| INVESTIGATIONS
Nigeria bribery probe: The U.S. Department of Justice is conducting a criminal investigation into an alleged $180 million bribe paid by Halliburton and three other companies to the government of Nigeria. The alleged bribe was paid in exchange for awarding a contract to the companies to build a $4 billion natural gas plant in Nigeria's southern delta region. The bribes were paid during the time when Dick Cheney was CEO of Halliburton. The U.S. Securities and Exchange Commission opened its own formal investigation on June 11, 2004. Click here for a chronology of events in the bribery case.
Nigeria bribery probe: The French government is conducting an investigation of the same Nigeria bribery allegations as the U.S. Justice Department. France is also investigating a former Halliburton executive for his role in the scheme. Investigators said $5 million of the bribes intended for Nigeria was deposited into the Swiss bank account of former KBR chairman, Jack Stanley, who retired from the company on December 31, 2003.
The U.S. Securities and Exchange Commission is investigating a second bribery case involving Nigeria. Halliburton admitted that its employees paid a $2.4 million bribe to a government official of Nigeria for the purpose of receiving favorable tax treatment.
The U.S. Federal Bureau of Investigation (FBI) is investigating allegations that the Army Corp of Engineers illegally favored Halliburton for contracts by excluding competitors from bidding on war-related work. In particular, the FBI is investigating the Army's $7 billion firefighting contract for Iraqi oil wells, which was awarded to Halliburton without competition in March of 2003. An Army whistleblower told the FBI that the line between government officials and Halliburton had become so blurred that a perception of conflict of interest existed. The conduct appears to have violated specific regulations and calls into question the independence of the contracting process.
The Pentagon admitted that a $7 billion no-bid contract to extinguish oil fires in Iraq was awarded to Halliburton after a "political appointee" from the Bush administration recommended the company for the job. Government policy forbids politicians or their appointees from taking a role in awarding contracts to private corporations. But Vice President Cheney ignored this basic principle when his political appointees were directly involved in awarding a $7 billion contract to Halliburton to rebuild Iraq's oil infrastructure.
The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) is investigating the legality of Halliburton's business dealings in Iran, an enemy of the United States. Halliburton sells goods and services to Iranian companies through its Cayman Islands subsidiary. The sales appear to have violated the U.S. trade embargo against trading with Iran. The OFAC referred the case to the Department of Justice, which is conducting a criminal investigation.
The Criminal Division of the U.S. Department of Justice issued a subpoena to a former employee of Halliburton's KBR unit to determine whether the company criminally overcharged for gasoline imported into Iraq. KBR, along with its Kuwaiti subcontractor Altanmia Commercial Marketing Co., allegedly overcharged the government by $61 million, but Democrats in Congress say the overcharges were closer to $167 million. KBR charged the government $2.64 per gallon of gasoline while competitors were importing gasoline for less than half that price.
Four former employees of Halliburton filed a class action lawsuit against their former employer, alleging the company engaged in "systemic" accounting fraud from 1998 to 2001. The former employees say Halliburton overbilled for services, overstated the amounts it was owed by customers and understated amounts it owed to vendors. A former employee in the accounting department said supervisors had told her to do "whatever it took" to make profit statements appear more profitable than was actually the case.
The U.S. Department of Defense is investigating Halliburton's billing system, which it calls "inadequate." Pentagon accountants said they are uncertain as to why Halliburton's KBR unit billed the government for $1.8 billion in work that was apparently never undertaken or completed. The $1.8 billion represents 43 percent of Halliburton's expenditures in the Middle East.
Congressional auditors issued a report that criticized Halliburton for a variety of abuses associated with its troop support and military logistics (LOGCAP) contract. It also criticized the Pentagon for �a pattern of contractor management problems,� including ineffective planning, a poor materials requisition system and inadequate supervision of subcontractors.
The Pentagon's Defense Contract Audit Agency (DCAA) completed a comprehensive review of Halliburton's system for billing the government for meals served to the troops in the Middle East. The DCAA said Halliburton billed the government for 36 percent more meals than was actually served to the troops while an internal KBR report said it had overcharged by 19 percent. In May 2004, the DCAA recommended that the Pentagon refuse to pay Halliburton for the overcharges.
An investigation by the inspector general of the now-disbanded U.S. Coalition Provisional Authority (CPA) found that Halliburton lost $18.6 million worth of government property in Iraq because of mismanagement. About a third of the government items under Halliburton management in Iraq, including trucks, computers and office furniture have disappeared.
The U.S. Justice Department is investigating Halliburton for possible over billing on government services work done in the Balkans from 1996 through 2000. The charges stem from a General Accounting Office report that found in 1997 that Halliburton billed the Army for questionable expenses for work in the Balkans, including charges of $85.98 per sheet of plywood that cost $14.06. A follow-up report by the GAO in 2000 found inflated costs, including charges for cleaning some offices up to four times a day.
The Army awarded Halliburton a no-bid contract in March 2003 despite a secret Pentagon report which found the company had "significant deficiencies" that could lead to defrauding the government. The Pentagon's report was given to Hearst News Service under the Freedom of Information Act over Halliburton's objections.
The Department of Defense repeatedly warned Halliburton's subsidiary, KBR, that its food and the kitchens where it is prepared are "dirty," NBC News reported. A Pentagon report found that KBR's promises to clean up its food and kitchens "have not been followed through."
The Kuwaiti government has delayed completion of a report on its investigation of the $61 million gasoline overcharge by KBR and its subcontractor, Altanmia. The U.S. embassy in Kuwait publicly stated it will not cooperate with the Kuwaiti government's investigation. Kuwait said its investigation is delayed because the U.S. Army refuses to testify.
The inspector general for the U.S. Coalition Provisional Authority (CPA) found that the United States failed to adequately control over $9 billion in international aid, including Halliburton's hotel costs in Kuwait. Halliburton charged the government $2.85 million for hotel costs, even though cheaper housing arrangements were available. For example, one CPA official lived at the Kuwaiti Hilton for almost $700 a night. The inspector general also criticized Halliburton for charging $191,000 a year for laundry services.
The auditing arm of Congress issued a report confirming that the Pentagon had violated procurement law by issuing a "task order" to Halliburton to develop plans for extinguishing oil well fires in Iraq. The report, issued by the General Accounting Office (GAO), said the task order violated the law because it was issued under Halliburton's LOGCAP contract, which is not authorized to handle oil fires. LOGCAP is a logistics contract that requires Halliburton to feed the troops, deliver supplies in a war zone and construct military buildings. But there is no authority under LOGCAP to deal with oil well fires. The GAO said Bush administration officials �overstepped the latitude provided by competition laws� when they misused the LOGCAP contract to assign the planning job to Halliburton.
Halliburton settled an investigation by the Securities and Exchange Commission (SEC) which accused the firm of providing "materially misleading" information to investors during the period when Vice President Dick Cheney was the chief executive officer. The SEC said it settled the case after Halliburton agreed to pay a $7.5 million fine and to stop "committing or causing future securities law violations."
The International Advisory and Monitoring Board (IAMB), a watchdog established by the United Nations, is investigating the management of Iraqi finances by the now-disbanded U.S. Coalition Provisional Authority (CPA). The IAMB complained that the CPA refuses to release documents on contracts awarded to private firms, including Halliburton. The Bush administration refused numerous IAMB requests for U.S. government reports about the payment of approximately $1.5 billion in Iraqi funds to Halliburton, which is the single largest private recipient of Iraqi oil proceeds.
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