Cheney watching the 9/11 attacks on NYC before being rushed into the White House bunker. Photo: White House.

This is an excerpt from Jeffrey St. Clair’s book on war-profiteering, Grand Theft Pentagon (Common Courage, 2005).

There’s no more pungent symbol of the corrupt nature of the Bush administration’s invasion and occupation of Iraq than Halliburton, the Houston, Texas-based oil services conglomerate, which has made billions from the war even in the face of charges of massive overbilling, shoddy work, official bribery and political influence-peddling.

The remarkable thing is that Halliburton’s looting of Iraq and the US treasury happened in broad daylight, right under the nose of the press, the Democrats and Michael Moore, who made Dick Cheney’s former company the bete noire of his film “Fahrenheit 9/11.” Nothing deterred the company from capitalizing on the war it helped orchestrate.

Even the Pentagon’s own team of auditors, who nailed Halliburton red-handed for bilking the government for $108.4 million in overcharges for only “one task order” of its work in Iraq, found their report languishing in a kind of bureaucratic netherland for many months.

The damning investigation by the Defense Contract Audit Agency was completed in early October of 2004 and shipped up the line to the Pentagon’s dark triumvirate, Douglas Feith, Paul Wolfowitz and Donald Rumsfeld. And there it sat. The Pentagon’s civilian leadership mothballed the explosive report for more than five months, until after the election, the inauguration, the State of the Union Address and the Defense Department budget request had all safely transpired.

Even Congress was denied a peek at the report’s findings until mid-March 2005. The Pentagon rejected 12 separate requests from Congressman Henry Waxman, the California Democrat who has spearheaded the ad hoc congressional inquiry into Halliburton’s contract abuse, seeking to examine the internal audits of Halliburton’s $2.5 billion contract for fuel supplies and other services to the US military and occupation government in Iraq.

Waxman charged that the Pentagon withheld the damaging reports at the behest of the office of Vice President Dick Cheney, the former CEO of Halliburton.

The Halliburton audits were also concealed from a team of investigators from the United Nations, which is probing profiteering from oil contracts in Iraq. More than $1.5 billion of Halliburton’s $2.5 billion deal was funded by Iraqi oil sales overseen by the UN.

“The evidence suggests that the Pentagon used Iraqi oil proceeds to overpay Halliburton,” says Waxman. “And then the company and the Pentagon sought to hide the evidence of these overcharges from the international auditors.”

Call it the Oil-for-Contracts scandal. But you didn’t hear daily drumbeats about the outrageous rip-off on Fox News.

When someone finally leaked the audit to Waxman’s office, the documents disclosed a thick wad of Halliburton billings that the Pentagon bookkeepers deemed “illogical.”

The most peculiar billing found in this limited series of transactions was a $27.5 million charge for shipping cooking gas and heating fuel that the Pentagon auditors valued at $82,000. This single invoice amounted to an overcharge of more than 335 times the value of the liquified natural gas delivered by Halliburton’s subcontractors.

The auditors examined only a single task order in Halliburton’s scandal-plagued contract with the Army Corps of Engineers, yet their report lambasted nearly every aspect of the deal, from the no-bid award to the cost-plus nature of the contract to the almost total lack of supervision of the work orders and the subcontractors.

From May 2003 to March 2004, Halliburton sent the Corps of Engineers bills totalling more than $875 million for supplies of fuel to US operations in Iraq. For this task order alone, the Pentagon auditors estimated that Halliburton overbilled the government by at least $108.4 million. That’s real money, even by Pentagon standards.

But that’s only a rough opening bid for the true scale of the looting, in large part because of the company’s indefatigable stonewalling. The auditor’s report accuses Halliburton of misleading the government inspectors at nearly every turn. For example, the auditors allege that Halliburton simply refused to hand over any information on its subcontractors in Kuwait. “Halliburton failed to demonstrate its prices for Kuwait fuel were ‘fair and reasonable’”, the auditors wrote in their report.

Similarly, Halliburton kept the Pentagon investigators in the dark about the prices it paid for purchasing fuel from Turkey and Jordan.

The Defense Contract Audit Agency report comes on top of previous investigations tagging Halliburton, and its Kellogg, Brown and Root subsidiary, for more than $442 million in “unsupported” billings for its work in Iraq, including charges for meals that were never served, $45 cases of pop, unnecessary heavy equipment, tailoring fees and $152,000 for movie screenings. In all, a report prepared by the Democratic Policy Committee estimates that Halliburton’s overcharges in Iraq alone exceed $1 billion.

Okay, the Pentagon learned a billion-dollar lesson the hard way, right? Wrong. In July, the Pentagon discreetly let slip that it had awarded Halliburton a fat new contract for yet more logistics work in Iraq. How fat? Try $5 billion. In fact, the contract was secretly handed to Halliburton in May, but the Pentagon kept it under wraps for more than a month. Why? “The Army didn’t consider it necessary” to reveal the terms of the deal, a Pentagon spokesman explained to Reuters.

In the ever-expanding universe of Pentagon contracting, cost is never the problem; public exposure is.

Halliburton, the signature corporation of the Bush-Cheney onslaught on Iraq, didn’t start its corporate life on the government dole. In fact, the company patriarch, Erle P. “Red” Halliburton, despised the federal government. His distaste for Uncle Sam was matched only by his ferocious hatred of Mexicans, blacks and labor unionists.

In 1919, Red Halliburton started the New Method Oil Well Cementing Company from his home in Wilson, Oklahoma, a hardscrabble town in the oil patch. Halliburton’s big innovation was something called the Cement Jet Mixer. When the oil boom hit Texas, the wildcatters and other drillers quickly began experiencing problems with their deep shafts. The steel pipe funneling the oil up from the Permian basin and other reservoirs of crude would sooner or later develop cracks, allowing groundwater to contaminate the crude. In some cases, the pipes would even explode.

Halliburton’s solution, which he unveiled in the oil town of Burkburnett, Texas, was to seal the well-pipes in a sheath of concrete, protecting the pipes from corrosion and precious loads of crude from contamination. He was soon in demand across the oil fields of Texas and Oklahoma. Erle changed the name of the company to Halliburton and raked in millions from his patent. Halliburton continues to garner millions from its drilling technology, from Saudi Arabia to the Amazonian rainforest.

Meanwhile, in that same crucial year of 1919, the other half of Halliburton was also beginning to take shape as two friends from San Marcos, Texas, Herman Brown and Dan Root, formed a road paving company that would eventually become one of the world’s largest construction firms. The Brown & Root Company shared Halliburton’s antipathy toward organized labor, but realized early on that there was a fortune to be made through outsourced government work.

Brown & Root also understood that government contracts are a lot easier to get if you have a politician on retainer.

In the late winter of 1937, the imperious Texas Congressman James P. “Bucky” Buchanan, chairman of the House Appropriations Committee, suddenly died in office. Buchanan departed the living with some unfinished business of extreme importance to his political cronies. The congressman, who controlled the federal purse, was in the midst of pushing through Congress the Lower Colorado River Project, a scheme to build a network of dams across the Texas hill country that would bring water to the people and millions in federal funds to favored contractors. The centerpiece of this enterprise was the Marshall Ford Dam outside Austin and the company that had won the contract to build the dam was none other than Brown & Root.

The $10 million dam deal was the biggest Brown & Root contract to date. But there were two problems left by Buchanan’s ill-timed passing: the money for the dam hadn’t yet been approved by Congress and the land at the dam-site wasn’t owned by the federal government. What had suddenly looked like a sure thing, now found Brown & Root on the unnerving verge of bankruptcy. The company had gone into debt by more than $1.5 million in order to purchase the equipment needed to build the dam.

Brown & Root decided there was no turning back. They began construction on the dam before getting any federal funds and before the feds had actually acquired the land from the state of Texas.

But the company had an ace in the hole in the shape of Lyndon Baines Johnson, the lumbering former schoolteacher who was vying to replace the departed Buchanan. In the spring of that year, young LBJ met several times with Herman Brown, vowing to make congressional approval of the dam project his top priority. Brown sluiced cash into LBJ’s campaign and he sailed to victory in a special election on May 13, 1937. LBJ lived up to his obligations. A little more than a week after having arrived in DC, the freshly hatched congressman had engineered congressional approval for both the appropriation and the land purchase.

The Marshall Ford Dam deal launched LBJ’s career as a can-do politician without parallel in American politics and it set Brown & Root on course to become one of the federal government’s favorite contractors. The apex political fixer Thomas “Tommy the Cork” Corcoran later observed that “LBJ’s whole world was built on that dam”. So too was Brown & Root’s.

LBJ had the good fortune to land on the congressional committee overseeing the operations of the US Navy as it prepared for World War II. When LBJ’s fortunes rose on the Hill, so did Brown & Root’s. As a brawny member of the Naval Affairs Committee, the ambitious congressman, a key southern supporter of FDR’s New Deal and therefore confident of the backing of the White House for almost any pet project, steered as many big contracts to his political financiers as possible.

It was courtesy of LBJ, and his privileged position in Congress, that Brown & Root got into the Pentagon contracting business in a big way. In 1940, the former road paving firm won a huge contract to build the Corpus Christi Naval Air Station, a complex of runways, hangars, barracks and command centers sprawling across 2,000 acres of swamp and scrubland on the Gulf Coast of Texas. It was a model for things to come.

The Corpus Christi Naval Air Station was one of the first “cost-plus” contracts, a sweet deal where the government simply pays every bill the contractor submits. The initial price tag was pegged at $23.5 million, with Brown & Root guaranteed a profit of $1.2 million. But within a year, the cost had soared to more than $45 million, with Brown & Root pocketing more than $2.4 million in profits. It was an early lesson in the demented logic of Pentagon contracting: the bigger the cost-overruns, the juicier the profits. In the end, the Naval Air Station cost the Pentagon more than $125 million.

The Corpus Christi deal initiated Brown & Root into the risk-free fraternity of favored Pentagon contractors. The company that had prospered through the Great Depression thanks to federal dam projects was poised to make a killing from World War II, with most of the deal coming courtesy of the US Navy and its congressional overlord, LBJ and the powerful congressman from Houston, Albert Thomas. Working together, LBJ and Thomas convinced the Navy to give Brown & Root a lucrative shipbuilding contract, even though, as investigative reporter Robert Bryce notes, up until that point, the company “had never built so much as a canoe.”

But over the next five years, Brown Shipbuilding, a huge operation on the Houston Ship Channel, would build 355 ships for the Navy, specializing in sub chasers and escorts for destroyers. The company made a cool $500 million from the deal.

As the war drew to a close, Brown & Root went from building ships to melting more than 20,000 surplus airplanes they bought on the cheap from the War Assets Administration. They were soon one of the big players in the aluminum business, much of which they sold right back to the feds, making tens of millions in profits. This neat trick was followed by a huge cost-plus contract to build the US military base on Guam in the South Pacific, a deal that started with a price tag of $25 million but soon ballooned to more than $250 million.

Never say that Brown & Root wasn’t grateful. They knew that their fortunes rode on the backs of their political benefactors and they did their best to keep them happy. Unlike many others in Congress during the 1940s, Johnson wasn’t rich. He and Lady Bird fretted about money during the early years of their marriage. Then, in the mid-1940s, opportunity came calling when KTBC, Austin’s first radio station, went on the market. Using money from Lady Bird’s inheritance and generous infusions of cash from Brown & Root, the Johnsons bought the station, made major upgrades........

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