No accounting for taste

(Photo:Shawn Baldwin/Reflex News, for The New York Times. Click story link below for full context.)

Army Overseer Tells of Ouster Over KBR Stir (by James Risen, NYT)

Ever since KBR emerged as the dominant contractor in Iraq, critics have questioned whether the company has benefited from its political connections to the Bush administration.

Until last year, KBR was known as Kellogg, Brown and Root and was a subsidiary of Halliburton, the Texas oil services giant, where Vice President Dick Cheney previously served as chief executive.

[T]he Pentagon has recently awarded KBR part of a 10-year, $150 billion contract in Iraq.

The Army official who managed the Pentagon’s largest contract in Iraq says he was ousted from his job when he refused to approve paying more than $1 billion in questionable charges to KBR, the Houston-based company that has provided food, housing and other services to American troops.

The official, Charles M. Smith, was the senior civilian overseeing the multibillion-dollar contract with KBR during the first two years of the war.

Army auditors had determined that KBR lacked credible data or records for more than $1 billion in spending, so Mr. Smith refused to sign off on the payments to the company.

Army officials denied that Mr. Smith had been removed because of the dispute, but confirmed that they had reversed his decision, arguing that blocking the payments to KBR would have eroded basic services to troops. They said that KBR had warned that if it was not paid, it would reduce payments to subcontractors, which in turn would cut back on services. [No tickie, no lunchie.]

“You have to understand the circumstances at the time,” said Jeffrey P. Parsons, executive director of the Army Contracting Command. “We could not let operational support suffer because of some other things.”

As chief of the Field Support Contracting Division of the Army Field Support Command, he [Mr. Smith] was in charge of the KBR contract from the start. Mr. Smith soon came to believe that KBR’s business operations in Iraq were a mess.

By the end of 2003, the Defense Contract Audit Agency told him that about $1 billion in cost estimates were not credible and should not be used as the basis for Army payments to the contractor.

Eventually, Mr. Smith began warning KBR that he would withhold payments and performance bonuses until the company provided the Army with adequate data to justify the expenses. The bonuses — worth up to 2 percent of the value of the work — had to be approved by special boards of Army officials, and Mr. Smith made it clear that he would not set up the boards without the information.

Mr. Smith also told KBR that, until the information was received, he would withhold 15 percent of all payments on its future work in Iraq.

In August 2004, he told one of his deputies, Mary Beth Watkins, to hand deliver a letter about the threatened penalties to a KBR official visiting Rock Island.

The next morning, Mr. Smith said he got a call from Brig. Gen. Jerome Johnson.... “He told me, “You’ve got to pull back that letter,”’ Mr. Smith recalled.

A day later, Mr. Smith discovered that he had been replaced when he went to a meeting with KBR officials and found a colleague there in his place.

Mr. Parsons, the contracting director, confirmed the personnel changes. But he denied that pressure from KBR was a factor in the Army’s decision making about the payments. “This issue was not decided overnight, and had been discussed all the way up to the office of the secretary of defense,” he said.

“In the end,” Mr. Smith said, “KBR got what it wanted.”

MORE ON THIS THEME:

Guambat was (subsequent to the above post) reading Yves Smith's blog, naked capitalism, and came across this link to a "report" based on details from a CIA insider/whistleblower. The report indicates the above KBR tale is just a drop in the bucket of corruption Bush cronies carried into his administration.

SueAnn Arrigo is the source. She was a high-level CIA insider. Her title was Special Operations Advisor to the Director of Central Intelligence (DCI). She also established the Remote Viewing Defense protocols for the Pentagon in her capacity as Remote Viewing Advisor to the Joint Chiefs of Staff (JCS). It earned her a two-star general rank in the military.

Arrigo worked at CIA for over 30 years and reported directly to Tenet.

Among the items the report more extensively covers:

~ Arrigo discovered high-level Pentagon corruption. It involved bid-rigging .... new plane orders were to enrich Boeing and high-level Pentagon types getting kickbacks for their cooperation. She also learned how much - an average $22,000 "for each (JCS meeting) vote according to their bank" records. Not US ones. CIA-arranged Swiss accounts specifically for this purpose.

~ a new section at the Agency without her knowledge. It employed 40 people, all working for Halliburton "while being paid by the US taxpayer as if they were CIA." It was secret. No files were on them. They were never interviewed, never vetted, and she concluded: "CIA had a back door in its security to let Halliburton put anyone they wanted in (its) hallways.

~ the company shipping half the contracted for amounts and shortchanging the troops and taxpayers. It was no different for war zones. Halliburton "set up the same corrupt system of swing shift receivers (for) at least 3 continents. They received the cartons and signed (off) that the goods were all received properly. Then the shortages later were chalked up to thefts or war damage, etc." Halliburton uses each shortage complaint as a new order. "In that way (it) never (loses) by having to make good for (what's) missing," and (it gets) paid double for the same merchandise.

~ Halliburton's "CIA Representative" confronted her, tore out her phone, ransacked her office, removed every shred of paper, and hauled her off bodily "to a prison cell" inside its basement offices. She was intimidated and threatened. Thought she might be killed. She survived, but the message was clear.

~ it's pure myth that Dick Cheney stopped running the company. "He called in orders to the man I worked for almost every day and sometimes two or more times a day. He remained (Halliburton's) functional head in all but name. No one....had the power to override his orders." Second, Cheney never divested himself of Halliburton profits. "He merely hid how (he got them) through a series of shell companies."

The article goes into more detail about how the CIA and Haliburton conspire to cook the books in ways that benefit the contractor and burden the taxpayer, and ends with the note that there are three times as many more instances of misconduct available from the source but not ready for prime time viewing.

Frankly, this is just so wildly and plausibly preposterous to Guambat that he's not at all sure it isn't just an outline for a cheap paper back fictional whodunnit.


He's certainly hoping that's the case.