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FBI interviews Army whistleblower over Halliburton contracts
24 Nov. 2004

WASHINGTON, Nov. 24 (HalliburtonWatch.org) -- The Federal Bureau of Investigation (FBI) interviewed a senior Army contracting specialist over accusations that Halliburton's KBR subsidiary illegally received military contracts.

The Army specialist, Bunnantine Greenhouse, repeatedly complained to superiors that they were illegally favoring KBR by excluding competitors from bidding on contracts. In particular, she complained about the Army's $7 billion firefighting contract for Iraqi oil wells, which was awarded to KBR without competition in March of last year. The Army claimed that only KBR was qualified to perform the contract since it is the only company suited to extinguish oil well fires. However, critics say the Army is incorrect.

Greenhouse also said Army officials repeatedly violated regulations designed to shield contract awards from unethical outside influences. At one point, KBR executives were present in a meeting of Army officials who were deliberating whether KBR should be awarded a contract. The executives left the meeting only after Ms. Greenhouse urged them to leave.

"[T]he line between government officials and KBR had become so blurred that a perception of conflict of interest existed," Greenhouse's attorney, Michael Kohn, said in a letter to the acting Secretary of the Army. "Employees of the U.S. government have taken improper action that favored KBR's interests," he said. "This conduct has violated specific regulations and calls into question the independence" of the contracting process.

In an interview with the AP, Kohn said the FBI questioned Ms. Greenhouse about all of her concerns and that "they asked questions regarding potential involvement of people at higher-level positions."

According to the AP: "A legal source familiar with the interview, speaking only on condition of anonymity, said Greenhouse provided the FBI with new information about intervention on one of the Halliburton matters by a senior defense official. The source declined to be more specific, saying the lead was still being pursued by investigators."

FBI agents interviewed Greenhouse for more than eight hours on Nov. 17, and asked questions about who in the Pentagon might have been applying pressure to get business to Halliburton. No White House names were discussed at the meeting.

Greenhouse said the contracting process was so flawed that KBR's Army logistics work in the Balkans was "out of control." Government auditors found KBR had overcharged taxpayers for everything from plywood to cleaning military offices. But Army officials ignored her concerns. Instead, they renewed Halliburton's contract in the Balkans for another five years. Greenhouse said Tina Ballard, deputy assistant Army secretary for policy and procurement, was telephoned during a meeting and ordered to renew the contract for "political reasons."

The FBI also interviewed Greenhouse regarding KBR's contract for importing gasoline from Kuwait to Iraq. Pentagon auditors accused KBR of overcharging by at least $61 million, but Democrats in Congress say the figure is closer to $167 million. The U.S. Justice Department is conducting a criminal investigation into the matter.

Greenhouse blew the whistle last month by disclosing her complaint to Time Magazine.

More Information:

Letter written by Ms. Greenhouse's lawyer reciting her charges of "waste, fraud, abuse and corruption" (pdf)

Army documents showing favoritism toward KBR

AP: FBI probes Halliburton's Pentagon contracts

Time Magazine: New Army whistleblower objected to government's Halliburton deals

Army to investigate new allegations of cronyism toward Halliburton

Related military documents obtained by the Center for Public Integrity