Ever since George W. Bush named him as a running mate, Dick Cheney has been all smiles. And why not? Cheney has led a charmed life. His political career included stints in the White House, Congress and the Defense Department. Then he went into the private sector and got rich.
But just how Cheney got rich deserves some scrutiny. As secretary of defense, Cheney oversaw one of the largest privatization efforts in the history of the Pentagon, steering millions of military dollars to civilian contractors. Two and a half years after Cheney left his federal job, he began cashing in on the very contracts that he helped initiate.
In 1992, the Pentagon, then under Cheney’s direction, paid Texas-based Brown & Root Services $3.9 million to produce a classified report detailing how private companies — like itself — could help provide logistics for American troops in potential war zones around the world. BRS specializes in such work; from 1962 to 1972, for instance, the company worked in the former South Vietnam building roads, landing strips, harbors, and military bases. Later in 1992, the Pentagon gave the company an additional $5 million to update its report. That same year, BRS won a massive, five-year logistics contract from the US Army Corps of Engineers to work alongside American GIs in places like Zaire, Haiti, Somalia, Kosovo, the Balkans, and Saudi Arabia.
After Bill Clinton’s election cost Cheney his government job, he wound up in 1995 as CEO of Halliburton Company, the Dallas-based oil services giant — which just happens to own Brown & Root Services. Since then, Cheney has collected more than $10 million in salary and stock payments from the company. In addition, he is currently the company’s largest individual shareholder, holding stock and options worth another $40 million. Those holdings have undoubtedly been made more valuable by the ever-more lucrative contracts BRS continues to score with the Pentagon.
Between 1992 and 1999, the Pentagon paid BRS more than $1.2 billion for its work in trouble spots around the globe. In May of 1999, the US Army Corps of Engineers re-enlisted the company’s help in the Balkans, giving it a new five-year contract worth $731 million.
To critics, this all adds up to classic revolving-door politics: Cheney’s work for Halliburton, they say, has allowed him to improperly profit off of actions he took and contacts he made while in government.
“Over the years, we’ve tried to slow the revolving door to make sure decision makers don’t benefit from decisions they make while they are in office,” said Tom Smith, the Texas state director of Public Citizen, a non-profit consumer group. “You have to question whose interests Cheney is looking after, and whether privatization has really benefited the Department of Defense, or the defense contractors like Brown & Root.”
Although the US military has long relied on contractors for various services, the issue for some observers is the possibility that Cheney used his contacts within government to enrich himself. “We are talking about nepotism of the highest order and profiteering at the expense of the US taxpayers,” says Pratap Chatterjee, a radio journalist who has followed Halliburton for several years.
Chatterjee points out that BRS gets a one percent profit guarantee on their logistics contracts and that in Somalia, the company was given another eight percentage points for meeting various incentive clauses in their contract. “Compare that with average corporate profit percentages, which are about three percent,” he said.
Moreover, while there are advantages to using private companies to do soldiers’ work, BRS has run into significant criticism for the way it has carried out some of its military missions.
The company has drawn praise for allowing more American soldiers to carry M-16’s instead of spatulas. “It doesn’t take a soldier to do what Brown & Root does for the Army,” explains Jan Finegan, a spokesperson for the Army Materiel Command, who points out that the active-duty force of the US military has declined by about 25 percent over the past decade. Hiring a private contractor to take out the garbage, do the laundry and take care of the dining halls “frees soldiers up to do what they are trained to do,” she said.
BRS also saves money by hiring local workers whenever possible. But that doesn’t always turn out happily. In 1994, at the end of its engagement in Somalia, where American troops had attempted to quell endemic civil strife, BRS dismissed the Somali workers it had hired. The disenchanted workers then staged a protest at the United Nations compound in Mogadishu, until they were scattered by UN troops armed with batons and tear gas. Three people were reportedly injured in the melee.
In 1996, in Hungary, where BRS had set up shop to support American troops stationed in the former Yugoslavia, the company ran into more controversy. Shortly after American forces moved in, Hungarian officials ruled that BRS was subject to the country’s value-added tax, and that company employees were subject to Hungarian income tax, just like any other private corporation. The Pentagon, however, insisted that the company was part of the American military and therefore exempt from the tax. Ultimately, BRS did pay the Hungarian government $18 million in taxes — for which it was reimbursed by the US government. The company was also accused of sexual harassment by several female workers who claimed that BRS employees had fondled and propositioned them.
Nonetheless, BRS, which has 20,000 employees worldwide, continues to pull in major government deals. The company recently won a $100 million contract from the US State Department to upgrade security at its embassies. It also holds a long-term contract with the British military to operate the Devonport Royal Naval Dockyard, the UK’s sole refitting and refueling location for nuclear powered submarines.
Nine years ago, Dick Cheney was overseeing the military’s performance in the Gulf War. Since then, he has made millions running a business that provides services to that same military. That business, incidentally, has contributed a quarter-million dollars to the Republican cause so far this election cycle. And now, Cheney and Bush are the odds-on favorites to take the White House.
Is this politics as usual? Or is it business as usual? In Cheney’s case, it’s difficult to tell the difference.