[Congressional Record Volume 150, Number 4 (Friday, January 23, 2004)]
[Senate]
[Pages S206-S207]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LEGISLATIVE AGENDA
Mr. DASCHLE. Mr. President, the majority leader talked briefly about
the schedule. I spoke yesterday on the pension bill, and I am very
hopeful we can complete our work on the pension bill at an early date.
I think it is a bill that merits broad bipartisan support and, judging
from the cosponsors, prominent Members on both sides of the aisle who
have worked to get us to this point, I have every expectation that we
will see completion of our work on the pension bill sometime early next
week.
We have--it is an overused word but certainly a word applicable
here--a crisis with regard to pensions and retirement security, both in
multiemployer plans as well as single-employer plans.
That crisis will not be satisfactorily or successfully confronted
until we take several steps. This is only meant to be an interim step,
but it is an important step. It is a temporary step that will allow us
some stability and confidence that we can address this issue more
effectively in the months and years ahead.
Secondly, with regard to schedule, it is important for us to
recognize the narrow window of opportunity we have to deal with the
highway bill. We have already lost valuable time. We should have done
this bill last year. Not only have we lost 90,000 jobs as a result of
our failure to pass the bill last fall, we have also threatened the
contract season this year by our inability to move this legislation
more expeditiously. For all intents and purposes, the contract cycle
has already started in the South. It is important that we send the
message that we intend to finish this bill as early as possible. It is
a jobs bill, an infrastructure bill. I cannot think of a greater
economic stimulus. We are told by experts that we could create 800,000
new, good-paying jobs if we can move this legislation forward.
So it is my hope we will take this legislation up well before the
President's Day recess in order to complete our work before that recess
and send a signal to the country that we understand the importance of
this legislation.
Finally, I call attention to a front-page story in the Wall Street
Journal this morning. The headline of the story reads, ``Halliburton
Tells the Pentagon Workers Took Iraq-Deal Kickbacks.'' The first couple
of paragraphs begin:
Halliburton Co. has told the Pentagon that two employees
took kickbacks valued at up to $6 million in return for
awarding a Kuwaiti-based company with lucrative work
supplying U.S. troops in Iraq. The disclosure is the first
firm indication of corruption involving U.S.-funded projects
in Iraq and raises new questions about Halliburton's dealings
there. The company's work already is being scrutinized
because of accusations that the U.S. government was
overcharged for gasoline under another controversial
contract.
It says a little later down, referring to that second charge now
under investigation:
. . . the top Defense Department auditor asked the office
to investigate whether Halliburton subsidy Kellogg Brown &
Root overcharged for fuel deliveries by more than $61
million.
These charges in this new report are terribly disturbing. I ask
unanimous consent that the article be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Jan. 23, 2004]
Halliburton Tells the Pentagon Workers Took Iraq-Deal Kickbacks
(By Neil King, Jr.)
Washington.--Halliburton Co. has told the Pentagon that two
employees took kickbacks valued at up to $6 million in return
for awarding a Kuwaiti-based company with lucrative work
supplying U.S. troops in Iraq.
The disclosure is the first firm indication of corruption
involving U.S.-funded projects in Iraq and raises new
questions about Halliburton's dealings there. The company's
work already is being scrutinized because of accusations that
the U.S. government was overcharged for gasoline under
another controversial contract.
Halliburton has strenuously defended its Iraq work as
fairly priced and free of taint. A discovery of kickbacks
could expose the company to hefty fines and other punishments
such as potential fraud charges. At the least, contacting
experts say, Halliburton will be required to reimburse the
money.
Any blow could be softened by the fact that Halliburton
itself disclosed the misconduct to the Pentagon inspector
general's office this week. That disclosure came just days
after the top Defense Department auditor asked the office to
investigate whether Halliburton subsidiary Kellogg Brown &
Root overcharged for fuel deliveries by more than $61
million.
The latest revelation, though, is sure to increased the
already intense scrutiny Halliburton has received from
congressional Democrats, some of whom charge that the
Houston-based company benefited from political favoritism in
securing lucrative work in Iraq. The news also is likely to
further raise suspicions abroad that Iraq reconstruction work
is largely benefiting U.S. companies and their employees.
Vice President Dick Cheney, who was chairman of Halliburton
until he left in 2000, defended the company Wednesday in a
Fox Radio Network interview. ``They get unfairly maligned
simply because of their past association with me,'' he said.
Halliburton stressed that it promptly told the Pentagon of
the problem. ``The key issue here is self-disclosure and
self-reporting,'' a Halliburton spokeswoman said.
``Halliburton international auditors found the irregularity,
which is a violation of our company's philosophy, policy and
our code of ethics. We found it quickly, and we immediately
reported it to the inspector general. We do not tolerate this
kind of behavior by anyone at any level in any Halliburton
company.'' A company statement said the payments were
``detected through the company's internal control
procedures.''
The company has fired the two employees, who were based in
Kuwait and whose names were not disclosed. Halliburton said
it could not discuss specifics of the matters because of a
Pentagon review.
KBR is now repairing Iraqi oil fields and supplying
everything from food and laundry services to housing for U.S.
troops and coalition officials in Iraq under two huge
contracts valued at up to $16 billion. That work has so far
cost nearly $6 billion, well over twice what has gone into
all of the other 40 other U.S. contractors in Iraq, according
to government records.
In all, the U.S. has so far funded a total of about $9
billion in Iraqi reconstruction costs, and expects to award
contracts valued at another $18.6 billion. Both the
congressional general accounting office and the Pentagon are
now completing large-scale investigations of all U.S.-funded
reconstruction work in Iraq.
The alleged kickbacks involve the same KBR contracting
office in Kuwait that handled the controversial gasoline
contact. The Pentagon inspector general's office received the
disclosure while conducting its own review to decide whether
to open a criminal investigation into the gasoline contract.
Pentagon officials decline to comment on the status of that
investigation.
The current accusations do not involve the gasoline
contract. Instead, the Kuwaiti company is said to have paid
kickbacks to the KBR officials after winning lucrative
subcontracts to help support U.S. troops in Iraq under what's
known as KBR's LogCap contract. U.S. officials declined to
provide specifics on the subcontracts involved or the
[[Page S207]]
name of the company implicated in the payoffs.
Halliburton said in a statement that the disclosure of what
it called a ``potential overcharge'' was a sign of its
``diligence'' in managing its Iraq contracts. ``KBR will
ensure that questionable charges will be credited to the
government and will seek recovery from the offending
subcontractors.''
Halliburton negotiated its current LogCap contract with a
very thin profit margin of 1% over costs. It has a maximum
bonus of an added 2% available if it delivers the needed
services in an expeditious way. But under these so-called
cost-plus arrangements, companies have little incentive to
rein in costs or to assure that they pick the most
competitive subcontractors, since the higher the costs, the
higher the profit.
The disclosure comes as Pentagon documents continue to
raise broader questions about KBR's financial controls in
Iraq. A previously undisclosed Jan. 13 memorandum from a
branch office of the Defense Control Audit Agency levels as
``inadequate'' KBR's system for accurately estimating the
cost of ongoing work in order to justify payments. The memo
was sent to various Army contracting officials.
The Pentagon has had to reject two huge proposed bills from
KBR, including one for $2.7 billion, because of myriad
``deficiencies,'' the memo says. ``We consider [the
company's] estimates in the area of subcontracts to be
inadequate,'' the memo says. The agency is now auditing
proposed KBR bills totaling $2.1 billion, the memo says.
Pentagon auditors last month said that KBR's Kuwaiti
supplier, Altanmia Commercial Marketing Co., was charging the
U.S. almost double the market price for gasoline. Auditors
said the overcharging amounted to $61 million through
September, and as much as $20 million a month since then.
The Army Corps defended the company's hiring of Altanmia in
a lengthy Jan. 6 report. The report said KBR had ``urgent and
compelling needs'' to use the Kuwaiti supplier, even at
significantly higher prices than other potential suppliers.
Still, Pentagon officials are likely to home in on the
circumstances under which KBR hired Altanmia. The Army Corps
reports says KBR picked Altanmia on May 5 after making phone
calls to just two other bidders. Officials say there is no
indication of kickbacks involving Altanmia.
A number of anonymous whistleblowers have come forward in
recent weeks with often-detailed allegations of KBR
wrongdoing in Kuwait, including accusations of paybacks from
companies that received lucrative subcontracting work from
KBR, according to U.S. officials and congressional sources.
These reports in turn have been taken up by the Pentagon's IG
office.
The Pentagon's fuel unit, the Defense Energy Support
Center, solicited bids yesterday for three fuel-delivery
contracts meant to replace the work that KBR is now
performing. KBR officials have said for months that they
wanted out of the work, which they described as dangerous and
not very profitable.
Mr. DASCHLE. As I said, it is very disturbing because there have
already been serious concerns raised about the lack of scrutiny,
auditing, and transparency with regard to the billions of dollars that
are now being committed in Iraq. The Defense Contract Audit Agency has
now been charged not only with taking responsibility for an audit, but
they have also begun consideration of a criminal investigation.
Clearly, if there is a possibility of a kickback, a criminal
investigation is certainly warranted.
I am troubled by the lack of any expressed concern in the Congress.
There has been virtually no oversight in either the House or the
Senate. When matters of this magnitude and concerns of this level are
addressed on the front pages of some of the most prominent newspapers
in the country, I cannot think of a more important wakeup call for us.
One of our primary roles as Members of Congress, of course, is
oversight, to make sure that the money we authorize and appropriate is
not only spent well but is spent as the American people would expect
it.
I do not think we have any choice but to investigate this matter
ourselves, to ask the appropriate committees, perhaps Government
Affairs, Armed Services, Foreign Relations, to look into these issues,
to ask the tough questions, and to have a somber appreciation ourselves
of what is going on, why is it that we are reading for the first time
reports of kickbacks when we have taken so little effort to understand
the magnitude of the problem, the depth and scope of the issues that
these allegations represent.
I think it is also important for us to call for a halt in all further
contracts with Halliburton until these issues are clarified. For the
life of me, I cannot understand why we would reward corporations or
organizations of any kind that face such serious allegations of fraud
and corruption, that are under investigation for perhaps overpricing
the American taxpayer by $61 million, at least with regard to the
gasoline sold. Why we would award one more contract until these matters
have been resolved? So I hope that on a bipartisan basis the Congress
will live up to its responsibility, first, through oversight and,
second, with a recognition that awarding contracts under circumstances
such as these makes no sense whatsoever.
We will have more to say as we learn more, of course. These are very
disturbing revelations. They merit more careful consideration. We need
to learn more and understand what circumstances allowed the kickbacks
in the first place. Lack of transparency above and beyond anything else
will generate stories and situations like this over and over again.
Many of us have called for a complete public accounting of these
funds, but here we are--no transparency, no public accounting, no
oversight on the part of Congress, and the possibility of perhaps more
contracts with Halliburton in the future. This is not the way to run a
government, especially if we are hopeful of improving the confidence on
the part of the American people that we understand the gravity of these
issues and want very much to build their confidence that we are doing
all we can in our efforts in Iraq to rebuild democracy, to provide for
the assistance required. We have said on many occasions how troubling
it is that we are the only real financial source for the economic,
military, and public assistance provided to Iraq.
When the American people hear that much of that money may now be
under a cloud, it is all the more imperative that we act to remove that
cloud, to provide the confidence, the transparency, the oversight, and
certainly the corrective actions required.
I yield the floor.
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