Halliburton Unit's Bill for Iraq Work Mounts
BAGHDAD — The Pentagon has paid nearly $90 million to a subsidiary of the well-connected Halliburton Co. to cater to the Americans who are working to rebuild Iraq, U.S. officials said -- while the reconstruction effort has yet to show significant results for ordinary Iraqis.
The Defense Department gave Halliburton's KBR exclusive rights to the job -- which has included fixing up an extravagant presidential palace being used by the Americans -- under a broad U.S. Army logistics contract that pays the company a fee based on a percentage of everything it spends, according to Pentagon documents and Halliburton's corporate filings.
KBR, whose parent firm has had strong ties to Vice President Dick Cheney, has drawn scrutiny for an emergency oil contract in Iraq that is becoming increasingly lucrative.
Under a "task order" from the lesser-known logistics contract, the Defense Department has rung up KBR's multimillion-dollar bill -- which is expected to nearly double -- as the number of U.S. officials and Iraqi exiles working for the Pentagon-created reconstruction agency balloons. In blocks-long convoys from Kuwait, the firm is hauling in everything from prefabricated offices, showers, generators and latrines the size of trailer homes to food and bottled water.
As supplies for the Americans continue to arrive by the ton, little of the millions KBR is spending have gone into the Iraqi economy that Washington has pledged to restore. KBR's logistics job gives it no direct role in the rebuilding of this shattered country; that falls to the Bush administration's ambitious $2.4-billion reconstruction program, which is being overseen by the State Department.
The company's most lucrative subcontracts are with trucking, catering and security companies based in neighboring Kuwait and Saudi Arabia, oil-rich nations with the best land routes into Iraq.
KBR and Pentagon officials say hiring Iraqis and buying local goods are a top priority. Although the company subcontracted with one Iraqi-owned firm that has bought local goods and recruited more than 350 Iraqis to work for the Americans, the firm estimates that the move has put just $100,000 into the local economy so far.
Fodder for Critics
Antiwar activists have asserted that U.S. corporate profits were among the motives in waging the campaign in Iraq, which has the second-largest oil reserves on the globe. Other critics have charged that the Dallas-based Halliburton has received preferential treatment from the Bush administration.
