- The Washington Times - Thursday, October 30, 2003

Politically connected firms have been the biggest beneficiaries of a confused contracting process seeking private-sector help to rebuild Iraq and Afghanistan after U.S.-led invasions, a watchdog group said in a report released yesterday.

“There is a stench of political favoritism and cronyism surrounding the contracting process in both Iraq and Afghanistan,” said Charles Lewis, executive director at the Center for Public Integrity. The center is a nonpartisan group funded largely through contributions from foundations and individuals.

More than 70 U.S. companies and individuals won contracts worth up to $8 billion for work in postwar Iraq and Afghanistan, the center estimated. Most, but not all, of the companies are politically connected and have directly or indirectly contributed almost $49 million to national political campaigns since 1990, the center said.

President Bush received more money than any other politician from the companies, about $500,000, the center said. Altogether, Republican Party committees received $12.7 million and Democratic Party committees received $7.1 million from the firms, their political action committees and employees, the center said. The rest went to individual candidates.

Defense firms typically contribute about two-thirds of their donations to Republicans and one-third to Democrats, according to figures from the Center for Responsive Politics, another watchdog group. The ratio is slightly higher toward Republicans with the construction sector.

The Center for Public Integrity report singled out Halliburton and subsidiary Kellogg, Brown & Root as the top recipient of federal contracts, worth $2.3 billion. Vice President Dick Cheney is Halliburton’s former chief executive officer, serving from 1995 until 2000.

The No. 2 contractor is San Francisco-based Bechtel Corp., with $1.03 billion in contracts. George Shultz, secretary of state under President Reagan, is a former Bechtel president and serves on the company’s board of directors.

“However, dozens of lower-profile, but well-connected companies shared in the reconstruction bounty,” Mr. Lewis said. About 60 percent of the companies had employees or board members with close ties to Republican or Democratic administrations, Congress or the military, he said.

Bush administration officials and contractors have denied that political ties or contributions led to the acquisition of government work.

The U.S. Agency for International Development, one of the main government agencies awarding the reconstruction contracts, said it has set up strict fire walls to separate procurement decisions from political considerations.

“Bechtel was awarded this contract on highest technical merit and lowest cost after an aggressive review by career civil servants — nonpolitical career professionals,” J. Edward Fox, assistant administrator at USAID’s Bureau for Legislative and Public Affairs, said in a letter Wednesday to the center.

“This fire wall was in place for all Iraq procurements,” Mr. Fox said.

Halliburton said it is one of the few companies in the world that can do the emergency restoration efforts in Iraq.

“Halliburton was selected on its merits to do the work in Iraq because it is the only company with the right skills and experience to handle such wartime emergencies,” Wendy Hall, a company spokeswoman, said in an e-mail.

Participation in the political process and support of elected officials is normal for such a firm, and political contributions have “nothing to do with receiving political favors or government contracts as a result of those contributions,” she said.

Scott Saunders, a spokesman for the Army Corps of Engineers, said that three agencies — the Defense Contract Audit Agency, the Army Audit Agency and the General Accounting Office — are examining the oil field-related contracts to Kellogg, Brown & Root.

“So far, no major material errors have been found,” he said.

Among lesser-known companies that won contracts, the center cited several cases of close political ties.

Perini Corp, with contracts worth up to $525 million in Iraq and Afghanistan, is owned by a group of investors that includes Richard Blum, husband of Sen. Diane Feinstein, California Democrat and a member of the Senate Appropriations Committee and the Senate Select Committee on Intelligence, the center said.

Sullivan Haave Associates, a subcontractor, was founded by Carol Haave, currently a deputy assistant secretary for defense at the Pentagon, the center said.

Even more than apparent political ties, Mr. Lewis said, he questioned management and oversight of the reconstruction effort.

“Frankly, what surprised us most was the Keystone Kops, rank amateur nature of the government contracting process,” he said.

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