Isn’t that special. Halliburton overcharges the government. The government finds out. Bush says, in a strong, forceful tone, “If there’s an overcharge, like we think there is, we expect that money to be repaid.” You know, I do business with the government every year in the form of taxes. What if I just don’t pay next year. If I happen to get caught, can I expect to simply pay what I should have, or can I expect huge fines and possible jail time?
I’m growing weary of being outraged by this administration. Okay, we have a criminal in the white house. I have to fight too hard to keep my job in this wretched economy to have energy left over to be bitter.
But, in my last spurt of energy, is there a single Bush supporter on these boards who is willing to explain how Bush’s reaction was appropriate?
If there was evidence that they deliberately plotted to overcharge the government, they would be liable to criminal prosecution.
If they were found to have simply encountered an “accounting error” or found to have simply misunderstood “what the market would bear,” they would probably not be liable to criminal prosecution.
To use your analogy, if the IRS discovered that you were in arrears, they would first send you a letter explaining that you owed the money and needed to arrange to pay it. If they simultaneusly discovered that you were publishing the sort of idiocy that relies on misinterpreting the Constitution in order to avoid paying taxes, they might decide to turn loose the lawyers (but I suspect that they would still send you the “please pay” letter, first).
(And if President Bush announced that he was going to prosecute them before he had all the facts, the defense lawyers would make a huge deal about the way that he had prejudiced the jury with his statements.)
There is no way he was okay to say, “If there’s an overcharge, like we think there is, we expect that money to be repaid” yet he would somehow be overstepping his bounds if he said “If there was wrongdoing, the justice department will prosecute the culprits to the full extent of the law.”
I just watched the video again (here. He actually said the same thing twice. The first time, “If there’s an overcharge, like we think there is, we expect that money to be repaid” and the second time, “If anybody is overcharing the government we expect them to repay that money.”
I don’t think there is any evidence that he plans to punish Halliburton in the least. He has clearly said – twice – that the only thing we should expect from his administration is a demand for repayment. What, from his history in office, would suggest that he will do more than that?
Since it is alleged that it was the Kuwaiti subcontractor which overcharged, it would be a little hard to prosecute them under US law, wouldn’t it? Perhaps we could prosecute them under “international law”.
The reality remains that it is a lot easier (and less costly) to simply recover the cash than it is to prosecute a trial successfully in such cases. (Just as it is more cost efficient for the IRS to send a nasty letter than to initiate criminal proceedings against a person who has gone only a year or two without paying income tax–absent prior information that there was criminal intent.)
Cost “overruns” and repayments are pretty standard fare when big business is feeding at the public trough.
Save your ire for the travesty of the Medicare “reform” and the pork of the energy “management” bill and the way he is making far more enemies than friends in the world for his his successors, and don’t let the petty graft get to you (especially when it is discovered so swiftly with the accompanying likelihood that some of it will be repaid).
Well, the first is issue is did Halliburton charge too much? Unfortunately, that’s not a simple question to answer.
Halliburton claims the price was set by the subcontractor who is an unnamed Kuwaiti third party. They also claim they had no choice in subcontractors because of governmental regulations and that they had been trying to change subcontractors unsuccessfully. Next is the issue as to whether or not Halliburton was actually able to profit from the alleged price-gouging. There are contradictory reports on this. Some resources are reporting that the contract is a cost plus a percentage. Government officials are saying that it was a simple pass-through for cost of goods and there was no way Halliburton could have profitted.
Since we don’t know who the subcontractor is (the gove ain’t telling,) we don’t know their side of the story. They may clear Halliburton, or cast them in a very bad light. For all we know, there was a legitimate reason for the price differential.
I can think of at least one possibility. Insurance and transportation costs. Turkey and Kuwait are not the same location. Iraq is a dangerous country. Was the gas sent to the same locations? If the gas from Kuwait was transported a long distance across dangerous territory and the gas from Turkey was transported a short distance across safe territory one might expect that the Kuwaiti gas would be justified in having much higher insurance, security, and transportation costs.
I’m not saying this is the case, simply that we do not know for a fact that something was done wrong. We don’t it’s nature, why it happened or who is culpable.
Now, this is story is being jumped on because the implication that Halliburton was price-gouging and defrauding the government is both interesting and sensationalistic. Doubly so because of Cheney’s relationship to Halliburton as VP.
This doesn’t mean that it has merit and should be accepted blindly at face value in an absence of fact.
Based on this, it seems to me that Bush is saying something very safe and political when he says that if there was an overcharge it will have to be paid back.
You seem to wish he would be making promises to prosecute somebody before we know there’s a crime. I don’t think it’s such a good idea to make statements like that.
Some critical thinking might rectify that in this situation. It’s easy to be outraged if your jumping to conclusions on an absence of evidence.
Clinton’s been gone for almost four years.
Yet somehow you managed to do it! Your pluck is admirable. The economy is improving. The market broke 10k Thrusday, the economy is growing at levels unheard of since Reagan! Soon you will have all the wealth and leisure necessary to really apply yourself to your bitterness. Of course than you won’t have anything to be bitter about, so it’s a bit of a catch-22.
Well, as I said, I think it’s best that we be sure there’s a crime before he starts making promises to prosecute it.
Unless I’m mistaken, you liberal types have recently been a little hard on the ole Bush for jumping to conclusions. You really can’t have it both ways.
Not only is this true, but I think it’s getting to the point where it’s very hard to trust people’s outrage anymore. People on every side of the issue seem to be litterally waiting around for some outrage to grasp onto, if not actively searching out chances to whip some broad misapprehension of the facts into a stern finger shaking.
As illicit and bad a trend I think the revolving door between public service and corporate service is (especially when it involves people regulating the industries they used to lobby for, and likely will again after they leave office), and as much as I might have some hankering for the poetic justice of a big scandal that confirms my fears, there have only been a few whiffs of potential Haliburton stink, and no truly glaring scandals. The fact is, Haliburton is not making much profit on Iraq as of yet (though you could argue that the real gain is to get their people ont he ground first, as a head start in a new market): I remember hearing on NPR that its only somewhere in the vincinity of 2% on their investment. That’s not nothing, but it isn’t a giant windfall or a sweetheart deal either. And this particular scandal doesn’t even seem to involve a way for the main firm to have profited off of the mistake in the first place. So while I initially gave this story some creedence, the details coming out have made me a lot more skeptical, and obviously the President is taking a similar tack. The fact is, they need Haliburton whether its going to screw us or not: there are many jobs where they are the only real option.
I’m going to share with you the viewpoint of someone reasonably familiar with the DCAA (Defense Contract Audit Agency) system.
In a nutshell, if you are overpaid, then you have to pay that money back. Those of us who have done Defense contracting understand that what Bush said is current policy. It has been policy since the DCAA came into existance. To us it was like him declaring that water was wet.
And understand that the DCAA audits EVERY contractor (the bigger companies have permanently assigned audit agents that rotate every so often). If the DCAA finds something they think is an overcharge, then you as the contractor have to justify it.
Is there fraud in Defense Contracting? Surely, as there is in every type of contracting on the planet. Is there massive fraud? Doubtful these days. The DCAA are notorious penny pinchers and very aggressive. Most overpays are the result either of a change in the rules during the contract period, or because some expense is ruled ineligible after the fact.
Haliburton, Bechtel, Lockheed Martin, SAIC, CSC and the other biggies get audited all the time, on a fairly continual basis. It’s a good idea to get away from the idea that Dick Cheney threw open the doors of the Treasury and told them to help themselves. Not because Dick Cheney is an angel of goodness and love, he’s not. But because these companies have done contracts with the Carter administration, the Reagan Admins, the first Bush Admin, the Clinton Admins and now the second Bush Admin. The point is, they want to do business with the NEXT Administration as well and they understand that a finding of fraud can BAR them from competing on contracts for YEARS if not PERMANENTLY! Ask Boeing. They just had a 1.8 BILLION dollar contract taken away and given to Lockheed Martin.
Do you think Haliburton is ** REALLY ** going to risk that for 61 million dollars? It’s just not in their interest to try and shave money this way, especially such a small sum.
If it was a cost plus fixed fee, then the fuel bill THEY got was 56 million. They just added their 10% and submitted it to the DCAA. If it was pass through, then they got a fuel bill for 61 million and passed it directly through. It’s just not likely they tried to defraud the gov’t. They have no need and it would be killing the goose that laid the golden egg if they get caught doing so.
Perhaps you’re unfamiliar with the concept that a company has to keep control of the work its subcontractors do. If you sign up with a builder for a new house, and one of the subs fucks up, are you going to accept the builder saying it isn’t his responsibility?
Just my opinion, but if the totally unlikely happens and Haliburton is made to pay back the millions, I have no doubt that they will receive contracts that will more than make up for the loss.
Evidently, the overcharge was amazingly glaring, and they had been questioned about this before: the accusations of overcharges are a least six months old, and they defended it by citing what turn out to be bogus reasons (they claimed it cost so much because of the cost of security, but it turns out that the American military has been providing the security, on the taxpayer’s bill, not Haliburtons). The Iraqi state oil company was bringing in oil with a charge of 96cents per gallon, and Halliburton was doing it for $2.64 a gallon. Haliburton itself apparently doesn’t actually DO anything in this transaction except arrange for other companies to do the work, and for that it makes about 24cents per gallon.
But again, you have to be skeptical that they would do anything so blatantly wrong just to get money, when the administration already has a means to essentially hand them money via the energy bill, and has been exercising it. Why try to steal money when you’ve got the king of kingdom simply doling out to you directly right out of the public treasury?
Yes. I loved his comment about “Well, I’ll have to talk to my lawyer.” It was a perfect reply to the smarmy-assed reporter who asked the question in the first place.
You know, I’ve heard that before and I’ve been thinking about it. Clinton lied for naked self-interest, to save his ass.
Now you may say that Bush lied so that he could get Iraq’s oil, and I can’t prove that he didn’t.
But, I happen to think that Bush lied because he had to for what he believed was the greater good. He had to if he was to have England on our side, and the war justified from a legal standpoint. And, I think he probably felt it wasn’t much of a lie. He genuinely beleived it to be true. There was evidence for it. It was the default position of the previous administration. He just couldn’t prove it.
So he lied.
We can talk about the end not justifying the means and whatnot, and that that’s no excuse or that maybe Bush’s lie is more serious and damaging than Clinton’s and I agree with those things.
I also know that I would lie and manipulate others to protect my family. There are things that I value more than my own integrity. I’m not sure it’s a good thing that I’m that way. I’m don’t think it’s a good thing for those around you to be that way. I know that it’s true, though. I know I would do it, and I hope I’m never put in a situation where I have to.
So, if I was the President, and I beleive that it was imperative that my country do something, and I had to lie to get it done, and there would be consequences if I didn’t in terms of lives… than I’d do it.
You can decide for yourself whethe those conditions were met or not. I’m sure you’ll think they weren’t. I don’t know, and my opinion isn’t better than yours on this.
I suspect I’d do it. I suspect that if you were the President and you had to lie to save lives, you would probably do it to. I think Bush felt that was what he was doing.
We all have to judge these things for ourselves, though.
On the other hand, though, I know I wouldn’t lie straightfaced to save my ass from the consequences of my own carnal stupidity if I were stupid enough to do such a thing as Clinton did. The consequences would be on me, for my own actions. I’d value my integrity higher than that.
Your entire post is an excellent one, but this phrase in particular illumintes a very useful point. No, of course they wouldn’t, and Halliburton’s CEO isn’t going to risk the Phil Condit treatment.
However, contractors (like governments) aren’t Big Giant Heads where every decision comes down from on high. Sure, the decision to bid for a contract this big probably hit the CEO or CFO’s office, but the particulars go down so some VP somewhere.
And to be clear, it may very well have been in his/her interest to shave money in exactly this way (say, to make an annual bonus or shine in the eyes of those higher-ups). As it happens, in this case it’s looking like that’s not the case – rather, there appears to have been exactly one Kuwait-approved contractor and a military insistence on a fuel supply from a country with lots of oil but too little gasoline (cite for those with $40 to spare for the WSJ online).
But the bigger point is that companies’ “self-interest” is often vastly different from that assumed or asserted by many of the participants in this forum. David Lesar didn’t personally authorize overcharging (justified or not) on this contract any more than Dick Cheney personally allowed it, just as Bernie Schwartz didn’t personally hand nuclear delivery technology to the Chinese. When people do personally engage in such shenanigans, they get the treatment Mike Sears got. And when they’re on watch when enough of it happens, whether they were personally involved or not, they end up like Phil Condit.
