December 31, 2008 (the date of publication in Russian)

Grigory Tinsky


The "great and terrible" VP appears to be a banal corruptionist

Part 1:


Privatization of the security apparatus, involved in military campaigns, was obviously not enough for Dick Cheney in his effort to establish his private "state in the state". He has reportedly multiplied his wealth and influence also by means of privatization of penitentiary institutions.

On November 18, 2008 in Houston, the Federal Grand Jury recognized criminal intent in the activities of VP Dick Cheney and ex-General Attorney Alberto Gonzalez. This conclusion was made from analysis of the materials, provided by the attorney of Willacy County in Rio Grande Valley, adjacent to the US-Mexican border. According to the verdict, published by Reuters, the jury admitted that Dick Cheney "derived profit from infringement on human rights and liberties of convicts".

The "money trace", leading to Dick Cheney, surfaced in his ownership of stakes in Vanguard Group and Geo, the two private companies managing major private penitentiaries of Texas. Ex-Attorney General Gonzalez was accused of "impeding investigation of abuse of power" in the jails, particularly of physical mistreatment of convicts. VP's office was reluctant to comment. Megan Mitchell, Cheney's spokesperson, claimed she was not ready to comment on "unknown facts".

The indictment, signed by District Attorney Juan Guerra, contains a reference to the testimony of certain Gregorio de la Rosa, who deceased on April 26, 2001 in a private penitentiary in Willacy. The Grand Jury emphasized that the verdict was "deplorable" but inevitable. Cheney's lawyer Terrence O'Donnell humbly noted that Cheney had never directly invested in Geo, the jail's proprietor, but just "accidentally" contributed to an investment fund that, in its turn, invested in the company. We can only wonder whether the US Supreme Court accepts this explanation.



However, Cheney's largest fortune was made from direct appropriation of budget funds associated with the notorious Halliburton. According to US business folklore, the sweetest pie is the budget. The VP appeared to be a candy hound with an appetite deserving the Guinness Book of Records. A complete description of not very sophisticated but highly profitable schemes of robbing US taxpayers requires a special study. Therefore, we'll dwell upon only several episodes, listing them in a chronological order for the convenience of attorneys.

In 1992, Brown&Root, a division of Halliburton, receives a $9 million fee from Pentagon for preparing a secret report on the ability of private companies to provide logistical support for US troops in potential regions of warfare across the globe. At this time, Dick Cheney is Defense Secretary. Shortly after presentation of this report, Pentagon signs a five-year contract with Brown&Root on logistical support of US Corps of Engineers. According to the General Accounting Office (GAO) of the United States, B&R received around $2.2 billion for this job from the federal budget.

1995: Dick Cheney joins Halliburton as Chairman of Board and CEO. In this period of Cheney's private career (until 2000), Halliburton is exposed of violating US legislation in trade with Libya. The corporation appears to have sold six generators of neutron impulses (used in detonators for nuclear bombs) to Colonel Gaddafi. After Halliburton paid a $3.8 million fine, the case is closed.

1997: Halliburton receives a $200 million "insurance against political risks" from the state-run Overseas Private Investment Corp. (OPIC) for gas exploration in Bangladesh. Meanwhile, the company's division, now named Kellogg, Brown & Root (KBR), launches the grand "Caspian Project" under the auspices of the Azeri International Operating Company (AIOC) – despite sanctions, introduced by the Congress against Azerbaijan over infringement on human rights. In the same period, the Anti-Corruption Office of Indonesia includes KBR in the list of 59 companies that use corruption methods in pushing contracts – particularly, with the family of President Suharto.

Despite sanctions against Iran and Libya, Halliburton continued to operate in Iran. In 1998, it also gets involved in Kosovo where Pentagon is then planning to build up a major military base. In a few months, GAO found out that the corporation used much more equipment and personnel than it was necessary for maintenance of offices and providing electric energy for the base. GAO also revealed that Halliburton established a price of $86 for a veneer sheet (used in construction of military bases) while the purchase price did not exceed $14.06. At that time, the contract was repudiated, but in 1999, Pentagon struck another deal with the corporation for the same purposes.

1998: Cheney brokers the merger of Halliburton and Dresser Industries, a major partner of Saddam Hussein's government in rebuilding the oil infrastructure after the 1991 Gulf War. Despite economic sanctions against Baghdad, Halliburton strikes two deals through intermediate companies for a total of $23 million.

1999: Halliburton signs large-scale contracts with Brazil and Nigeria for delivery of oil extraction equipment in the interests of Chevron and Shell. The corporation, in partnership with Chevron, also gets a contract for oil exploration in 30 oil deposits in the Kabina enclave of Angola.

August 2000: Cheney leaves the post of Halliburton's Chairman and CEO with a dismissal premium of $33.7 million, .joining George W. Bush's election team.

October 2000: In a round of TV debates with Joe Lieberman, Cheney claims that the government "has nothing to do" with Halliburton's financial success.

During the election campaign, Halliburton's accountant Arthur Andersen (later exposed of withholding sensitive documents during the SEC investigation), donates $146,650 to the election staff – the fifth largest donation. Kenneth Lay, CEO and Chairman of Enron, donates $113,000. Later, he is entrusted by Cheney to select members of the Federal Power Commission.



By the time when Cheney is elected Vice President, Halliburton had become a major diversified company in energy services, construction and maintenance, with an annual income of $15 billion, a staff of 100,000 employees, and over 7000 clients in 120 nations.

2001: KBR strikes a $300 million contract on logistical support of the US Navy. The deal includes subsistence supplies, fuel deliveries, and construction. Simultaneously, VP Dick Cheney takes charge of the newly-established National Energy Policy Development Group (NEPDG). Under its auspices, Cheney meets with top managers of major oil and gas companies. Reps John Dingell and Henry Waxman inquire on the agenda of those meetings, but the request is rejected. After that, GAO undertakes a similar inquiry.

In the same year, KBR signs a contract with Pentagon on logistical support of the US Army for a period of 10 years. This deal, known as LOGCAP (Logistics Civil Augmentation Program), is struck for an unlimited amount of finances. Pricing is determined according to the formula "price plus costs plus bonus". Thus, the Government accepts an obligation to deploy KBR to any point of the world for fulfilling humanitarian and military missions for an unlimited award.

February 2002: The state investigation in California reveals forgery of 224 orders for maintenance and renovation of Fort Ward military base in the contract signed with KBR in the period between April 1994 and September 1998 (in the period when Halliburton was chaired by Dick Cheney). KBR is forced to pay a $2 million fine.

2002, February 27: New York Times identifies the person who visited Cheney's office a year before. This businessman, Robert J. Allison Jr., chairs the board of Anadarko petroleum, Halliburton's partner since 1959. The talks were reportedly related to personal interests of VP's spouse Lynne Cheney, a shareholder and director of Union Pacific Resources (UPR). The merger of this energy company with Anadarko brought a $250,000 bonus to Ms. Cheney.

March 2002: Eventually, the list of 22 top managers of oil and gas companies involved in abovementioned secret talks with VP Cheney is leaked to mass media. 19 of them represent major sponsors of the US Republican Party, such as Enron, Exxon Mobil, BP Amoco, Anadarko, Shell, Chevron, Barbour, Griffith & Rogers (the latter's directors Eric Burgeon and Bryan Cunningham subsequently joining John McCain's election staff). Cheney is subpoenaed by GAO over reluctance to disclose the list of members of the National Energy Council. However, the authority has to give up the investigation after the Republicans threaten to slash its $440 million budget.

May 2002: The New York Times exposes Halliburton of inflating stock price in the period between June 1999 and May 2002, as well as overrating expenditures for construction. On the grounds of this information, the Securities Commission initiated an official investigation. At that time, the company was audited by the abovementioned Arthur Andersen. However, despite multiple investigation and proven facts of swindle, Halliburton continued to receive billion-worth state contracts.

June 2002: KBR is authorized to provide logistics ($22 million offer) for the newly-established US military base in Uzbekistan – despite reports of brutal oppression of political opponents by President Karimov. This is only the first KBR's contract in the framework of LOGCAP and "anti-terrorist strategy". Meanwhile, Halliburton informs its personnel that pensions and dismissal wages will be slashed, in order to compensate planned mergers and acquisitions.

July-August 2002: Experts calculate that during the period of Cheney's chairmanship, the number of Halliburton's offshore subsidiaries soared from 9 (1995) to 44 (1999). One of them, the Caymans- registered Halliburton Products and Services Ltd, was used to bypass trade sanctions against Iran. However, by coincidence, Halliburton's revenues shrunk from $302 million to $85 million.

In 2002 alone, Halliburton signs contracts for a total of $1.3 billion, including a $115 million deal for designing and construction of the Embassy quarter in Kabul, Afghanistan, and a $37.3 million deal for a new 816-cell detention camp in Guantanamo Bay, Cuba.

2003, March: Rep. Henry Waxman initiates an investigation of the downplayed no-bid contract between the US Corps of Engineers and KBR on fire safety of oil deposits in Iraq. The $7 billion deal guarantees a 7% bonus to the contractor and guarantees of compensation of possible additional costs. Weeks after the information is revealed, it is found out that the contract also includes maintenance of oil wells. The White House officially explained that the contract was signed without a tender because Halliburton is the only company sufficiently competent for fulfilling the task in a shortest time.

Bids from other major companies were rejected. GSM Consulting's president Bob Grace addressed Pentagon in order to receive information on planned contracts. Only on December 30, 2002, he received an official message from the Department of Defense saying that "it is too early to speculate on the development (in the Middle East) in case of an unexpected war". In fact, the privileged deal had been already struck, and KBR resold a part of it to friendly companies like Boots & Coots International Well Control Inc., and Wild Well Control Inc.

Thousands of KBR's personnel were cooperating with US military forces in Turkey and Kuwait in the framework of $1bln contract. At the same time, KBR provided logistical support for operations in Afghanistan, Djibouti, Georgia, Jordan, and Uzbekistan. The total value of contracts, signed by KBR since the start of the LOGCAP program, comprised over $830 million.

May 8, 2003: Halliburton admits the fact of conveying a $2.4 million bribe to the government of Nigeria in exchange for tax relief.

May 30, 2003: Twenty shareholders sue the leadership of Halliburton over falsification of the annual accounts in the times of Cheney's leadership. Eventually, the plaintiffs receive $6 million in an amicable agreement.

September 14, 2003: Speaking to the "Meeting the Press" TV program, VP Dick Cheney claims: "Since my resignation from Halliburton, I have not had any common financial interests with the company". At this time, he receives a $150,000 annual salary and owns 433,333 unclaimed options for purchase of the company's stock.

December 2003: A scrutiny, conducted by the Defense Contractor Audit Agency (DCAA), confirms that Halliburton and Kuwait's Altamnia Co. have overrated the price of transport of gas to Iraq at least by $61 million. KBR's price reached $2.64 per gallon, while other bidders offered a twice smaller price. DCCA earlier recommended the Pentagon's Chief Military Inspector to scrutinize the markup, indicating that Altamnia had won the contract under very strange circumstances.

(To be continued)

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