In 1991 when he was Secretary of Defense, Dick Cheney decided that there were many services the Military performed for itself in logistics (food, fuel and construction) that might be done by private contractors. But within the Pentagon, there was considerable resistance to this idea. Generals asked “What if a contractor didn’t deliver what we paid for to a war zone?” So to quiet the resistance, Cheney hired an outside contractor, Brown and Root Services, a subsidiary of Halliburton and paid them $8.5 Million for a consulting survey of the privatization concept. Brown and Root reported back that privatizing the supply chain was a wonderful idea and Cheney was able to ram it through the bureaucracy in his last months in office.By 1994, Halliburton and KBR were doing most of the logistics for U.S. troops in the Balkans conflict and in 1995, Cheney became President of Halliburton.
I present this little history lesson because this morning The New York Times reports that the worst fears of the Generals who resisted Cheney’s privatization scam were realized in Iraq. Moreover, when one man stood up to KBR for overbilling $1 billion for non delivered food services, he was demoted and KBR was paid.
The Army official who managed the Pentagon’s largest contract in Iraqsays he was ousted from his job when he refused to approve paying more than $1 billion in questionable charges to KBR, the Houston-based company that has provided food, housing and other services to American troops.
The official, Charles M. Smith, was the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war. Speaking out for the first time, Mr. Smith said that he was forced from his job in 2004 after informing KBR officials that the Army would impose escalating financial penalties if they failed to improve their chaotic Iraqi operations.
When Smith told the KBR official he was withholding payment, they essentially blackmailed the Army- “They said that KBR had warned that if it was not paid, it would reduce payments to subcontractors, which in turn would cut back on services.” Smith continued to hold back payments and demand KBR account for the missing services.
In August 2004, he told one of his deputies, Mary Beth Watkins, to hand deliver a letter about the threatened penalties to a KBR official visiting Rock Island. That official, whose name Mr. Smith said he could not recall, responded by saying, “This is going to get turned around,” Mr. Smith said.
Two officials familiar with the episode confirmed that account, but would speak only on the condition of anonymity out of concern for their jobs.The next morning, Mr. Smith said he got a call from Brig. Gen. Jerome Johnson, who succeeded General McManus when he retired the month before. “He told me, “You’ve got to pull back that letter,”’ Mr. Smith recalled. General Johnson declined to comment for this article.
Smith was then fired and KBR was paid their full $1 billion. My guess is that the KBR official could speak so confidently of a reversal of Smith’s order because they could appeal to a higher power in the Vice President’s office (who by the way was still a shareholder of Halliburton). I thought I had lost my capacity to be outraged by the conduct of Dick Cheney, so egregious has been his arrogance and incompetence in the last 8 years. But this morning as I read the The Times article, I felt that old familiar blood boil.
In the long sad history of American War Profiteers , Dick Cheney and the criminals at Halliburton and KBR must surely stand at the head of the class. If Waxman and Levin don’t haul all of these guys before Congress soon, it will be a crime.