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2004-05-17

The Halliburton Agenda: The Politics of Oil and Money

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As protesters plan to demonstrate outside Halliburton’s annual shareholder meeting in Houston on Wednesday we speak with Dan Briody, author of the 'Halliburton Agenda', and Pratap Chattergee from Corpwatch which has just released an alternative annual report for Halliburton called 'Houston, We Have A Problem'. [includes rush transcript]

Hundreds of pig-snouted activists will be out in front of the glamorous Four Seasons hotel in downtown Houston this Wednesday to protest the Annual Shareholders Meeting of Halliburton — what they call "bringing home the Hallibacon."

Halliburton is the largest oil-and-gas services company in the world and it is also one of the most controversial corporations in the United States.

The company has been the number one financial beneficiary of the invasion of Iraq, raking in some $18 billion in contracts to rebuild the country’s oil industry and service US troops.

It has also been accused of more fraud, waste and corruption than any other Iraq contractor, with allegations ranging from overcharging for tens of millions of dollars for fuel and meals to outright bribery. Halliburton is also currently under investigation by the Department of Justice.

And of course, the connections to the Bush administration cannot run deeper–Vice President Dick Cheney was Halliburton’s chief executive prior to taking office in 2000.

Today we take an in-depth look at Halliburton...

  • Pratap Chatterjee, managing director of CorpWatch.org. He is speaking to us from the KPFT studios in Houston where Halliburton is holding its annual shareholders meeting on Wednesday. CorpWatch has just issued an alternative annual report for Halliburton titled "Houston, We Have A Problem."
  • Dan Briody,  author of the new book "The Halliburton Agenda : The Politics of Oil and Money." His previous book which came out a year ago is "The Iron Triangle: Inside the Secret World of the Carlyle Group."

Transcript

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Today we’ll take an in depth look at Halliburton with the author of a new book, "The Halliburton Agenda", Dan Briody. First, we will go to Houston with Pratap Chatterjee, the Managing Director of CorpWatch.org. Welcome to Democracy Now! Pratap.

PRATAP CHATTERJEE: Thank you, Amy.

AMY GOODMAN: Can you tell us about the preparations as well as the new report that CorpWatch has out, called "Houston, We Have a Problem"?

PRATAP CHATTERJEE: Indeed Amy, Houston, we do have a problem, and the problem is Halliburton and its relationship with the U.S. Government and especially with the military in Iraq. But actually as you mentioned, a much longer standing problem which is that of global warming and dealing with corrupt dictatorships around the world. Halliburton has been around for 80 years, and for much of the last decade they have been dealing with governments from Iran to Azerbaijan, countries that in fact we’ve often had rules against doing business with, and they have deliberately gone and worked with these people in order to make a profit. And actually the back cover of the report has a quote from Dick Cheney, where he says the problem is that the good lord didn’t see fit to put oil and gas reserves with democratically elected regimes, friendly to the interests of the United States. This is really a story of a company that has, you know, over a period of years, and Dan can probably speak this more eloquently than I can, started out by stealing technology, oil well technology. Mr. Earl Halliburton stole it from his former boss and then made a killing, made a huge profit in selling this around the world. Now they are making a profit out of doing this in war zones, directly by supporting the U.S. military and by using sweat shop labor from India. We’ve just heard in the last week or so that people have been paying Snakeheads in India in order to get jobs in Iraq and then once they come, they get to Iraq and they are handled as virtual slaves. So, what Corpwatch is doing here in Houston is we’ve issued this report "Houston, we have a Problem." The cover is actually a picture of the oil fires and the oil wealth down in southern Iraq that I took with David Martinez back in December. This report, which is issued in conjunction with Global Exchange, and also in collaboration with the Center for Corporate Policy, Common Cause, the Sustainable Energy and Economy Network, the Institute for Southern Studies and Taxes for Common Sense, we’re going to make this available to share holders on Wednesday so they can see what really is happening. It is a beautiful report and actually goes along very well along with Halliburton’s own stated policy today. For some reason their new sort of logo seems to be red, so we brought them a red report and we’re going to be telling people here exactly what’s happening. As you mentioned, Amy, I believe there will be 200 pig-snouted executives waiting outside the Four Seasons Hotel on Wednesday morning at 8:00. And indeed, many of them will be in attendance at a place called "The Station" on Tuesday night, where there will be an event, a teach-in to talk about what’s happening. That’s at 1802 Alabama, 1502 Alabama, I think it is, in Houston.

AMY GOODMAN: You talk about the former Halliburton employee who blew the whistle on overspending.

PRATAP CHATTERJEE: Henry Bunting is one of many people, in fact, several of whom I’ve talked to, others we hear may come forward in the next week or so, to explain that Halliburton has indeed deliberately overcharged the Government, and knew, and has falsified information in order to be able to make a profit. For example, Amy, the military requires Halliburton or any contractor indeed, to competitively bid something that’s priced over $2500 in order to make sure that people aren’t sole sourcing materials and buying it from their friends. Well Halliburton has done exactly the opposite of what the military doctrine requires: if they wanted to buy a camera that was worth $5,000, they split it into two task orders and they said, "today we’ll buy half the camera and tomorrow we’ll buy the other half of the camera," and they asked the vendor to provide them with two invoices. Now that is illegal, and the reason is, we’re expecting them to be able get us the best price. Henry Bunting proved — he was part of this and then he left because he was so disgusted with their methods — was they were going out there buying things without asking people for prices, and they were buying, purchasing supplies that were three times the actual cost of what they needed to pay. For example, they bought these orange embroidered towels which said, "MWR", the logo of an Army unit, I think it is "Morale, Welfare and Recreation", rather than buying just regular towels that they could have gotten for $1.50, they paid three times as much. And we understand there may be more people coming forward in the next week or so to explain how Halliburton has deliberately falsified or asked its employees to deliberately falsify the logs so that they can charge more for the transportation of materials across Iraq and hand us the bill.

AMY GOODMAN: Pratap Chatterjee, I want to thank you for being with us, speaking to us from Houston, where the shareholders meeting will be taking place of Halliburton on Wednesday with major protests outside. Author of Corpatch’s "Houston, we have a problem" report on Halliburton. This is Democracy Now! When we come back, Dan Briody joins us of "The Halliburton Agenda." Also tonight, I’m looking forward to seeing folks in Albany, a benefit for WRPI at the Livingston Magnet Academy at 315 Northern Boulevard, and on Wednesday night at the Jacob Burns Center in West Chester, New York, in Pleasantville, New York. We’ll be screening "Independent Media in a Time of War" and "The Revolution Will Not Be Televised." I’ll be speaking as well. And our continuation of "The Exception to the Rulers" tour. You can see more at democracynow.org. Stay with us.

AMY GOODMAN: This is Democracy Now!, the "War and Peace Report", I’m Amy Goodman. "The Halliburton Agenda; the Politics of Oil and Money," it’s Dan Briody’s new book. Dan Briody who wrote the best-selling book "The Iron Triangle," which was inside the secret world of the Carlisle group. Why did you decide to focus on Halliburton?

DAN BRIODY: Well, it seemed like a natural extension of what I had already reported on with "The Iron Triangle," which was essentially this idea of the military industrial complex, you know, the confluence of big business, the defense industry, and politicians. So Halliburton, like the Carlisle group, is a company that uses political influence in order to enhance its finances and that’s essentially its modus operandi, it’s how it does business. And certainly with everything that’s going on in Iraq right now, the incredible amount of money that Halliburton has garnered in contracts, some people put it at $9 billion, some people put it at more, it was definitely a subject worth looking at right now.

AMY GOODMAN: Tell us who Halliburton was, who is this company named after? A thumbnail sketch of Halliburton and its subsidiary, KBR.

DAN BRIODY: You know it’s funny, both of the companies have been around since 1919. They were both started in Texas and Halliburton itself is essentially a very unromantic oilfield services company. Earl Halliburton, the name sake of the company, was a guy who was hard working, he intensely disliked politics, kept his company out of politics as much as possible. It’s the KBR subsidiary, Kellogg, Brown & Root, which until recently was just called Brown & Root, which was highly, highly political throughout its history. Herman and George Brown, the brothers in Texas, had a very close relationship with Lyndon Johnson. They contributed heavily to his campaigns and in return got very, very lucrative government contracts.

AMY GOODMAN: Can you talk about the relationship between the Browns and Lyndon Johnson, which does seem to be a model for what’s happening today?

DAN BRIODY: It is. And I think that the idea that politicians could build this company began even before that, when Brown & Root started getting local road building contracts in their county in Texas. But they sort of grew up when they met Lyndon Johnson and Lyndon Johnson became a congressman from the 10th district in Texas and they began contributing to his campaigns and in return, Lyndon Johnson really worked for these guys on Capitol Hill. He literally would push through task orders and change orders for contracts that they were working on to get more public funding for big dam projects, and then push them towards Navy ship building during WWII, got them contracts to build air bases, naval air bases, Corpus Christi, all the way up until the Johnson presidency when he was working for them to get space contracts. These guys built the Houston space center and also some strange contracts for the National Science Foundation. Goes on and on.

AMY GOODMAN: And what did Johnson get in return?

DAN BRIODY: Johnson got a phenomenal amount of financial backing for his campaigns, much of it was illegal contributions. If you’ve read any of the Robert Carroll biographies of Lyndon Johnson, you have a good idea of how business was done back then. The Brown brothers were incredible contributors to Lyndon Johnson’s campaigns; bags of cash passed around, hundreds of thousands of dollars funding campaigns the likes of which the nation had never seen at that time. A lot of this came under investigation by the IRS and things of that nature, but many of the investigations were scuttled and Brown & Root got away with a slap on the wrist.

AMY GOODMAN: Interesting, going well back to the time of Lyndon Johnson and the deal he had with the Brown brothers, the way they helped each other, to put it nicely. You have people in the Government saying these are no bid contracts with a company, Brown & Root, who has no experience doing the things, for example, building of the dam or the Corpus Christi base. So how did they get away with it?

DAN BRIODY: Yes it’s a testament to the power of political influence that these contracts would even be given to a company like Brown & Root. Brown & Root was literally a road builder. All they knew was how to grade and pave roads until this Mansfield Dam project comes along. They decide they want it, Johnson decides it would be a good political move to give it to them and create this relationship between this high-powered company, and so away they went. And this is a company that has never turned down work, no matter how strange or different it is from their core competency. And in fact if you look at the company today, Halliburton is an oilfields services company. KBR is essentially an arm of the military. The two should have very little to do with each other. But as we both know, that is not the case today.

AMY GOODMAN: We’re talking with Dan Briody, author of a new book, "The Halliburton Agenda: the Politics of Oil and Money." Dan, today, compare what we saw with KBR or BR, Brown & Root then, with what’s happening in Iraq today. How did they get these deals.

DAN BRIODY: Well, it is very similar. Obviously the company still believes in the power of political influence, otherwise why hire Dick Cheney as your CEO in 1995, a man who had absolutely no business experience whatsoever? He was a career politician. Seemed to be no reason to hire him. But if you look at what took place between 1995 and 2000, while Dick Cheney was CEO, it’s very clear why they hired him. I think he had a tenfold increase in the amount of loans that Halliburton was given by the US export-import bank. He shot them up the list of the Pentagon’s top contractors. On and on, the Government contracting business just grew wildly during Dick Cheney’s tenure there. And so I think it’s very obvious that Halliburton has a legacy of a very political business that continues today.

AMY GOODMAN: You quote Dick Cheney as saying the biggest problem that he faced as Secretary of Defense was the Congress. And the biggest problem he faced as CEO of Halliburton was the Congress.

DAN BRIODY: Right. And this is a man who has said publicly that his success at Halliburton and his financial success, which I think comes in at around $30 million, that was his severance package when he left the company, had nothing to do with the United States Government. Which is laughable when you look at the type of business that these guys are in, and why Dick Cheney was brought on board. So, you know a quote like that, "my biggest problem as CEO of Halliburton, is the United States Congress," just sort of gives you an idea of just how political this business is. It is all about buying and selling of politicians.

AMY GOODMAN: Talk about how KBR came to be a subsidiary, or Brown & Root came to be a subsidiary, but more importantly, the role Dick Cheney played with what LOGCAP is.

DAN BRIODY: Right. As I said before, Halliburton was essentially an oilfield services company and Brown & Root was this very political animal from the start. In 1962, Halliburton acquired KBR, which is at that point Brown & Root, and so since then the nature of Halliburton’s business has become increasingly political. In fact, the company has used Brown & Root as a stalking-horse for business overseas and things of that nature. But it wasn’t until 1992 when Halliburton and KBR got a contract called LOGCAP, which is the Logistical Civil Augmentation Program. Essentially it’s the outsourcing of all of the logistics for the U.S. Army. The Navy and the marines have similar contracts, both of which are owned by KBR as well. This is a contract that the company actually designed themselves. They were contracted by the Pentagon to actually design the contract and then were allowed to bid on that very same contract, obviously giving them a pretty decided advantage in winning it, concerning the fact that they had already created it. That contract is usually for five years at a time and can be fantastically lucrative. It is right now, as I said, approaching $9 billion for the work in Iraq and it is essentially created, it made KBR another branch of the United States military, which is absolutely critical to their operations today.

AMY GOODMAN: What about the privatization of the military? We hear very little about that.

DAN BRIODY: So, this is something that makes KBR’s business tick. The outsourcing or privatization of the military. You know, when the cold war ended, there was going to be this supposed peacetime dividend and the troop forces were reduced and the amount of defense spending was reduced. Now the way that the Army got around that was by outsourcing a lot of the critical functions, including some of the sort of lower profile functions like building camps, cleaning the latrines, doing the laundry, serving the food. Anything that was not a direct military operation was outsourced. And KBR was the recipient of that work. Now the dangers of that obviously are that these folks are not answering within the chain of command in the military. They can leave if they feel that their life is threatened and if they don’t perform their duties or if they’re overcharging, they’re not subject to court-martials the way that military personnel are.

AMY GOODMAN: What about Halliburton’s record of business in Libya, Iran, Iraq?

DAN BRIODY: Yeah. You know, Pratap mentioned this earlier, but I think what’s stunning to me, there is a history of doing business in countries that are under Government sanctions right now or U.N. Sanctions and I think that the most eye-popping example is the business that the company did in Iraq between 1995 and 2000 while Dick Cheney was CEO. Just as a reminder, this is of course between wars that Dick Cheney led against Iraq, once as Secretary of Defense, and now as Vice President. His company was doing millions and millions of dollars of business with Saddam Hussein through the oil-for-food program that the U.N. was running. This is a program that was widely considered to be a joke and very much abused on both sides and Halliburton acquired a company called Dresser that was doing a good amount of business in Iraq during that time. It just sort of shows that Dick Cheney has these sort of politics of convenience, you know, as Secretary of Defense, Saddam is an evil, brutal dictator, but as CEO of Halliburton, he is a good person to do business with.

AMY GOODMAN: We’re talking with Dan Briody about Halliburton corporation, the site of a lot of protests this week. Houston, shareholders meeting, a lot of people will be outside, many charging that Halliburton is making a killing off the killing in Iraq. What about overcharging?

DAN BRIODY: Well, this is something that has dogged this company since its very beginnings. Like I said, they have worked in WWII, Vietnam, Bosnia, Somalia. What often happens is that in the fog of war, the military is not that interested in how much things are costing them. They don’t have time to audit every task order that comes their way. They are more interested in speed. And in the past, KBR has been very, very good at that and that’s why the military loves them, because they get them things and make their lives better over there. On the flipside, the contracts that are awarded to this company are called "cost plus", which essentially means that KBR is covered for all of their costs for whatever they pay for to provide the military, plus a guaranteed profit on top of that. Now what a contract like this does, obviously, is encourages the contractor to overspend. The more they spend, the higher their profit is going to be and also the more they spend the happier the military is because it’s not their money and their lives are better, so they will give them good marks, which actually improves their profit margins. When you start looking at contracts that are in the area of $9 billion, you know, 1–5% on top of that is a good chunk of change.

AMY GOODMAN: It’s amazing when you read the history of Halliburton, how this worked going way back. When they were trying to figure out the amount they would charge, say for a dam or for a base, being told it doesn’t matter, you can undercharge because once you’ve got this contracted…

DAN BRIODY: Right.

AMY GOODMAN: …the Government is completely dependant on you and then it doesn’t matter how much you say you are experiencing in cost overruns, they are going to have to pay it.

DAN BRIODY: Exactly. You get your foot in the door and you get established as the primary contractor for a job, and there is virtually no way you can be pulled off that job. I don’t think there’s any better example of that than what KBR is doing with the LOGCAP contract right now. In fact if you look back in 1995 when they took over in Bosnia and started doing the work there, a new contractor was supposed to take over that work in 1997. But the military found it literally impossible to get KBR out of Bosnia. They were so intimately involved in every detail of that operation that they were indispensable and couldn’t leave.

AMY GOODMAN: Dick Cheney’s relationship with Halliburton today.

DAN BRIODY: Today he is still in contact with the executives. They sort of look at him actually as like a godfather figure. They have a ton of respect for him, which is a little confounding from my perspective because his track record at the company is awful.

AMY GOODMAN: But the money he is making.

DAN BRIODY: He’s still making a deferred salary payment, annual payment of about $150,000 a year. I think he made $178,000 this year. So he is still on the Halliburton payroll.

AMY GOODMAN: The Vice President of the United States?

DAN BRIODY: Correct.

AMY GOODMAN: Still on the Halliburton payroll that is making the most money of any corporation in Iraq?

DAN BRIODY: That’s correct.

AMY GOODMAN: I want to thank you for being with us, Dan Briody. "The Halliburton Agenda: the Politics of Oil and Money" is the title of his new book. And that does it for today’s program. You can go to our website for contact information at democracynow.org.

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