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Fat Tuesday for Disaster Profiteers
by Ruth Conniff    The Progressive
Entered into the database on Monday, February 27th, 2006 @ 19:04:25 MST


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As a depleted population struggled to celebrate Mardi Gras in New Orleans, new reports emerged about corporate cronyism and disaster profiteering under the Bush Administration.

"Six months after Hurricane Katrina battered the Gulf Coast, government contracts have gone to politically connected corporations with track records of fraud and violations of worker rights," says a report by the Gulf Coast Commission on Reconstruction Equity.

"The Gulf Coast has been besieged by large corporate profiteers, while many workers don't even receive their wages," said the Reverend Nelson Johnson, president of Interfaith Worker Justice.

At the same time Johnson’s group was calling its press conference on the damage done by cronyism in New Orleans, the New York Times reported that the Army has decided to pay Halliburton nearly all $2.41 billion in disputed costs on its controversial no-bid contract to rebuild Iraq. The Army is paying the bill "even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified," the Times reports.

The Bush Administration seems to be applying the same wasteful, crony-capitalist model in both Iraq and New Orleans.

In Iraq, the Times reports that fuel transportation costs under the no-bid contract with Halliburton subsidiary Kellogg Brown & Root were triple what other companies charged to do the same job. And Kellogg Brown & Root was charging 40 percent more for a gallon of gas than what the military paid when it bypassed the subcontractor and got the fuel for itself.

Still, the Army is paying all but 3.8 percent of the disputed amount of Halliburton's bill. The Times analysis shows just how irregular that decision is. In recent years ,the military has withheld between 56 and 75 percent of payments questioned by auditors.

Could it be that the company's relationship with former Halliburton chief executive Vice President Dick Cheney helped grease the wheels?

As Representative Henry Waxman, Democrat of California, put it: "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."

Forget Dubais Ports International. Americans should be worrying about what the Bush Administration's corporate buddies are doing with their noncompetitive government contracts.

In New Orleans, "Of more than 700 FEMA contracts valued at $500,000 or greater, more than half were awarded without competition, often to politically connected companies such as Bechtel Corp. and AshBritt Inc.," according to a February 13 Associated Press story in the San Diego Union Tribune. "Audits of those no-bid contracts are under way."

Recall that one of the President's first acts in response to Hurricane Katrina was to attempt to roll back prevailing-wage laws so that contractors could underpay workers in the relief effort. Then the Administration suspended OSHA safety standards.

Interfaith Worker Justice points out that the $29 billion in spending Congress OK'd for Katrina relief in December is offset by budget cuts that affect Katrina's victims. Medicaid cutbacks are just one example. Another is, incredibly, $23.4 billion cut from the FEMA Disaster Relief Fund. And 20 percent of Katrina relief funds are allocated for the military. "This is particularly questionable when no public discussion or planning has occurred about whether military facilities in the Gulf should be rebuilt, and while funding for community development is insufficient," the group reports.

A generation ago, military contractors' $800 toilet seats were a national scandal. Today, the government is spending millions on no-bid contracts for politically connected companies who are profiting from the misery of people the Bush Administration has let down. Halliburton and Bechtel may be doing a heck of a job for stockholders like the Cheneys, but they are robbing the rest of us. The pattern should, by now, be amply clear.