of Iraq Oil Money Controversy
by Christopher Bollyn
|The US Army Corps of Engineers had described
the contract given to Halliburton as putting out fires at oil wells during
However, there seems to be a lot more going on between Halliburton and Dick Cheney.
More of these photos here
|Halliburton, a Texas-based oil service company formerly headed by Vice
President Dick Cheney, is the leading profiteer from the Iraq war with
military and oil service contracts potentially worth $18 billion.
One Texas-based oil service company is at the center of the controversy surrounding the misuse of Iraqi oil funds by the Coalition Provisional Authority (CPA). That company, Halliburton, and its subsidiary Kellogg, Brown & Root (KBR), hold contracts in Iraq worth a potential $18 billion.
How Halliburton won these lucrative contracts and its role in failing to prevent the loss of millions of dollars of Iraqi oil during the U.S.-led occupation are questions now being raised by the release of the initial audit of the Development Fund for Iraq (DFI).
The initial audit of the DFI, which covers the period from May 22 to December 31, 2003, was conducted by KPMG Audit & Risk Advisory Services in Manama in the Persian Gulf nation of Bahrain.
The audit was signed on June 29 – one day after Lewis Paul Bremer, the American proconsul, turned over limited sovereignty to a U.S.-appointed Iraqi government.
The “independent” audit was mandated by the U.N. resolution, which created the DFI in May 2003, and is being done for the International Advisory and Monitoring Board (IAMB). Although the IAMB was created to monitor the fund and see that the money was spent to benefit the people of Iraq, it took until December of 2003 before the IAMB convened its first meeting.
Jean-Pierre Halbwachs, the U.N. representative on the IAMB, said on July 15 that the Bush administration is withholding information from the auditors. The information being withheld pertains to more than $1 billion in contracts awarded to Halliburton and other companies without competitive bidding.
Halbwachs said the U.S. has repeatedly “rebuffed his requests since March to turn over internal audits,” the Washington Post reported on July 16. One covered three contracts awarded to Halliburton valued at $1.4 billion. The U.S. government is also refusing to provide a list of other companies that have obtained contracts without having to compete, the Post reported.
What the Post and The New York Times did not include in their recent articles about the withholding of information is that Halliburton’s contracts in Iraq may be worth as much as $18 billion, more than the Gross Domestic Product of Lebanon, Qatar or Bahrain.
I asked Wendy Hall, Director of Public Relations for the Houston-based Halliburton, if it is true that Halliburton has Iraqi contracts potentially worth $18 billion and what these contracts are for.
Hall did not contest the figure and simply provided a March 18 press release that described Halliburton’s two main contracts in Iraq: the Logistics Civil Augmentation Program (LOGCAP), which provides services for military personnel in Iraq, and the Restore Iraqi Oil (RIO) contract to service the Iraqi oil industry.
Asked why the U.S. government had refused to provide the IAMB with the information they had requested about Halliburton’s contract, Pentagon spokesman Lt. Col Rose Anne Lynch said it was due to an agreement between the government and the contractor.
I asked Halliburton’s Wendy Hall if there is any agreement between the government and the contractor that would prevent the government from releasing information about the contract to the independent auditors.
“Wrong,” Hall responded. “KBR has absolutely nothing to do with the determination for contract awards.” She referred questions about the initial RIO contract “funding source decisions” to the Dept. of Defense Controller.
The LOGCAP contract is a 10-year Task Order contract, awarded to Halliburton subsidiary KBR in December 2001. It has a one-year base period and nine one-year options. As Vice President Dick Cheney, former chairman of Halliburton, said after 911 and has often repeated, the “war on terror” will be a long and drawn out conflict.
Cheney’s role in coordinating the RIO contract with Halliburton, two weeks before the war began, was exposed in an e-mail obtained by the watchdog group Judicial Watch and published in Time magazine of June 7.
The e-mail, dated March 5, 2003, says that Douglas Feith, the high-ranking “neo-con” Pentagon hawk, got the “authority to execute RIO” from his boss, Deputy Defense Secretary Paul Wolfowitz.
It says that Feith approved arrangements for the contract “contingent on informing WH [White House] tomorrow. We anticipate no issues since action has been coordinated w [with] VP’s [Vice President’s] office.”
Three days later, Time reported, the Army Corps of Engineers gave Halliburton the contract to restore Iraq’s oil flow without seeking other bids.
When the war began two weeks later, Halliburton has its RIO team already in the area. During April 2003 the RIO team assessed more than 600 oil infrastructure facilities in Iraq and by the end of the month Iraq’s oil was flowing from its southern oil fields in the area of Basra.
As the Halliburton press release says, “We assisted in surpassing Iraq’s prewar oil production levels of approximately 2 million barrels per day when production reached 2.4 million barrels per day in December 2003.”
Subtracting 400,000 barrels per day for Iraq’s domestic use, this would mean that in December 2003 some 2 million barrels per day were available for export. Figures published by the U.S. government, however, indicate that daily averages of less than 1.6 million barrels were exported in December 2003.
Due to the lack of metering devices there is no accurate accounting of Iraq’s oil exports during the time of U.S.-led occupation. Revenues from these exports provided the billions of dollars used by the CPA. Halliburton has received the largest share of these funds.
“Nearly all of the $20 billion in the DFI was spent or allocated by June 28 – but only 2 percent of the $18.4 billion promised by the U.S. for reconstruction was actually spent,” The Guardian (UK) reported on July 20. “Not one cent of America’s own money had been spent on construction, healthcare, sanitation and water projects as of last month.”
“In the span of less than a year,” Doug Fletcher, project general manager for KBR, said KBR and the Corps of Engineers were able to “restore oil production to prewar levels and resume exports to generate revenue for the newly liberated country.”
While Halliburton engineers provided Iraqi engineers “with an opportunity to work with up-to-date technology,” there is one essential component they did not provide – metering of the export oil flow.
As the KPMG audit says, the absence of metering equipment means it was not “practicable to extend our auditing procedures sufficiently to quantify such amounts and accordingly we could not satisfy ourselves about the completeness of export sales.”
In a July 15 statement from the IAMB the “absence of oil metering” is the first concern listed. “Contrary to earlier representations by the CPA,” the statement reads, “the award of metering contracts has been delayed and it is therefore impossible to ascertain that all oil extraction is properly accounted for.”
The first thing that the IAMB “hopes that the Government of Iraq will give priority to” is the installation of oil metering.
It is ironic that the absence of metering equipment has been blamed on Saddam Hussein. Without metering of Iraq’s oil exports the former Iraqi dictator was able to sell oil without discovery by the U.N. authorities.
The fact that Halliburton did not install metering devices to measure the precise quantities of Iraqi oil being exported appears to have been a decision made at the highest level of the U.S.-led occupation.
Halliburton even produces a skid-mounted mobile metering system called the FastQ system, “capable of measuring the flow rates of oil, water, and gas continuously without any mixing or separating of fluids.”
In October 2002, Halliburton said its “highly accurate” and “environmentally friendly” FastQ system had been successfully tested at independent flow test laboratories in Norway and the UK.
Questions sent to Wendy Hall of Halliburton, in writing, about why the RIO team has not installed metering devices at Iraq’s oil export facilities after a year of exporting its most valuable product went unanswered.
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