Cheney’s Old Company Continues To
Break Laws While Profiting From Terror
by Jason Leopold
May 13, 2003
Halliburton Corp., the second largest oil services company in world, is the poster child for corporate greed and terror. And it seems that nothing will stop Vice President Dick Cheney’s old company from repeatedly breaking the law to save and earn mountains of cash.
In a Securities and Exchange Commission filing this week, Kellogg Brown & Root, the Halliburton unit that won a controversial no-bid contract to extinguish Iraqi oil well fires, disclosed that it paid $2.4 million in bribes to a Nigerian tax official to obtain favorable tax treatment in the country where it’s building a natural gas plant and an offshore oil and gas facility.
The bribes were paid between 2001 and 2002 to “an entity owned by a Nigerian national who held himself out as a tax consultant, when in fact he was an employee of a local tax authority,” the company said in the SEC filing, which was discovered during an internal audit.
That was also the time frame which some of Nigeria’s worst human rights abuses took place. KBR has been scrutinized by human rights organizations for doing business in countries like Nigeria, where human rights are routinely violated.
In 1997, while Cheney was chief executive of Halliburton, KBR was alleged by Environmental Rights Action to have collaborated with Nigeria’s Mobile Police unit who shot and killed a protestor, playing a similar role to Shell and Chevron in the mobilization of this 'kill and go" unit to protect company property, Wayne Madsen reported in The Progressive in 2000.
When it comes to corruption, Nigeria routinely scores near the bottom on surveys of world business leaders.
In last year's Corruption Perceptions Index, published by Berlin-based Transparency International, Nigeria ranked 101 out of 102, beating out only Bangladesh.
In March, Halliburton launched an investigation it has started a probe involving U.S. and Nigerian government officials over theft of a radioactive device used at its Nigerian operations that officials feared could be used to make a “dirty bomb,” an explosive device designed to scatter radioactivity in a densely populated area. The theft occurred between the Nigerian towns of Wari and Port Harcourt in the Niger Delta, in the heart of the West African country's oil producing region.
According to one expert, if the device's radioactive material were combined with a pound of TNT and exploded, an area covering 60 city blocks would be contaminated with a radiation dose in excess of safety guidelines of the Environmental Protection Agency.
The tax scheme is just the latest development in a long list of laws the company broke over the past decade—including skirting U.S. sanctions imposed on countries such as Syria, Libya, Iran and Iraq—in an effort to boost its stock price and enrich the company’s shareholders.
A Halliburton spokeswoman said the tax scheme did not involve any of the company’s senior officials, but several employees of the company involved in the scam were fired after the discovery.
Halliburton officials said KBR may have to pay as much as $5 million in additional taxes to Nigeria, according to the SEC filing.
This week, Congressman Henry Waxman, D-California, disclosed in a letter sent to him by the Army Corps of Engineers, that KBR has gone from fixing Iraq's oil wells to running them, turning the no-bid contract to extinguish oil well fires into a multimillion deal to supply Iraq's emergency energy needs. The U.S. Army Corps of Engineers on Wednesday disclosed the wider role for KBR in response to an inquiry from Waxman, who accused the company of conducting business in countries that sponsored terrorism.
News of KBR’s expanded role in Iraq prompted criticism from some congressional critics who were under the impression that the company's job would be limited to putting out fires and repairing damage to Iraq's rich petroleum fields. The Army Corps of Engineers said KBR actually had been authorized under the original contract to operate and distribute oil produced in Iraq, but the Corps of Engineers played down that aspect of the deal in its initial communications with Congress and the media. For pumping oil from Iraq's oil fields and importing gasoline and propane from Turkey and other countries, Halliburton will receive $24 million, raising to $76.8 million the amount it will have received since being awarded the contract in March, said Scott Saunders, a spokesman for the Corps of Engineers. Saunders said the Halliburton subsidiary now is pumping 125,000 barrels of oil a day, far short of the demand that is expected to reach 400,000 barrels.
Meanwhile, while KBR is skirting U.S. laws and profiting off rebuilding Iraq’s oil fields, the SEC is still investigating the company for alleged accounting fraud. The SEC is examining how Halliburton booked and disclosed cost overruns on construction contracts beginning in 1998, when Cheney was chief executive officer. The SEC, according to a lawyer familiar with the matter, has not contacted Cheney. Cheney's office confirmed he hasn't been questioned, Reuters reported.
The company said Thursday it turned over about 300,000 documents to the SEC, a process that "is essentially complete," according to a regulatory filing. The company said it is continuing to make people available to testify under subpoenas.
Jason Leopold is a freelance journalist based in California, he is currently finishing a book on the California energy crisis. He can be contacted at email@example.com. This article first appeared in The Free Press (www.freepress.org)