Tuesday, May 11, 2010

Halliburton's Return: Oil Spill Puts Symbol Of Cronyism And Corruption Back In The News


It seems increasingly likely that when investigators determine the precise cause of the oil-rig explosion that threatens to poison huge swaths of the Gulf of Mexico, what they'll conclude is that something went catastrophically wrong with the work done by Halliburton.

BP owns the well, and Transocean Ltd. owns the drilling rig, but Halliburton was the subcontractor in charge of sealing the bottom of the well. At two Senate hearings Tuesday, executives from Halliburton, BP and Transocean will be furiously blaming each other for the diaster.

For Halliburton, it's just the latest in a seemingly endless series of brushes with notoriety.

During the Bush years, Halliburton was so omnipresent that its very name became synonymous with crony capitalism and the corrupt intersection between government and the military-industrial complex -- particularly when oil and/or big money were involved.

The company most famously reaped huge profits by bilking the government on billion-dollar sweetheart contracts to support a war in Iraq that its former chairman, Dick Cheney, helped lead the nation into as vice president.

Under just one of the deals, as the Washington Post reported in 2006, "Halliburton had exclusive rights to provide the military with a wide range of work that included keeping soldiers around the world fed, sheltered and in communication with friends and family back home. Government audits turned up more than $1 billion in questionable costs. Whistle-blowers told how the company charged $45 per case of soda, double-billed on meals and allowed troops to bathe in contaminated water."

There were also multiple allegations that while in Iraq, the company sanctioned sexual violence against women employees. Jamie Leigh Jones, a 20-year old Texas woman, was drugged, stripped, beaten and gang-raped by her co-workers on her fourth day in country -- after which Halliburton put her under guard in a shipping container for 24 hours with no food or water and warned her that if she left Iraq for medical treatment, she'd be out of a job.

Story continues belowIn 2009, Halliburton and its former subsidiary, KBR, paid $569 million in fines to settle bribery charges. It turns out that from 1995 to 2004, Halliburton had bribed a long succession of Nigerian officials to obtain lucrative construction contracts.

In this country, the influence-peddling is done with a little more subtlety, at least most of the time.

Consider this episode, also reported by the Washington Post: "As the government prepared for war in Iraq in the fall of 2002, a senior political appointee in the Defense Department chose oil services giant Halliburton Co. to secretly plan how to repair Iraqi oil fields, and then briefed Vice President Cheney's chief of staff and other White House officials about the sole-source contract before it was granted."

(Historical note: It was a dig from Sen. Patrick J. Leahy (D-Vt.), about Cheney's ties to Halliburton that earned him the infamous "Go fuck yourself" comment from the vice president on the Senate floor.)

People who get in Halliburton's way get mysteriously crushed. For instance, in 2005, as the New York Times reported, a top Army contracting official who criticized a large, noncompetitive contract to Halliburton was demoted.

And time and again, Halliburton (and its now spun-off subsidiary, KBR) get away with it all.

A 2004 GAO investigation into Halliburton's contract to provide essential services to the troops in Iraq "found significant problems in almost every area, including ineffective planning, inadequate cost control, insufficient training of contract management officials, and a pattern of recurring problems with controlling costs, meeting schedules, documenting purchases, and overseeing subcontractors."

Just last month, the Justice Department brought a civil fraud suit against KBR, alleging that it charged the government for unauthorized security services in Iraq. "In 2007 and 2008, the Defense Department disapproved $103.4 million paid to KBR under LOGCAP III for unauthorized security services," Reuters reported.

"Separately, the Justice Department said on Wednesday it had joined a lawsuit against KBR that alleges employees of two freight forwarders provided unlawful kickbacks to KBR transportation department employees."

And yet despite all that, the Army suddenly reversed itself last week and said it will stick with KBR to supply "up to another $568 million of food, laundry and other essential support to U.S. troops in Iraq until their scheduled withdrawal at the end of next year."

Charlie Cray is an activist and policy analyst who co-founded the Halliburton Watch website because "nobody else seemed to be keeping track of all their various misdeeds in one place."

"We've got a recidivist corporate criminal, basically, with a long track record of violations and seeming impunity from significant enforcement consequences for their most egregious transgressions," Cray told HuffPost.

"The track record obviously suggests that there is an ongoing and continuing question of responsibility and reasonable willingness to comply with the law."

Cray said that if Halliburton turns out to be "at least partially culpable for this incident, what we would say is the least that can be done, given their track record, is suspend them from any new leases or federal contracts for a certain amount of time."

As it happens, this latest incident harkens back to Halliburton's roots in the early 1900s as an oil-field services company specializing in "cementing" oil wells -- or sending cement slurry down the pipe of an oil well to create a seal when it hardens.

Halliburton was doing just that -- albeit several thousand feet below the surface of the Gulf of Mexico -- less than a day before the Deepwater Horizon oil platform exploded, burned and sank, killing 11 workers and leaving an out-of-control gusher spewing millions of gallons of oil into the water.

The Wall Street Journal reported that a 2007 study "found that cementing was a factor in 18 of 39 well blowouts in the Gulf of Mexico over a 14-year period. That was the single largest factor, ahead of equipment failure and pipe failure."

Meanwhile, Halliburton continues to actively market its deepwater services. Its Web site states that: "Halliburton technologies have played a key role in the success of many deepwater Gulf of Mexico wells."

The pitch concludes: "Our experience speaks for itself."

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