Haliburton OK'd To Do Whatever The Fuck They Want

[Adam]

Ok, my headline.

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20040106/us_nm/energy_halliburton_dc_8

WASHINGTON (Reuters) - The U.S. Army said on Tuesday it had granted Halliburton a waiver to bring fuel into Iraq via a no-bid deal with a Kuwaiti supplier despite a draft Pentagon audit that found evidence of overcharging for fuel.

U.S. Army Corps of Engineers spokesman Ross Adkins said the waiver was not tied to the Pentagon's audit of Halliburton, the oil services company once run by Vice President Dick Cheney, but was done to ensure much-needed fuel reached the Iraqis.
...

sure.

 

[Subsonic Chronic]

There was a similar story a while back about how the U.S. had granted Haliburton basically a carte blanche to do whatever the fuck they want, including violating laws, in order to keep the oil/money flowing.

 

[OTIS]

Don't forget that guaranteed minimum 8% profit, regardless of the outcome of the war or it's length.

Freedom!

 

[AdRiaN]

Originally posted by OTIS
Don't forget that guaranteed minimum 8% profit, regardless of the outcome of the war or it's length.

Is that before or after tax?

(it's actually 2% minimum, and a maximum of 7% depending on performance)

 

[OTIS]

Hmm.. I've read, and heard otherwise.. just wondering on your source?

 

[AdRiaN]

http://asia.news.yahoo.com/031213/ap/d7vd7oo00.html

(near the end of the article)

"Halliburton is guaranteed a profit equal to at least two percent of its costs. Depending on performance, Halliburton can earn a profit of up to 7 percent of costs. "

 

[OTIS]

Thanks for the link.. I confirmed this eslewhere too.
It says alot to explain why they're overcharging so much already.

 

[man_slut]

HALLIBURTON'S BUILT-IN GOUGE
1/5/2004
http://www.jimhightower.com/air/read.asp?id=11268

Dick Cheney's old company, Halliburton, keeps getting stuck in its own Iraqi sand pit – and Cheney and his sidekick George W are stuck there, too.

Halliburton, which continues to pay about $150,000 a year to its old CEO Cheney, was first in line to get multi-billion-dollar, no-bid contracts from the Bush-Cheney regime for occupying and rebuilding Iraq. But don't think that any political favoritism was involved. No, no, Bush officials say, it's just that Dick's old company was the only one in the whole wide world qualified to do the job. Imagine, the only one.

And what a job it has done! Take it's contract for providing gasoline to Iraqis. An audit shows that the Houston-based giant has already gouged us taxpayers by as much as $61 million on this no-bidder. It's been charging the Pentagon $2.64 a gallon to haul gasoline from nearby Kuwait. Well, yes, say the Bushites, that's expensive, but, hey, it's costly to deliver gas in a combat zone.

Before you swallow that, though, note that the Pentagon's own energy support center delivers gasoline from Kuwait to Iraqi pumps in exactly the same war conditions for under a buck-twenty a gallon – less than half of Halliburton's charge. And Iraqi's own state oil company does the same job for under a dollar a gallon.

Caught in Halliburton's web of deceit, George W is now trying to get on the high road, declaring that "If there's an overcharge... we expect that money to be repaid." Repaid? What about charging his and Cheney's no-bid cronies with fraud?

But here comes the real stinker: Halliburton's contract from the Bushites actually gives the company an incentive to overcharge us taxpayers. It guarantees a profit to Halliburton of between two and seven percent of its costs – meaning that the more cost it can put into each gallon, the more profit Halliburton gets.

It's a built-in gouge, brought to us by Bush and Cheney, who like to claim that they're running our government like a business.



--------------------------------------------------------------------------------


"Evidence Is Cited Of Overcharging In Iraq Contract, New York Times, December 12, 2003.
"High Payments To Halliburton For Fuel in Iraq," New York Times, December 10, 2003.
"Bush: Halliburton Must Pay for Overcharge," Austin American-Statesman, Decmeber 14, 2003.

 

[2canplay]

Originally posted by AdRiaN
http://asia.news.yahoo.com/031213/ap/d7vd7oo00.html

(near the end of the article)

"Halliburton is guaranteed a profit equal to at least two percent of its costs. Depending on performance, Halliburton can earn a profit of up to 7 percent of costs. "

Does this include "cost of capital?" I bet you it is...
(That would mean 7% (cost of capital) plus 2%+)

If I was running HAL, that's the way I would of done it...2% is hardly worth getting out of bed for, non?

 

[2canplay]

Actually, let me also say that people would lose their job at HAL, if they were signing 2% contracts. Especially when their stated goals for return on capital are 10%. 2% contracts lose lots, and lots of money.

 

[OTIS]

You kidding, Haliburton was on the brink of Bankruptcy the year before the contract.. this contract was a fuckin lifeline for them.. 2% of whatever they get to charge in a NO BID GOVERNMENT REBUILDING TAX FUNDED contract is fuckin gold for a corporation!

It's a dream of guaranteed growth for a long long time. For any corproation it's a hugely very lucritive deal with 0 risk.

 

[AdRiaN]

I don't know enough about the specifics of this contract (ie., what exactly they are being contracted to do) but it seems the majority of the work is centred around delivering fuel to Iraq. If the company is not building any signficant infrastructure under this contract (ie., investing capital), but merely earning a 2% markup on its deliveries, then Halliburton is definitely earning a very good return on capital.

 

[OTIS]

From what I understand, they are also responsible for some road & bridge infastructure rebuilding.

 

[2canplay]

I'm no expert on specific aspects about contract bidding, however I understand the obligations that senior management has vis a vis adequate capital returns. I think if you view it in those terms, the deal probably works out something like this;

Labour: 1000 contractors equals about 100 million in sales, and 20 million in capital outlays (payroll, etc)...probably only making 2%-7%, plus the cost of capital (6-8%) on each contractors pay, unless its project specific, then it would be on the whole project.

Capital: Total capital committed, total cost, plus cost of capital, plus 2%, minimum. So if the bridge costs $1billion, built into that (or on top, I'm not sure), is the 6-8% cost of capital (probably charged from the Haliburton holding company, to the subsidiary doing the work (ie, Kellog,Brown and Root)), plus the scaled profit margin of 2-7%. So figure on a 1 billion dollar capital commitment, Haliburton will make anywhere from 8% to 15-16%...

As well, I suspect Haliburton has built in a number of favourable assumptions about their costs, probably pushing up their margins.

That being said, if the contract does cap out at 7%, it's not a fantastic deal, but no one would turn it down, that's for sure. Long-term, it's probably a big plus for HAL because it will insure their presence in Iraq for a very, very long time.

 

[man_slut]

I think you need to remember that 7% profit on 100 000 000 is sufficient (7 million) compared to a lesser value of lets say
$30 000 ($2100).

 

[AdRiaN]

Originally posted by 2canplay
As well, I suspect Haliburton has built in a number of favourable assumptions about their costs, probably pushing up their margins.

In most contracts, the proponent assumes risk for any cost overruns relative to the initial estimates. Some costs may be passed through if they are outside of the proponent's control (ie,. if the commodity price of gasoline increases) but usually higher delivery costs would be absorbed as a loss. It seems the problem with this particular contract is that Halliburton does not assume any cost risk for delivery of gasoline.

 

[Adam]

Probably meaningless, but it's a nice gesture:

Pentagon Mulls Haliburton Probe

The Pentagon's inspector general has reportedly been asked to investigate whether Halliburton overcharged the US military for fuel in Iraq. The request came from military auditors, Pentagon officials speaking on condition of anonymity have told the Reuters and AFP news agencies.

 

[Adam]

Halliburton Tells Pentagon Workers Took Kickbacks

 

[Adam]

Halliburton deal 'violated rules on procurement'
By Joshua Chaffin in Washington
Published: June 2 2004 5:00 | Last Updated: June 2 2004 5:00

The Pentagon violated federal procurement rules when it awarded Halliburton, the oilfield services company formerly headed by Dick Cheney, US vice-president, a multi-billion dollar contract to repair Iraq's oil infrastructure, according to people briefed on a pending report by congressional auditors.

The deal raised objections within the army, according to these people, but they were overruled by the office of Donald Rumsfeld, defence secretary.

Halliburton deal 'violated rules on procurement'

 

[wayne kenoff]

Originally posted by Adam
Halliburton deal 'violated rules on procurement'
By Joshua Chaffin in Washington
Published: June 2 2004 5:00 | Last Updated: June 2 2004 5:00

The Pentagon violated federal procurement rules when it awarded Halliburton, the oilfield services company formerly headed by Dick Cheney, US vice-president, a multi-billion dollar contract to repair Iraq's oil infrastructure, according to people briefed on a pending report by congressional auditors.

The deal raised objections within the army, according to these people, but they were overruled by the office of Donald Rumsfeld, defence secretary.

Halliburton deal 'violated rules on procurement'

holy fuck.. FINALLY! some accountability. this is not going to wash with conservatives. that's corruption plain and simple.

 

[Adam]

9 months later..

Halliburton Questioned on $1.8 Billion Iraq Work -WSJ
NEW YORK (Reuters) - Pentagon auditors have concluded that Halliburton Co. failed to adequately account for more than $1.8 billion of work in Iraq and Kuwait, the Wall Street Journal said on Wednesday, citing a Pentagon report.

The amount represents 43 percent of the $4.18 billion that Houston-based Halliburton's Kellogg Brown & Root unit has billed the Pentagon to feed and house troops in the region, the newspaper said.
...

http://story.news.yahoo.com/news?tm.../nm/20040811/ts_nm/energy_halliburton_iraq_dc

 

[Adam]

Yeah, remember when we threatened to withhold payments? Never mind, here you go.

http://www.cbc.ca/story/world/national/2004/08/18/KBR040818.html

Military flip-flops, will pay Halliburton fully
Last Updated Wed, 18 Aug 2004 10:55:36 EDT
WASHINGTON - The Pentagon has hastily reversed a decision to partially withhold payments to Halliburton, the biggest U.S. contractor in Iraq.

On Tuesday, the U.S armed forces administration announced it would hold back 15 per cent of payment on future bills to the group, which used to be headed by U.S. Vice President Dick Cheney.
...

 

[Adam]

The Thief Of Baghdad

Missing: One giant generator owned by the United States military. Estimated cost: $734,863

Last seen: Somewhere in Iraq.

While much of the media is focused on the pitched battle over the control of the holy shrine in Najaf, a bigger scandal is brewing in Iraq that may well have an equally important effect on the future of the U.S. occupation.

A team of auditors was dispatched to Iraq in late January this year after a string of internal reports showed that the military was wasting billions of dollars of taxpayer money. They have issued eleven reports since June 25, almost all of which have pointed to the misuse of the money allocated for reconstruction, be it Iraqi or Congress-appropriated funds.

According to two of these reports issued in late July by Stuart Bowen, the auditor-inspector general of the Coalition Provisional Authority (CPA), not only have a full one-third of the items purchased by the Pentagon gone MIA (including the pricey generator), but a whopping. $1.9 billion or more of Iraqi oil revenue has also mysteriously disappeared.
...