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US ambassador ordered preferential treatment for KBR subcontractor
10 Nov. 2004

WASHINGTON, Nov. 10 (HalliburtonWatch.org) -- The U.S. ambassador to Kuwait demanded that Halliburton award a lucrative subcontract to a Kuwaiti firm despite evidence that the firm had defrauded the military, newly-released State Department documents show.

The ambassador, Richard Jones, demanded Halliburton's KBR subsidiary immediately award a subcontract to Kuwaiti-based Altanmia Commercial Marketing Co. without considering whether other firms could do the work at less cost to the government. The demand was also made despite an ongoing investigation by the Pentagon into allegations that Altanmia, in collusion with KBR, had illegally overcharged U.S. taxpayers for importing gasoline into Iraq. The investigation was later referred to the Criminal Division of U.S. Department of Justice, which is handling the case today.

In October of 2003, as allegations of corruption at Altanmia began to surface, Amb. Richard Jones said in an email to underlings: "[T]ell KBR to get off their butts and conclude deals with Kuwait NOW! Tell them we want a deal done with al-Tanmia within 24 hours and don't take any excuses. If Amb. Bremer hears that KBR is still dragging its feet, he will be livid." Paul Bremer was the Civilian Administrator of Iraq at the time the email was written.

The ambassador's demand for preferential treatment of Altanmia violated U.S. contracting law, critics say. "Federal procurement rules require 'complete impartiality and ... preferential treatment for none' in contracting decisions," Rep. Henry Waxman (D-CA) said in a letter disclosing the new State Department documents. "Yet as this email [from Amb. Jones] and other similar ones reveal, senior Administration officials repeatedly insisted that Halliburton continue to use Altanmia rather than solicit bids from less expensive competitors," he said.

Political appointees like ambassadors are not normally involved in contracting decisions in order to avoid conflicts of interests, favoritism and corruption. Contracting ethics dictates that career civil servants award contracts, not political appointees.

In his letter, Rep. Waxman quoted a career civil servant with the Army Corps of Engineers who said she received "political pressures ... to go against my integrity and pay a higher price for the fuel than necessary."

Furthermore, the new State Department documents reveal that Altanmia thinks KBR is a corrupt organization. A government official summarized a meeting with Altanmia executives in which they said it is "common knowledge" that KBR and U.S. government officials "are on the take; that they solicit bribes openly; that anyone visiting their seaside villas at the Kuwaiti Hilton who offers to provide services will be asked for a bribe."

On December 30, 2003, the Pentagon fired Halliburton and Altanmia from the gasoline importation contract and assigned it to an office within the Pentagon known as the Defense Energy Support Center (DESC). The result, according to Democrats in Congress, was a 50 percent reduction in gasoline prices charged to U.S. taxpayers.

More Information:

Rep. Henry Waxman's letter to Chairman Tom Davis, House Committee on Government Reform (pdf)

Houston Chronicle: U.S. envoy may have helped Halliburton deal

KBR's Gasoline Overcharges

Two reports explain how Halliburton took taxpayers for a ride in Iraq

Government widens criminal probe of Halliburton's gas overcharges

Pentagon says 43% of Halliburton's Iraq expenses are not verifiable

Committee on Government Reform - Minority Staff: Halliburton's Gasoline Overcharges (pdf)