Halliburton at centre of Iraq contract storm

As the US government begins awarding potentially lucrative contracts this week to rebuild Iraq, the controversy surrounding the…

As the US government begins awarding potentially lucrative contracts this week to rebuild Iraq, the controversy surrounding the process is engulfing one bidder more than the rest: Halliburton.

Foreign companies and governments complaining that they have been shut out of the process have pointed to the close political ties of the large US engineering and construction companies that have been invited to bid.

While a number of the short-listed entrants, including Bechtel, Fluor, Louis Berger and Parsons, may be connected, none is more so than Halliburton.

The company's former chief executive, Mr Dick Cheney, US vice-president, is next in line for the Oval Office.

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In addition, the Dallas-based oil services and engineering company counts Mr Lawrence Eagleburger, secretary of state under President George H. W. Bush, as a board member, and Mr Richard Armitage, a former deputy secretary of state, has been a paid consultant.

Whispers about those connections grew this week after Halliburton's Kellogg Brown & Root subsidiary won a contract to put out oil-well fires in Iraq, and repair oil infrastructure.

They are likely to grow louder if the company wins another contract, valued at up to $900 million (€840 million), to rebuild Iraq's roads, electricity plants and other infrastructure in the wake of the conflict.

One Democratic congresswoman, Ms Maxine Waters from California, has already seized on the issue. Ms Waters urged Congress this week to adopt an amendment to restrict companies with close ties to the administration from government rebuilding contracts.

"Halliburton contracts in Iraq would create the appearance that the vice-president may be using his position to increase his former company's profits in a time of war," Ms Waters said.

No one has yet alleged that. And even some political activists who have been critical of the company concede that there are only a few companies in the world capable of taking on complicated tasks such as putting out oil-well fires or quickly constructing military bases.

The company's familiarity with the US administration could prove a valuable asset given the political urgency to restore basic services for the Iraqi people.

Still, Halliburton's involvement in the process creates a perception problem for the Bush administration because it has fuelled suspicions - particularly abroad - that it is waging war in Iraq to satisfy its friends in "big oil".

The closed nature of the bidding - which the international development agency USAID said was used to expedite the process - has only worsened the situation.

Halliburton was a government contractor long before Mr Cheney arrived.

Kellogg Brown & Root began building ships for the US navy in 1942. Since then, it has landed a number of Pentagon deals, including a 10-year $2 billion contract in 1991 to supply logistical services.

As a result, the company is no stranger to political pressure.

It came under scrutiny last year after Democrats said they might call hearings over its accounting policies under Mr Cheney, which are being investigated by the Securities and Exchange Commission.

Earlier this week, Halliburton bowed to shareholder pressure and agreed to review its operations in Iran, which the US considers a state sponsor of terrorism.

If Halliburton is tapped for future Iraq contracts, it is also likely to weather the political storm - although not without criticism.

"It's less that the Bush administration and their friends are out to make a buck off the war," one political activist said. "It's more that you have a tight circle of people giving business to trusted friends, and that's what leads to cronyism."