As the first bombs rain down on Baghdad, CorpWatch has learned that thousands of employees of Halliburton, Vice President Dick Cheney's former company, are working alongside US troops in Kuwait and Turkey under a package deal worth close to a billion dollars. According to US Army sources, they are building tent cities and providing logistical support for the war in Iraq in addition to other hot spots in the "war on terrorism."
While recent news coverage has speculated on the post-war reconstruction gravy train that corporations like Halliburton stand to gain from, this latest information indicates that Halliburton is already profiting from war time contracts worth hundreds of millions of dollars.
Cheney served as chief executive of Halliburton until he stepped down to become George W. Bush's running mate in the 2000 presidential race. Today he still draws compensation of up to a million dollars a year from the company, although his spokesperson denies that the White House helped the company win the contract.
In December 2001, Kellogg, Brown and Root, a subsidiary of Halliburton, secured a 10-year deal known as the Logistics Civil Augmentation Program (LOGCAP), from the Pentagon. The contract is a "cost-plus-award-fee, indefinite-delivery/indefinite-quantity service" which basically means that the federal government has an open-ended mandate and budget to send Brown and Root anywhere in the world to run military operations for a profit.
Linda Theis, a public affairs officer for the U.S. Army Field Support Command in Rock Island Arsenal, Illinois, confirmed for Corpwatch that Brown and Root is also supporting operations in Afghanistan, Djibouti, Georgia, Jordan and Uzbekistan.
"Specific locations along with military units, number of personnel assigned, and dates of duration are considered classified," she said. "The overall anticipated cost of task orders awarded since contract award in December 2001 is approximately $830 million."
Kuwait
The current contract in Kuwait began in September 2002 when Joyce Taylor of the U.S. Army Materiel Command's Program Management Office, arrived to supervise approximately 1,800 Brown and Root employees to set up tent cities that would provide accommodation for tens of thousands of soldiers and officials.
Army officials working with Brown and Root says the collaboration is helping cut costs by hiring local labor at a fraction of regular Army salaries. "We can quickly purchase building materials and hire third-country nationals to perform the work. This means a small number of combat-service-support soldiers are needed to support this logistic aspect of building up an area," says Lt. Col. Rod Cutright, the senior LOGCAP planner for all of Southwest Asia.
During the past few weeks, these Brown and Root employees have helped transform Kuwait into an armed camp, to support some 80,000 foreign troops, roughly the equivalent of 10% of Kuwait's native born population.
Most of these troops are now living in the tent cities in the rugged desert north of Kuwait City, poised to invade Iraq. Some of the encampments are named after the states associated with the attacks of Sept. 11, 2001 -- Camp New York, Camp Virginia and Camp Pennsylvania.
The headquarters for this effort is Camp Arifjan, where civilian and military employees have built a gravel terrace with plastic picnic tables and chairs, surrounded by a gymnasium in a tent, a PX and newly arrived fast food outlets such as Burger King, Subway and Baskin-Robbins, set up in trailers or shipping containers. Basketball hoops and volleyball nets are set up outside the mess hall.
Turkey
North of Iraq approximately 1,500 civilians are working for Brown and Root and the United States military near the city of Adana, about an hour's drive inland from the Mediterranean coast of central Turkey, where they support approximately 1,400 US soldiers staffing Operation Northern Watch's Air Force F-15 Strike Eagles and F-16 Fighting Falcons monitoring the no-fly zone above the 36th parallel in Iraq.
The jet pilots are catered and housed at the Incirlik military base seven miles outside the city by a company named Vinnell, Brown and Root (VBR), a joint venture between Brown and Root and Vinnell corporation of Fairfax, Virginia, under a contract that was signed on October 1, 1988, which also includes two more minor military sites in Turkey: Ankara and Izmir.
The joint venture's latest contract, which started July 1, 1999 and will expire in September 2003, was initially valued at $118 million. US Army officials confirm that Brown and Root has been awarded new and additional contracts in Turkey in the last year to support the "war on terrorism" although they refused to give any details.
"We provide support services for the United States Air Force in areas of civil engineering, motor vehicles transportation, in the services arena here - that includes food service operations, lodging, and maintenance of a golf course. We also do US customs inspection," explained VBR site manager Alex Daniels, who has worked at Incirlik for almost 15 years.
Cheap labor is also the primary reason for outsourcing services, says Major Toni Kemper, head of public affairs at the base. "The reason that the military goes to contracting is largely because it's more cost effective in certain areas. I mean there was a lot of studies years ago as to what services can be provided via contractor versus military personnel. Because when we go contract, we don't have to pay health care and all the another things for the employees, that's up to the employer."
Soon after the contract was signed Incirlik provided a major staging post for thousands of sorties flown against Iraq and occupied Kuwait during the Gulf war in January 1991 dropping over 3,000 tons of bombs on military and civilian targets.
Central Asian Contracts
Still ongoing is the first LOGCAP contract in the "war on terrorism" which began in June 2002, when Brown and Root was awarded a $22 million deal to run support services at Camp Stronghold Freedom, located at the Khanabad air base in central Uzbekistan. Khanabade is one of the main US bases in the Afghanistan war that houses some 1,000 US soldiers from the Green Berets and the 10th Mountain Division.
In November 2002 Brown and Root began a one-year contract, estimated at $42.5 million, to cover services for troops at bases in both Bagram and Khandahar. Brown and Root employees were first set to work running laundry services, showers, mess halls and installing heaters in soldiers' tents.
Future Contracts in Iraq
Halliburton is also one of five large US corporations invited to bid for contracts in what may turn out to be the biggest reconstruction project since the Second World War. The others are the Bechtel Group, Fluor Corp, Parsons Corp, and the Louis Berger Group.
The Iraq reconstruction plan will require contractors to fulfill various tasks, including reopening at least half of the "economically important roads and bridges" -- about 1,500 miles of roadway within 18 months, according to the Wall Street Journal.
The contractors will also be asked to repair 15% of high-voltage electricity grid, renovate several thousand schools and deliver 550 emergency generators within two months. The contract is estimated to be worth up to $900 million for the preliminary work alone.
The Pentagon has also awarded a contract to Brown and Root to control oil fires if Saddam Hussein sets the well heads ablaze. Iraq has oil reserves second only to those of Saudi Arabia. This makes Brown and Root a leading candidate to win the role of top contractor in any petroleum field rehabilitation effort in Iraq that industry analysts say could be as much as $1.5 billion in contracts to jump start Iraq's petroleum sector following a war.
Wartime Profiteering
Meanwhile Dick Cheney's 2001 financial disclosure statement, states that the Halliburton is paying him a "deferred compensation" of up to $1million a year following his resignation as chief executive in 2000. At the time Cheney opted not to receive his severance package in a lump sum, but instead to have it paid to him over five years, possibly for tax reasons.
The company would not say how much the payments are. The obligatory disclosure statement filled by all top government officials says only that they are in the range of $100,000 and $1million. Nor is it clear how they are calculated.
Critics say that the apparent conflict of interest is deplorable. "The Bush-Cheney team have turned the United States into a family business," says Harvey Wasserman, author of The Last Energy War (Seven Stories Press, 2000). "That's why we haven't seen Cheney - he's cutting deals with his old buddies who gave him a multimillion-dollar golden handshake. Have they no grace, no shame, no common sense? Why don't they just have Enron run America? Or have Zapata Petroleum (George W. Bush's failed oil-exploration venture) build a pipeline across Afghanistan?"
Army officials disagree. Major Bill Bigelow, public relations officer for the US Army in Western Europe, says: "If you're going to ask a specific question - like, do you think it's right that contractors profit in wartime - I would think that they might be better [asked] at a higher level, to people who set the policy. We don't set the policy, we work within the framework that's been established."
"Those questions have been asked forever, because they go back to World War Two when Chrysler and Ford and Chevy stopped making cars and started making guns and tanks. Obviously it's a question that's been around for quite some time. But it's true that nowadays there are very few defense contractors, but go back sixty years to the World War Two era almost everybody was manufacturing something that either directly or indirectly had something to do with defense," he added.
Ever since George W. Bush named him as a running mate, Dick Cheney has been all smiles. And why not? Cheney has led a charmed life. His political career included stints in the White House, Congress and the Defense Department. Then he went into the private sector and got rich.
But just how Cheney got rich deserves some scrutiny. As secretary of defense, Cheney oversaw one of the largest privatization efforts in the history of the Pentagon, steering millions of military dollars to civilian contractors. Two and a half years after Cheney left his federal job, he began cashing in on the very contracts that he helped initiate.
In 1992, the Pentagon, then under Cheney's direction, paid Texas-based Brown & Root Services $3.9 million to produce a classified report detailing how private companies -- like itself -- could help provide logistics for American troops in potential war zones around the world. BRS specializes in such work; from 1962 to 1972, for instance, the company worked in the former South Vietnam building roads, landing strips, harbors, and military bases. Later in 1992, the Pentagon gave the company an additional $5 million to update its report. That same year, BRS won a massive, five-year logistics contract from the US Army Corps of Engineers to work alongside American GIs in places like Zaire, Haiti, Somalia, Kosovo, the Balkans, and Saudi Arabia.
After Bill Clinton's election cost Cheney his government job, he wound up in 1995 as CEO of Halliburton Company, the Dallas-based oil services giant -- which just happens to own Brown & Root Services. Since then, Cheney has collected more than $10 million in salary and stock payments from the company. In addition, he is currently the company's largest individual shareholder, holding stock and options worth another $40 million. Those holdings have undoubtedly been made more valuable by the ever-more lucrative contracts BRS continues to score with the Pentagon.
Between 1992 and 1999, the Pentagon paid BRS more than $1.2 billion for its work in trouble spots around the globe. In May of 1999, the US Army Corps of Engineers re-enlisted the company's help in the Balkans, giving it a new five-year contract worth $731 million.
To critics, this all adds up to classic revolving-door politics: Cheney's work for Halliburton, they say, has allowed him to improperly profit off of actions he took and contacts he made while in government.
"Over the years, we've tried to slow the revolving door to make sure decision makers don't benefit from decisions they make while they are in office," said Tom Smith, the Texas state director of Public Citizen, a non-profit consumer group. "You have to question whose interests Cheney is looking after, and whether privatization has really benefited the Department of Defense, or the defense contractors like Brown & Root."
Although the US military has long relied on contractors for various services, the issue for some observers is the possibility that Cheney used his contacts within government to enrich himself. "We are talking about nepotism of the highest order and profiteering at the expense of the US taxpayers," says Pratap Chatterjee, a radio journalist who has followed Halliburton for several years.
Chatterjee points out that BRS gets a one percent profit guarantee on their logistics contracts and that in Somalia, the company was given another eight percentage points for meeting various incentive clauses in their contract. "Compare that with average corporate profit percentages, which are about three percent," he said.
Moreover, while there are advantages to using private companies to do soldiers' work, BRS has run into significant criticism for the way it has carried out some of its military missions.
The company has drawn praise for allowing more American soldiers to carry M-16's instead of spatulas. "It doesn't take a soldier to do what Brown & Root does for the Army," explains Jan Finegan, a spokesperson for the Army Materiel Command, who points out that the active-duty force of the US military has declined by about 25 percent over the past decade. Hiring a private contractor to take out the garbage, do the laundry and take care of the dining halls "frees soldiers up to do what they are trained to do," she said.
BRS also saves money by hiring local workers whenever possible. But that doesn't always turn out happily. In 1994, at the end of its engagement in Somalia, where American troops had attempted to quell endemic civil strife, BRS dismissed the Somali workers it had hired. The disenchanted workers then staged a protest at the United Nations compound in Mogadishu, until they were scattered by UN troops armed with batons and tear gas. Three people were reportedly injured in the melee.
In 1996, in Hungary, where BRS had set up shop to support American troops stationed in the former Yugoslavia, the company ran into more controversy. Shortly after American forces moved in, Hungarian officials ruled that BRS was subject to the country's value-added tax, and that company employees were subject to Hungarian income tax, just like any other private corporation. The Pentagon, however, insisted that the company was part of the American military and therefore exempt from the tax. Ultimately, BRS did pay the Hungarian government $18 million in taxes -- for which it was reimbursed by the US government. The company was also accused of sexual harassment by several female workers who claimed that BRS employees had fondled and propositioned them.
Nonetheless, BRS, which has 20,000 employees worldwide, continues to pull in major government deals. The company recently won a $100 million contract from the US State Department to upgrade security at its embassies. It also holds a long-term contract with the British military to operate the Devonport Royal Naval Dockyard, the UK's sole refitting and refueling location for nuclear powered submarines.
Nine years ago, Dick Cheney was overseeing the military's performance in the Gulf War. Since then, he has made millions running a business that provides services to that same military. That business, incidentally, has contributed a quarter-million dollars to the Republican cause so far this election cycle. And now, Cheney and Bush are the odds-on favorites to take the White House.
Is this politics as usual? Or is it business as usual? In Cheney's case, it's difficult to tell the difference
This is something that really bugs the **** out of me.
If we are 'freeing' the Iraqi people and it is 'their oil money' that will 'finance the rebuilding of their country', why isn't it 'they' who will decide where 'their money' will go and 'who will rebuild their country'?
