Halliburton Disputes Accusations of Waste in Iraq

After enduring months of pummeling by Democrats, Halliburton Co. executives Thursday appeared for the first time before Congress to dispute accusations that the company had gouged American taxpayers.

The executives offered a sweeping defense of the company’s actions in Iraq, where a Halliburton subsidiary holds a U.S. government contract, worth as much as $7 billion, to provide food, mail delivery and other logistics services to U.S. troops.

While acknowledging mistakes that they attributed to the difficulty of working in a war zone, the executives said Halliburton had saved taxpayers millions of dollars in some cases by fighting to keep down costs.

“Never before has any contractor worked in as difficult and dangerous a situation as we do in Iraq,” said Alfred V. Neffgen, who is in charge of U.S. government contracts for KBR, the subsidiary operating in Iraq. “We have performed, and performed well, for our soldiers and our country.”

Halliburton’s record has emerged as a key issue in the presidential campaign as Democrats have focused on the company’s ties to Vice President Dick Cheney, who headed the Houston-based company between 1995 and 2000.

The politics of the issue were on display at Thursday’s hearing before the House Government Reform Committee, as Democrats and Republicans attacked each other with increasing rancor.

The spectacle included Republicans lashing former Halliburton truck drivers who had complained about waste as “so-called” whistle-blowers and Democrats intensely drilling executives over soda cans, spare tires and oil filters.

The two sides split on a party-line vote, 23-19, as Republicans quashed a motion to subpoena any records of contact between the vice president’s office and the Pentagon over the awarding of the contract.

“I for one still believe that if it weren’t for the fact that the vice president was the former -- and I emphasize former -- CEO of the parent company, we wouldn’t even be here today,” said Rep. Tom Davis, the Virginia Republican who heads the committee. “Politics is driving this agenda, and I suspect that not even the truth will keep the detractors at bay.”

But Rep. Henry A. Waxman (D-Los Angeles), who has led the attacks against Halliburton, said the company’s conduct in Iraq and its ties to Cheney were fair game.

He noted that audits by three government agencies, including the Defense Contract Audit Agency, had found problems with Halliburton’s contract. The company is in a fight with the government over charges that it wrongly billed for $186 million in meals that U.S. troops were never served.

In addition, Halliburton faces a grand jury investigation over the operations of a subsidiary in Iran; a Justice Department inquiry into whether a consortium it belonged to bribed Nigerian officials; and another criminal investigation into whether two of its employees received as much as $6.3 million in kickbacks for a contract in Kuwait.

“The administration’s approach to the reconstruction of Iraq is fundamentally flawed,” Waxman said. “It’s a boondoggle that’s enriching private contractors.”

The hearing began with testimony that Waxman had previously released from three former Halliburton employees who complained about waste they had seen.

Two truck drivers, David Wilson and James Warren, said the company failed to maintain expensive Mercedes-Benz trucks purchased with government money, did little to stop pilfering and abandoned vehicles by the side of the road.

Marie deYoung, who worked in its contracting department in Kuwait, said Halliburton housed workers in five-star hotels while U.S. soldiers slept in tents in the desert. She said the company failed to follow up on her complaints about overcharges.

But Halliburton executives defended the company in painstaking detail. They said that trucks were routinely supplied with oil filters and spare tires and that no trucks had been abandoned because of maintenance problems.

They said that 87% of the company’s 14,000 expatriate workers slept in tents and that those in hotels often doubled or tripled up in rooms. They flashed pictures of the tents; Democrats responded with pictures of the pool and the plush beds at the Hilton Kuwait Resort.

“We placed continuous pressure on ourselves to do better,” Neffgen said. “We identified problems and we fixed them. We also have elaborate systems to detect improprieties, and when they occurred, we acted.”