Archives - October 06, 2004 SBS Dateline
HALLIBURTON DOWN UNDER
The American company Halliburton was one of the hot topics in today’s vice-presidential debate in the US. The current Vice-President, Dick Cheney, was the CEO of the oil and defence conglomerate for much of the 1990s. Now the company stands accused of bribery and the rorting of contracts in Iraq which they were given without tender. As Sophie McNeil reports, the company has a little-known, but significant, presence in Australia, where it is also receiving large government projects without any bidding process involved.
Reporter: Sophie McNeil
It’s a quiet Thursday afternoon in suburban Adelaide. Local pub manager Richard Tonkin is heading out to protest. His target is controversial American defence and oil conglomerate Halliburton. Unknown to many, it has an important operations base in Adelaide, 10 minutes away from Richard’s house.
RICHARD TONKIN, PUB MANAGER: I wanted there to be a visual portrayal of the fact that people are not happy. I wanted people to have the chance to know about it.
Halliburton’s wholly owned subsidiary Kellogg, Brown and Root, or KBR, has its global infrastructure division headquarters here on one of Adelaide’s main roads. Some 2,500 staff employed by KBR worldwide are coordinated out of this office.
RICHARD TONKIN: We need the Australian people to learn that everyone from the Pentagon down is accusing this company of mistruth, of financial manipulation. It might all seem very far away but the plans that are coming from this office are the plans to generate profit from the aftermath of the bloodshed.
And while Halliburton’s profile is relatively nonexistent in Australia, in the United States the Halliburton story is everywhere.
US REPORTER: Halliburton is under scrutiny again...
US REPORTER 2:..has been overcharging the government for contract work performed in Iraq.
US REPORTER 3: ..said that the company violated Defence Department procurement rules...
Halliburton is the biggest civilian defence contractor in the United States. Its subsidiary KBR has received nearly $18 billion worth of contracts from the American Government for work in postwar Iraq. But it’s now under investigation by the Pentagon for its accounting practices.
CHARLIE CRAY, DIRECTOR, CITIZEN WORKS: They’re accused of overcharging taxpayers at least $61 million for gasoline imported from Kuwait. They’re accused of charging the US Government $150 million-plus for meals that were never served to the troops.
Charlie Cray runs the corporate watchdog Citizen Works in Washington.
CHARLIE CRAY: In August the defence contract audit agency issued a report which explained that Halliburton could not justify $1.8 billion out of $4.3 billion charged to the US taxpayers for its work under one contract in Iraq.
In response to all the bad publicity, Halliburton launched its own PR counterattack.
HALLIBURTON ADVERTISEMENT: Our employees are doing a great job. We’re feeding the soldiers, we’re rebuilding Iraq. Will things go wrong? Sure they will, it’s a war zone.
But this is not the first time Halliburton has come under scrutiny. The Nigerian Government has frozen all its operations and, as of last week, Halliburton is now banned from operating in that country. Back home in the United States, Halliburton has become a controversial feature of the presidential race. The links between Halliburton and Bush Vice-President Dick Cheney are under fierce attack.
SENATOR JOHN KERRY, US DEMOCRATIC PRESIDENTIAL CANDIDATE: Dick Cheney’s old company Halliburton has profited from the mess in Iraq at the expense of American troops and taxpayers.
Two weeks ago, the Democrats launched a television advertisement directly targeting Halliburton and its former CEO, Cheney.
ADVERTISEMENT: Halliburton got billions in no-bid contracts in Iraq.
Unknown to many, the company has become well established in Australia. Halliburton’s interest began in 1999 with the commencement of the Adelaide to Darwin railway. It led the consortium that built the $1.3 billion project and it now owns and operates the line in a contract that is to last the next 50 years. Halliburton’s CEO, David Lesar, came all the way from Houston for the grand opening in January. But the company’s growth in recent times hasn’t just been in railways. If you want to get into the defence market, this is the place to be. The key players of Australia’s defence industry are gathered here at this hotel in inner-city Melbourne. They’re eager to find out what projects the Defence Material Organisation has up for grabs. This man is from Halliburton but he’s here under the less-recognisable name of Kellogg, Brown and Root. And he has every reason to smile. Halliburton has been awarded over 200 contracts, amounting to more than $21 million with the Australian Defence Forces. 90 of those contracts have been awarded in the first six months of this year.
PETER CHARLTON, ’COURIER MAIL’: I mean, I’ve been in this game a long time and I have never found a story that is so difficult to get the facts as when you start asking questions about Halliburton, Kellogg, Brown and Root in Australia.
Peter Charlton is the national affairs editor with Brisbane’s ’Courier Mail’ newspaper. A former lieutenant colonel, he’s been watching KBR move into the Australian market.
PETER CHARLTON: We’ve already seen local companies lose contracts that they had previously with the ADF basically because they can’t compete with Halliburton’s size.
Companies like Halliburton have become so big because of a global shift in defence operations policy. In an attempt to cut costs, many military functions are now outsourced to private companies. But there’s a debate over whether outsourcing really saves money.
PETER CHARLTON: I think the jury is really out on that. I do. It can be a book entry. You can move, say, the cost of cooks from the defence budget but the private companies that are supplying the meals aren’t doing it at - on a cost bases. They’re making a profit out of it.
PROF CHALMERS JOHNSON, AUTHOR: It’s extremely controversial in the United States and there are many members of Congress deeply upset over the waste of taxpayers’ money in functions that should be done by the Department of Defense.
Professor Chalmers Johnson is a former US naval officer and well-known author. He’s written extensively about the privatisation of the American military.
PROF CHALMERS JOHNSON: It was an idea invented by Cheney when he was secretary of defense in 19...in the early 1990s, to see how much of the military activities could be privatised. He claimed to be saving money. As it turns out, it’s infinitely more expensive.
By the late 1990, Halliburton, now run by Cheney, started to receive billions of dollars to provide logistic support.
PROF CHALMERS JOHNSON: There’s no question about who profited from it, namely Dick Cheney and his company Halliburton, and Kellogg, Brown and Root, its subsidiary that does this kind of work.
This outsourcing of defence has also happened in Australia. And Halliburton’s move into the defence market has begun to raise concerns.
CHRIS EVANS, SHADOW MINISTER FOR DEFENCE PROCUREMENT: Well, certainly there’s some concern over their reputation and I think you’d want to be very careful to ensure you’re getting good value for money.
SENATOR ROBERT HILL, DEFENCE MINISTER: There are allegations against them but they’re - that’s not all that unusual in terms of international business.
What safeguards are there in place to ensure that a company like Halliburton or any other company plays by the rules here?
SENATOR ROBERT HILL: Safeguards are the culture of the Australian bureaucracy.
In the United States, one of the biggest controversies about Halliburton is the lack of any competitive bidding process before it secured its huge contracts in Iraq. Dateline has learnt that Halliburton has also received defence contracts here without them going to tender - at least 20 in the last four months.
CHRIS EVANS: What concerns me is that those contracts haven’t gone to open tender and that means concerns will be raised, people will have their doubts and the sort of concerns and issues that have arisen inside America will obviously be raised here as well.
Dateline asked Minister Hill why Halliburton has received contracts without them going to tender.
SENATOR ROBERT HILL: There’s got to be a specific benefit in that decision that outweighs the benefit of another contest and a competition for the work.
CHRIS EVANS: What Australian industry tells me is that a lot of these contracts they could have competed for, they could have supplied, but they haven’t been given the opportunity.
PETER CHARLTON: I really believe there should be much more transparency, much more scrutiny by our politicians and...audit reports conducted by the Audit Office into the way the contracts are carried out.
CHARLIE CRAY: Many of the watchdogs who file a Pentagon contract and have called for the suspension or debarment of Halliburton, along with many members of Congress. So I would be wary about contracting with a company that has this kind of track record.
While there are no suggestions KBR has overcharged Australian taxpayers, its history has inevitably led to concerns being raised here. In a written statement, Halliburton told Dateline "it was a highly ethical organisation, committed to working within Australian Government regulations." Despite the efforts of these protesters, it does appear that Halliburton is in for the long haul. It’s donated over $60,000 to both Labor and Liberal parties since the 2001 election and plans to expand its participation in the Australian defence market.
PROTESTER: Big companies making profit off of war and oil. That’s really all it’s about in the end. It’s about oil.