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The Daily Whim

The Daily Whim

Sun. Oct 24, 2004

Buried Abuse

There’s a recent story about potential abuse of billions of taxpayer dollars that’s been pretty well glossed over. In fact, I’m having some trouble with the basic underlying math.

The Army is laying the groundwork to let Halliburton Co. keep several billion dollars paid for work in Iraq that Pentagon auditors say is questionable or unsupported by proper documentation, according to a report published Friday. According to Pentagon documents reviewed by the Wall Street Journal, the Army has acknowledged that the Houston-based company might never be able to account properly for some of its work.

According to the report, Kellogg Brown & Root has so far billed about $12 billion in Iraq, and about $3 billion of that remains disputed by government officials.

The Journal also cited Pentagon records showing that $650 million in Halliburton billings are deemed questionable. An additional $2 billion is considered to have insufficient paperwork to justify the billing, the report said.

CNN: “Halliburton may keep disputed Iraq money”

Here’s a simple math problem I have with this. Just a few weeks back, we were talking about how 27 cents of each dollar budgeted for Iraq is actually spent on “reconstruction.” And as part of that, the highest figure discussed with regards to the amount “allocated” so far in Iraq, was $7.1 Billion. Of the $18.4 Billion appropriation, using the vague manner the government determines what they consider “spent,” you could only show that figure to be $7.1 Billion … or less.

Yet Halliburton’s Kellogg Brown & Root division has already billed for $12 Billion? Never mind the fact that the government is disputing $3 Billion of that, a whopping 25% of the total, how can Halliburton have billed $5 Billion more than the government says it has so far “allocated”?

But even if we assume there is some reasonable explanation of that discrepancy (KBR provided support of military units in Iraq?), how on Earth does a major corporation do some $3,000,000,000 of work that is “unsupported by proper documentation,” and in the end, “might never be able to account properly for some of its work”? One would think that level of funding would generate copious reams of paper documentation … if nothing else.

But, hey, let’s not waste time worrying over failed audits, and just pay it out. It’s only a few billion in a much larger Halliburton/KBR contract, what some might refer to as “slop.” Or, about $11 per living American, if you prefer to look at it as “taxpayer dollars.”

And it is not an isolated occurrence.

Managers of a security firm that won large contracts in Iraq warned their bosses in February of what they called a pattern of fraudulent billing practices, internal company memorandums suggest.

The memorandums, written primarily by two company managers, charged that the security firm, Custer Battles, repeatedly billed the occupation authorities for nonexistent services or at grossly inflated prices.

The charges swirling around Custer Battles in part reflect a problem that American government auditors have acknowledged: the inability of the Iraq occupation authority, particularly in its first year, to monitor properly the performance of hundreds of companies, large and small, that flocked to Baghdad seeking contracts for everything from building materials to armed guards.

The memorandums, provided by a lawyer for the managers who filed the lawsuit against Custer Battles, charge that the company submitted invoices from supposed subcontractors or suppliers that — unbeknownst to the American officials who paid the final tab — were virtual shells, newly created by Custer Battles executives and their partners.

NYT: “Corruption Accusations: Memos Warned of Billing Fraud by Firm in Iraq”

As I remarked earlier, “It pains me to say this. But this has almost reached the same financial scale of corruption of the UN Oil-for-Food scandal, in a far shorter time span.”

But on one side of our purely partisan world, no one cares about the UN Oil-For-Food scandal, as it doesn’t kick their can down the street any further. On the opposing side of our purely partisan world, no one cares about the fraud, waste, and mismanagement of an equally large fund of US taxpayer dollars, meant to help rebuild Iraq. No tarnish allowed during these critical days.

I would speculate that in the past 8 or 9 years, close to $20 Billion meant to help the Iraqi people has instead been siphoned away from their country, as “slop,” via two quite disparate efforts. And the few people who are willing to voice any moral outrage over it are only talking about one half, or the other.

However, we know what most people are doing. Busy avoiding stories like this in hopes of squeezing past Nov. 3, and bringing this electoral madness to an end. A worthy goal, but at some point we’re going to have to look back over our shoulders, and see the ugly masses of blood, bones, and shattered policy we’ve left by the side of the road over the past six months, in our “electoral rush.”


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