Halliburton Defends Iraq Work
Executives Concede Mistakes, Blame Conditions
By Robert O'Harrow Jr. and David S. Hilzenrath
Washington Post Staff Writers
Friday, July 23, 2004; Page E01
Halliburton Co. executives told a House committee yesterday that allegations that the company overcharged the government for work in Iraq distorted the truth, and they urged Congress to consider the wartime conditions when assessing any financial or logistical missteps.
A hearing by the House Committee on Government Reform was the first time executives of the company's Kellogg Brown & Root Inc. subsidiary appeared on Capitol Hill to respond to charges that it systematically misspent public money while doing $5.6 billion worth of work in Iraq.
"While we have undoubtedly made some mistakes, we are confident that KBR has delivered and accomplished its mission at a fair and reasonable cost," said Alfred V. Neffgen, the chief operating officer of government operations in the Americas.
The hearing was deeply partisan from the start. Democrats led by Henry A. Waxman (Calif.) repeatedly referred to the fact that Dick Cheney was Halliburton's chief executive before he was vice president. They suggested that Halliburton and its subsidiaries defrauded the government.
Waxman said he believes that Cheney or his staff had more involvement in Halliburton contracts than they have said. "It's a boondoggle that is enriching a lot of contractors," he said of the projects in Iraq. Waxman's request to have the committee subpoena communications between Cheney's office and the Pentagon failed on a party-line vote.
Chairman Thomas M. Davis III (R-Va.) called the Democrat's efforts a "witch hunt" in search of "sensational" material instead of facts. "We are having this hearing today because there are those who believe we have a company, Kellogg Brown & Root, that is wasting tax dollars or abusing its contracting role, or even defrauding the U.S. taxpayer," Davis said as he opened the hearing.
"I happen to disagree," he said. "I have yet to see any serious evidence of this. What you see are occasional failures to communicate, inattentiveness in adhering to strict business procedures and a less-than-perfect accounting process."
Davis praised KBR and other government contractors. "The sacrifices these people make are inspiring," he said.
The political rift was reflected by the witnesses. Among them were former KBR employees in Iraq, including two truck drivers and a former logistics specialist, who said the company routinely wasted government money. They told of trucks that were abandoned during convoys because of flat tires, inflated bills for KBR employees at luxury hotels and $45 cases of soda -- details that Waxman said exemplified Halliburton's disregard for thrift.
Adding to that litany, Waxman cited a new report by his staff that he said showed Halliburton charged the government $167 million more than necessary to import gasoline into Iraq.
The KBR executives followed up with an appeal for understanding of the hazards and rapidly shifting demands of a combat zone under which their employees worked and sometimes died.
They also challenged the former employees' allegations. Every Halliburton convoy traveled with spare tires, contrary to the testimony of one former KBR truck driver, said Keith Richard, a KBR transportation manager. It was the Army, he said, not KBR, that determined whether to abandon or fix a vehicle that broke down on the road.
The high cost of fuel was principally a result of high logistical expenses and security challenges, which prevented tankers from making as many trips to Iraq as the company had expected, Neffgen said in prepared testimony.
One reason for KBR's higher prices was its limited ability to transport fuel from Turkey instead of Kuwait, said Charles "Stoney" Cox, a KBR operations executive. Turkish drivers often refused to make the journey, and the Army gave the company specific instructions on how much fuel to purchase from Kuwait and Turkey, Cox said.
© 2004 The Washington Post Company