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[casi] Halliburton Expands War Repair Role

--------- Begin forwarded message ----------
Subject: Halliburton Expands War Repair Role
Date: Sat, 12 Jul 2003 18:52:28 -0400
Message-ID: <>

Boston Globe
July 10, 2003

Halliburton unit expands war-repair role

By Stephen J. Glain and Robert Schlesinger, Globe Staff,

BAGHDAD -- They travel like foreign dignitaries, their
SUVs escorted by two US Army Humvees and a security
detail led by a master sergeant. No Iraqi official is
too busy to meet them and when it comes to Iraq's most
precious resource, oil, they are granted total and
instant access.

Officials from Kellogg, Brown & Root Services, a
subsidiary of oil-services giant Halliburton Co., are
using a broadly worded contract to evaluate and repair
Iraq's petroleum infrastructure, ''as directed'' by the
US government, to gain a huge head start over potential
competitors in redeveloping the country's vast, outdated
oil industry. With much of Iraqi reconstruction bogged
down by sabotage, chronic looting, and bureaucratic
mire, KBR -- which also is supposed to repair war-
damaged oil wells and provide general logistical support
to the US Army -- has expanded its role to include
everything from gasoline imports to laundry services.

Some Iraqi oil officials say KBR is using what appears
to be an open-ended mandate to effectively corner a
market coveted by its rivals and to win business Iraqis
can do themselves.

''We don't need KBR,'' says Dathar Al Khashab, general
manager of Baghdad's Daura Refinery Co., which like
Iraq's other refineries badly needs new equipment after
a generation of sanctions. ''I can work with any other
company to do this job.''

KBR's work in Iraq comes under two different contracts.
In 2001 the company was awarded a 10-year contract under
the Army Logistics Civil Augmentation Program, known as
Logcap, that calls for the company to provide a wide
range of logistical services to the US Army. By the end
of May, KBR had received $425 million under that
contract, according to correspondence between
Representative Henry A. Waxman of California, the
ranking Democrat on the House Government Reform
Committee, and the Department of the Army.

Through that contract, KBR had prepositioned personnel
and equipment in the Iraq region -- deployments that in
the Army's eyes made the company the logical choice for
an oil infrastructure contract that was awarded soon
after the war in Iraq began.

That KBR contract -- according to Waxman, who is
investigating the deal -- has ''no set time limit and no
dollar limit and is apparently structured in such a way
as to encourage the contract to increase its costs and,
consequently, the costs to the taxpayer.''

It took Waxman's investigation to uncover key details of
the KBR contract, which was awarded by the Army Corps of
Engineers as part of a secret process by US government
agencies charged with rebuilding postwar Iraq. Several
of the companies involved in the closed-door bidding,
allowed in times of a national crisis under federal
procurement laws, have close ties to the White House or
were major contributors to the Bush presidential

In addition to KBR, the winning bidders included San
Francisco-based Bechtel/Parsons Brinckerhoff, which was
awarded a $780 million contract to supervise Iraqi
reconstruction. Bechtel, together with Halliburton,
donated more than $2 million in campaign contributions,
primarily to Republican candidates, according to the
Center for Responsive Politics. From 1995 to 2000,
Halliburton was headed by now-Vice President Dick

KBR, according to an Army Corp of Engineers official
responding in early April to Waxman's written queries,
was awarded a two-year, $7 billion contract to put out
oil well fires and evaluate the state of petroleum
fields in postwar Iraq.

By early July, five ''task orders'' had been issued
under the infrastructure contract worth more than $282
million, according to a website set up by the Army Corps
of Engineers. The orders included training and advice
for safely shutting down equipment and assessing damage,
repairing facilities, building base camp facilities, and
bringing oil into Iraq while indigenous distribution
systems are still being repaired.

The contract was designed to cover a ''worst-case
estimate'' of possible damage, wrote Lieutenant General
Robert Flowers, and ''those services necessary to
support the mission in the near term.''

Flowers gave Waxman his written assurance that ''no
other contractor could satisfy the mission

That's not how many Iraqis see it. They say KBR's
preponderant role in postwar reconstruction reinforces
local suspicion that the invasion of Iraq was more about
promoting American corporate interests than removing
Saddam Hussein. At a time when US officials in Iraq have
been criticized for employing American companies to do
what Iraqis are capable of doing on their own, KBR
manages laundry services and a hair salon at US
occupation headquarters.

''KBR is performing tasks as directed by our clients to
provide for the continuity of operations of the Iraqi
oil infrastructure, as well as the logistical support
services required as part of the Logcap contract,''
Cathy Gist, a KBR manager of public and community
relations, wrote in response to e-mailed queries.

Iraqi and US officials offer different interpretations
of KBR's core business in Iraq. Philip Carroll, US
adviser to the Iraqi oil ministry, says the terms of
KBR's contract limits the company to a survey of war-
related damage and recommendations on how to fix it. The
survey should not cover equipment damaged or worn out
during the 13-year-old UN embargo imposed on Iraq after
Baghdad's 1990 invasion of Kuwait, he said.

By year's end, according to Carroll, KBR will submit its
report for evaluation by the oil ministry, which will
use it as a blueprint for the repair of Iraq's oil
infrastructure. ''When they come up with a plan they
will submit it to the ministry, and we will review it
and compare it with the terms of their contract,'' he

To hear Iraqi oil officials tell it, the rebuilding
process has already begun, with KBR as both consultant
and supplier.

Khashab of the Daura refinery said there is little war
damage to evaluate, because the facility survived the
war unscathed. ''We can go straight'' into rebuilding,
he said. ''The refinery is very old, and KBR is happy to
help us. We're sitting down with them, and they're
working to get what we need.''

Khashab says he and KBR are discussing ways to upgrade
Daura's capacity to develop light-oil products, such as
lubricating oil. It is a procurement job Khashab says he
is perfectly capable of doing without KBR's help. ''But
since KBR is here,'' he said, ''why not work with

KBR's Gist said that the company is conducting
''emergency repairs'' of the infrastructure.

''KBR personnel continue to assess the situations and
inspect the oil infrastructure, performing repairs as
directed by the Corps of Engineers,'' she wrote.
''However these assessments and reviews are not
complete, and it is too early to speculate on an overall
condition or course of action.''

Waxman, when informed of the scope of the company's
activities in Iraq, expressed reservations about KBR's
expanding role.

''It's important that we provide essential services to
our servicemen and women, but some of the services
Halliburton is providing go beyond that and certainly
give the appearance of a `Full Halliburton Employment
Act,' '' Waxman said. ''There may be good reasons why
taxpayers are paying a multinational corporation like
Halliburton to cut hair and wash shirts, but it would be
helpful to know why.''

KBR has also been tasked to arrange overland shipments
of gasoline to ease fuel shortages following waves of
postwar looting that crippled Iraqi oil production.
Thousands of tanker trucks are entering Iraq each week
from Syria, Saudi Arabia, Turkey, and Jordan, nearly all
of which are fixed by KBR agents. It is a business with
which the Iraqis have years of experience; since the
1991 Gulf War, Iraq provided Jordan with discounted oil
in return for Amman's support of Baghdad's invasion of
Kuwait. Those shipments ended with the coalition assault
in March, and Iraqi truckers have been out of work since
then. KBR agents have hired foreign truckers, not Iraqi
ones, say Iraqi transport companies.

''We have enough trucks to do this ourselves,'' says
Shahab Ahmed Hamid, a member of a local truckers' union.
''We were promised subcontracts from the Americans, but
no Iraqi trucks have been employed.''

Stephen J. Glain can be reached at glain@g...

7/10/2003.  Copyright 2003 Globe Newspaper Company.

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