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Two reports explain how Halliburton took taxpayers for a ride in Iraq

21 July 2004

WASHINGTON, July 21 (HalliburtonWatch.org) -- Two new reports released by members of Congress Wednesday criticized Halliburton for $167 million worth of price gouging associated with gasoline imports from Kuwait, as well as a variety of abuses associated with its troop support and military logistics (LOGCAP) contract.

A Government Accountability Office (GAO) report concluded that �it is difficult to know how much [Halliburton] has actually spent� in Iraq because of inadequate cost controls and shoddy documentation associated with its logistics support contract (LOGCAP).

The GAO report found �a pattern of contractor management problems,� including ineffective planning, a poor materials requisition system and inadequate supervision of subcontractors. The GAO also criticized the military officials for failing to properly oversee Halliburton�s work. The GAO interviewed military officials who �told us that they knew nothing about LOGCAP before they deployed and had received no training regarding their roles and responsibilities.�

To view the GAO report click here.

The blurring of LOGCAP work with other contract work in Iraq (including the unexplained use of Iraqi oil money with little to no accountability as suggested by a recent KPMG audit) has created additional confusion surrounding the company�s work and made it extremely difficult for investigators to sort through the mess. In June the GAO concluded that political appointees in the Pentagon had violated competitive contracting rules by giving Halliburton an oil-related task order before the war began under its global military logistics (LOGCAP) contract, providing the company an inside-track to later obtain no-bid contracts worth billions of dollars.

For the GAO�s June report click here.

The use of private military contractors for military logistics work was originally intended to relieve an already overextended U.S. military and save taxpayer money (the LOGCAP was created under then-Secretary of Defense Richard Cheney, who paid Brown & Root $9 million to produce a still-secret report which recommended privatizing military logistics work; soon after in 1992 the Pentagon gave the company its first LOGCAP contract). Three years later, in 1995, Halliburton hired Cheney as CEO. See our Cheney-Halliburton Chronology here.

But the GAO�s new report says that the military�s ability to utilize Halliburton�s work effectively was hampered by support units that have �no prior LOGCAP or contracting experience.�

Halliburton has been awarded contracts worth a total of up to $18.2 billion (including $5.6 billion associated with the LOGCAP) in Iraq.

In addition to the GAO report, Rep. Henry Waxman (D-CA) and Rep. John Dingell (R-MI) of the House Committee on Government Reform released the results of a nine month investigation into price gouging associated with Halliburton�s no-bid contract to import Kuwaiti gasoline into Iraq.

Halliburton charged an extra $165 million to transport gasoline into Iraq than the Pentagon�s Defense Energy Support Center (DESC), which took over responsibility for the same work in April. In addition, the contractor charged over 40 times more than the DESC for fees and overhead.

To view the report on Halliburton�s gas overcharges click here.

�These two reports only confirm that as the number one war profiteer, Halliburton has taken U.S. taxpayers for a ride through a systemic pattern of waste, fraud and abuse,� said Charlie Cray of HalliburtonWatch.org.

On Thursday, the House Committee on Government Reform is scheduled to hold hearings with whistleblowers. Halliburton has declined to send top executives, although other representatives of the company are scheduled to attend.

The hearings of the House Committee on Government Reform can be viewed at the committee�s web site here.