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The Cheney myth (continued)

THE STORY OF how Cheney wound up as Halliburton’s chief executive officer is a familiar one by now. After having tested the waters for a possible 1996 run for president and finding them to be mighty chilly, the former secretary of defense was looking for something to do. On a fishing trip to New Brunswick with several high-powered corporate executives, the subject of Halliburton’s vacant CEO’s office came up. While Cheney slept, these masters of the universe decided that he would be the perfect candidate.

And why not? Toward the end of George H.W. Bush’s presidency, Cheney had commissioned a study on how private contractors such as Halliburton might take over much of the scut work of military life — cooking the meals, doing the laundry, cleaning the latrines, and the like. Incredibly, the study was farmed out to Halliburton’s Brown & Root subsidiary (now Kellogg Brown & Root, or KBR) at a total cost of $8.9 million. As Jane Mayer wrote in a memorable New Yorker piece last February on the ties between Cheney and Halliburton, "In effect, the company was being asked to create its own market." Hiring Cheney was an investment, a way of ensuring that Halliburton’s share of this new market would keep on growing. In that context, it hardly mattered that Cheney had virtually no experience in the business world.

Since the time of that study, the role of private contractors in military operations has grown steadily larger and more controversial. Halliburton fed at the trough regularly during Cheney’s years as CEO, just as his fishing buddies had hoped. According to John Nichols’s Dick, Halliburton received $1.2 billion in federal contracts during the five years before Cheney took charge — and $2.3 billion, or almost double that, during his five years at the top.

Halliburton’s first significant wartime test under this new policy came in the Balkans conflict. Dan Briody, author of The Halliburton Agenda: The Politics of Oil and Money (Wiley, 2004), writes that Brown & Root’s Balkans operations were marked by cost overruns and unnecessary work that call to mind the problems that would later crop up in Iraq. For instance, the company was providing military base camps with twice as much electricity as they needed, a luxury that would have cost $85 million over five years if it hadn’t been put to a stop. A General Accounting Office investigation found that Brown & Root work crews in the Balkans were so overstaffed that "half of the crews had at least 40 percent of their members not engaged in work."

But contracting out vital military functions is about more than money — it’s also about a philosophy that makes it easier to wage war, and that thus removes a huge obstacle from policymakers such as Bush, Cheney, and Secretary of Defense Donald Rumsfeld. Sam Gardiner, a retired Air Force colonel, put it this way in an interview with the New Yorker’s Jane Mayer: "It makes it too easy to go to war. When you can hire people to go to war, there’s none of the grumbling and the political friction." Gardiner went on to estimate that, without private contractors, the US would need 300,000 troops in Iraq rather than the 135,000 who are actually there. "Think how much harder it would have been to get Congress, or the American public, to support those numbers," he said.

The money that Halliburton made from the military during the 1990s was nothing compared to what came its way after Cheney became vice-president. KBR, the successor to Brown & Root, has received some $12 billion in contracts, including a no-bid agreement to rebuild Iraq’s oil industry. The company is currently under investigation for allegedly overcharging the government for gasoline and other items, as well as for a reported kickback scandal in Kuwait. Halliburton itself has been crying poormouth, and recently announced that it might seek to sell KBR, which has been the source of most of its troubles. But as Dan Briody notes, the profit on projects such as Iraq may be low, but it’s guaranteed. Plus, there are all those opportunities to goose up the charges here and there — which it has every incentive to do, since it is guaranteed a profit on the total cost of its work. Briody writes: "When the figures start to climb into the $2 billion range, even if the margin is only 2 or 3 percent, the company is looking at a profit of between $40 million to $60 million, which is not bad for less than a year’s work."

The good fortune that has befallen Halliburton since Cheney left the executive suite for the White House has, naturally, led to questions about whether the vice-president was steering business to his old company, and whether he stood to benefit personally. He has staunchly answered "no" to both of those questions, and certainly there is no evidence to the contrary. But one reason the questions persist is that when Cheney appeared on NBC’s Meet the Press in September 2003, he had an opportunity to set the record straight — and he chose to lie directly to host Tim Russert’s face.

Cheney told Russert that "since I left Halliburton to become George Bush’s vice-president, I’ve severed all my ties with the company, gotten rid of all my financial interests. I have no financial interest in Halliburton of any kind and haven’t had now for over three years." But as the New Yorker’s Mayer and others have noted, Halliburton pays Cheney "deferred compensation" that amounts to $150,000 per year. He continues to hold $18 million in stock options as well, although he has said he will donate any money he makes from those options to charity.

Now, it may be true that Cheney’s compensation package is such that it cannot be affected by any change in Halliburton’s business prospects, either for good or for ill, assuming he sticks to his pledge to donate any stock-option income to charity. But he could have said that; instead, he chose not to tell the truth. His favorite Web site, FactCheck.org, has given him a pass on this. In a recent critique of a Kerry-campaign ad critical of Cheney’s ties to Halliburton, the FactCheckers say, "The fact is, Cheney doesn’t gain a penny from Halliburton’s contracts, and almost certainly won’t lose even if Halliburton goes bankrupt." But shouldn’t Cheney have told the truth, and let the public decide whether his deferred-compensation package amounted to a conflict of interest?

One other bipartisan group disagrees with Cheney’s contention that he has "no financial interest" in Halliburton. According to Briody, the Congressional Research Service has determined that ties such as Cheney’s amount to "a continuing financial interest" and "potential conflicts of interest." Now, FactCheck.org also observes that the president and the vice-president are "specifically exempted from federal conflict-of-interest laws." But this isn’t a matter of law — it’s a matter of morality and ethics, and of being straight with the people who send elected officials to office. When it came to telling the truth, it would appear that Cheney had "other priorities," to quote his memorable answer when he was once asked why he had sought repeated draft deferments during the Vietnam War.

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Issue Date: October 22 - 28, 2004
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