David Teather

Halliburton’s problematic Cheney connection

Hoping to escape the election spotlight, the vice president's old firm may shed its KBR division, the one doing billions of dollars of work in Iraq.

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It must have seemed like a terrific stroke of luck: Dick Cheney, the man who for the past five years had been the chief executive of Halliburton, became the vice president in 2000. The oil services and engineering company was given a direct line to the White House. But Halliburton’s relationship with the Bush administration is beginning to prove more problematic than it is worth.

The company admitted 12 days ago that it was considering selling Kellogg Brown & Root (KBR), the division carrying out billions of dollars’ worth of work for the U.S. government in Iraq, in a desperate attempt to get out of the spotlight. It is considering a sale, a spinoff or a separate listing for the business on the stock exchange. The company’s shares have fallen from $50 when Cheney first took office in the White House to the low $30s.

Halliburton’s business with the federal government has grown considerably since the current administration took office. According to the New York Times, the business went from being the 22nd biggest military contractor in 2000 to the seventh largest in 2003. Prior to the invasion of Iraq, without being asked to tender, Halliburton was handed a contract worth up to $7 billion to repair the nation’s oil fields. It was also given a contract to provide logistical support to U.S. troops, handling everything from food to transport and laundry services. That deal, awarded under an existing long-term contract to provide emergency services, was worth a potential $13 billion.

When the first secretive contract came to light, shortly after the March 2003 invasion, Democrats rounded on the company, arguing that it was evidence of an old-boy network in the White House. Cheney, who walked away from Halliburton with a $36 million package, continued to receive deferred income from the firm.

The oil fields contract was eventually put out to tender, with KBR retaining part of the business. The higher profile of Halliburton has ensured that the company has remained on the front pages throughout a series of controversies that might otherwise have gone unreported. This year the firm agreed to pay $7.5 million to settle allegations that it failed to disclose a key accounting change in 1998 that allowed it to inflate profits and meet Wall Street targets while Cheney was still in charge. The accounting change, concerning the booking of disputed cost overruns on projects, allowed it to increase its profits by more than $200 million. A class action lawsuit brought on behalf of shareholders has accused the firm of systemic accounting fraud — allegations the company denies.

Investigations are still underway into claims that a consortium KBR now leads paid bribes to Nigerian officials to secure a contract to build a natural gas plant. The company has admitted uncovering discussions of bribes, though it has no evidence they were actually paid. A Treasury Department inquiry has also been reopened into dealings the company may have had with Iran. Military officials, meanwhile, have accused KBR of routinely overcharging for work carried out as part of its logistics contract in Iraq and have threatened to withhold payment on 15 percent of bills.

A Pentagon auditors’ report said the company had failed to account for at least $1.8 billion worth of work done. In a little-covered development, the Pentagon’s Defense Contract Management Agency said last month that the company’s billing methods were adequate, but that has had no effect on the other investigations and audits still pending.

The Pentagon is now considering breaking the contract up into six pieces and inviting new tenders. Tired of the onslaught of invective, Halliburton has said it is not certain if it will bid for any of the smaller pieces. Another reason for wanting to quit Iraq is that 45 of the company’s workers have died there.

In a meeting with investors in Houston toward the end of September, Halliburton’s chief executive, David Lesar, said the company had become the target of a “vicious campaign” of political attacks ahead of the presidential election. The company’s workers, he added, “don’t deserve to have their jobs threatened for political gain.”

As the presidential election has heated up, so has the temperature surrounding Halliburton. The company has become a useful piece of shorthand for the newly aggressive Democratic nominee, John Kerry. He told an audience in Albuquerque, N.M., on a campaign trip last month: “Dick Cheney’s old company, Halliburton, has profited from the mess in Iraq at the expense of American troops and taxpayers. While Halliburton has been engaging in massive overcharging and wasteful practices under this no-bid contract, Dick Cheney has continued to receive compensation from his former company.”

In last week’s presidential debate, the Democratic nominee assailed Halliburton again on national television. He said the administration had deliberately limited overseas participation in Iraqi reconstruction to save the “spoils of war” for the company.

Cheney, it turns out, may have been of little real help to Halliburton at all: KBR filed for bankruptcy earlier this year, weighed down by asbestos litigation it inherited from an acquisition the vice president made while he was still running the firm.

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Not jumping to conclusions

New York officials seek clues in the toy-grenade bombing outside the British Consulate Thursday.

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The police and FBI were analyzing footage from 17 security cameras Thursday night after two homemade bombs exploded outside the British consulate in New York. The bombs, encased in toy grenades and apparently placed in the soil of a large cement flower tub outside the building, went off at 3:35 a.m. EDT.

The explosion hurled a footlong piece of concrete from the tub through the glass door of the building but injured no one. Firefighters and police from nearby stations rushed to the scene, but did not see anybody running away.

A Dutch U.N. employee arrested at the scene and later questioned by police was released without charge. A jogger, cyclist and taxi were also seen in the security footage. “This is New York,” said the police commissioner, Raymond Kelly. “It’s 3:30 in the morning, yet these people were out on the street.”

One of the cameras appeared to show something being thrown from across the street. The timing of the blasts led to speculation that they were linked to the British election and perhaps the country’s role in the Iraq war.

New York Mayor Michael Bloomberg described the bombs as “relatively unsophisticated” explosive devices. “It is true that the British Consulate is in that building, but I don’t think anybody should jump to conclusions,” he said.

The British consul general, Sir Philip Thomas, said an election night party at the offices, hosted by the journalist Sir Harold Evans, would go ahead. “I’m not frightened,” Sir Philip said. “Clearly this is Election Day in Britain and our staff just want to get on with their work.” British interests overseas have been on the alert in the run-up to the election amid fears of a repeat of the attack in Madrid last year that killed nearly 200 people and swayed the vote days later.

Members of the New York Police Department’s counterterrorism bureau, the intelligence division, the FBI and the Joint Terrorism Task Force were called to the site. The British Consulate occupies the ninth and 10th floors of the otherwise anonymous office building at 845 Third Ave. Other countries have missions in the 21-story building, and it houses a number of domestic and international companies. At street level, the building has a branch of the North Fork Bank and a sports store.

Five hours after the blasts, the street was still cordoned off. Sniffer dogs combed the area for any other devices but found nothing. The grenades, described as Second World War “novelty” toys, were planted in the soil of the tub, one of 12 installed outside the building as part of post-Sept. 11 security measures to prevent car bombs. There was no evidence of a timer, suggesting the explosives were detonated by hand, according to Kelly.

At the scene, bomb experts were picking through earth from the flower tub mixed with pieces of glass and shrapnel strewn across the pavement in front of the building. A large gash ran the length of the glass door. Pieces of the devices were found up to half a block away.

Police determined that one of the bombs was the size of a pineapple, the other the size of a lemon. The toy grenades had been packed with black powder, which was taken for testing.

“I heard a bang, that’s it,” a witness told the Associated Press. “I came outside to check it out and I see nothing around, no flames, no smoke, that’s it.”

Police cordoned off several blocks around the consulate and conducted a sweep of other diplomatic buildings in the area. The consulate is one block from the head office of Citigroup, which is said to be one of a handful of financial institutions listed as targets by al-Qaida.

After the incident, police in Chicago temporarily closed off the area surrounding the British Consulate there.

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Stopping Hillary before she starts

Although the senator denies any interest in the presidency, she's becoming the No. 1 target of the right's attack machine.

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She has yet to declare any intention of running for president, but the long shadow of Hillary Rodham Clinton over American politics has already prompted Republicans to train their sights on the former first lady. Republican strategist Arthur Finkelstein is reportedly raising $10 million for a political action committee called Stop Her Now. He aims to prevent Clinton’s reelection to the Senate next year, and ultimately thwart any bid she makes for the White House.

Stop Her Now is a “527″ advocacy group, similar to the Swift Boat Veterans for Truth group, which helped to undermine Democratic presidential candidate John Kerry in last November’s election. The groups began to emerge last year after campaign funding reform prevented donors from giving unlimited sums directly to political parties.

Finkelstein, an advisor to New York Gov. George Pataki and Israeli Prime Minister Ariel Sharon, is a controversial figure within his party. He raised eyebrows by warning against the influence of evangelical Christians. He is also openly gay, and startled some party supporters when headlines last weekend disclosed that he had recently married his long-term partner.

Although Clinton has refused to be pinned down on a run for president, she is widely seen as a leading contender among Democrats, and her popularity in New York is at an all-time high. She was introduced as “the next great president of the United States of America” at an address in Minnesota over the weekend. One of her advisors told the Associated Press that the Stop Her Now group was evidence that the Republicans planned “a negative campaign of lies and distortion.”

The New York Republican Party’s chairman has also launched a Stop Hillary Now fundraising drive. In a letter dated April 8 seen by the AP, Stephen Minarik said the campaign “is not merely a race for New York. It’s a race for America. Stopping Hillary Rodham Clinton is the most important thing you and I can do as Republicans in the next two years.”

Clinton has told potential supporters in an e-mail that she is the “No. 1 target for the rightwing attack machine.” Her spokeswoman, Ann Lewis, told the AP that the Clinton campaign was “not surprised that the Republican Party has chosen to wage a personally negative campaign. They don’t want to talk about Hillary’s record of working for New Yorkers, throughout the state and in the Senate.”

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Old, ugly and fired

In the latest case against Wall Street sex bias, a woman is awarded $29 million after complaining of a corporate culture hostile to females.

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When Laura Zubulake’s male colleagues on Wall Street wanted to strike deals with clients they headed to the golf course, the baseball stadium and, inevitably, the strip club. Amid the machismo, Zubulake, 44, never got a look in. Her lawyers claimed that a male executive at the bank told her she was old and ugly and could not do the job. After making a complaint, she was fired.

Now her former employer, UBS, Europe’s largest bank, is being forced to pay out $29 million in damages — the latest award in a growing number of sexual discrimination lawsuits challenging the way that the world’s most powerful financial center does business. It is one of the largest discrimination awards to an individual on record.

Last July, another of the big Wall Street banks, Morgan Stanley, agreed to pay $54 million to settle a discrimination suit brought by the EEOC, the U.S. employment commission, on behalf of Allison Schieffelin, a former bond trader, and 340 other women. Also last year, Merrill Lynch paid out $2.2 million to a female former broker.

Zubulake said she was “gratified and relieved” that the case she filed three years ago was over. “Do I think I’m unique?” she considered. “Probably not. I’d like this to send a message to other women on Wall Street that if they are experiencing different treatment, they should stand up and speak out, which is a difficult thing to do, believe me.”

Zubulake’s testimony offered insight into the secretive, clubby and often brutal world of high finance. She was hired on the Asian equities sales desk at the bank in 1999 and worked in UBS offices in Manhattan and Stamford, Conn. She initially enjoyed the job.

In her suit against the bank, though, she described how she was passed over for the job of manager on the sales desk in early 2001. The position was given to a former UBS employee, Matthew Chapin, who, she testified, went on to belittle and ridicule her in front of the rest of the office, make sexist remarks, exclude her from trips with clients and deny her important accounts. Zubulake said her desk was even placed across an aisle from the rest of the team, seating her with the office assistants.

In the complaint, she said Chapin on several occasions asked, “Does anybody like you?” in front of other workers. While looking at a C.V. for a female job candidate, he allegedly said, “I have to interview this chick … Oh, I mean woman,” and remarked that he had “yellow fever,” meaning he liked Asian women. She said she was accused of insubordination while male colleagues were allowed to yell back at Chapin.

The behavior was not isolated to Chapin, she said. Written peer evaluations said she should “smile more” and be “softer.” Despite her complaints, the bank allegedly took no action. The head of human resources responded by telling her she should be more “soft-spoken,” the complaint said.

“It was a constant battle,” Zubulake said. “It was demoralizing. I kept trying to work with them, but it was a very difficult period.” Exasperated, she filed a complaint with the Equal Employment Opportunity Commission in August 2001, and was fired two months later.

Her lawyer, James Batson, said: “It is nice to see some recovery not just for gender discrimination but for retaliation. A lot of women feel that if they complain they will get fired — that they are history. I hope this verdict will serve notice to companies that they can’t do that.”

The most notorious case of sex discrimination on Wall Street was brought against the firm Smith Barney in 1996; it detailed the existence of drinking parties for mainly male brokers in the firm’s basement, called the “boom-boom room,” where a toilet bowl hung from the ceiling.

Martha Burk, author of the book “Cult of Power; Sex Discrimination in Corporate America and What Can Be Done About It,” says bad behavior on Wall Street is still pervasive. “I don’t think firms have learned a thing. This trickles down from top management and creates a corporate culture that is hostile to women. It is notorious in New York that clients are taken to strip clubs.”

The American Securities Industry Association said recently that more than 70 percent of all investment bankers, traders and brokers in management positions were white men. Women have yet to break through to the very top jobs. Sallie Krawcheck, chief financial officer and head of strategy at Citigroup, is arguably the most powerful. She is effectively No. 3 at the company.

An additional case against Smith Barney (now a part of Citigroup) was filed last month by four women who alleged that they were denied promotions and were paid less than male colleagues. The suit was filed with the help of the Washington-based National Council of Women’s Organizations, which set up the Women on Wall Street Project last year to combat discrimination.

The initial focus of the project was to lobby financial firms whose bosses are members of the male-only Augusta Golf Club. They include the bosses of Citigroup, Morgan Stanley, American Express, Bank of America and J.P. Morgan Chase.

Burk, who works with the project, said awards need to go higher. The “$29 million won’t even make a footnote to a bank. They see this as the cost of doing business. It is cheaper to pay out every five years or so than it is to fix pay disparities.”

UBS argued in its defense that Zubulake had not been singled out. Chapin, defense lawyers said, had treated everyone badly. In closing statements, the lawyer for UBS, Bettina Plevan, argued that Zubulake was fired because she had “performance problems” and was not a team player.

A UBS spokesman said the bank was “disappointed” and would appeal. “We regard the amount awarded as excessive and will now move to set aside the verdict.”

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“Disruptive” detainees

The Pentagon confirms the report of a mass suicide attempt by prisoners at Guantanamo in 2003.

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Twenty-three detainees at the Guantánamo Bay military camp made an apparent mass suicide attempt in an orchestrated protest in 2003, the United States confirmed Monday night. The captives tried to either hang or strangle themselves in their cells over eight days in August of that year. Ten made an attempt on Aug. 22.

The military did not say why it had not previously reported the incident, described by officials as “self-injurious behavior” — an attempt to get attention rather than genuine attempts at suicide. The plan had been engineered, they said, to disrupt operations and unnerve new guards. Sixteen of the 23 are among 553 prisoners still at the camp. Many of the detainees have been held for three years without being charged.

Critics said the mass protest came in the same year that Maj. Gen. Geoffrey Miller assumed command of the camp in Cuba with orders to get more information from prisoners suspected of having links to al-Qaida or the Taliban.

Allistair Hodgett, a spokesman for Amnesty International in Washington, told the Associated Press: “When you have suicide attempts or so-called self-harm incidents, it shows the type of impact indefinite detention can have.” In total there were 350 “self-harm” incidents at the camp during 2003, the military said. Last year there were 110 self-harm incidents. The military has reported 34 actual suicide attempts since the camp opened in January 2002.

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The “Salvador option”

The U.S. considers forming assassination squads like those once used by the Reagan administration to crush the insurgency in Iraq.

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The United States is considering setting up an elite squad of assassins to target leaders of the Iraqi insurgency, according to reports Sunday. Newsweek magazine said the Pentagon is drawing up possible proposals to send U.S. Special Forces teams to advise, support and train handpicked Iraqi squads to target Sunni rebels.

The ploy has apparently been called the “Salvador option” after the strategy that was secretly employed by Ronald Reagan’s administration to combat the leftist guerrilla insurgency in El Salvador in the early 1980s. In that instance, the U.S. government backed “nationalist forces” that hunted down rebel leaders and their supporters.

The plans appear to be a sign of the increasing frustration at the continued level of violence in Iraq. Direct actions, such the attack on Fallujah in November, have had little more effect than spreading the rebels out. Newsweek cited an unidentified senior military officer. “What everyone agrees is that we can’t just go on as we are,” he said. “We have to find a way to take the offensive against the insurgents. Right now, we are playing defense. And we are losing.”

A retired four-star general, Gary Luck, is due in Iraq this week to conduct a reevaluation of tactics in Iraq, including troop levels and the training of Iraqi forces.

The U.S. and Iraqi security forces are facing mounting losses, and the stubbornness of the insurgents is causing increasing concern in Washington. Gen Luck is due to report back to Defense Secretary Donald Rumsfeld within a month.

The Iraqi elite squads would most likely be made up of Kurdish Peshmerga fighters and Shiite militiamen and could even operate across the Syrian border, the report said. It remains unclear whether they would be used for assassinations or in so-called snatch operations, capturing targets and taking them to U.S. bases for interrogation. According to Newsweek it is also still unclear which part of the U.S. government would take responsibility for the squads. Covert operations have in the past been run by the CIA, but the Defense Department under Rumsfeld has been seeking to build up the Pentagon’s intelligence operations.

The plan would expand the role of the U.S. Special Forces into undercover missions, something many in the CIA are said to oppose. The interim government of Prime Minister Ayad Allawi is said to have given the proposal strong backing.

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