As a result, Halliburton moved from No. 19 on the Army's list of its top 50 contractors in fiscal 2002 to No. 1 in 2003.
During its ascent as a contractor, the company became entangled in a variety of investigations. Government investigators and Defense Department auditors have accused KBR and its subcontractors of overcharging for fuel, food and other services in Iraq under its large contract for logistics support, called LogCAP. In response to audits that said Halliburton had not properly justified many bills, Army officials are weighing whether to withhold some payments on future claims.
Democratic candidate John F. Kerry introduced an ad suggesting connections between Vice President Cheney and Halliburton contracts.
(Kerry-edwards 2004 Via AP)
The Justice Department, meanwhile, is investigating allegations of profiteering in the Balkans, from the time when Cheney was chief executive, as well as the company's business activities in Nigeria and Iran. And a Securities and Exchange Commission probe of a change in Halliburton's accounting practices under Cheney, which the SEC said enabled the company to inflate profit reports, ended in early August. The company paid a $7.5 million settlement, while one former executive paid a fine and another was sued.
Cheney declined requests for an interview for this story.
His successor at Halliburton, chief executive David J. Lesar, described the probes as a function of the company's size and the fact that Cheney led it from 1995 to 2000, not that it was engaged in profiteering or prone to shady dealings. "There's no company in corporate America today that is as scrutinized as Halliburton," Lesar said in an interview.
But statements by Cheney and others in the Bush administration have served to stoke criticism, especially from Democrats. "Every time we turned around, things we were told at the beginning weren't the full story," said Rep. Henry A. Waxman (D-Calif.), who has led the questioning.
For example, Cheney said in a television interview last September that he was not involved in awarding contracts while he was secretary of Defense, had never lobbied the Pentagon while head of Halliburton and had severed all ties to the company since becoming vice president. The Kerry campaign features the interview in its new television ad. "I have no financial interest in Halliburton of any kind and haven't had now for over three years," Cheney said on NBC's Meet the Press.
Yet Cheney has reported on his financial disclosure statements that he continues to receive money from Halliburton. The payments are part of a deferred compensation contract that pays him for work he performed in 1999. It provides for five payments, the last one in January. Cheney reported receiving $147,579 in 2001, $162,392 in 2002, and $178,437 in 2003 in deferred salary.
Cheney spokesman Kevin Kellems said the amount of the deferred pay is unaffected by any Halliburton business because Cheney had purchased an insurance contract that guarantees he will receive the full amount owed.
Cheney also had options to buy more than 400,000 shares of the company stock, according to financial disclosure records filed in May 2003. Cheney said he has committed to donate to charities any proceeds from the sale of that stock and cannot personally benefit in any way from the holdings.
Though not mentioned in the Kerry ad, Cheney added in the same television interview last year, "As vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts led by the Corps of Engineers or anybody else in the federal government."
Details about the activities of the Energy Infrastructure Planning Group, which helped the Pentagon prepare for the war, do not provide a direct link to Cheney. The Army Corps of Engineers chief counsel has said Halliburton's first secret Iraq contract "was done by career civil servants." But details unearthed about the workings of that planning group showed that at least two political appointees, not just career civil servants, were involved.
The head of the group, Michael H. Mobbs, was a senior political appointee. Mobbs played a decisive role in granting the first oil field work to KBR in November 2002, and again just before the war began in the spring of 2003, according to statements he made to lawmakers in a closed-door meeting in June.
Mobbs said at that meeting, according to a summary released by Waxman that hasn't been challenged, that he chose KBR over two other companies because it was already working with Army war planners, an apparent reference to the company's existing LogCAP contract. In doing so, Mobbs, backed by other department officials, overruled objections from a career Army attorney who argued the new work was not "within the scope" of that contract, according to a Government Accountability Office report. The GAO agreed the initial contract didn't fit under LogCAP.