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December 10, 2003 YOUR $18 BILLION AT WORK....Coals to Newcastle? Refrigerators to eskimos? Gasoline to Iraq? I know, I know, Iraq's infrastructure is busted and it actually makes sense that we have to import gasoline into the country. Fine. But how much should it cost? Here's a couple of data points:
OK, so the Iraqis can do it for 96 cents, and the army can do it for about $1.08. So how much can our friends at Halliburton do it for?
Add in a 26 cent markup — which one expert says is a profit margin that any oil services company in the world would "salivate" over — and you get $2.64. Why so much? The Halliburton flacks say their costs are high because it's really dangerous to import gasoline into Iraq right now, trucks get shot up, drivers are injured, yadda yadda yadda. Fine, I'll buy that. But surely SOMO's trucks and the army's trucks are getting shot up too? Yep: "The gasoline transported by SOMO — and by Halliburton's subcontractor — are delivered to the same depots in Iraq and often use the same military escorts." So why the difference? Can you spell "war profiteering"? (Thanks to Unfogged for pointing me to this story.) Posted by Kevin Drum at December 10, 2003 08:45 PM | TrackBackComments
During WWII and Korea there was an excess war profit tax. Will that happen now?? HA!!! BOHICA Posted by: BOHICA at December 10, 2003 08:52 PM | PERMALINKAnd this is surprising why? Saw David Gergen on the News with brian Willaims tonite--he literally had to check himself, despite using phrase like "why poke allies in the eye with a stick--over the farce that is now codified by woolfowitz: No deals for Russia, France and Germany. The shit's falling so furiously you need a helmet for that too now--at probably, oh, say, $1500.00 per, sans transport and "fragile cargo" surcharge. Posted by: fouro at December 10, 2003 08:56 PM | PERMALINKBeware of the stated profit margin on any transaction. As a finance guy I can tell you first hand, you can allocate and "justify" just about any overhead and indirect allocation you want and call it part of the cost. The devil is in the details. Someone should try and get the details of what went into those numbers. Posted by: Oregon Duck at December 10, 2003 09:06 PM | PERMALINKYes, Duck, let us ask Cheney for the details. He is usually very forthcoming with information. Posted by: Dick Durata at December 10, 2003 09:12 PM | PERMALINKDuck: oh yeah. Give me an copy of Excel and a few minutes and I'm sure I could justify just about any overhead number you asked me to. Posted by: Kevin Drum at December 10, 2003 09:18 PM | PERMALINKWell, they're all finite... surely that makes them all the same? Posted by: Anarch at December 10, 2003 09:20 PM | PERMALINKObviously they aren't going to open the books and say, "Here you go!" But if the subject comes up at a press conference, a common sense and embarrassing question (given the outrageous stated "cost") would be, "How much of the Halliburton gas price is a direct incremental cost and how much is overhead and indirect?" The follow-up questions should be, "How much of the direct cost is for gas? How much is for transportation? What makes up the rest of it?" Depending on the answer, a series of basic questions could be asked to drill down further. If they provide nothing, then at least some public skepticism would be raised about the cost in addition to the "profit." Posted by: Oregon Duck at December 10, 2003 09:24 PM | PERMALINKPress conference? I wish you were right, Duck, but I just don't know. Posted by: JP at December 10, 2003 09:31 PM | PERMALINKScratch that last post! The gas and transportation aspects were already stated in the article. The questions should be around direct and indirect only. Sorry. Posted by: Oregon Duck at December 10, 2003 09:33 PM | PERMALINKA few thoughts: 1) Maybe the price is legit--surely someone must have reviewed it when the contract was put out for tend...oh right. 2) It would seem to me that our conservative friends should be all over this--the whole "waste and fraud" angle should be irrestible. 3) If price gouging is going on, then the US government is being bilked out of millions of dollars; money that could be spent on body armor, troop benefits, and, most importantly, tax cuts. The conservatives have a word for that kind of behaviour--they've used it a lot lately--starts with a "t". Posted by: Dazir at December 10, 2003 09:34 PM | PERMALINKTo be sure, it would be construed as a rude critique of the administration, as well as being a heck of a lot of work. Still, why don't congressional democrats insist on the establishment of a modern day Truman committee? Kerry, Gephardt, Lieberman, and Edwards- all voted to leave the decision to declare war to the good judgement of George Bush. One might reasonably expect them to feel particularly offended by the treasoneous spectacle of the ongoing war profiteering, and, more to the point, do something about it. But it appears they've got bigger fish to fry. They couldn't lead a group of five year olds to an ice cream stand. And they wonder why Howard Dean has so far caught them all flat footed. Posted by: Sovereign Eye at December 10, 2003 09:35 PM | PERMALINKBut the private sector does everything better, more efficiently, and cheaper. Could it be that I have been misinformed on this point? As for "costs" ask Art Buchwald about that, and how the movie "Coming to America" grossed over $140 million but made no -- count 'em -- NO profits. Posted by: QrazyQat at December 10, 2003 09:38 PM | PERMALINKRegarding Sovereign Eye's comment, this item from Talking Points was illuminating. It's a recap of a conversation he had with a labor guy in DC, wherein the guy says other than filibustering potential judges, the Democrats on the Hill can't fight their way out of paper bags. Posted by: Linkmeister at December 10, 2003 09:55 PM | PERMALINKIn the Bush I administration, Dick Cheney privatized a ton of civil corp of engineers work (mainly to Halliburton and a few others). Then after Bush lost, he personally made millions working for Halliburton. Now he's hooking up his bro's with billions more. He may not be making money from it now, but do you think he might have plans to go back in some capacity after this administration is finished? Someone should ask Dick if he would pledge to never work for (or gain from deals involving)Halliburton in the future. Look at all of the insider deals that have come up lately (see Boeing). ALL government officials deciding on or influencing contracts should make a similar pledge or agreement (like a non-compete in the business world). This would at least help stem the fraud and enhance the government oversight. Posted by: Oregon Duck at December 10, 2003 09:57 PM | PERMALINKDuring WWII and Korea there was an excess war profit tax. Will that happen now?? HA!!!
Well, hell. Josh has changed his archiving methods. Scroll down to the 12/8 entry at 10:49pm. Posted by: Linkmeister at December 10, 2003 09:58 PM | PERMALINKHalliburton's total revenue for the Kuwait deliveries is 61,000,000 x .26. That's total revenue for this project of $15.86 million. Halliburton's revenue last quarter was over $4 billion. I don't know if there is a problem here or not. But this part of the project isn't a big deal to Halliburton that's for sure. Posted by: spc67 at December 10, 2003 10:49 PM | PERMALINKThe $0.26 is the "profit" margin per unit, not the revenue. If the 61mm gallons is accurate (is that per month or per quarter?), their revenue would be $161mm. The point is, if they are exploiting something with an obvious market price like fuel, how much are they overcharging for the other operations? (The real profit margin is probably in the range of $1.00 per gallon. $61mm here, $61mm there. Pretty soon you're talking about real money.) Posted by: Oregon Duck at December 10, 2003 11:07 PM | PERMALINKJust looked it up, it was for six months. The total revenue was for $383mm. The fuel from Turkey adds another $XXmm in profit. Like you pointed out (sort of), the bigger scam is in the other operations. The best way to feel for the overall impact is to look at their company-wide profit margin before the war to where it's at now. Then add back any capitalized costs. That would get you close, although you still wouldn't have the bonus payouts and accruals (or Congressional kickbacks). Not for me, but somebody in Congress should be tracking it. Posted by: Oregon Duck at December 10, 2003 11:28 PM | PERMALINKFriends, this is not the time to scrutinize each and every business deal Haliburton makes in Iraq. Yes, Haliburton is probably charging stiffer prices than the free market would normally ensure. News flash: it ain't a free market out there. There is no time to put the reconstruction on hold while Haliburton is subjected to line audits. Efficiency is not what we are talking about here: getting shit done is where it's at. When the dust has settled and the reconstruction is chugging along, that's the time to start hangin' people. Not now. Posted by: BP at December 11, 2003 12:26 AM | PERMALINKNo one could imagine a connection between Halliburton's oil gouging and the policy excluding foreign companies. Imagine the outrage if a French corporation were to do such a thing! It's way too late, but here's an invocation: Where are the comments from the clockwise wingnuts? Spc67, you seem to have missed the fuel amount from Turkey, which is why the article says $383 Million. Dividing this by two (the number of quarters) one gets $191 Million per quarter. You also seemed to have missed the difference between profit (the $0.26 you used in your calculation) and revenue (the numbers from the article). I hope this clarifies why they bothered to get the contract in the first place. No rational company would give up nearly five percent of its gross revenue for a quarter without a fight – the project is indeed a big deal to Halliburton. Posted by: Lori Thantos at December 11, 2003 01:26 AM | PERMALINKLesson: Whenever big government idiots like Kevin Drum, George Bush, Jim Robinson, and Ted Kennedy tell you that government can do it cheaper and better, ... well Kevin Drum just proved them mostly full of shit. Posted by: Matt Young at December 11, 2003 01:42 AM | PERMALINKNewsflash: Halliburton employs Americans. SOMO employs Iraqis. Oh, Newsflash #2: This is merely the same standard privatization surcharge applied to HMOs in the Bush Medicare reform. No big deal just 15 million or so! Posted by: chad at December 11, 2003 03:26 AM | PERMALINKwell Kevin Drum just proved them mostly full of shit how? by pointing out how a private company is fleecing us all? Posted by: ChrisL at December 11, 2003 04:34 AM | PERMALINKChrisl. Matt is a typical wing-nut. Show that 2+2=4, and he'll claim that leftists can't count, or something like that. Posted by: Barry at December 11, 2003 04:52 AM | PERMALINKI also noticed that the oil is selling for 5-10 cents per gallon at the pump...which means that Joe Taxpayer is taking a loss of about $2.50 per gallon, while the syndicate gets $0.26--and that doesn't even include the security bill the taxpayer is footing. This is real-life Milo Minderbender stuff. Posted by: praktike at December 11, 2003 06:11 AM | PERMALINKThis Haliburton stuff takes me from infuriated to bemused to embarassed and back again. I'm certain the same ethics folks who cleared the head of medicare of any conflict as he wrote the new legislation AND negotiated terms of his potential employment with FIVE healthcare firms will also see no conflict here. Where's the press and congressional oversight? Posted by: carsick at December 11, 2003 06:51 AM | PERMALINKCoals to Newcastle? Refrigerators to eskimos? Gasoline to Iraq? "Goldfish to Seaworld." I'm just saying. Posted by: Ara Rubyan at December 11, 2003 06:54 AM | PERMALINKOh! and "G" Friends, this is not the time to scrutinize each and every business deal Haliburton makes in Iraq. So when would be a good time? when Halliburton has all our tax dollars squirrelled away? And I suppose you think this administration would investigate and do anything about gouging after the fact. Fat chance. If it lucks like a duck, and quacks like a duck..... I'm sure you all can complete the sentence on your own. Posted by: four legs good at December 11, 2003 07:04 AM | PERMALINKCarsick, they're people who are unfortunate enough to be in the military when a looter administration got carte blanche to loot. They'll get f*cked, used, abused and used up. Then screwed on veteran's benefits. The frightening thing is, at least half of them will probably still vote for Dubya in '04. And that will be down from what it was in 2000. Posted by: Barry at December 11, 2003 07:04 AM | PERMALINK
BP would gladly pay $2.64/gal to fill 'er up. Right? "BP would gladly pay $2.64/gal to fill 'er up. Right?" No I wouldn't. What the fuck does that have to do with anything? I'm saying that if you propose to line audit construction companies in the thick of battle you wont get much done under any circumstances. I'm saying that Haliburton isn't going away any time soon: what the fuck is the problem with investigating Haliburton's books for fraud in, oh, say two fuckin' year's time? Posted by: BP at December 11, 2003 09:03 AM | PERMALINKI have a close relative who will be leaving the military in the near future. He is being actively recruited by Haliburton and other assorted US companies for "private sector" duty in Iraq. He says that the monthly stipends being offered are absolutely obscene. Posted by: Andy at December 11, 2003 09:09 AM | PERMALINKBP wrote: "what the fuck is the problem with investigating Haliburton's books for fraud in, oh, say two fuckin' year's time?" Because Halliburton will have two more years to continue this scam and to come up with others? Because, so far, the Republican Congress and Republican administration show absolutely no interest in any kind of fair accounting, much less accountability? Because the story is in the news now and we need to act while the outrage is widespread? In two years, this will all have been forgotten. Because an audit just isn't that big a deal and wouldn't take up too much of Halliburton's time nor interfere too much with reconstruction? Because this may be the tip of the iceberg (see another story about the way that Halliburton is totally screwing up the school reconstructions, for example)? I'm sure I can come up with other reasons, BP. Why should we wait? Posted by: PaulB at December 11, 2003 09:24 AM | PERMALINK"Because an audit just isn't that big a deal and wouldn't take up too much of Halliburton's time nor interfere too much with reconstruction?" Yes it would. Suppose Halliburton's books are audited and the audit shows that they are creaming off more than they should. Halliburton gets fired. Rinse and repeat with any other company involved in the reconstruction. What happens to the projects they were working on? Answer: shit doesn't get done. Now is not the time, boys. Posted by: BP at December 11, 2003 09:40 AM | PERMALINKwhat the fuck is the problem with investigating Haliburton's books for fraud in, oh, say two fuckin' year's time? The fraud it lets them get away with in the meantime? The extra time it gives them to cover their tracks? What happens to the projects they were working on? They get given to companies that aren't looting the public treasury? Posted by: cmdicely at December 11, 2003 09:47 AM | PERMALINKAlso, remember Afghanistan? Before the Iraq war, whenever I saw people pointing out that this administration was walking away from Afghanistan, the response was that Aghanistan was old news, it didn't matter, move on, yadda yadda yadda. In two years Iraq will be old news, and the right will be howling about the next thing that they want. Posted by: Barry at December 11, 2003 09:56 AM | PERMALINKJust to say that as an American, I feel PERSONALLY slimed by this sort of news. There's been a fair bit of it since about, oh, Spring 2001. With some luck, I can start washing it off after 2004. Posted by: John Isbell at December 11, 2003 09:58 AM | PERMALINK>They get given to companies that aren't looting Ah, the mythical honest government contractor. A legendary creature believed in by those on both sides of the political mainstream. Almost as common as the selfless bureaucrat and principled politician. Posted by: rvman at December 11, 2003 10:24 AM | PERMALINKBP wrote: "Suppose Halliburton's books are audited and the audit shows that they are creaming off more than they should. Halliburton gets fired." Not necessarily. In most cases, and particularly in cases like this, the company is simply forced to return the extra profit and its books are monitored for compliance. Your doomsday scenario is unlikely to the point of absurdity. I just thought of an even more important reason why this shouldn't wait. The more stories like this that get circulated amongst the Iraqi people, the more it affects our reputation and our ability to have a successful outcome in Iraq. This needs to be stopped now, while we still have time to do damage control. Two years from now is too late.
spc67, So it's OK to steal $16 million if you're really rich? Posted by: Bernard Yomtov at December 11, 2003 11:12 AM | PERMALINKRight (and Left) wingers excuse big government waste because Right (and Left) think their big government programs are moral. It's the same shit, there is no difference; in the end, whether it's Ted Kennedy or Tom Delay, the poor and middle class families suffer because some big government socialist group wants their government check.
Ah the classic whine of the “libertarian:” “they all do it, so everyone but me is an idiot.” Bullshit. This is war profiteering. When the government wasn’t in partnership with the looters there were sanctions for this kind of behavior. Now that we are ruled by war criminals such considerations are considered gauche. Oh, and by the way, what the hell is wrong with someone who compares pointing out war profiteering with genocide? Did you get this from Saletan’s comparison of an endorsement with halting vote counting? This is insane. Posted by: Lori Thantos at December 11, 2003 01:17 PM | PERMALINKYes it would. Suppose Halliburton's books are audited and the audit shows that they are creaming off more than they should. Halliburton gets fired. Rinse and repeat with any other company involved in the reconstruction. What happens to the projects they were working on? Answer: shit doesn't get done. Now is not the time, boys. Um...right. I do so love it when we get told when the time for things is. Anyway - what happens when we run out of alloted money for reconstruction, when we find we've overpaid by a few billion? We go back and get more? No. We audit now. We either force those companies to ship up, or we get another company who can do it, regardless of nationality. We have neither the time, the money or the leeway to simply overspend billions of dollars because it's slightly more convenient. Posted by: jesse at December 11, 2003 01:27 PM | PERMALINKSuppose Halliburton's books are audited and the audit shows that they are creaming off more than they should. Posted by: Joe Grossberg at December 11, 2003 01:37 PM | PERMALINKP.S. In case you're wondering, the first paragraph initially said "into Kuwait from Iraq" ... duh. Posted by: Joe Grossberg at December 11, 2003 01:38 PM | PERMALINKLori Thantos, So you just want to bitch about the right wing rip-offs? Why limit yourself? In my neighborhood, we get over 80% of our income from young minimum wage laborors yet we live in million dollar homes, all the result of Kevin Drum and his left wing rip-offs. Why distinguish between the two, stop them all. I'm not saying we should forgive the right wing rip -offs, I'm saying we should attack you and Kevin Drum with your left wing rip-offs at the same time. When we hang Cheney for the treasonous destruction of our young generation, we should hang Kevin Drum, Jim Robinson, the ARRP, Ted Kennedy, George Bush, Nancy Pelosi, and all the rest. All these groups are doing their best to destroy the young generation. What do all these genocidal killers have in common? A desire to take resources from the young generation, destroy their hopes and dreams, decimate the population, drive jobs overseas, intensify the terrorist and immigrations problem, waste resources. Their tool? A knee jerk reaction to take resources from the young and transfer them to government to give their friends bigger government checks. If we could just stop you and all the other big government theives, we would have a simple solution that solves most of our problems, namely: Tax the filthy rich and cut government to the bone. What does this accomplish? It gives hope to the young generation, something neither the left nor the right seem to care about. And it keeps the IRS thugs from forcing young families fromn their homes. I don't distinguish, I would hang Kevin Drum as I hang Jim Robinson. Two sides of the same genocidal coin.
I know I asked Matt Young the other day what he meant by his stupid remark about "Tax the filthy rich and cut govt. to the bone" ... and he never answered. Now he's spouting it again, and calling Kevin Drum "genocidal" to boot. Kevin, I'm not asking YOU to delete his idiot remarks, because we who normally read this site need to be constantly reminded how totally crazy, out of control, and, er, well, genocidal the freepers really are. But I'm offended by them for your sake. Posted by: Temperance at December 11, 2003 04:43 PM | PERMALINKMr. Young, you have demonstrated yourself to be too delusional for debate. We’re done. Posted by: Lori Thantos at December 11, 2003 04:55 PM | PERMALINKhttp://abcnews.go.com/wire/Politics/ap20031211_1991.html WASHINGTON Dec. 11 ? A Pentagon investigation has found overcharging and other violations in Iraq reconstruction contracts worth $15.6 billion that were awarded to Vice President Dick Cheney's former company, two defense officials said Thursday. -- cut -- I also heard on the radio (no urls yet, apparently) that the pentagon is planning to make Haliburton refund the difference. =darwin Posted by: Darwin at December 11, 2003 05:24 PM | PERMALINKBuried in the NYTimes today: "The [Pentagon] officials said Halliburton did not appear to have profited from overcharging for fuel, but had instead paid a subcontractor too much for the gasoline in the first place." http://www.nytimes.com/2003/12/12/international/middleeast/12PENT.html?hp
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