Sun, Feb 15, 2004 page10

• Halliburton in Iraq set to become campaign issue

  GOVERNMENT TIES Democrats say they will use the company's ties with the Bush administration in the run up to the election, while senators want it suspended

  • NY TIMES NEWS SERVICE
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  As the allegations and investigations of the Halliburton Co's federal contracts in Iraq broaden in size and number, Democrats say they will use the company's ties to the Bush administration as a campaign issue, and Halliburton is responding with television advertisements implying that the company is being unfairly targeted.

  "We are serving our troops because of what we know, not who we know," declares the 30-second spot, which is airing in Washington, Houston and several other cities.

  A company filing with the Securities and Exchange Commission late last month declared that Halliburton's Iraq contracts "will likely be subject to intense scrutiny" in the months ahead, in large part because "the Vice President of the United States" is "a former chief executive officer."

  "We expect that this focus and these allegations will continue and possibly intensify as the 2004 elections draw near," it adds with understandable prescience.

  In recent days, several prominent Democrats have made a point of attacking the White House over Halliburton's contracting troubles -- issues that in normal times would hardly rise to the level of prominent national debate.

  "At a time when Halliburton is defrauding the federal government and facing serious allegations of bribery, we look forward to taking this debate to George Bush," Senator John Kerry's campaign said in a statement late last week.

  And Senator Barbara Boxer sent a letter to Defense Secretary Donald Rumsfeld on Friday demanding that he "immediately begin suspension or disbarment proceedings against the Halliburton Company" because of its contracting problems. Senate Minority Leader Tom Daschle of South Carolina has made a similar request.

  Bill Carrick, who was the media strategist for the presidential campaign of Republican Dick Gephardt of Missouri, said he believed Halliburton's problems had the power to remain a durable campaign issue because "in a lot of people's minds, it's a surrogate for the larger feeling that the Bush administration is too close to the oil business, and Cheney has in some ways become an elusive figure."

  While Bill Dal Col, a Republican consultant, called Halliburton "a good rallying cry" for Democrats that "will help with fund-raising," he added that "it doesn't really have any traction with anyone who is not already opposed to the administration."

  Cathy Gist, a Halliburton spokesman, acknowledged that "there has been a lot said about the company's contracts in Iraq" but then pointed out that Pentagon comptroller Dov Zakheim, in congressional testimony last week, said Halliburton "is doing their best to do the right thing."

  In the advertisements, Dave Lesar, Halliburton's chief executive, said: "You've heard a lot about Halliburton lately. Criticism is OK. We can take it. Criticism is not failure."

  Still, Halliburton's trouble's continue to multiply. On Thursday, two Democratic members of Congress informed the Pentagon that two former Halliburton employees had come forward with a variety of allegations about wasteful spending of government money, saying Halliburton "routinely overcharged" for its work in Iraq.

  "High-level Halliburton officials frequently told employees that the high prices charged by vendors were not a problem because the US government would reimburse Halliburton's costs and then pay Halliburton an additional fee," the two Congressmen -- Henry Waxman of California and John D. Dingell of Michigan -- wrote in a letter to Pentagon auditors.

  One of the former employees, according to the letter, said "a Halliburton motto was: `Don't worry about price. It's cost-plus.'"

  In the letter, the congressmen said the two men approached Waxman after leaving jobs with Halliburton for personal reasons last month. The letter said the employees told them Halliburton worked hard to avoid putting purchases out for competitive bidding and therefore overspent for many purchases as well as common items.

  One of the employees, Henry Bunting, had been a buyer for the company in Kuwait for several months. The other, who was not identified, worked for the company for only a few months.
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