About-face on Halliburton

HALLIBURTON Co., rivaling Enron as the poster child for bad corporate behavior and closely associated with its former chief, Vice President Dick Cheney, has done it again.
The Pentagon first decided, in accordance with federal procurement rules, to withhold, effective Sunday, 15 percent of payments to Halliburton subsidiary Kellogg Brown & Root until the defense contractor could justify its bills.

Then the Army Materiel Command, which oversees the contract, reversed itself and decided not to withhold any payments. KBR bills the government about $4.8 billion a year as part of an open-ended, no-bid contract for services it provides to U.S. forces overseas in food, housing, and other support.

Halliburton and its subsidiaries have been awarded altogether about $8 billion in Iraq war-related contracts. They have contributed $2.4 million to President Bush’s re-election campaign.

The Pentagon’s withholding measure, applied against a background of previous KBR overcharging, billing for meals it didn’t serve to U.S. forces, etc., would have kept $60 million a month from Halliburton.

One can only speculate what caused the Army’s change of heart. Vice President Cheney’s office isn’t commenting. Texas-based Halliburton has become in the past year one of the largest government contractors, largely from its role in the Iraq War. It was awarded some $3.2 billion in new contracts last year, primarily by the Defense Department, moving it into the top ranks of companies doing business with the government, right behind the big aircraft, weapons, and computer suppliers.

Mr. Cheney, after having been President George H.W. Bush’s secretary of Defense, was chairman of the board and chief executive officer of Halliburton, serving in that position until he was nominated as vice president in 2000.

Another possible Halliburton misstep emerged in June when the U.S. Securities and Exchange Commission opened an investigation into the awarding of a contract by the government of Nigeria to build a $6 billion gas liquification plant in its oil fields.

A French judicial probe revealed that Halliburton had likely paid a $180 million bribe to get the contract, with possible kickbacks going into the private overseas accounts of two Halliburton executives. The SEC investigation and legal action in France are still under way.

In early August, Halliburton paid $7.5 million to settle a civil suit filed by the SEC for accounting fraud, which began while Mr. Cheney headed the company, apparently without his knowledge.

It will be interesting to learn whether Halliburton has cheated the U.S. government again this time, and what role if any the White House played in reversing the decision to insist on the accuracy of the company’s billing before paying its invoices.

One might imagine that Halliburton would at least clean up its act a bit to help the vice president with the election less than 10 weeks off.

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