Whistle-Blower Asks for Halliburton Investigation
By Sue Pleming, Wired News, October 25, 2004

WASHINGTON (Reuters) - The Army Corps of Engineers' top contracting official has demanded an investigation into contracts given to Halliburton, citing improper action that favored Vice President Dick Cheney's old company.

According to documents made available to Reuters on Monday by congressional sources, Army Corps whistle-blower Bunny Greenhouse complained of repeated interference in billions of dollars of contracts given to Halliburton unit Kellogg Brown and Root for work in Iraq and the Balkans.

"This interference was largely focused on multibillion-dollar contract issues pertaining to a Halliburton subsidiary Kellogg Brown and Root," said a letter faxed on Thursday to Acting Army Secretary Les Brownlee by lawyers for Greenhouse.

"As set forth below, employees of the U.S. government have taken improper action that favored KBR's interests," the letter said.

An Army attorney said the matter was being referred to the Defense Department's inspector general and the Corps was asked not to act against Greenhouse until a sufficient record was available.

The Corps said it supported the right of employees to use established procedures to ensure governmental actions complied with applicable laws but declined further comment.

The Pentagon inspector general's office said it could neither confirm nor deny the existence of any investigation.

A decision could take months or even years.

FEAR OF LOSING JOB

Greenhouse lawyer Michael Kohn said his client went public after the Corps tried to remove her from her post as principal assistant responsible for contracting and not because she wanted to influence next week's election by raising questions about Halliburton, which Cheney ran from 1995-2000.

Halliburton, which is already under investigation for overcharging for work in Iraq, has been a target of Democratic criticism ahead of the Nov. 2 election, with suggestions the Texas firm got special treatment because of Cheney.

A spokesman for Democratic Sen. Frank Lautenberg said the New Jersey senator would introduce a resolution after the election to create a special committee to look into the contracts given to KBR.

"When Halliburton is sitting in on the drafting of its no-bid contract, you know lines have been crossed," said Lautenberg, referred to complaints by Greenhouse that KBR officials were allowed to attend military planning meetings before it was awarded a sole-source Iraq contract.

Halliburton spokeswoman Wendy Hall said KBR did not have any information on what Greenhouse may or may not have said to Pentagon officials in 2003 when a no-bid contract worth up to $7 billion was given to KBR to rebuild Iraq's oil industry.

"On the larger issues, the old allegations have once again been recycled, this time one week before the election," said Hall.

Greenhouse said the Iraq oil contract given to KBR, which was later replaced by a competitively bid deal, as well as another to feed and house U.S. troops in the Balkans, put at risk the "integrity of the federal contracting program."

Kohn said KBR contracts were awarded despite his client's reservations, which she expressed in hand-written notes on official documents, a tactic her superiors asked her to stop.

In one case, he said Army Corps officials bypassed getting a signature from Greenhouse to grant a waiver for KBR to be relieved of its obligation to provide cost and pricing data for bringing fuel into Iraq.

That waiver was granted after a draft Army audit said KBR may have overcharged the military by at least $61 million to bring in fuel to Iraq to ease a shortage of refined oil products.

November 15, 2004
A Watchdog Follows the Money in Iraq
By ERIK ECKHOLM, NY TIMES, November 15, 2004

If leaders at the Army Corps of Engineers expected the agency's pesky contracting director, Bunnatine H. Greenhouse, to be forced out quietly, they were wrong.

From 1997, when Ms. Greenhouse joined the Army's sprawling construction agency with orders to end what some called casual and clubby contracting practices, Corps veterans grumbled that she was a troublemaker. As former officials describe it, some officers regarded her as a stickler for cumbersome rules on things like sharing contracts with small businesses and ensuring open competition for bids.

She was also an African-American woman and a civilian, trying to shake up what one former Corps commander has called a "good ole boy" network of longtime officers and favored companies.

Things reached a climax as the Corps was thrust into the center of the Iraq war effort, given the task of distributing billions of dollars in reconstruction money. For the urgent repair of Iraqi oil fields, the Corps turned - too readily and too generously, Ms. Greenhouse charged in bruising internal debates last year - to the Houston-based Halliburton Company with one of the biggest single contracts of the war.

Now the Army Corps of Engineers is trying to demote Ms. Greenhouse, 60, or push her into retirement. To the surprise of no one who knows her, she is unbowed, charging in a much publicized letter of Oct. 21 that the Corps has shown a pattern of favoritism toward Halliburton that imperils "the integrity of the federal contracting program."

"I never dreamed it would come to this," Ms. Greenhouse said in an interview last week at her home in Reston, Va., as she described her long, determined climb through the labyrinths of Pentagon contracting, and her alarm over what she saw as the Corps' inappropriately cozy relations with certain companies.

With the bluntness and rectitude that has angered some of her superiors, she explained why she was not taking the vested retirement her commander had pointedly dangled.

"When our officers don't understand that a decision is giving one company an exceptional advantage," she said, "when they don't understand that a decision doesn't protect the public trust, then it's my job to make them understand it."

Ms. Greenhouse, known as Bunny, sent her letter to the acting Army secretary, with copies to Congress and the news media. The Pentagon was forced to promise an inquiry and to protect her position in the meantime, and her allegations drew the interest of the F.B.I.

Officials of the Corps decline to comment on Ms. Greenhouse's charges or the personnel proceedings, beyond a general statement that the agency "fully supports the rights and responsibilities of all Federal employees to use established procedures to ensure governmental actions comply with applicable laws and regulation."

Halliburton has denied any wrongdoing, and both the company and senior Pentagon officials involved in the war effort have argued, in defense of the noncompetitive, costly projects she criticizes, that hair-splitting was neither possible nor wise in the ominous chaos after the Iraq invasion. Halliburton had vital experience and ties with the American military in the Middle East, officials have said to explain their early reliance on the company.

Ms. Greenhouse traces her dogged resistance to her upbringing. She grew up in a segregated cotton town in Louisiana, with parents who barely finished grade school.

She beamed as she described how her parents instilled religious devotion - she sings in a church choir every Sunday - and a drive to excel. She talked of two sisters who earned doctorates, and the triumphs of her brother Elvin Hayes, the N.B.A. all-star and a player who, incidentally, was known to coaches and teammates for his uncomfortably brusque talk. ("I speak what I feel," he once explained.)

"I grew up feeling there was nothing I couldn't do," Ms. Greenhouse said. "I try to instill that attitude in my employees, too."

Ms. Greenhouse studied math at Southern University, and in 1967 she joined a high school in Louisiana as its first black teacher. Her husband was a military procurement officer, and after years of teaching while following his postings around the country, she entered government herself in 1981.

As she applied herself to successive contracting jobs, Ms. Greenhouse also picked up three master's degrees, in business management, engineering and national resources strategy. "It appealed to my love of mathematics," she said of contract management. "I like structure and rules. I don't ever want to feel like I am in La-La Land."

And so, as the Corps's chief custodian of rules devised to ensure fair competition, Ms. Greenhouse said she found herself troubled by some recent deals with Halliburton.

In March 2003, she saw no reason why the Corps should give the Halliburton subsidiary Kellogg Brown & Root, without competition, a five-year, $7 billion contract to repair oil fields. If an emergency required a quick deal, it should be for only one year at most, she argued. (The contract was given for five years over her objection, but later, after a public outcry, was cut short and put to competition.)

In December, she said, she was outraged when Corps leaders went behind her back to issue a legal document approving the unusually high prices KBR had charged for fuel imports to Iraq - prices that the Pentagon's own auditors called inflated by at least $61 million and that are now the subject of criminal inquiries.

This spring, she questioned why, after four years, an expiring Halliburton logistics contract in the Balkans had to be extended for an extra 11 months and $165 million on grounds that no other company could do the job in time.

"There is no legitimate explanation for what I witnessed," she said last week of the succession of disputes. The Corps, she said, "was at the point of knowingly violating federal acquisition regulations in favor of Halliburton. It can't get much worse than that."

To the Halliburton defense that critics like Ms. Greenhouse did not understand the urgency of wartime, she replies, "Of course I care about the soldiers who are dying."

"That $61 million could have gone for body armor for the soldiers," she said in the interview.

On Oct. 6, the commander of the Corps, Lt. Gen. Carl A. Strock, informed Ms. Greenhouse in a letter that because her last two performance ratings had been "less than fully successful," she must be removed from her post as chief of all contracting and demoted from the Senior Executive Service. She is eligible for retirement, he pointed out.

Corps leaders had tried to demote Ms. Greenhouse a year earlier, but that effort was derailed in hearings where a former commander of the agency - the one who brought Ms. Greenhouse to the Corps in 1997 with a mandate to make contracting more professional - praised her work.

"She did an outstanding job," wrote the former commander, Lt. Gen. Joe N. Ballard, in a sworn affidavit in September 2003.

Many senior officials of the Corps, said General Ballard, who retired in 2000, "were associated with favorite companies" and resisted Ms. Greenhouse's "strict and ethical application" of rules intended to encourage fairness and competition.

General Ballard added, "I did not believe that females and minorities are always treated fairly at the Corps because of long-standing 'good ole boy' mentality by a number of members of the Command."

The Corps refused to comment on General Ballard's allegations, simply stating its dedication to equal opportunity, fairness and respect.

Through all the recent turmoil, Ms. Greenhouse said, she has continued going to work each day, watching her staff get whittled down and sitting through meetings in which superiors have made sarcastic remarks about whistle-blowers.

"I pass colleagues in the hall who say, 'We're proud of you,' and 'You go get 'em Bunny,' " she said. "But they say this while keeping their heads straight ahead."

And now, an audit shows that there are questions as to the whereabouts of alot of money:

Audit: Halliburton lost track of property
Investigators can't locate a third of inventory in Iraq
The Associated Press, Nov.26, 2004

LINK

WASHINGTON - A third or more of the government property Halliburton Co. was paid to manage for the U.S.-led Coalition Provisional Authority in Iraq could not be located by auditors, investigative reports to Congress show.

Halliburton's KBR subsidiary "did not effectively manage government property" and auditors could not locate hundreds of CPA items worth millions of dollars in Iraq and Kuwait this summer and fall, Inspector General Stuart W. Bowen reported to Congress in two reports.

Bowen's findings mark the latest bad news for Vice President Dick Cheney's former company, which is the focus of both a criminal investigation into alleged fuel price gouging and an FBI inquiry into possible favoritism from the Bush administration.

The Associated Press reported Wednesday that FBI agents have extensively interviewed an Army contracting officer who last month went public with allegations that the Bush administration was improperly awarding contracts to Halliburton without competitive bidding.

Halliburton and the Pentagon deny wrongdoing, and say they are cooperating in all investigations.

Company spokeswoman Cathy Gist said Friday that KBR recently conducted a "wall-to-wall" review of all property it is managing for the Pentagon in war zones including Iraq and Afghanistan and produced results far better than Bowen's findings.

"We are pleased to report that this total inventory review confirmed 99.4 percent accountability of all property," she said. "The facts show that KBR has adequately managed property for this mission by aggressively monitoring its property management functions -- above and beyond what is required."

The U.S.-backed CPA officially dissolved after a year in power in Baghdad when an interim Iraqi government took control of the country this summer. But Bowen's office continues to review how money was spent and it gave a tough assessment of KBR's performance.

KBR won a key logistics contract to manage everything from trucks and generators to computers.

Bowen reported that an audit earlier this summer found KBR had lost track of more than $18 million worth of equipment in Iraq. Investigators could not track down 52 of 164 randomly selected items in an inventory of more than 20,000 items overseen by KBR, including two electric generators worth nearly $1 million, 18 trucks or SUVs and six laptop computers.

Searching since summer
Pentagon and Halliburton officials have been searching since the summer for the missing items and have tracked down many of them. Some were found in the hands of "unauthorized users" and 111 vehicles had not been returned for required check-in, they said.

Bowen's auditors found the problems extended beyond Iraq's borders. More recently, auditors sought to determine how well KBR managed the inventory and supplies of the CPA offices and warehouses in neighboring Kuwait, initially sampling 90 items from an inventory of more than 3,000.

The auditors found 30 of the 90 items could not be accounted for, and then reviewed additional documents and projected a total of 1,297 of the 3,032 property items, or 42.8 percent, could not be accounted for or were missing.

The inspector general said 108 additional items were on hand but not properly recorded in inventory. The audit projected more than 400 required hand receipts for property were not available or weren't filled out.

"This occurred because KBR did not effectively manage government property: specifically, KBR did not properly control CPA property items. Further, the KBR property records were not sufficiently accurate or available to properly account for CPA property items," Bowen reported to Congress.

"As a result, the CPA-IG projected that property valued at more than $1.1 million was not accurately accounted for or was missing," it added.

Bowen's report said the Pentagon agency that managed KBR in Iraq did not agree with all of the findings, and the agency declined to force KBR to change its inventory tracking system.

The Pentagon "stated that the contractor has put an accurate property control system in place that is effective, and an analysis of the system does not need to be performed at this time," Bowen's report said.

Bowen told lawmakers the Pentagon didn't provide any information to back its conclusions. However, he said the government did agree to "conduct a thorough review of CPA property and seek to recover the cost of missing equipment from the responsible party."

Halliburton shares closed up 5 cents to $40.84 in a holiday-shortened session Friday on the New York Stock Exchange.

Copyright 2004 The Associated Press. All rights reserved. URL: http://www.msnbc.msn.com/id/6590045/