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Halliburton Likely to Be a Campaign Issue This Fall
Published on Saturday, February 14, 2004 by the New York Times
Halliburton Likely to Be a Campaign Issue This Fall
by Joel Brinkley
 

WASHINGTON As the accusations and investigations of the Halliburton Company's federal contracts in Iraq expand in size and number, Democrats say they will use the company's ties to the Bush administration as a campaign issue, and Halliburton is responding with television advertisements implying that it is being unfairly singled out.

"We are serving our troops because of what we know, not who we know," declares the 30-second spot, which is running in Washington, Houston and several other cities.

A company filing with the Securities and Exchange Commission late last month declared that Halliburton's Iraq contracts "will likely be subject to intense scrutiny" in the months ahead, in large part because "the vice president of the United States" is "a former chief executive officer."

"We expect that this focus and these allegations will continue and possibly intensify as the 2004 elections draw near," it adds with understandable prescience.

In recent days, several prominent Democrats have made a point of attacking the White House over Halliburton's contracting troubles, issues that in normal times would hardly rise to the level of prominent national debate.

"At a time when Halliburton is defrauding the federal government and facing serious allegations of bribery, we look forward to taking this debate to George Bush," Senator John Kerry's campaign said in a statement late last week.

And Senator Barbara Boxer, Democrat of California, sent a letter to Defense Secretary Donald H. Rumsfeld on Friday demanding that he "immediately begin suspension or disbarment proceedings against the Halliburton Company" because of its contracting problems. The Senate minority leader, Tom Daschle, has made a similar request.

Bill Carrick, who was the media strategist for the presidential campaign of Representative Richard A. Gephardt of Missouri, said he believed that Halliburton's problems had the power to remain a durable campaign issue because "in a lot of people's minds, it's a surrogate for the larger feeling that the Bush administration is too close to the oil business, and Cheney has in some ways become an elusive figure."

While Bill Dal Col, a Republican consultant, called Halliburton "a good rallying cry" for Democrats that "will help with fund-raising," he added that "it doesn't really have any traction with anyone who is not already opposed to the administration."

Cathy Gist, a Halliburton spokeswoman, acknowledged that "there has been a lot said about the company's contracts in Iraq" but she then pointed out that the Pentagon comptroller, Dov S. Zakheim said in Congressional testimony last week that Halliburton was "doing their best to do the right thing."

In the advertisements, Dave Lesar, Halliburton's chief executive, said: "You've heard a lot about Halliburton lately. Criticism is O.K. We can take it. Criticism is not failure."

Still, Halliburton's troubles continue to multiply. On Thursday, two Democratic members of Congress informed the Pentagon that two former Halliburton employees had come forward with a variety of accusations about wasteful spending of government money, saying Halliburton "routinely overcharged" for its work in Iraq.

"High-level Halliburton officials frequently told employees that the high prices charged by vendors were not a problem because the U.S. government would reimburse Halliburton's costs and then pay Halliburton an additional fee," the two Congressman Henry Waxman of California and John D. Dingell of Michigan wrote in a letter to Pentagon auditors.

One of the former employees, according to the letter, said "a Halliburton motto was: `Don't worry about price. It's cost-plus.' "

In the letter, the congressmen said the two men approached Mr. Waxman after leaving jobs with Halliburton for personal reasons last month. The letter said the employees told them Halliburton worked hard to avoid putting purchases out for competitive bidding and therefore overspent for many purchases as well as common items.

One of them, Henry Bunting, had been a buyer for the company in Kuwait for several months. The other, who was not named, also worked for the company for only a few months, said Karen Lightfoot, an aide to Mr. Waxman. Mr. Bunting repeated his accusations on Friday in testimony to Senate Democrats, saying, "There was not concern about price."

Ms. Gist, the Halliburton spokeswoman, said the company took seriously any accusations of improper conduct. Nonetheless, she noted that Halliburton had no record that Mr. Bunting ever called the company hot line for employee concerns about business practices.

The former employees' accusations are the latest in a long string of troubles. On Monday Kuwait's energy minister asked his country's chief prosecutor to investigate accusations of overcharging in relation to Halliburton's contract to import fuel to Iraq from Kuwait. On Wednesday, Kuwaiti legislators demanded a separate inquiry.

Last Friday, Nigeria ordered an investigation into accusations that a Halliburton subsidiary paid $180 million in bribes in an effort to win a natural gas contract there, accusations already being investigated in the United States and France.

Also last week, Halliburton said it would withhold billing for as much as $27.4 million until a debate with the Pentagon was resolved over the cost of supplying meals to troops in Iraq. In addition, the company disclosed last month that two employees had taken kickbacks from a Kuwaiti subcontractor who was providing services to American troops. The company reimbursed the government $6.3 million.

The largest controversy remains the debate over whether Kellogg Brown & Root, the Halliburton subsidiary, overcharged the government by $61 million while importing fuel to Iraq. Halliburton says the government-owned Kuwait Petroleum Corporation pressured Halliburton's subsidiary to buy the fuel from an obscure family-owned company, the Altanmia Commercial Marketing Company, despite its high price.

Scott Saunders, a spokesman for the Army Corps of Engineers, which handled bidding on the fuel contract, said Halliburton had solicited bids from three companies, "but the other two could not meet the requirements of the contract," specifically the capability to export large quantities of fuel to Iraq. "So," Mr. Saunders said, "we told K.B.R. to go with" Altanmia.

© Copyright 2004 The New York Times Company

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