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WE HAVE A PROBLEM
AN ALTERNATIVE ANNUAL REPORT ON HALLIBURTON, APRIL 2004
HOUSTON,
TABLE OF CONTENTS
I. Introduction: Houston, We Have a Problem
II. Military Contracts, the War on Terrorism, and Iraq
III. Around the World
IV. Corporate Welfare and Political Connections
V. C onclusion and Recommendations
V. A dditional Resources
COVER: Zubair oil fields, Southern Iraq.
Photo: David Martinez, Corpwatch
HOUSTON, WE HAVE A PROBLEM
HOUSTON, WE HAVE A PROBLEM
Halliburton, the largest oil-and-gas services company in the world, is also one of the most controversial corporations in the
United States. The company has been the number one financial beneficiary of the war against Iraq, raking in some $18 billion in
contracts to rebuild the country’s oil industry and service the U.S. troops. It has also been accused of more fraud, waste, and cor-
ruption than any other Iraq contractor, with allegations ranging from overcharging $61 million for fuel and $24.7 million for
meals, to confirmed kickbacks worth $6.3 million. Halliburton is also currently under investigation by the Department of Justice.
Perhaps most importantly, Halliburton has friends in the high-
est of places: Vice President Dick Cheney was Halliburton’s
CEO prior to his taking office in 2000, and he continues to
receive annual payments from the company in excess of
$150,000. While CEO at Halliburton from 1995 to 2000,
Cheney took advantage of his extensive relationships with U.S.
government agencies and world leaders that he developed dur-
ing his tenure as secretary of defense under President George
Bush Senior. Through these ties, he helped the company win
billions of dollars in government contracts to provide services
to the U.S. military and billions more from international lend-
ing institutions for projects ranging from coal mines in India
to oil fields in Chad and Colombia.
Although Halliburton saw a barrage of criticism in 2003, the
company has a history of scandal. Since 1919, when Earle P.
Halliburton founded the company with patented technology
stolen from his former employer
2
, Halliburton has been
involved in controversial oil drilling projects around the world.
It was found guilty of fixing the prices of marine construction
in the oil industry over a 16-year period in the Gulf of Mexico,
and it paid out more than $90 million in claims and fines in
the 1970s.
3
In 2002, the company admitted that one of its
employees in Nigeria was caught attempting to bribe a tax
inspector for $2.4 million.
4
Over the years, Halliburton has been subject to charges of war
profiteering and cronyism. During the Vietnam War,
Halliburton’s construction-and-engineering subsidiary, Brown
& Root Services
5
, was heavily criticized for war-profiteering
and lax controls. In 1982, the General Accounting Office
(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.
6
Now that Cheney has become the U.S. vice president, even
more money has flooded into Halliburton’s coffers. In 2003
Halliburton earned $3.9 billion from contracts with the U.S.
military, a dizzying 680 percent increase over the $483 million
it earned in 2002.
1
In Iraq, Halliburton’s contracts are worth
three times those of Bechtel, its nearest competitor.
1
ALTERNATIVE ANNUAL REPORT ON HALLIBURTON
In 1966 Donald H. Rumsfeld, then a Republican member of
the House of Representatives from Illinois, demanded to
know about the 30-year association between Halliburton
Chairman George R. Brown and Lyndon B. Johnson. Brown
had contributed $23,000 to the President’s Club while the
Congress was considering whether to continue another mul-
timillion-dollar Brown & Root Services project.
7
“Why this
huge contract has not been and is not now being adequately
audited is beyond me. The potential for waste and profiteer-
ing under such a contract is substantial,” Rumsfeld said.
8
This report will document Halliburton’s track record in violat-
ing many of the values that Americans hold dear, from a belief
in human rights and democracy to an interest in transparency
and accountability. It covers Halliburton’s blatant use of politi-
cal connections and campaign contributions to win contracts
that have allowed it to profit from the war on terrorism as well
as the war in Iraq. The report also provides numerous case
studies of Halliburton’s business dealings with some of the most
odious and corrupt regimes in the world. Many of these busi-
ness deals were subsidized with corporate welfare checks from
the World Bank and the U.S. Export-Import Bank (ExIm).
Since the Vietnam War, Halliburton’s military contracts have
only increased, and the company is under more scrutiny. As
Halliburton President and CEO David J. Lesar acknowledged
in a recent television spot responding to taxpayer concerns
about its Iraq contracts, “You’ve heard a lot about Halliburton
lately.” But we certainly haven’t heard everything. Halliburton’s
public-relations machine emphasizes that the company is
“proud to serve our troops,” but it fails to mention the myriad
ways in which Halliburton has proven itself to be one of the
most unpatriotic corporations in America.
Halliburton’s Lesar insists that “criticism is OK.” “We can take
it,” he says. The question is, can the company study the criti-
cism and translate it into ethical, transparent, and accountable
business practices? Judging from its track record as document-
ed in this report, it is unlikely that Halliburton will transform
its claims of patriotism from sound bites into substance. This
report concludes with recommendations that, if enacted,
would ensure that Halliburton no longer rips off Iraqis nor the
U.S. public. Without such changes, the firm’s government con-
tracts should be terminated, and Congress should ensure that
our taxpayer dollars no longer go to truly unpatriotic compa-
nies such as Halliburton.
1 Is What’s Good for Boeing and Halliburton Good for America? Bill Hartung and Frida Berrigan, World Policy Institute, February 2004
2effrey Rodengen, The Legend of Halliburton, Write Stuff Press, 1996
3Brown & Root is a Golden Problem Child for Halliburton, Linda Gillan, Houston Chronicle, March 4, 1980.
4Cheney Firm Paid Millions in Bribes to Nigerian Official, Oliver Burkeman, The Guardian (UK), May 9, 2003
5 Rodengen, op. cit.
6Raymond Klempin, Houston Business Journal, September 13, 1982
7Unearthing Democratic Root to Halliburton Flap, Al Kamen, Washington Post, March 5th, 2004
8War Profiteering from Vietnam to Iraq, James M. Carter, Counterpunch.org, December 11, 2003.
2
HOUSTON, WE HAVE A PROBLEM
HALLIBURTON AND THE MILITARY
Halliburton is one of the ten largest contractors to the U.S. military with several lucrative deals in Iraq: It earned $3.9 billion from
the military in 2003, a dizzying 680 percent more than in 2002, when the company brought in just $483 million from the military.
Halliburton’s business in Iraq is three times as much as Bechtel, its nearest competitor.
1
Just how Halliburton has won so many
lucrative contracts from the military can be attributed to one man—its former CEO and current U.S. Vice President Dick Cheney, a
lifelong politician in Washington, D.C., who practically invented the modern system of outsourcing American military work.
EARLY CONTRACTS
Cheney’s role began in 1988, when he was named secretary of
defense after the election of George Bush Senior. The end of
the Cold War brought with it expectations of a peace dividend,
and Cheney’s mandate was to reduce forces, cut weapons sys-
tems, and close military bases. Over the next four years,
Cheney downsized the total number of U.S. soldiers to their
lowest level since the Korean War.
2
He also sought private
companies to pick up some of the jobs left vacant by the mili-
tary downsizing.
tracts. In 1990, the Pentagon paid Halliburton $3.9 million to
draw up a strategy for providing rapid support to 20,000
troops in emergency situations. After reading the initial
Halliburton report, the Pentagon awarded Halliburton another
$5 million to complete the plans for outsourcing support oper-
ations.
3
In August 1992, the U.S. Army Corps of Engineers chose
Halliburton to implement a plan the company had drawn up
under a contract called Logistics Civil Augmentation Program
(LOGCAP). The contract gave the government an open-ended
mandate and budget to send Halliburton anywhere in the
world to support military operations.
4
Although the Pentagon
had often used private contractors, this was the first time it
had relied so heavily on a single company. For Halliburton, the
As a company with a history of military contracting—
Halliburton subsidiary Kellogg Brown & Root (KBR) has been
building bases and warships for the military since World War
II—Halliburton was a natural choice for many of these con-
3
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