Halliburton executives deny gouging taxpayers

On Hill, company officials acknowledge mistakes but defend actions in Iraq

Election 2004

July 23, 2004|By T. Christian Miller | T. Christian Miller,LOS ANGELES TIMES

WASHINGTON - After enduring months of pummeling by Democrats, Halliburton executives appeared yesterday for the first time before Congress to dispute accusations that the company had gouged American taxpayers.

They offered a sweeping defense of the company's actions in Iraq, where a Halliburton subsidiary holds a U.S. government contract worth up to $7 billion to provide food, mail delivery and other logistics services to U.S. troops.

While acknowledging mistakes that they attributed to the difficulty of working in a war zone, the executives said Halliburton had saved taxpayers millions, in some cases, by fighting to keep down costs.

"Never before has any contractor worked in as difficult and dangerous a situation as we do in Iraq," said Alfred V. Neff- gen, who is in charge of all U.S. government contracts for KBR, the subsidiary operating in Iraq. "We have performed, and performed well, for our soldiers and our country."

Halliburton's record has emerged as a key issue in the presidential campaign as Democrats have focused on the company's ties to Vice President Dick Cheney, who headed the Houston-based company from 1995 to 2000.

The politics of the issue were on display at yesterday's hearing before the House Government Reform Committee, as Democrats and Republicans attacked each other verbally.

The spectacle included Republicans lashing former Halliburton truck drivers who complained about waste as "so-called" whistle-blowers and Democrats grilling executives over soda cans, spare tires and oil filters.

The two sides split on a party-line vote, 23-19, as Republicans quashed a motion to subpoena any records of contact between the vice president's office and the Pentagon over the awarding of the contract.

"I, for one, still believe that if it weren't for the fact that the vice president was the former, and I emphasize former, CEO of the parent company, we wouldn't even be here today," said Rep. Thomas M. Davis III, the Virginia Republican who heads the committee. "Politics is driving this agenda, and I suspect that not even the truth will keep the detractors at bay."

But Rep. Henry A. Waxman, a California Democrat who has led the attacks against Halliburton, said the company's conduct in Iraq and its ties to Cheney are fair game.

He noted that audits by three government agencies, including the Defense Contract Audit Agency, had found problems with Halliburton's contract. The company is in a fight with the government over charges that it wrongly billed for $186 million in meals that U.S. troops were never served.

In addition, Halliburton faces a grand jury investigation over the operations of a subsidiary in Iran; a Justice Department inquiry into whether a consortium it belonged to bribed Nigerian officials; and another criminal investigation into whether two of its employees received as much as $6.3 million in kickbacks for a contract in Kuwait.

"The administration's approach to the reconstruction of Iraq is fundamentally flawed," Waxman said. "It's a boondoggle that's enriching private contractors."

The hearing began with testimony that Waxman had previously released from three former Halliburton employees who complained about waste they had seen. Two truck drivers, David Wilson and James Warren, said the company failed to maintain expensive Mercedes trucks purchased with government money, did little to stop pilfering and abandoned vehicles by the side of the road.

Marie deYoung, who worked in the company's contracting department in Kuwait, said Halliburton housed workers in five-star hotels while U.S. soldiers slept in tents in the desert. She said the company failed to follow up on her complaints about overcharges, including overpriced cases of soda and laundry services.

But Halliburton executives said the trucks were routinely supplied with oil filters and spare tires, and that no trucks had been abandoned due to maintenance problems.

They said 87 percent of the company's 14,000 expatriate workers slept in tents and that employees in hotels often doubled or tripled up in rooms.

"We placed continuous pressure on ourselves to do better," Neffgen said. "We identified problems and we fixed them. We also have elaborate systems to detect improprieties, and when they occurred, we acted."

The Los Angeles Times is a Tribune Publishing newspaper.

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