Ongoing Investigations Into Haliburton as of April 2005

  • The U.S. Federal Bureau of Investigation (FBI) is investigating allegations by an Army official claiming that the Army Corp of Engineers illegally excluded Halliburton's competitors from bidding on Iraq contracts.Bunnatine Greenhouse, an Army whistleblower, says the line between government officials and Halliburton had become so blurred that a conflict of interest exists.The conduct appears to have violated specific federal contract-related regulations and calls into question the independence of the contracting process.
  • The U.S. Department of Justice (DOJ) is conducting a criminal investigation into Halliburton's admission that it "may have paid" $180 million in bribes to officials in the Nigerian government to win a multibillion dollar construction con-tract. Some of the bribes were paid during Dick Cheney's tenure as chief executive officer. Halliburton terminated its relationship with former KBR chief Albert Jack Stanley after discovering that $5 million of the bribe money was allegedly deposited into his Swiss bank account.
  • The Securities and Exchange Commission (SEC) is investi-gating a second bribery case involving Nigeria. Halliburton admitted that its employees paid a $2.4 million bribe to a Nigerian government official for the pur-pose of receiving favorable tax treat-ment. As the Houston Chronicle points out, "left unanswered is how a 'low-level employee' could channel that much money from the company to the pockets of a corrupt official."
  • The DOJ has opened a criminal investigating of Halliburton's business dealings in Iran.The company sells goods and services to Iran through a Cayman Islands sub-sidiary. The sales appear to have violated the U.S. trade embargo against Iran.
  • The criminal division of the DOJ has issued a subpoena to a former employee of KBR to determine whether the company criminally over-charged for fuels imported into Iraq.Meanwhile Pentagon auditors investigating the same matter found that KBR and its Kuwaiti subcontractor, Altanmia Commercial Marketing Company, had overcharged the military by $174 million for importing fuel into Iraq under the Restore Iraqi Oil (RIO) infrastructure contract. Other alleged over-charges under the same contract (not fuel imports) add up to another $38 million, bringing the total overcharges to at least $212 million. The Kuwaiti government, which has also been investigating the fuel overcharging, recently com-plained about the "lack of cooperation" by KBR and the U.S. military.
  • The DOJ indicted Jeff Alex Mazon, a former KBR manager, and a Kuwaiti businessman on charges of defrauding the U.S. government of $3.5 million over a fuel supply con-tract. The two men are charged with rigging bids to favor KBR subcontractor LaNouvelle over other subcontractors and then with overcharging the U.S. military for fuel trans-port services at a Kuwait airport. The alleged fraud cost the U.S. military $5.5 million for services KBR initially estimated would cost only $685,000.
  • The Pentagon's Defense Contract Audit Agency (DCAA) has issued several audit reports related to task orders under KBR's RIO contract that reported $212 million in questioned and unsupported costs. The Pentagon fired Halliburton from its gasoline importation con-tract and assigned it to an office within the Pentagon known as the Defense Energy Support Center (DESC). The result was a 50 percent reduction in gasoline prices charged to U.S. taxpayers.
  • The DOJ is investigating possible over-billing for government service work done in the Balkans between 1996 and 2000. The charges stem from a General Accounting Office (GAO) report that found Halliburton billed the Army for questionable expenses for work in the Balkans, including charges of $85.98 per sheet of plywood that cost them $14.06. A follow-up report by the GAO in 2000 also found inflated costs, including charges for clean-ing some offices up to four times a day.
  • The International Advisory and Monitoring Board (IAMB), a watchdog established by the United Nations, is investigating the management of Iraqi finances by the now-disbanded U.S. Coalition Provisional Authority (CPA). The Bush administration refused numerous IAMB requests for U.S. government audits about the payment of approximately $1.66 billion in Iraqi funds to Halliburton, which is the single largest private recipient of Iraqi oil proceeds. In October 2004, after failing to cooperate for months, the Pentagon finally sent the IAMB six of its audits. It was later found that portions of the audit were withheld from the IAMB to conceal damning evidence about KBR, including $212 million in overcharges and "unreasonable costs" associated with importing fuel into Iraq. The evidence was concealed from the public at KBR's request.
  • In March 2005, the DOJ opened a criminal inquiry into possible bid-rigging on foreign contracts by Halliburton. The company admitted it "may have" criminally rigged contract bids and said "information has been uncovered" that former employees of KBR "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...."
  • "Coordinating" with competitors to secure contracts with foreign governments is anticompetitive and a violation of U.S. antitrust law. The practice, known as "bid rigging," is punishable by criminal fines and denial of future contracts with the U.S. government.
  • The EPA is investigating complaints by Wes Wilson, one of its senior engineers, who said the agency distorts sci-ence in order to shield Halliburton from pollution laws. The engineer said the Bush administration purposely tam-pered with environmental science in order to shield a lucrative drilling technique, known as hydraulic fractur-ing, from all regulations. He believes the technique, pioneered by Halliburton, is harmful to drinking water sup-plies. Halliburton has spent years trying to get the federal government to exempt the technique from environmental regulations.
AMP Section Name:War & Disaster Profiteering
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