Erik Eckholm, New York Times
Friday, October 29, 2004
The FBI is investigating whether the Army's handling of a large Iraq contract with Halliburton Co. violated procurement rules, according to lawyers for an Army official who made the charges of improprieties.
FBI agents have requested an interview with the official, Bunnatine Greenhouse, the chief of contracting with the Army Corps of Engineers, on her allegations regarding a 2003 contract with Halliburton to repair Iraqi oil fields, her lawyer, Michael Kohn, said Thursday.
Greenhouse, in an Oct. 21 letter to the acting Army secretary, charged that officials had shown favoritism toward Halliburton, the Houston-based conglomerate formerly led by Vice President Dick Cheney, in the awarding and oversight of the oil contract.
She also complained that the Corps of Engineers ignored her objections to a decision to award Halliburton a lucrative contract extension to provide logistical support to U.S. soldiers in the Balkans, the Los Angeles Times reported today.
Greenhouse also said officials at the Army Corps of Engineers had tried to remove her as chief contract monitor after she persistently raised questions about Halliburton contracts. The Army says it has referred her letter to the Pentagon's inspector general for review.
The oil contract was awarded in early 2003 without competition to the Halliburton subsidiary Kellogg Brown & Root, as the U.S.-led invasion of Iraq began, and was initially for five years and worth up to $7 billion.
Greenhouse argued that if the press of war required granting an award without competition, its duration should be restricted to one year. After a public outcry over the large contract with Halliburton, the Pentagon did cut short the agreement after less than a year and $2.4 billion in expenditures and put the remaining work out for bid.
One aspect of the company's performance -- the importation of high- priced fuels into Iraq soon after the invasion -- had already attracted the attention of Pentagon auditors, who say the government may have been overcharged by $61 million.
The FBI has been investigating those charges and has collected documents from Washington, D.C., and Texas offices of the Army Corps of Engineers as well as from KBR.
It is unclear whether the decision to question Greenhouse reflects an expansion of the criminal inquiry on fuel charges into the broader allegation of favoritism in the initial award. One of Greenhouse's charges relates to the narrower issue: She said in her letter that the Corps of Engineers issued a waiver calling those fuel costs reasonable without her knowledge or assent, which she says was legally required.
The Corps of Engineers circumvented Greenhouse again on Oct. 8 when it awarded Halliburton the $165 million contract extension in the Balkans without the competitive bidding designed to protect U.S. taxpayers, the Los Angeles Times reported.
The final approval did not carry Greenhouse's signature, as normally required by contracting regulations. Instead, it was signed by her assistant, Lt. Col. Norbert Doyle, according to documents obtained by the Los Angeles Times.
Greenhouse's lawyers said Thursday their client will cooperate but that she wants whistle-blower protection against Pentagon retaliation.
"I think it (the FBI interview request) underscores the seriousness of the misconduct, and it also demonstrates how courageous Ms. Greenhouse was for stepping forward," Kohn said.
FBI spokesman Bill Carter refused to comment, saying that the agency never confirms or denies the existence of ongoing investigations.
Halliburton spokeswoman Wendy Hall said Thursday that the company has cooperated fully with the Justice Department and the Army Corps of Engineers as they investigate the fuel-importation issue. The company has denied any wrongdoing, saying it paid what was necessary in an emergency situation. Hall said it was her understanding that any document seizures were related to the fuel inquiry.
"We have disclosed the U.S. attorney's investigation into the fuel issue in our public filings," she said.
Hall denied Greenhouse's suggestion that the company received unjustified favors when the oil contract was first granted. "The old allegations have once again been recycled, this time one week before the election," she said.
Cheney spokesman Kevin Kellems, asked if investigators had contacted the vice president or his office about the contracts, said they had not.
Democrats have tried to make Halliburton an election-year issue, and vice presidential candidate John Edwards quickly seized on this latest development. "Good people came forward to tell the truth about these contracts because they -- like the American people -- know that the administration's special treatment of Halliburton was wrong," Edwards said in a statement.