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Cheney Makes a Bundle Off War

Robert Bryce

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As Secretary of Defense, Dick Cheney learned how to make war. As CEO of Halliburton, he learned how to profit from it. While working at the Pentagon, Cheney helped command hundreds of thousands of troops for the invasion of Kuwait and Iraq. The Gulf War also allowed Cheney to launch one of the largest privatization efforts in the history of the Pentagon, steering huge military logistics contracts to private contractors. Then, in 1995, just two-and-a-half years after Cheney left his federal job, he went to Halliburton and began cashing in on the very contracts he helped initiate.

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In 1992, the Pentagon paid a Halliburton subsidiary, Brown & Root Services, $3.9 million to produce a classified report detailing how private companies - like itself - could help provide logistics for American troops in potential war zones around the world. Brown & Root specializes in such work. From 1962 to 1972, for instance, the company worked in the former South Vietnam building roads, landing strips, harbors and military bases. Later in 1992, the Pentagon gave the company an additional $5 million to update its report. That same year, Brown & Root won a five-year logistics contract from the United States Army Corps of Engineers to work alongside American GIs in places like Zaire, Haiti, Somalia, Kosovo, the Balkans and Saudi Arabia.

In the pre-Cheney days, Brown & Root was effective at garnering military contracts. But when Cheney parachuted into Halliburton’s executive suite, he put Brown & Root’s tanks into overdrive. According to The Baltimore Sun, when Cheney started at Halliburton, the company was doing less than $300 million per year in business with the Defense Department. By last year, the amount had grown to more than $650 million. According to the United States Army Corps of Engineers, between 1992 and 1999, the Pentagon paid Brown & Root more than $1.2 billion for its work in trouble spots around the globe. In May of 1999, the Corps re-enlisted the company’s help in the Balkans, giving it a new five-year contract worth $731 million. On top of that, the company was recently hired by the State Department to do a $100 million security upgrade on American embassies and consulates around the world.

There are many advantages to using private companies to do soldiers’ work. Contractors like Brown & Root allow the military to have more soldiers armed with M-16’s instead of spatulas. “It doesn’t take a soldier to do what Brown & Root does for the Army,” explains Jan Finegan, a spokesperson for the Army Materiel Command, who points out that the active-duty force of the United States military has declined by about 25 percent over the past decade. Hiring a private contractor to take out the garbage, do the laundry and take care of the dining halls “frees soldiers up to do what they are trained to do,” she said. While outsourcing some Pentagon jobs makes sense, some critics believe Cheney’s behavior is a classic example of revolving-door politics. “Over the years, we’ve tried to slow the revolving door to make sure decision-makers don’t benefit from decisions they make while they are in office,” said Tom Smith, the Texas state director of Public Citizen, a non-profit consumer group. “You have to question whose interests Cheney is looking after, and whether privatization has really benefited the Department of Defense, or the defense contractors like Brown & Root.” Cheney clearly benefited from his stint at Halliburton. During his tenure at the company, he collected more than $10 million in salary and stock payments. And his going-away present from the company was a stock and cash package worth some $33 million. Cheney has since relinquished some of the stock options that he held with the company to avoid the appearance of impropriety.

The American press has paid lots of attention to Cheney’s pay. But it has given little coverage to Brown & Root’s sometimes troubled relationships with its foreign employees. In 1994, at the end of its engagement in Somalia, where American troops had attempted to quell the country’s ongoing civil strife, Brown & Root dismissed its Somali workers. The disenchanted workers then staged a protest at the United Nations compound in Mogadishu until they were scattered by UN troops armed with batons and tear gas. Three people were reportedly injured in the melee. In 1996, in Hungary, where Brown & Root had set up shop to support American troops stationed in the former Yugoslavia, the company ran into more controversy. Shortly after American forces moved in, Hungarian officials ruled that Brown & Root was subject to the country’s value-added tax, and that company employees were subject to Hungarian income tax, just like any other private corporation. The Pentagon insisted that the company was part of the American military and therefore exempt from the tax. Ultimately, the company paid the Hungarian government $18 million in taxes - for which it was reimbursed by the Pentagon. The company was also accused of sexual harassment by several female workers who claimed that Brown & Root employees had fondled and propositioned them. One of the women who complained, a 22-year-old cook named Csaba Horvath, told the Associated Press in 1996 that the Brown & Root contractors “do with us as they please.” She added that the company is “a state within a state” and that the United States military was too lax in overseeing its operations.

While those complaints are difficult to prove, Cheney’s impact on Halliburton’s bottom line has been unmistakable. And the company made sure to spread some of that wealth around. Halliburton has contributed a quarter-million dollars to the Republican Party so far this election cycle. And Cheney’s company made sure it had access to decision-makers. In 1996, Halliburton was spending less than $300,000 per year on lobbyists. Last year it spent $600,000. Given Cheney and Halliburton’s success at getting federal money, it looks like that money was well spent.


Published Monday, October 9th, 2000 - 09:11pm GMT

Robert Bryce is an author and investigative reporter from the USA.  His latest book, “Pipe Dreams”, examines the greed and arrogance behind Enron executives during the lead-up to the company’s downfall.

Texas Observer

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