Pentagon, Ex-Workers Hit Halliburton on Oversight, Costs

Times Staff Writer

Halliburton Inc. was hit Monday with some of the sharpest criticism yet of its work in Iraq and Kuwait, as government auditors faulted its control over subcontractors and whistle-blowers alleged massive overspending.

The Pentagon’s Defense Contract Audit Agency found that Halliburton’s system of billing the government for billions of dollars in contracts was “inadequate in part,” failing to follow the company’s internal procedures or even to determine whether subcontractors had performed work.

At the same time, four former Halliburton employees issued signed statements charging that the company had routinely wasted money. Among other things, they said the company had paid $45 apiece for cases of soda and $100 per bag of laundry, and had abandoned nearly new, $85,000 trucks in the desert for lack of spare parts.

“There was this whole thought process that we can spend whatever we want to because the government won’t crack down in the first year of a war,” said Marie deYoung, a former logistics officer with the company.


Halliburton officials declined to address specifics of the allegations by former employees but said they would investigate. The officials said they were working to correct many of the deficiencies cited in the audit, and they denied that they had failed to control subcontractor costs.

“Rebuilding Iraq is one of the largest and most complex reconstruction undertakings of the past half-century, and our employees do not let danger stand in the way of efforts to make life a little easier for long-suffering people,” said Wendy Hall, a corporate spokeswoman.

The latest revelations came from Democrats. They are trying to focus attention during the presidential race on the links between Halliburton and Vice President Dick Cheney, who ran the company from 1995 to 2000, and it has become increasingly difficult to separate politics from unbiased criticism of Halliburton’s working relationship with the government.

Rep. Henry A. Waxman (D-Los Angeles), one of Halliburton’s biggest critics in Congress, had planned to introduce the whistle-blower testimony at a hearing today by the House Government Reform Committee, but was blocked by Rep. Thomas M. Davis (R-Va.), the panel’s chairman, who was seeking more time to investigate the complaints.


Instead, Waxman released a copy of the audit, the whistle-blower statements and an angry letter to Davis, demanding that the committee increase its oversight of Halliburton contracts.

A spokesman said Davis was willing to hear testimony by the whistle-blowers but wanted their claims corroborated first.

Waxman’s demands followed his statement Sunday that political appointees, not procurement experts, had recommended in the fall of 2002 that Halliburton be awarded a contract to plan the postwar reconstruction of Iraq’s oil industry.

Pentagon officials confirmed that account. Halliburton won a secretly negotiated contract worth as much as $7 billion to carry out the reconstruction effort. However, no evidence has been presented that Cheney influenced the awarding of contracts to his former company.


Waxman also disclosed a General Accounting Office report that said the Defense Department erred in awarding the Iraq planning contract to Halliburton by using an existing contract for providing logistical support to the military in general.

Sen. Frank R. Lautenberg, a New Jersey Democrat, called Monday for Atty. Gen. John Ashcroft to appoint a special counsel to investigate the awarding of the contract to Halliburton in the absence of competitive bidding designed to protect the taxpayer. Justice Department officials declined to comment.

Meanwhile, a liberal political group announced it would begin airing a 30-second television commercial today that links Cheney and President Bush to the controversy over Halliburton contracts. MoveOn PAC is spending $1.1 million to broadcast the spot in Ohio, Oregon, Nevada and Missouri -- all tightly contested states in the presidential campaign.

“The Bush administration gave Dick Cheney’s old company no-bid contracts for Iraq on a silver platter,” the MoveOn ad says, according to a script released Monday.


Cheney has long denied that he had any influence over the contracts. Defense officials say they notified his office that they planned to award the rebuilding contract to Halliburton, but only to alert it to a potentially politically controversial decision.

“Nobody is aware of any influence or pressure put on this contract by anyone in the White House,” said David Marin, a spokesman for the Republican majority on the Government Reform Committee.

The defense audit is the latest to find fault with Halliburton’s practices. Earlier audits concluded that the company overcharged more than $27 million for meals at dining facilities in Iraq, a finding Halliburton has disputed. It also found potential overcharges of up to $61 million for gasoline costs.

The most recent audit, dated May 13, said that the company failed to follow its own procedures for billing the government. It also found that Halliburton frequently did not follow up to see whether subcontractors had performed the work for which they were being paid.


Those findings were echoed by several former employees who contacted Waxman’s office to deliver their statements.

One of them, deYoung, said she had tried to renegotiate for lower prices several times but was repeatedly rebuffed by higher-ups, who showed no interest in bringing down costs. In one instance, deYoung said, Halliburton was paying up to $1.2 million a month for a laundry service that did so little work that the laundry wound up costing $100 per bag.

Two other former Halliburton employees who worked as convoy drivers gave Waxman’s office statements saying that when the trucks, which cost $85,000, broke down, the vehicles were either burned by the side of the road or abandoned. Both men said they were later fired in an unrelated dispute.

“As someone who has been in trucking for 13 years, I do not understand how a company could ditch a brand-new truck because they didn’t have a spare tire,” James Warren wrote. “No trucker I know would have been that careless with his own truck.”


Times staff writer Nick Anderson contributed to this report.