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US says Halliburton deal includes operating Iraq oil fields
WASHINGTON (AFP) - The US Army has revealed for the first time that a subsidiary of Halliburton Co. has a contract encompassing the operation of Iraqi oil fields, a senior US lawmaker said.
Previously, the US Army Corps of Engineers had described the contract given to Halliburton -- run by US Vice President Dick Cheney ( news - web sites) from 1995 to 2000 -- as involving oil well firefighting.
But in a May 2 letter replying to questions from a senior Democratic lawmaker, Henry Waxman, the army said the contract also included "operation of facilities and distribution of products."
Waxman, the top-ranking Democrat in the House of Representatives' committee on government reform, asked for an explanation Tuesday.
"Your May 2 letter indicates that the contract is considerably broader in scope than previously known," Waxman told Army Corps of Engineers military programs chief Lieutenant General Robert Flowers.
"Prior descriptions of the Halliburton contract had indicated that the contract was for extinguishing fires at oil wells and for related repair activities," the lawmaker said, according to a copy of the letter.
"These new disclosures are significant and they seem at odds with the administration's repeated assurances that the Iraqi oil belongs to the Iraqi people."
The Army Corps of Engineers said the Halliburton contract was designed as a temporary bridge to a contract that would be out to competitive tender. It expected the replacement contract to be advertised by early summer and awarded at the end of August.
The corps had already come under fire Wednesday over its granting of the Iraqi oil contract on March 8 to Halliburton subsidiary Kellogg, Brown and Root (KBR) without putting it out to tender.
Representative Henry Waxman also said Halliburton's dealings with countries cited by Washington as state sponsors of terrorism, or members of the so-called "axis of evil", date back to the 1980s.
The dealings "appear to have continued during the period between 1995 and 2000, when Vice President Cheney headed the company; and they are apparently ongoing even today," said Waxman, a frequent critic of President George W. Bush ( news - web sites)'s administration.
"Halliburton has recently been awarded a leading -- and lucrative -- role in the US war against terrorism," Waxman wrote.
"Yet there is also evidence from press accounts and other sources that indicates that Halliburton has profited from numerous business dealings with state sponsors of terrorism, including two of the three members of President Bush's 'axis of evil.'"
The "axis of evil" first cited by Bush in early 2002 included Iraq ( news - web sites), prior to the US-led war, Iran and North Korea ( news - web sites ).
Waxman stopped short of saying Halliburton's actions violated US laws that prohibit business dealings in certain countries, but maintained that Halliburton "appears to have sought to circumvent these restrictions by setting up subsidiaries in foreign countries and territories such as the Cayman Islands."
Waxman said he was concerned that the US government was awarding new contracts to Halliburton despite its ties to certain countries.
He wrote to Rumsfeld, "I would like to know what the Defense Department knows about these ties and whether you think this should be a matter of concern to the Congress and the American taxpayer.
"Rather than being criticized, the company is rewarded with valuable government contracts."
Some of the involvement of Halliburton is detailed in company documents including its annual reports.
Halliburton spokesman Wendy Hall did not dispute the Waxman allegations, but said the company operates within the law while trying to remain competitive with US and foreign rivals.
"Putting politics aside, we and our affiliates operate in countries, to the extent it is legally permissible, where our customers are active as they expect us to provide oilfield services support to their international operations," Hall said in a written statement.
"Where the United States government has mandated that United States companies refrain from commerce, we comply, often to the advantage of our international competitors. We do not always agree with policies or actions of governments in every place that we do business and make no excuses for their behaviors."
As for the actions of Halliburton offshore subsidiaries, Hall said, "The company believes that the operations of its subsidiaries are in compliance with US laws. These entities and activities are staffed and managed by non-US personnel."
Waxman has asked the General Accounting Office ( news - web sites ), the investigative arm of Congress, to probe whether the firm had received favorable treatment by the administration.
Meanwhile, a spokeswoman for Cheney, contacted about the letter, gave no immediate response.
But Citizen Works, a consumer advocacy group founded by onetime presidential candidate Ralph Nader ( news - web sites), said Halliburton's treatment by the government was questionable.
"It's extremely troubling that our government is using taxpayer money to deliver lucrative contracts to companies like Halliburton that have used offshore subsidiaries to maneuver around restrictions on doing business with state sponsors of terrorism," said spokesman Charlie Cray.
