FBI Investigating Halliburton Contracts

Friday, October 29th 2004, 7:36 am

By: News On 6

WASHINGTON (AP) _ The FBI is investigating whether U.S. officials improperly awarded Vice President Dick Cheney's former company lucrative contract work without competition, a probe that was confirmed only days after a top Army contract officer raised the issue of favoritism.

The investigation expands an existing probe of whether Halliburton Co. overcharged for fuel deliveries in Iraq. The probe now includes the no-bid work awarded the company in Iraq, including restoration of the country's oil industry at a cost of $2.5 billion.

The expanded investigation is converging with statements made last weekend by Bunnatine Greenhouse, the chief contracting officer for the U.S. Army Corps of Engineers. The FBI has requested an interview with Greenhouse, who said her agency unfairly awarded KBR, a Halliburton subsidiary, the Iraq work.

Cheney headed Halliburton, a Houston-based oil services conglomerate, prior to running for vice president four years ago. He has consistently denied any involvement in the contracts. His spokesman, Kevin Kellems, said in response to a question that neither Cheney nor his aides have been contacted by investigators.

A federal law enforcement official, speaking only on condition of anonymity, said the investigation does not involve anyone in the White House, including Cheney's office.

The FBI investigation, confirmed by several government sources who insisted on anonymity, raised the profile of a key Democratic attack issue in the final days of the presidential campaign.

``Good people came forward to tell the truth about these contracts because they _ like the American people _ know that the administration's special treatment of Halliburton was wrong,'' vice presidential candidate John Edwards said in a statement Thursday night.

Greenhouse's lawyers said Thursday their client will cooperate but that she wants whistle-blower protection from Pentagon retaliation.

One of the lawyers, Stephen Kohn, said it was Greenhouse's job to protect ``the honesty and the integrity of the contracting process itself, so it's an even playing field. Why should a large corporation with political influence get all the money?''

FBI agents recently began collecting documents from Army offices in Texas and elsewhere to examine how and why Halliburton got the no-bid work.

A Corps spokeswoman, Carol Sanders, said she could not confirm an expanded investigation.

``The Corps is absolutely cooperating with the FBI, and it has been an ongoing effort,'' Sanders said. ``Our role is to cooperate. It's a public contract and public funds. We've been providing them information for quite a while.''

Wendy Hall, a Halliburton spokeswoman, said the company is cooperating with various investigations, but she dismissed the latest revelation as election politics. She noted Congress' auditing arm, the Government Accountability Office, found the company's no-bid work in Iraq was legal.

``The old allegations have once again been recycled, this time one week before the election,'' Hall said. ``The GAO said earlier this year that the contract was properly awarded because Halliburton was the only contractor that could do the work.

``We look forward to the end of the election, because no matter who is elected president, Halliburton is proud to serve the troops just as we have for the past 60 years for both Democrat and Republican administrations,'' she said.

Sen. Frank Lautenberg, a New Jersey Democrat on the Senate Governmental Affairs Committee who has been investigating Halliburton's contracts, said his office was told the FBI recently sought documents from various government offices. The requests focused on how and why Halliburton got the Iraq contracts.

In a formal whistle-blower complaint filed last week, Greenhouse alleged the award of contracts without competition to KBR puts at risk ``the integrity of the federal contracting program as it relates to a major defense contractor.'' The contracts were to restore Iraq's oil industry.

The Army last week referred Greenhouse's allegations to the Defense Department's inspector general. Documents show FBI agents from Quad Cities, Ill., asked Tuesday to interview Greenhouse. Her lawyers declined to discuss the contacts.

Greenhouse alleged in her complaint that after her superiors signed off on the Iraq business in February 2003, a month before the war began, and returned it for her necessary approval, she specifically asked why the work was being extended for several years.

Beside her signature Greenhouse wrote: ``I caution that extending this sole-source effort beyond a one-year period could convey an invalid perception that there is not strong intent for a limited competition,'' the complaint said.

The oil restoration work was given to KBR without competitive bidding through 10 separate work assignments called ``task orders.'' The orders were issued under an existing contract between Halliburton and the U.S. military that was awarded competitively in December 2001.

While the Corps was authorized to spend up to $7 billion for the oil restoration work, the actual cost so far has been $2.5 billion. Halliburton is still working on the oil facilities, but it is now operating under a new, competitively awarded contract.