Halliburton and Cheney: War Profiteers in Chief Fight to Keep Their Wallets Fat

Halliburton's stock has risen 200% since the invasion of Iraq three and a half years ago. David Lesar, its CEO, made over $40,000,000 in 2004 alone.
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Halliburton woke up Friday, determined to debunk a film by Robert Greenwald that it has not seen. You have to wonder just what Halliburton's CEO and department of agitation and propaganda are thinking. The reaction to Iraq for Sale: The War Profiteers is similar to CEO David Lesar's ads in which he says that Halliburton is doing a great job in Iraq: Both are without first hand knowledge, based on fantasy and hearsay.

It's worth pausing to recall the insidious nature of Halliburton's role in the invasion and occupation of Iraq. As with so much related to the Bush/Cheney Administration, the truth is stranger than fiction. We did not need Oliver Stone for this one; Robert Greenwald's fact-based documentary tells it better than any novelist could imagine.

We all by now know that Dick Cheney retired from the Pentagon in 1993 to accede to the throne of Halliburton, an oil field services company based in Houston. Under Mr. Cheney's reign, Halliburton acquired Dresser Industries which included the Kellogg Company (the K of KBR), a major engineering firm. True to form, Mr. Cheney's acquisition did not include much due diligence. After Mr. Cheney left Halliburton with tens of millions of dollars in his pocket largely earned because of his connections to Middle East dictators, Halliburton had to cough up $2.3 billion in cash, about $1.2 billion in stock and another $55 million in IOUs to help pay off the tens of thousands of people in this country who had suffered and/or died of asbestos poisoning at the hand of Dresser, which Mr. Cheney had acquired and for which Mr. Cheney was (and apparently still is) handsomely compensated. If this sounds a bit like Mr. Cheney's due diligence with respect to weapons of mass destruction in Iraq, it should. He never bothered to look at what Dresser had before he bought it for Halliburton and he never bothered to look at what Iraq had before he broke it for the U.S.

As Messrs. Cheney and Rumsfeld planned the war in Iraq beginning during the first year of the Bush Administration, Mr. Cheney's Halliburton was the contractor of choice to do the work that the military had always done in past wars. This time, though, the war would be privatized to suit the ideology and obfuscation of the Bush team, which wanted to pretend that the number of people we'd need in Iraq would be small (so outsource it) and that the government can be privatized (so outsource it to friends).

The Iraq debacle is now the subject of at least a half a dozen books, including the terrific Fiasco, by Tom Ricks. Until very recently, however, there has been relatively little penetration into the popular psyche of the role played by Halliburton/KBR in particular and other private military contractors in general, such as Blackwater (runs a private army in Iraq), Titan and CACI (provided translation and interrogation services for places such as the Abu Ghraib prison and both still provide key services to the US military in Iraq and elsewhere).

The reason is simple: the Bush Administration and its Congressional foot soldiers ranging from George Allen and John Warner of Virginia to Rick Santorum of Pennsylvania have refused at every turn to allow for any oversight at all, even though Democratic Senators have asked for such bi-partisan review for years. Unlike their Republican friends, Democrats recall the historic role that Harry Truman played in conducting such oversight during World War II, uncovering $160 billion (in today's dollars) of waste, fraud, abuse and profiteering. I suppose Congress in World War II did not take bribes. Halliburton learned the lesson and this time has gotten its money's worth, having paid over $2 million in campaign contributions to Republicans as hush money to keep the terms of the contracts, and the human destruction those contracts have wrought, all locked up.

Even in Bush's America, where journalists often fear to write and careers end for truths told, the facts eventually speak for themselves. Friday, CBS News and Bloomberg broke the story of a lawsuit by families and survivors of the so-called Friday Massacre in Iraq, in which seven Halliburton/KBR truck drivers were brutally murdered because Halliburton/KBR insisted on sending a convoy of oil tankers out on roads that the US military had closed to all traffic due to extraordinarily high risk. But you gotta make a buck, so Halliburton sent the trucks out. Men died. And more hatred between US and locals ensued, further destabilizing the mess that is Iraq.

Iraq for Sale tells the story of that gruesome ride for profits, probably the most egregious example of out right war profiteering that we have yet seen in a killing field where the likes of Halliburton/KBR reap money with men's lives. Halliburton's stock has risen 200% since the invasion of Iraq three and a half years ago. David Lesar, its CEO, made over $40,000,000 (that's forty million dollars) in 2004 alone and by some calculations, has made at least $150,000,000 (one hundred fifty million) since the war began. It's hard to tell just how rich he has gotten on the intestinal tracts of our soldiers and the bodies of his former employees, but it's probably enough money for him to live happily ever after in several countries outside the U.S.

Let's keep following the money, though. In May, 2006, Halliburton filed a form S-1 with Securities and Exchange Commission announcing its intention to sell its KBR subsidiary to the public. KBR had sales in 2005 of over $10 billion and profits of over $200 million, according to the filing. The reason for the sale of the giant subsidiary, according to the filing, is that "the full value of KBR is not reflected in Halliburton's stock price."

A few weeks later, Halliburton canceled its sale of KBR, saying that it would instead explore a tax free spin off to shareholders. In other words, the news about KBR in Iraq was getting out, so KBR's share price, were it an independent company, would not fetch what Halliburton wants for it, so they'll just stick it to the shareholders. Besides, KBR's government contracts in Iraq are on the wane, because the government funding for Iraq is on the wane.

Mr. Lesar probably learned a lesson from his mentor, Mr. Cheney, who bought Dresser and with it billions of dollars of liabilities. With the truth coming out and law suits pending, Mr. Lesar may well think that by dumping KBR, he can shove the liabilities into the hands of new owners of KBR (think pension plans, index funds and individual investors), of which Halliburton will not be one.

And there's another related reason: Publicly traded companies such as Halliburton and Wal-Mart do not like "headline risk." That's the term for fear instilled in the hearts of stock pickers and analysts when they see a company's name all over the news, and not for saving the world. Who wants to own the stock of a company that might lose one of its major clients (the US Government) and that might face tens of millions or more in potential liability claims?

It's clear why Halliburton CEO David Lesar and his hyperbole machine attacked Iraq for Sale on Friday without even seeing it. On Monday, 18 September in Washington, Senator Dorgan, a crusader for truth and oversight of companies such as Halliburton, together with Senators Reid and Bingaman, is holding hearings with four witnesses from the film who will talk about the "Friday Massacre." The senators know that Halliburton has been profiteering at the expense of taxpayers, soldiers and its own employees. Mr. Lesar is scared that finally, with a film that everyone can see and hearings that everyone will watch, his reliance on the federal trough may come to an unhappy end. Having looked across town at his former Enron neighbors, even Mr. Lesar has to remember the old Wall Street adage: Bulls have their day. Bears have their day. But pigs always get slaughtered.

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