorsed sanctions that gave Saddam Hussein too much control.

The oil-for-food program was created to help the Iraqi people cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait. The program, which ran from 1996 to 2003, allowed the Iraqi government to sell oil primarily to buy humanitarian good.

But on Tuesday companies hired to monitor the oil sales and the products entering Iraq said they were threatened by Iraqi officials_ on one occasion by 20 armed guards, and stymied by Hussein's ability to manipulate records and trade.

U.N. Ambassador Patrick Kennedy said the program successfully provided critical food and medicine to the Iraqi people.

But under heated questioning from Shays, he acknowledged that the Cotecna, the company hired to monitor goods coming into Iraq, and Saybolt International B.V., the company inspecting oil exports, did not have the authority they needed to do adequate inspections.

Stronger oversight, he said, would have been blocked by other countries on the U.N. Security Council who did not want to undermine Iraq's sovereignty. Companies from some of those countries also were doing business with Iraq, either buying oil or selling products.

"It was about as leaky as it could get," said Shays. "Almost every transaction may have been a rip-off" that compromised the United Nations and allowed Hussein to make money.

Executives from Cotecna and Saybolt said they were hampered by poor equipment, dangerous conditions, and relentless efforts by Hussein to exploit the oil sales for illegal profits and kickbacks.

The Government Accounting Office has estimated that the Iraqi government skimmed $4.4 billion through kickbacks and another $5.7 billion through oil smuggling.