How to Stay Out of Sight While Making Millions from the War in Iraq

By Pratap Chatterjee, Tomdispatch.com. Posted June 3, 2009.

The Houstonian Hotel is an elegant, secluded resort set on an 18-acre wooded oasis in the heart of downtown Houston. Two weeks ago, David Lesar, CEO of the once notorious energy services corporation Halliburton, spoke to some 100 shareholders and members of senior management gathered there at the company's annual meeting. All was remarkably staid as they celebrated Halliburton's $4 billion in operating profits in 2008, a striking 22% return at a time when many companies are announcing record losses. Analysts remain bullish on Halliburton's stock, reflecting a more general view that any company in the oil business is likely to have a profitable future in store.

There were no protestors outside the meeting this year, nor the kind of national media stakeouts commonplace when Lesar addressed the same crew at the posh Four Seasons Hotel in downtown Houston in May 2004. Then, dozens of mounted police faced off against 300 protestors in the streets outside, while a San Francisco group that dubbed itself the Ronald Reagan Home for the Criminally Insane fielded activists in Bush and Cheney masks, offering fake $100 bills to passers-by in a mock protest against war profiteering. And don't forget the 25-foot inflatable pig there to mock shareholders. Local TV crews swarmed, a national crew from NBC flew in from New York, and reporters from the Financial Times and the Wall Street Journal eagerly scribbled notes.

Now the 25-foot pigs are gone and all is quiet on the western front. How did Halliburton, once branded the ugly stepchild of Dick Cheney -- the company's former CEO -- and a poster child of war profiteering, receive such absolution from anti-war activists and the media? Of course, the defeat of the Republicans in the 2008 election, the departure of the Bush administration, and a general apathy towards the ongoing, but lower-level war in Iraq are part of the answer, but don't ignore a potentially brilliant financial sleight of hand by Halliburton either. That move played a crucial role in the cleansing of the company.

"Burn & Loot"

Halliburton has been doing work in war zones since the early 1960s, when it acquired the construction company Brown & Root and was tasked by the Pentagon with building the infrastructure for the Vietnam War. Back in those days, it was vilified as "Burn & Loot." After more than three decades in news obscurity, in March 2003, with the invasion of Iraq, it suddenly returned to national attention. After all, not only had its former CEO been beating the public drums for an invasion, but its subsidiary KBR (the old Brown & Root) had been given a vast, open-ended, multi-billion dollar contract to build and maintain the new infrastructure of bases that the U.S. military was rushing to construct in that country.

More than six years later, KBR has taken in over $31 billion for a variety of services to the U.S. military, notably in the field of logistics, and the money continues to flow in. As of April 2008, under a renewed contract, the company estimated that it had served more than 720 million meals, driven more than 400 million miles on various convoy missions, treated 12 billion gallons of potable water, and produced more than 267 million tons of ice. While these numbers may be impressive, so are the multiple claims from Pentagon investigators of Godzilla-like overcharges and waste, not to speak of spiraling claims of workplace negligence, including faulty electrical wiring that led to deaths and injuries on bases KBR built, and a failure to provide adequately clean water supplies to the troops; and then there are those allegations of war profiteering made by activist groups and politicians.

In September 2004, Lesar announced that Halliburton was considering spinning off KBR as a separate company, in part he claimed because it was bearing the brunt of a "vicious campaign" of political attacks and its employees didn't "deserve to have their jobs threatened for political gain." It took three years, but in April 2007 the spin-off of KBR was completed. It is now officially on its own, and the results for both companies seem little short of miraculous. No protestors even attended the three annual shareholder meetings that KBR has since held, though its activities in the war zones have hardly changed, and only five made it to Halliburton's in 2008. This year, of course, the protesting larder was bare.

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Pratap Chatterjee is the author of Halliburton's Army: How a Well-Connected Texas Oil Company Revolutionized the Way America Makes War. He is the former executive director of CorpWatch and a shareholder of both Halliburton and KBR.

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