U.S. Ambassador Intervened in Halliburton Contract, Documents Show
By Larry Margasak
Associated Press Writer
WASHINGTON (AP) - The U.S. ambassador to Kuwait intervened last year to
ensure that Halliburton, the oil services company once led by Vice
President Dick Cheney, retained a Kuwaiti business as a subcontractor to
deliver fuel to Iraq, documents released Wednesday show.
State Department documents appear to contradict the Bush
administration's assertion that all decisions involving Halliburton's
contracts were handled only by career contracting officers for the
government.
The ambassador's effort was aimed at ensuring that the company favored
by the Kuwaiti government remained part of the contract.
With Iraq experiencing a gasoline shortage after the U.S.-led invasion
last year, U.S. officials gave Halliburton the job of obtaining fuel in
Kuwait and delivering it to Iraq. The work became part of Halliburton's
existing $2.5 billion no-bid work to restore Iraq's oil industry.
On May 4, 2003, Halliburton asked three Kuwaiti companies to bid. The
next day, Halliburton, through its KBR subsidiary, placed its first
order with Altanmia.
By that December, an Army Corps of Engineers contracting officer was
pushing Halliburton to put the fuel delivery contract out for
competitive bids.
That same month, U.S. Ambassador Richard Jones wrote that Halliburton
officials had to "get off their butts and conclude deals" that would
keep Altanmia as a subcontractor.
"Tell them we want a deal done with Altanmia within 24 hours and don't
take any excuses," Jones wrote. The documents, turned over to a
congressman by the State Department, do not disclose to whom Jones'
message was directed.
Another memo, this one to Jones, said: "As KBR has been told repeatedly,
Altanmia is the GOK's (Government of Kuwait's) sole source provider. The
GOK has established Altanmia as a sop to the USG (United States
Government) in order to allow sales from Altanmia to KBR."
A Halliburton spokeswoman, Wendy Hall, said that KBR "delivered fuel to
Iraq at the best value, the best price, and the best terms and in ways
completely consistent with government procurement policies. The original
mission detailed by the Army Corps of Engineers was to find a fuel
source in the region. The first fuel source found was in Kuwait."
State Department officials had no immediate comment on the memos. Jones
is a career State Department employee.
The embassy intervention to retain Altanmia brought a strong protest
from the career Army contracting official who was overseeing the work to
deliver fuel to Iraq.
"My ethics will not allow me to direct KBR to go sole source to a
contractor when I know there are other potential sources that can
provide the fuel to the people in Iraq," Army Corps of Engineers
contracting officer Mary Robertson wrote an official of KBR.
Robertson said the lack of competition would result in higher fuel
prices being paid by U.S. taxpayers.
Robertson's Dec. 6, 2003, prediction of higher prices proved to be
accurate. Five days later, a draft report by the Pentagon's audit agency
disclosed that Halliburton and the Kuwaiti subcontractor had overcharged
taxpayers $61 million for gasoline imports to Iraq in the initial months
of the contract.
The Pentagon early this year replaced Halliburton and the Kuwaiti
company. The work went to a Defense Department agency that supplies U.S.
forces around the world.
Robertson's letter and a number of State Department documents were
released by Rep. Henry Waxman of California, top Democrat on the House
Government Reform Committee.
Halliburton's contracting was a major issue in the presidential
campaign. Democrats charged that the administration showed favoritism
toward Cheney's former company.
The Associated Press reported last month that the FBI had begun
investigating whether the Pentagon improperly awarded no-bid contracts
to Halliburton. The FBI was seeking an interview with Army contracting
officer Bunnatine Greenhouse, who raised the same questions of fairness.
Waxman asked Rep. Tom Davis, R-Va., the committee chairman, to hold
hearings on "the new evidence that senior administration officials
applied political pressure to stifle competition and steer the lucrative
fuel subcontract" to Altanmia.
Davis' spokesman, David Marin, said, "This committee's oversight of
Iraqi contracting issues has been exhaustive, and it is ongoing. The
minority's focus is entirely partisan. We're continuing to look at the
recent State Department documents, and based on that review the chairman
will decide what if any next steps are required."
The documents also show that the department got reports in June and
August 2003 that Halliburton officials demanded kickbacks.
A department summary of an Aug. 4, 2003, noted, "Some of these charges
are almost too flamboyant not to have at least a grain - however tiny -
of truth to them."
Hall, the Halliburton spokeswoman, said, "It is important to the company
that clients, suppliers and host countries know Halliburton's code of
business conduct is expected to be followed in every country in which
the company operates."