Halliburton
Unit Expands
War-Repair Role
By Stephen J. Glain and
Robert Schlesinger
The Boston Globe
17 July, 2003
BAGHDAD -- They travel like foreign dignitaries, their SUVs escorted
by two US Army Humvees and a security detail led by a master sergeant.
No Iraqi official is too busy to meet them and when it comes to Iraq's
most precious resource, oil, they are granted total and instant access.
Officials from Kellogg, Brown
& Root Services, a subsidiary of oil-services giant Halliburton
Co., are using a broadly worded contract to evaluate and repair Iraq's
petroleum infrastructure, ''as directed'' by the US government, to gain
a huge head start over potential competitors in redeveloping the country's
vast, outdated oil industry. With much of Iraqi reconstruction bogged
down by sabotage, chronic looting, and bureaucratic mire, KBR -- which
also is supposed to repair war-damaged oil wells and provide general
logistical support to the US Army -- has expanded its role to include
everything from gasoline imports to laundry services.
Some Iraqi oil officials
say KBR is using what appears to be an open-ended mandate to effectively
corner a market coveted by its rivals and to win business Iraqis can
do themselves.
''We don't need KBR,'' says
Dathar Al Khashab, general manager of Baghdad's Daura Refinery Co.,
which like Iraq's other refineries badly needs new equipment after a
generation of sanctions. ''I can work with any other company to do this
job.''
KBR's work in Iraq comes
under two different contracts. In 2001 the company was awarded a 10-year
contract under the Army Logistics Civil Augmentation Program, known
as Logcap, that calls for the company to provide a wide range of logistical
services to the US Army. By the end of May, KBR had received $425 million
under that contract, according to correspondence between Representative
Henry A. Waxman of California, the ranking Democrat on the House Government
Reform Committee, and the Department of the Army.
Through that contract, KBR
had prepositioned personnel and equipment in the Iraq region -- deployments
that in the Army's eyes made the company the logical choice for an oil
infrastructure contract that was awarded soon after the war in Iraq
began.
That KBR contract -- according
to Waxman, who is investigating the deal -- has ''no set time limit
and no dollar limit and is apparently structured in such a way as to
encourage the contract to increase its costs and, consequently, the
costs to the taxpayer.''
It took Waxman's investigation
to uncover key details of the KBR contract, which was awarded by the
Army Corps of Engineers as part of a secret process by US government
agencies charged with rebuilding postwar Iraq. Several of the companies
involved in the closed-door bidding, allowed in times of a national
crisis under federal procurement laws, have close ties to the White
House or were major contributors to the Bush presidential campaign.
In addition to KBR, the winning
bidders included San Francisco-based Bechtel/Parsons Brinckerhoff, which
was awarded a $780 million contract to supervise Iraqi reconstruction.
Bechtel, together with Halliburton, donated more than $2 million in
campaign contributions, primarily to Republican candidates, according
to the Center for Responsive Politics. From 1995 to 2000, Halliburton
was headed by now-Vice President Dick Cheney.
KBR, according to an Army
Corp of Engineers official responding in early April to Waxman's written
queries, was awarded a two-year, $7 billion contract to put out oil
well fires and evaluate the state of petroleum fields in postwar Iraq.
By early July, five ''task
orders'' had been issued under the infrastructure contract worth more
than $282 million, according to a website set up by the Army Corps of
Engineers. The orders included training and advice for safely shutting
down equipment and assessing damage, repairing facilities, building
base camp facilities, and bringing oil into Iraq while indigenous distribution
systems are still being repaired.
The contract was designed
to cover a ''worst-case estimate'' of possible damage, wrote Lieutenant
General Robert Flowers, and ''those services necessary to support the
mission in the near term.''
Flowers gave Waxman his written
assurance that ''no other contractor could satisfy the mission requirements.''
That's not how many Iraqis
see it. They say KBR's preponderant role in postwar reconstruction reinforces
local suspicion that the invasion of Iraq was more about promoting American
corporate interests than removing Saddam Hussein. At a time when US
officials in Iraq have been criticized for employing American companies
to do what Iraqis are capable of doing on their own, KBR manages laundry
services and a hair salon at US occupation headquarters.
''KBR is performing tasks
as directed by our clients to provide for the continuity of operations
of the Iraqi oil infrastructure, as well as the logistical support services
required as part of the Logcap contract,'' Cathy Gist, a KBR manager
of public and community relations, wrote in response to e-mailed queries.
Iraqi and US officials offer
different interpretations of KBR's core business in Iraq. Philip Carroll,
US adviser to the Iraqi oil ministry, says the terms of KBR's contract
limits the company to a survey of war-related damage and recommendations
on how to fix it. The survey should not cover equipment damaged or worn
out during the 13-year-old UN embargo imposed on Iraq after Baghdad's
1990 invasion of Kuwait, he said.
By year's end, according
to Carroll, KBR will submit its report for evaluation by the oil ministry,
which will use it as a blueprint for the repair of Iraq's oil infrastructure.
''When they come up with a plan they will submit it to the ministry,
and we will review it and compare it with the terms of their contract,''
he said.
To hear Iraqi oil officials
tell it, the rebuilding process has already begun, with KBR as both
consultant and supplier.
Khashab of the Daura refinery
said there is little war damage to evaluate, because the facility survived
the war unscathed. ''We can go straight'' into rebuilding, he said.
''The refinery is very old, and KBR is happy to help us. We're sitting
down with them, and they're working to get what we need.''
Khashab says he and KBR are
discussing ways to upgrade Daura's capacity to develop light-oil products,
such as lubricating oil. It is a procurement job Khashab says he is
perfectly capable of doing without KBR's help. ''But since KBR is here,''
he said, ''why not work with them?''
KBR's Gist said that the
company is conducting ''emergency repairs'' of the infrastructure.
''KBR personnel continue
to assess the situations and inspect the oil infrastructure, performing
repairs as directed by the Corps of Engineers,'' she wrote. ''However
these assessments and reviews are not complete, and it is too early
to speculate on an overall condition or course of action.''
Waxman, when informed of
the scope of the company's activities in Iraq, expressed reservations
about KBR's expanding role.
''It's important that we
provide essential services to our servicemen and women, but some of
the services Halliburton is providing go beyond that and certainly give
the appearance of a `Full Halliburton Employment Act,' '' Waxman said.
''There may be good reasons why taxpayers are paying a multinational
corporation like Halliburton to cut hair and wash shirts, but it would
be helpful to know why.''
KBR has also been tasked
to arrange overland shipments of gasoline to ease fuel shortages following
waves of postwar looting that crippled Iraqi oil production. Thousands
of tanker trucks are entering Iraq each week from Syria, Saudi Arabia,
Turkey, and Jordan, nearly all of which are fixed by KBR agents. It
is a business with which the Iraqis have years of experience; since
the 1991 Gulf War, Iraq provided Jordan with discounted oil in return
for Amman's support of Baghdad's invasion of Kuwait. Those shipments
ended with the coalition assault in March, and Iraqi truckers have been
out of work since then. KBR agents have hired foreign truckers, not
Iraqi ones, say Iraqi transport companies.
''We have enough trucks to
do this ourselves,'' says Shahab Ahmed Hamid, a member of a local truckers'
union. ''We were promised subcontracts from the Americans, but no Iraqi
trucks have been employed.''