Congress hears of Halliburton waste

By HANNAH K. STRANGE, United Press International

WASHINGTON, July 22 (UPI) -- Bad financial management by a Halliburton subsidiary operating in Iraq has cost the U.S. taxpayers millions of dollars, a former employee told Congress Thursday.

Marie de Young, who worked for Kellogg, Brown and Root, told a hearing at the House Committee on Government Reform that "significant waste" in a subcontracting department in Kuwait was endemic.


Halliburton's Logistics Civil Augmentation Program, called LOGCAP, provides food, housing and construction services for coalition troops in Iraq and Kuwait.

"I came to the conclusion that the very poor subcontract management practices were evident in every phase of the company's work," she said. When she tried to bring errors to attention, de Young said, managers made it clear that such comments were not welcome.

The Tiger Team -- established by Halliburton to clear up subcontracting issues -- continued questionable auditing and subcontract practices, said de Young. They instructed employees to pay invoices without verifying if the services had ever been delivered, she alleged, and frequently extended subcontracts that did not have the required documentation without checking on whether the services were still needed.


"This lack of systemic oversight resulted in grossly inflated charges to the government," she said.

KBR Director of Government Compliance for the Americas William Walter rebuffed the claims, saying the Tiger Team was brought in specifically to deal with invoices not paid because of lack of documentation. De Young's allegations of overpricing due to services not fully delivered were misconceptions, he said, or faulty calculations. In the instances where there had been some fault, he added, KBR had taken steps to correct the problems.

Republicans on the committee dismissed de Young and two other former employees giving testimony as having a myopic view of Halliburton's practices and lacking sufficient qualifications to properly understand the procedures undertaken by KBR.

Rep. Marsha Blackburn, R-Tenn., said that de Young's resume revealed her as someone without specialist knowledge in procurement, having a background as a primary school assistant, chaplain and shopkeeper.

De Young immediately pointed out that Blackburn had neglected to mention her management of government contracts of up to $1 million during her 10-year service in the military.

In his opening statement, Chairman Tom Davis, R-Va., cast the witnesses as disgruntled employees motivated by resentment or the possibility of financial gain through litigation or even book deals.


He cited the "overheated political atmosphere" surrounding Iraq and the possibility of causing damage during an election season as the main reasons for the Democratic "witch hunt," resulting in "yet another hearing."

"If it weren't for the fact that the vice president was the former -- and I emphasize former -- CEO of the parent company, we wouldn't even be here today," he said.

Rep. Mark Souder, R-Ind., agreed that this was indeed a "show hearing," held largely for the benefit of the press.

Only one Republican committee member involved in questioning showed any willingness to consider there might be legitimate concerns. Rep. John Duncan, R-Tenn., said that if such charges were true, Republicans would be "more horrified than anyone else in the country," and the companies involved should be banned from doing business with the federal government and be subject to criminal proceedings.

Both Republicans and KBR representatives emphasized the difficulty of operating in the hostile environment in Iraq.

"Under these conditions no one should expect that assembling such complicated logistics would be the epitome of pristine perfection," said Alfred Neffgen, KBR chief operating officer for the Americas.

The unanticipated requirements for over 100,000 troops that were more than originally estimated did "tax and stretch" KBR's systems, he said. Mistakes had certainly been made, he added, but he maintained that KBR had risen to the challenge of operating in a war zone.


Davis agreed. "I cannot emphasize how hard it is to do business in Iraq," he said, denying that there had been any waste of the taxpayer's money.

However, Rep. Philip Waxman, D-Calif., the ranking minority member on the committee, stressed that there had been six independent reports by three non-partisan organizations that corresponded exactly with the whistle-blowers'' allegations.

A General Accountability Office report released Thursday found problems throughout KBR's LOGCAP operations in Iraq, including a lack of sufficient documentation for Halliburton's requisitions, inadequate control over subcontractors, and unqualified officials in charge of oversight.

The GAO also found the administration's planning to be "ineffective" and "piecemeal."

A report prepared by the minority staff of the committee also released Thursday found Halliburton's overcharges on oil transportation, an activity reallocated to a federal agency in April, exceeded $165 million. KBR disputes the figures.

"Halliburton is gouging the taxpayers," said Waxman, "... (and) the Bush administration doesn't seem to care."

Despite the lack of apparent progress for the Democrats at the hearing, they were not dissuaded.

A Democratic staff member for Waxman agreed it was hard to say exactly what had been achieved, but emphasized that the investigation would continue.

"A lot of questions remain unanswered," she said, "... This is one step along the way."


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