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The War Profiteers - War Crimes,
Kidnappings, Torture and Big Money |
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October 28th, 2006 - Report Says
Iraq Contractor Is Hiding Data From U.S. |
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Report Says
Iraq Contractor Is Hiding Data From U.S. By James Glanz and Floyd Norris New York Times October 28, 2006 A Halliburton subsidiary
that has been subjected to numerous investigations for billions of dollars in
contracts it received for work in Iraq has systematically misused federal
rules to withhold basic information on its practices from American officials,
a federal oversight agency said yesterday. The contracts awarded to the
company, KBR, formerly named Kellogg Brown & Root, are for housing, food,
fuel and other necessities for American troops and government officials in Iraq,
and for restoring that country’s crucial oil infrastructure. The contracts
total about $20 billion. The oversight agency, the
Office of the Special Inspector General for Iraq Reconstruction, said KBR had
refused to disclose information as basic as how many people are fed each day
in its dining facilities and how many gallons of fuel are delivered to
foreign embassies in Iraq, claiming that the data was proprietary, meaning it
would unfairly help its business competitors. Although KBR has been
subjected to a growing number of specific investigations and paid substantial
penalties, this is the first time the federal government has weighed in and
accused it of systematically engaging in a practice aimed at veiling its
business practices in Iraq. The allegations come at a
critical time for the company, as Halliburton is trying to spin off the
subsidiary. And in July, the Army announced that it would terminate KBR’s
largest contract with the government, and the company says that it will
compete to regain some of that business when the government calls for new
bids. Proprietary information is
protected by the so-called federal acquisition regulations, known as FAR. But
the agency said KBR routinely stamped nearly all of the data it collects on
its work as proprietary, impeding not only the investigations into the
company’s activities but also things as simple as managerial oversight of the
work. “The use of proprietary data
markings on reports and information submitted by KBR to the government is an
abuse of the FAR and the procurement system,” says a memo released yesterday
by the special inspector general. As a result, the memo said,
“KBR is not protecting its own data, but is in many instances inappropriately
restricting the government’s use of information that KBR is required to
gather for the government.” The specific examples cited
by the inspector general are taken from an $18 billion contract called the
Logistics Civil Augmentation Program, informally known as Logcap, under which
KBR provides food, fuel, housing, recreational facilities and laundry and
other services to American troops, government officials and other contractors
in Iraq. A spokeswoman for
Halliburton, Cathy Mann, did not dispute the company’s extensive use of the
proprietary label but said, “KBR has included proprietary markings on the
majority of its data and property in support of its government contracts for
the U.S. Army for at least the last decade.” That assertion could not
immediately be confirmed with the Army. But in its memo, the inspector
general’s office said that during the course of its investigation, both
Pentagon auditors and Army contracting officers had shared serious concerns
about the practice. And a statement released
late yesterday by the Army Sustainment Command in Rock Island, Ill., said
that it had “implemented corrective actions relative to the concerns raised”
in the memo. Ms. Mann added that KBR
believed that the use of proprietary markings in work for the United States
government “is not only encouraged, but required” by federal laws restricting
the disclosure of American trade secrets abroad. With the release of the new
memo, that argument is unlikely to gain much traction with members of
Congress, federal investigators and the numerous critics who have been
calling for access to information on KBR’s work in Iraq almost since the
invasion ended. “The arrogance is astounding
on the part of KBR,” said William L. Nash, a retired Army major general who
is a senior fellow at the Council on Foreign Relations and an expert on
postconflict zones. “It’s time for Congress to step in, because this has just
gone too far.” Reaction to the memo on
Capitol Hill also revealed that the issue of KBR’s performance and
investigations of its work are increasingly causing concern on both sides of
the political aisle. Henry A. Waxman, the
California Democrat who is the ranking minority member of the House Committee
on Government Reform and was one of the earliest critics of KBR’s use of the
proprietary label, said the new memo showed how the company had tried to
conceal “corporate profiteering during wartime.” Senator Susan Collins, the
Maine Republican who is chairwoman of the Homeland Security and Governmental
Affairs Committee, said, “I am concerned that the special inspector general
has not always had full cooperation and access to the corporate documents
that his office needs to carry out its critical mission.” Access to that information,
Senator Collins said, “helps to ensure that government contractors fulfill
their contractual obligations and that government gets the best value for
taxpayer dollars. The improper use of proprietary claims impedes critical
transparency and makes it more difficult for the inspector general’s office
to complete essential audits.” The special inspector
general for Iraq reconstruction is Stuart W. Bowen Jr., a Republican whose
investigative zeal has surprised some political analysts who believed that he
would be reluctant to expose flaws in the administration’s reconstruction
program and companies like Halliburton. Dick Cheney was Halliburton’s chief
executive until he left to run for vice president. Halliburton has blamed KBR
for holding down the company’s stock performance, and is planning to sell a
20 percent stake in KBR to the public by the end of the year, and then spin
off the rest of the shares in the company to Halliburton shareholders in
early 2007, thus severing the corporate ties. Halliburton, though, would
retain some responsibility for dealing with continuing federal investigations
of KBR’s work in Iraq. Documents filed with the Securities and Exchange
Commission as part of the public offering have revealed a wide range of
investigations into KBR’s work in Iraq, raising the possibilities that
investors and the parent company could foot the bill for settlements against
KBR. Those documents, which must
reveal potential risks to investors, indicate that continuing Justice
Department investigations into KBR’s work in Iraq have produced grand jury
subpoenas for current and former employees. The company could have other
liabilities. Outside Iraq, the papers say, there is a Justice Department
investigation into possible overcharges in its work in the Balkans from 1996
to 2000. And the securities commission and the Justice Department are
investigating payments in Nigeria that may have violated the Foreign Corrupt
Practices Act, which bars the bribing of foreign officials. There is also an antitrust
investigation, and the company says investigations into the Nigerian project
found information that “former employees may have engaged in coordinated
bidding with one or more competitors on certain foreign construction projects
and that such coordination possibly began as early as the mid-1980s.” The memo by the inspector
general said that KBR would sometimes provide data to one part of the United
States government, like Pentagon auditors, but with the proprietary label
that would prevent its release to the public or even to other parts of the
government. In other cases that clearly
irritated the inspector general’s auditors, KBR would hobble their work by
releasing data in the form of gigantic but indigestible tables rather than
within the kind of software - like Excel spreadsheets - that would let the
auditors do their calculations. Those findings have raised
suspicions that if KBR was going to such lengths to keep the data out of the
hands of auditors, then the company must have something to hide, said
Frederick D. Barton, a director of the Postconflict Reconstruction Project at
the Center for Strategic and International Studies. “There’s been smoke for some
time,” Mr. Barton said. “This seems to indicate that there was fire as well.” Halliburton stock was weak
early in the Bush administration, in part because oil prices fell as the
world economy weakened in 2001. The stock bottomed out at $4.30 in early 2002
and rose sharply thereafter, eventually peaking at $41.98 this April as the
oil services industry benefited from increased oil exploration and as the
Iraq war continued. It dropped as low as $26.33
earlier this month, as oil prices fell. It closed yesterday at $32.15. Copyright 2006 The New York
Times Company External link: http://www.nytimes.com/2006/10/28/world/middleeast/28reconstruct.html |