Pentagon Opens Criminal Fraud Investigation into Halliburton

Floor Speech

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Ms. SCHAKOWSKY. Mr. Speaker, I thank the gentleman from New Jersey (Mr. Pallone) for allowing me to share my thoughts on this.

I wanted to begin with something that may seem a little bit off point. I just returned from the White House meeting along with the Congressional Black Caucus that was kind enough to let me come along, in a meeting with Secretary of State Colin Powell and Condoleezza Rice and the President, and we were talking about the crisis in Haiti right now. And one of the reasons now given for our going to Iraq was to liberate Iraq, to bring democracy to Iraq. And we stand here right now at a moment when violence and thugs and M-16s are moving toward the palace of the democratically elected President of Haiti, Mr. Aristide, and there seems to be a reluctance for the United States now to get involved in saving a democracy.

Whatever one thinks of Mr. Aristide, some of us do not like some of the things the President does, or we are talking about the Vice President tonight, but we are going to wait until November, until there is another election. We are not even so sure about the last election. They talk about some irregularities in the Haitian election in 2000. We think there were some here, too, but we do not do anything. And I got to thinking that what if there was some oil in Haiti? Maybe there would be a little more interest on the part of the United States in really doing something.

Our hope is that the President understands, and I know he understands, but that in the light of there being an imminent bloodbath in Haiti, that the United States takes some action. It would be pretty ironic if we were trying to bring democracy to Iraq and yet we let democracy crumble in Haiti.

Let me get back to the point. I have been watching these ads on television that Halliburton has been putting on. They are pretty glossy ads, and they show soldiers, handsome young men and women, getting meals that Halliburton says that it is providing to our soldiers; and says that Halliburton has been doing all this great work, and I am sure that over the years they can proudly point to some of their accomplishments. But they are bragging about meals right now, and what we have found out now is that, yes, they provide meals, but they have also been

charging for three times as many meals as were actually served in a major Army facility in Kuwait, that American taxpayers are paying millions and millions of dollars to Halliburton for meals that simply never got served. Whoops, a little mistake. Or is it just a mistake?

Maybe the gentleman has referred to it already, and he can stop me if he has, but the gentleman from California (Mr. Waxman) has been doing a wonderful job in calling for investigations of these overspendings on behalf of the American taxpayers. We should not be paying 1 cent more than we need to be spending, particularly in a war that, in my view, we should not have been involved in in the first place. But there we are, and Halliburton is there, too.

So he, along with the distinguished gentleman from Michigan (Mr. Dingell), sent a letter on February 12 to the Director of the Defense Contract Audit Agency asking them to look into some of the problems based on information that was provided to them by whistleblowers. It is not always so easy to be a whistleblower, to stand up and risk one's job and sometimes risk all kinds of retribution to tell what is really going on.

Halliburton deserves scrutiny. They were awarded in 2001 a global logistics contract worth about $3.7 billion, 90 percent of this total value for work in Iraq, and here is what these whistleblowers are saying that Halliburton is doing: that they are engaging in these improper practices, telling employees that price does not matter. This is from the letter:

"High-level Halliburton officials frequently told employees that the high prices charged by vendors were not a problem because the U.S. Government would reimburse Halliburton's costs and then pay Halliburton an additional fee. One whistleblower said that a Halliburton motto was 'Don't worry about price. It's cost-plus,' " which means they not only get their costs, but, on top of that, some profit. So do not worry about it.

"Wasteful spending: Ordinary vehicles were leased for $7,500 a month. Higher prices than necessary were paid for furniture and cellular phone service. Poor quality mobile homes were purchased and accepted even though much better units were available. Under Halliburton's cost-plus contract, all of these wasteful expenditures were passed on to the taxpayer. The company even sought to order embroidered towels at a cost of $7.50 each when ordinarily towels would have cost about one-third of the price."

Those of us who are involved in decorating our homes, maybe once in a while we are going to splurge on an embroidered towel. I do not think that we need to do that when we are trying to be cost-effective in a war in Iraq and have a little money left over to help some people at home.

"Avoiding competition among vendors: Halliburton's objective was to keep as many purchase orders as possible below $2,500 in value ....." Because they are being frugal? No. The letter goes on to say: " ..... so its buyers could avoid the requirement to solicit quotes from more than one vendor. Instead of having multiple vendors submit competitive quotes for needed materials and selecting the lowest quote, Halliburton frequently sought only one quote from a single vendor."

"Inviting unjustifiably high quotes: It was routine for Halliburton buyers to copy a requisition, hand it to a single Kuwaiti vendor, and tell the vendor to submit any quote below $2,500 the next day. The focus was not on obtaining a reasonable price."

And there is a lot more in this letter, but in the summary here, it says, "Relying on an inadequate list of preferred vendors: Halliburton's supervisors provided buyers with a list of preferred Kuwaiti vendors. Many of the preferred firms were unreliable or charged 'outrageous' prices. Supervisors did not encourage buyers to identify alternative vendors and, in some cases, wanted to use a higher-priced vendor on the preferred list rather than a new, cheaper vendor.

According to the whistleblowers, improved business practices would yield significant savings."
And they talk about "Mr. Bunting," one of the whistleblowers, "estimated that competition could reduce costs by up to 15 percent. The former procurement supervisor explained that when he obtained three quotes instead of just one, he typically saved up to 30 percent." So we are paying top dollar, unnecessarily high prices.

And just what is this company and its relationship to the Vice President? Because that is what we are talking about here today. The integrity of this administration is in question.

And when Mr. Cheney says in 2000, July of 2000, before the election, said, "What I will have to do, assuming we are successful in the election, is divest myself, sell any remaining shares that I have in the company," the fact is a congressional report found that Mr. Cheney still owns more than 433,000 Halliburton stock options, including 100,000 shares at $54.50 per share, 33,333 shares at $28.00, and 300,000 shares at $39.50. That is from CNN in September of 2003.

Then he says in January of this year, "I severed my ties with Halliburton when I became a candidate for Vice President in August of 2000." I do not know what "severed" means. I clearly do not understand the meaning of the word "severed," because, to me, this is a pretty good and lucrative tie. "Along with 433,000 stock options," and this is a quote from CNN, "CHENEY still receives about $150,000 a year" from Halliburton.

I would like people I may have severed ties from to have that kind of deal. Severed to me means no, I do not get any money, but that is clearly not the definition of the word to Mr. Cheney.

So I think, look, there are just so many questions here, and I do not know if this issue would even come up so much if we could count on this company spending taxpayer dollars in the way that they should be spent. But it is not one issue, it is not two issues, it is time after time after time. Every time the light is shined on what Halliburton has done, we find taxpayer dollars that are being wasted there. We cannot afford to do that. The Vice President of the United States should take some responsibility for that. It is a company he was CEO of. This is a company he continues to gain benefits from, and I think it really does raise a matter of where does the buck stop, where is the responsibility and the accountability, and, fundamentally, it raises questions of integrity, of ethics.

So I appreciate the gentleman letting me raise the issues.

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