Cheney firm's rival is forced to drop oil bid

Cheney firm's rival is forced to drop oil bid

David Teather, New York, The Guardian

August 9, 2003

One of the main bidders for the lucrative contract to rebuild the Iraqi oil industry has dropped out of the race, amid concerns that the tender process unfairly favours Halliburton, the company with close ties to the US vice-president, Dick Cheney.

The construction giant Bechtel, one of the biggest engineering companies in the world, now plans to sidestep Washington and apply directly to the Iraqi oil ministry for work.

The growing disquiet over cronyism in George Bush's administration was further stirred yesterday when it emerged that a friend of the president who helped his election campaign had been hired as the director of private development in Iraq.

Thomas Foley, 51, befriended Mr Bush when they attended Harvard. He will be in charge of 200 state-owned enterprises including mining, chemical, cement and tobacco production, and report directly to the top US administrator in Iraq, Paul Bremer.

A Halliburton subsidiary, Kellogg Brown & Root, was quietly awarded a contract without tendering in the spring to perform immediate repairs to Iraq's oil infrastructure, and extinguish oil fires. The Army Corps of Engineers said the work, which could be worth up to $7bn (£4.3bn), was part of a wider contract signed last year.

Two further contracts worth $500m each for repair work in the oil industry have since been offered.

However, a week ago, the date for completion of the work was brought forward to December 31, sparking concerns that the deadline would be nearly impossible to meet for any company not already on the ground in Iraq.

The Army Corps did not return telephone calls on the matter yesterday.

A Bechtel spokeswoman, Alison Abbott, said: "The Army Corps of Engineers' final plan for Iraqi oil services work details their intent to accelerate the transition of responsibility to the Iraqi oil ministry, effectively minimising the scope of any new contracts. Given this plan, Bechtel has decided to focus our efforts on future opportunities with the ministry."

The San Francisco-based company won the $680m chief contract to begin work on rebuilding other Iraqi infrastructure - roads and schools - from the US agency for international development earlier this year.

At a meeting with the Army Corps last month to discuss the forthcoming contracts, several of the putative bidders expressed concerns that Halliburton would have an unfair advantage because it was already working in Iraq.

Halliburton was involved in a separate meeting in late July in Baghdad with the Army Corps, the oil ministry and other officials to set out what was needed to restore Iraq's oil infrastructure to prewar levels.

Mr Cheney is the former chief executive of Halliburton, and left with a $36m severance package in 2000 to join the White House campaign. In its latest financial results, Halliburton said 9% of its $3.6bn quarterly revenues had come from Iraq.

Democrats have expressed dismay that a single company should make so much from the rebuilding of Iraq, and questioned the links between Mr Cheney and the firm.