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August 16th, 2006

ASHBRITT

Three days after Hurricane Katrina hit, AshBritt hired the former head of the Army Corps of Engineers, Mike Parker, specifically to help it maximize its contracts for Katrina cleanup.

Among the company’s other lobbyists were a former Louisiana legislator, and Barbour, Griffith & Rogers, a lobbying firm co-founded by former chairman of the Republican National Committee and current Mississippi governor, Haley Barbour. By mid-September, AshBritt had $500 million in debris-removal contracts, plus its guaranteed $56 million contingency fee from FEMA under a preexisting retainer for natural disaster recovery. (12)

AshBritt, a Florida-based firm, has close ties with Florida governor and presidential brother Jeb Bush, and lobbied hard for a state contract in Florida in 2004. Records show that AshBritt’s CEO is a major donor to state and federal GOP candidates. (13) Local debris-removal firms in Mississippi have said AshBritt’s cozy relationship with Washington essentially precluded competition for Katrina contracts.

AMERICOLD


Another former FEMA director, James Lee Witt, is also now a lobbyist. His firm, James Lee Witt Associates, is Louisiana’s disaster consultant. Americold Logistics of Atlanta retained Witt’s firm prior to the hurricane, for which it paid $40,000 in fees. (14)

Witt arranged a meeting between Americold executives and FEMA and, a result, Americold was on retainer with FEMA even prior to the 2005 hurricane season to provide ice and cold storage facilities in case of a major storm. Its Katrina contracts totaled over $1.7 billion. Taxpayers for Common Sense (TCS), which investigated the contract, criticized Witt for “acting like a gatekeeper.” TCS’s Keith Ashdown called Witt the “king of disaster lobbying.”

“The message it sends,” Ashdown says, “is that if you’re not willing to pay his firm a retainer, you’re not going to get a FEMA contract.” (15)

Americold was the contractor at the center of controversy when a truck full of ice headed for the devastated region was turned away by disorganized FEMA officials and ended up traveling 1600 miles by truck before melting, unused. (16)

CARNIVAL CRUISE LINE

Florida-based Carnival won a $236 million no-bid contract to house hurricane victims, despite the fact that the nation of Greece offered the use of ships for free. Jeb Bush pushed for the contract, according to emails made public by Congressman Henry Waxman. Bush forwarded an email from the top Carnival executive directly to FEMA chief Mike Brown. Bush claimed simply to be “facilitating” communication between the parties. (17)

The cruise ships floated half-empty for six months, and the cost per person per week for those housed on the ships (many of them public employees such as police officers) worked out to more than twice the cost of a Caribbean cruise vacation for the same period. And that’s minus most of the crew, entertainment, fancy banquets and the cost of actually sailing the ships.

Carnival said the cost of canceling booked cruises contributed to the price, and that food and other services were also provided. (18) “Finding out after the fact that we’re spending taxpayer money on no-bid contracts and sweetheart deals for cruise lines is no way to run a recovery effort,” Senator Tom Coburn complained. (19)

Some of the contractors who have benefited from their familiarity with the powers that be say it’s less about cronyism and more about expedience. Many of the contracts for cleanup and emergency services were actually negotiated long before Katrina, in anticipation of such an emergency. (Such an arrangement is known as putting a company on “active status.”)

Firms like AshBritt and Americold are retained by FEMA and other federal agencies to be activated on short notice should an emergency strike (the same goes for private contractors in war zones, who often have agreements in place prior to hostilities). Negotiating when there isn’t a crisis saves time and money when there is, they argue.

This might partially explain why the same names come up in Iraq and in New Orleans — AshBritt, Blackwater, Bechtel, Fluor, CH2M Hill and others — and why it is so difficult for small, local companies to get in on the action.

KELLOGG, BROWN AND ROOT (KBR)/HALLIBURTON

Halliburton is primarily an oil fields services company with extensive contracts from offshore drilling and pipeline construction. In the last five years, however, the company has seen a boom in its work with the U.S. military’s “global war on terrorism” — for which is has billed over $20 billion. (68) Most of which is derived from providing logistical support for the United States military in Iraq such as cooking meals and cleaning toilets. This work is conducted by its Kellogg, Brown and Root (KBR) subsidiary, whose history of work for the military dates back to the Second World War. (69) The company was part of the major consortium that built U.S. military bases in Vietnam and today is the main architect for new bases from Afghanistan to Guantanamo Bay.

Indeed Camp Delta in Guantanamo Bay was built by KBR in 2002 to host prisoners from Afghanistan, under a special open-ended contract with the U.S. Navy called Contingency Construction Capabilities (CONCAP) with low-paid imported Philippino labor. (70) When Hurricane Katrina struck, the Navy turned to KBR to help clean up its three bases in Mississippi under this very same special open-ended contract. (71) The frantic U.S. Army Corps of Engineers, which did not have a similar plan in place, used this “contract vehicle” to drain Plaquemines Parish. (72)

Yet Halliburton has the dubious distinction of being accused of using low-wage labor and presenting astronomical bills for work done for many military projects. During the Vietnam War, the GAO reported that the company lost accounting control of $120 million and that its security was so poor that millions of dollars worth of equipment had been stolen. (73)

At the time, Donald Rumsfeld — then a Republican member of the House of Representatives from Illinois — demanded to know about the “30-year association, personal and political, between Lyndon B. Johnson as congressman, senator, vice president and president” (who won on the Democratic party ticket) and the company’s chairman, George R. Brown of Houston, who “had contributed $23,000 to the President’s Club while the Congress was considering” whether to continue another multimillion-dollar Brown & Root project. “Why this huge contract has not been and is not now being adequately audited is beyond me. The potential for waste and profiteering under such a contract is substantial,” Rumsfeld said in 1966. (74)

It is somewhat ironic, therefore, that the company now gives money to Rumsfeld’s party, but perhaps understandable, because his party controls the purse-strings today. Between the years 1990-2002, KBR gave $2,379,792 in political contributions, almost exclusively to Republicans. In 2002, $120,784 was contributed to various Republican causes. The same party enjoyed 96 percent of 2000’s contribution of $168,277 while Democrats picked up four percent, according to figures from the Center for Responsive Politics, a non-partisan, non-profit research group based in Washington, D.C. that tracks money in politics and its effect on elections and public policy. (75)

The company also still has friends in the White House Rumsfeld’s colleague, Vice President Dick Cheney, was the Chief Executive Officer of Halliburton from 1995 to 2000, during which time the company, almost doubling the corporation’s government contracts from $1.2 to $2.3 billion. (76) Indeed, Cheney continues to receive a large deferred salary from the company until this day, worth almost as much as his government salary. This deferred salary and the 433,333 stock options in the company that he owns was judged by the Congressional Research Service (CRS) to be a conflict of interest. (77) Lest it be forgot, the company has also been accused of overcharging for cleaning up military bases as recently as the 1990s. In February 2002, Brown and Root paid out $2 million to settle a suit with the Justice Department that alleged the company defrauded the government during the mid-1990s closure of Fort Ord in Monterey, California.

The allegations in the case surfaced several years ago when Dammen Gant Campbell, a former contracts manager for Brown and Root turned whistle-blower, charged that between 1994 and 1998 the company fraudulently inflated project costs by misrepresenting the quantities, quality, and types of materials required for 224 projects. Campbell said the company submitted a detailed “contractors pricing proposal” from an army manual containing fixed prices for some 30,000 line items.

Once the proposal was approved, the company submitted a more general “statement of work,” which did not contain a breakdown of items to be purchased. Campbell maintained the company intentionally did not deliver many items listed in the original proposal. The company defended this practice by claiming the statement of work was the legally binding document, not the original contractors pricing proposal.

“Whether you characterize it as fraud or sharp business practices, the bottom line is the same: the government was not getting what it paid for,” says Michael Hirst, of the United States Attorney’s Office in Sacramento, who litigated the suit on behalf of the government. “We alleged that they exploited the contracting process and increased their profits at the governments expense.” (78)

-Pratap Chatterjee

 
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