Halliburton Makes a Killing on Iraq War


March 23, 2003

As the first bombs rain down on Baghdad, thousands of employees of 
Halliburton, Vice President Dick Cheney's former company, are working 
alongside US troops in Kuwait and Turkey under a package deal worth close to 
a billion dollars. According to US Army sources, they are building tent 
cities and providing logistical support for the war in Iraq in addition to 
other hot spots in the "war on terrorism." 

While recent news coverage has speculated on the post-war reconstruction 
gravy train that corporations like Halliburton stand to gain from, this 
latest information indicates that Halliburton is already profiting from war 
time contracts worth hundreds of millions of dollars. 

Cheney served as chief executive of Halliburton until he stepped down to 
become George W. Bush's running mate in the 2000 presidential race. Today he 
still draws compensation of up to a million dollars a year from the company, 
although his spokesperson denies that the White House helped the company win 
the contract. 

In December 2001, Kellogg, Brown and Root, a subsidiary of Halliburton, 
secured a 10-year deal known as the Logistics Civil Augmentation Program 
(LOGCAP), from the Pentagon. The contract is a "cost-plus-award-fee, 
indefinite-delivery/indefinite-quantity service" which basically means that 
the federal government has an open-ended mandate and budget to send Brown and 
Root anywhere in the world to run military operations for a profit. 

Linda Theis, a public affairs officer for the U.S. Army Field Support Command 
in Rock Island Arsenal, Illinois, confirmed that Brown and Root is also 
supporting operations in Afghanistan, Djibouti, Georgia, Jordan and 
Uzbekistan. 

"Specific locations along with military units, number of personnel assigned, 
and dates of duration are considered classified," she said. "The overall 
anticipated cost of task orders awarded since contract award in December 2001 
is approximately $830 million." 

Local Labor in Kuwait 

The current contract in Kuwait began in September 2002 when Joyce Taylor of 
the U.S. Army Materiel Command's Program Management Office, arrived to 
supervise approximately 1,800 Brown and Root employees to set up tent cities 
that would provide accommodation for tens of thousands of soldiers and 
officials. Army officials working with Brown and Root say the collaboration 
is helping cut costs by hiring local labor at a fraction of regular Army 
salaries. 

"We can quickly purchase building materials and hire third-country nationals 
to perform the work. This means a small number of combat-service-support 
soldiers are needed to support this logistic aspect of building up an area," 
says Lt. Col. Rod Cutright, the senior LOGCAP planner for all of Southwest 
Asia. 

During the past few weeks, these Brown and Root employees have helped 
transform Kuwait into an armed camp, to support some 80,000 foreign troops, 
roughly the equivalent of 10 percent of Kuwait's native-born population. 

Most of these troops are now living in the tent cities in the rugged desert 
north of Kuwait City, poised to invade Iraq. Some of the encampments are 
named after the states associated with the attacks of Sept. 11, 2001 – Camp 
New York, Camp Virginia and Camp Pennsylvania. 

The headquarters for this effort is Camp Arifjan, where civilian and military 
employees have built a gravel terrace with plastic picnic tables and chairs, 
surrounded by a gymnasium in a tent, a PX and newly arrived fast food outlets 
such as Burger King, Subway and Baskin-Robbins, set up in trailers or 
shipping containers. Basketball hoops and volleyball nets are set up outside 
the mess hall. 

Meanwhile, In Turkey ... 

North of Iraq approximately 1,500 civilians are working for Brown and Root 
and the United States military near the city of Adana, about an hour's drive 
inland from the Mediterranean coast of central Turkey, where they support 
approximately 1,400 US soldiers staffing Operation Northern Watch's Air Force 
F-15 Strike Eagles and F-16 Fighting Falcons monitoring the no-fly zone above 
the 36th parallel in Iraq. 

The jet pilots are catered and housed at the Incirlik military base seven 
miles outside the city by a company named Vinnell, Brown and Root (VBR), a 
joint venture between Brown and Root and Vinnell corporation of Fairfax, 
Virginia, under a contract that was signed on Oct. 1, 1988, which also 
includes two more minor military sites in Turkey: Ankara and Izmir. 

The joint venture's latest contract, which started July 1, 1999 and will 
expire in September 2003, was initially valued at $118 million. US Army 
officials confirm that Brown and Root has been awarded new and additional 
contracts in Turkey in the last year to support the "war on terrorism" 
although they refused to give any details. 

"We provide support services for the United States Air Force in areas of 
civil engineering, motor vehicles transportation, in the services arena here –
 that includes food service operations, lodging, and maintenance of a golf 
course. We also do US customs inspection," explained VBR site manager Alex 
Daniels, who has worked at Incirlik for almost 15 years. 

Cheap labor is also the primary reason for outsourcing services, says Major 
Toni Kemper, head of public affairs at the base. "The reason that the 
military goes to contracting is largely because it's more cost effective in 
certain areas. I mean there was a lot of studies years ago as to what 
services can be provided via contractor versus military personnel. Because 
when we go contract, we don't have to pay health care and all the another 
things for the employees, that's up to the employer." 

Soon after the contract was signed, Incirlik provided a major staging post 
for thousands of sorties flown against Iraq and occupied Kuwait during the 
Gulf war in January 1991 dropping over 3,000 tons of bombs on military and 
civilian targets. 

Still ongoing is the first LOGCAP contract in the "war on terrorism," which 
began in June 2002, when Brown and Root was awarded a $22 million deal to run 
support services at Camp Stronghold Freedom, located at the Khanabad air base 
in central Uzbekistan. Khanabade is one of the main US bases in the 
Afghanistan war that houses some 1,000 US soldiers from the Green Berets and 
the 10th Mountain Division. 

In November 2002 Brown and Root began a one-year contract, estimated at $42.5 
million, to cover services for troops at bases in both Bagram and Khandahar. 
Brown and Root employees were first set to work running laundry services, 
showers, mess halls and installing heaters in soldiers' tents. 

Future Contracts in Iraq 

Halliburton is also one of five large US corporations invited to bid for 
contracts in what may turn out to be the biggest reconstruction project since 
the Second World War. The others are the Bechtel Group, Fluor Corp, Parsons 
Corp and the Louis Berger Group. 

The Iraq reconstruction plan will require contractors to fulfill various 
tasks, including reopening at least half of the "economically important roads 
and bridges" – about 1,500 miles of roadway within 18 months, according to 
the Wall Street Journal. 

The contractors will also be asked to repair 15 percejnt of high-voltage 
electricity grid, renovate several thousand schools and deliver 550 emergency 
generators within two months. The contract is estimated to be worth up to 
$900 million for the preliminary work alone. 

The Pentagon has also awarded a contract to Brown and Root to control oil 
fires if Saddam Hussein sets the well heads ablaze. Iraq has oil reserves 
second only to those of Saudi Arabia. This makes Brown and Root a leading 
candidate to win the role of top contractor in any petroleum field 
rehabilitation effort in Iraq that industry analysts say could be as much as 
$1.5 billion in contracts to jump start Iraq's petroleum sector following a 
war. 

Wartime Profiteering 

Meanwhile Dick Cheney's 2001 financial disclosure statement, states that 
Halliburton is paying him a "deferred compensation" of up to $1million a year 
following his resignation as chief executive in 2000. At the time Cheney 
opted not to receive his severance package in a lump sum, but instead to have 
it paid to him over five years, possibly for tax reasons. 

The company would not say how much the payments are. The obligatory 
disclosure statement filed by all top government officials says only that 
they are in the range of $100,000 and $1 million. Nor is it clear how they 
are calculated. 

Critics say that the apparent conflict of interest is deplorable. 

"The Bush-Cheney team have turned the United States into a family business," 
says Harvey Wasserman, author of "The Last Energy War" (Seven Stories Press, 
2000). "That's why we haven't seen Cheney – he's cutting deals with his old 
buddies who gave him a multimillion-dollar golden handshake. Have they no 
grace, no shame, no common sense? Why don't they just have Enron run America? 
Or have Zapata Petroleum (George W. Bush's failed oil-exploration venture) 
build a pipeline across Afghanistan?" 

Army officials disagree. Major Bill Bigelow, public relations officer for the 
US Army in Western Europe, says: "If you're going to ask a specific question –
 like, do you think it's right that contractors profit in wartime – I would 
think that they might be better [asked] at a higher level, to people who set 
the policy. We don't set the policy, we work within the framework that's been 
established. 

"Those questions have been asked forever, because they go back to World War 
Two when Chrysler and Ford and Chevy stopped making cars and started making 
guns and tanks," he added. "Obviously it's a question that's been around for 
quite some time. But it's true that nowadays there are very few defense 
contractors, but go back 60 years to the World War Two era, almost everybody 
was manufacturing something that either directly or indirectly had something 
to do with defense." 

Sasha Lilley and Aaron Glantz helped conduct interviews for this article. 

Pratap Chatterjee is an investigative journalist based in Berkeley, Calif. He 
traveled to Afghanistan and Uzbekistan in January 2002 and to Incirlik, 
Turkey, in January 2003 to research this article.

    

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