Sirotablog

By David Sirota and Judd Legum
American Prospect - 7/9/04 (Permalink)

Fact: Halliburton has overcharged taxpayers for food, accepted kickbacks for oil subcontracts, and spent taxpayer money renting rooms at five-star resorts in Kuwait.

But instead of expressing outrage the government’s top watchdog, Pentagon Inspector General Joseph Schmitz, last week parroted the company line, saying he believes Halliburton’s problems “are not out of line with the size and scope of their contracts.” He then accused the press of overemphasizing the connections between the company and its former CEO Dick Cheney, even though Vice President Cheney still collects hundreds of thousands of dollars in deferred compensation, owns company stock options, and had his office “coordinate” Halliburton contracts in Iraq.

Why is the government’s top independent watchdog deliberately sugarcoating taxpayer ripoffs? Because he, like other Bush administration officials charged with overseeing expenditures in Iraq, is anything but independent.

Instead of filling the various inspector general, comptroller, and budget officer positions in Iraq with skilled, non-partisan public servants, President Bush has packed them with partisans and cronies like Schmitz. Many of these individuals have longstanding political ties with the administration and ties to the very industries and companies that they are supposed to oversee. Here are the dirty details:

Joseph Schmitz: Defense Department Inspector General

Defense Department Inspector General Joseph Schmitz was appointed to his post by President Bush in 2001 after the Associated Press reported the office “was caught cheating” and destroying internal documents. His office has broad jurisdiction to investigate all Pentagon contracts, both in Iraq and elsewhere. But judging by Schmitz’s qualifications, the White House had one thing in mind when it appointed him: political loyalty.

According to National Journal, Schmitz is the son of former California Rep. John G. Schmitz, who was a John Birch Society director. As a member of the archconservative Washington Legal Foundation, Joseph Schmitz made a name for himself as “a conservative activist” and as a lawyer for House Speaker Newt Gingrich in a court case attempting to outlaw forms of taxation. In 1992, he authored a letter to The Washington Times insinuating that the Democratic presidential nominee had connections to Russian intelligence, writing, “The KGB apparently knows more about the shady side of Bill Clinton than the American people ever will.”

His short tenure at the Pentagon has been marked not only by defending Halliburton, but also by defending the administration he is supposed to be overseeing. For instance, in 2002, Schmitz refused congressional entreaties to declassify a report detailing how the administration was providing inadequate training and protective gear to troops in the event of a bio-chemical attack.

And Schmitz’s corporate background has also raised questions about his objectivity. According to the January 5, 1996, Aviation Daily newsletter, Schmitz “had a number of airline clients in his private practice” — and as IG has subsequently refused bipartisan efforts to intervene and terminate a controversial, multi-billion–dollar Pentagon contract with Boeing. The contract would send more than $23 billion in taxpayer funds to the company, yet in return would only be allowed to lease jets, not own them. In fact, even though Schmitz himself admitted the administration “used inappropriate procurement strategies and did not use best business practices … to provide sufficient accountability” for the contract, he claimed there was “no compelling reason” to halt the deal.

Stuart Bowen: Coalition Provisional Authority Inspector General

The inspector general of the Coalition Provisional Authority (CPA) is described by the CPA’s website as an “independent and objective oversight office” to monitor taxpayer money being spent on contracts. But instead of appointing someone with budget or contracting experience, the White House appointed Stuart Bowen, Jr., a Texas lawyer with longtime ties to President Bush. Before being appointed Inspector General, Bowen worked directly for the President for eight years — most recently as a White House legal counselor, and before that in the Texas governor’s office.

According to The Chicago Tribune, between his time at the White House and the CPA, Bowen lobbied for Iraq contracts for the consulting firm URS Group; his connections to the Bush team landed contracts worth up to $30 million. As inspector general, Bowen oversees many of the investigations into Halliburton’s misuse of taxpayer money. Yet despite evidence that the company could be bilking taxpayers, he has been only mildly critical. In fact, one of his most public statements was a call for more taxpayer money to be spent in Iraq, not more control over that money: In April he issued a report discussing “the need for more funding to accomplish the reconstruction mission.”

Over the years, Bowen has displayed a penchant for placing ideology and political loyalty above independent analysis. During his time in Texas, for instance, Bowen wrote a memo to Bush regarding the 1997 execution of David Wayne Spence, using what The Nation called “distortion, omissions, outright lies, and an inappropriate adversarial bent.” Writing several months after the execution and using the same information Bowen used in his memo, New York Times columnist Bob Herbert concluded that Spence was “almost certainly innocent” and the case against him a “travesty.” This behavior was more the rule than the exception for Bowen’s office. As a 2000 study noted, one third of the 131 death penalty cases under Governor Bush involved lawyers who were later disbarred or otherwise sanctioned — yet Bush and his legal team ignored this injustice and pushed forward with signing the highest number of death certificates in the country.

George Wolfe: CPA Office of Management and Budget

On March 18, 2003, the Bush administration appointed Treasury official George Wolfe as the director of the CPA’s Office of Management and Budget. In that capacity, he is supposed to oversee spending by the CPA. Yet Wolfe’s major career distinction is serving as the top corporate lawyer at South Carolina’s largest law firm, Nelson, Mullins, Riley, & Scarborough. The firm, which has made more than $23,000 in contributions to President Bush, represents construction firms and private banks — both industries Wolfe is now supposed to be overseeing at the CPA. According to National Journal, Wolfe’s wife, Virginia, is a former spokeswoman for the National Republican Senatorial Campaign Committee and currently works at the public-relations firm Manning, Selvage, & Lee. Her firm now lists the U.S. Army as one of its clients. The couple has made substantial campaign donations to President Bush and conservatives in Congress.

Andrew Natsios: Administrator of U.S. Agency for International Development

Andrew Natsios heads the U.S. Agency for International Development (USAID), where he oversees the bidding process for reconstruction contracts in Iraq. Under his leadership, the Bechtel Corporation received highly lucrative Iraq contracts, totaling at least $2.83 billion since last April. They received this largesse even though Nastios had intimate knowledge of the company’s poor project management record: Prior to joining the Bush administration on May 21, 2001, Natsios was chief executive of the Massachusetts Turnpike Authority and oversaw the scandalously bloated Big Dig project — whose chief contractor was none other than Bechtel.

Under Bechtel, the cost of the Big Dig project ballooned to more than five times its original total, from $2.6 billion to a whopping $14.6 billion. According to State Senator Robert Havern, chairman of the Massachusetts Joint Transportation Committee looking into the scandalous project, “it was when Natsios was Turnpike chief that the biggest rise in costs, from $10.8 billion to $14.7 billion, took place.”

Lawmakers have submitted formal requests to Natsios, demanding that he release information about all the contracts his agency has awarded. But according to Rep. Henry Waxman, six months after the invasion not one contract had been released by Natsios for congressional review.

Dov Zakheim: Defense Department Chief Financial Officer

According to the Baltimore Sun, Dov Zakheim — who until April was the Defense Department’s chief financial officer — described himself as “a very partisan person.” And his mix of partisanship and corporate lobbying for defense contractors made him a perfect Bush administration appointee to oversee all financial transactions at the Pentagon.

Before being appointed, Zakheim made a career selling access to the Pentagon as CEO of the defense consultancy Systems Planning Corporation. A client named Emultek bragged in an August 1997 press release that partnering with Zakheim would provide “significant DoD exposure for the company.” In 2000, he was a part of a neoconservative group nicknamed “the Vulcans” who were senior advisors to the Bush campaign. After taking office Bush appointed him to the Defense Department where “he oversaw three Department of Defense budgets, each totaling more than $300 billion, and recently proposed a 2005 budget of $401.7 billion.” Zakheim resigned in April to take a lucrative position as a vice president of the consultancy Booz Allen Hamilton. According to a May 6, 2004 press release, he will be an officer in Booz Allen’s “public sector” business.

Norm Szydolowski: CPA Review Board

With concerns from both Iraqis and the international community about who will control Iraq’s oil, the CPA’s liaison to the fledgling Iraqi oil ministry is a highly sensitive position. Yet, the Bush administration brushed aside all concerns and nominated ChevronTexaco Vice President Norm Szydlowski to fill the position.

The company, of course, has a lot to gain from Iraq’s vast oil fields — and it invested wisely to place one of its top executives in such a sensitive position. ChevronTexaco has contributed $515,388 in PAC money and $534,550 soft money to the GOP since 2000.

For its part, the White House has made a concerted effort to keep any probe of taxpayer fraud within the bounds of these compromised officials’ purview. The administration has gone out of its way to rebuff congressional investigations. Waxman has made numerous requests for basic information but has been virtually ignored, even as the offending parties continue to bilk taxpayers. Even when Waxman tried to call Halliburton employees to testify before Congress about contracting abuses, House Republicans blocked him.

The companies that charge for food that has not been served or supplies that have not been delivered should be held responsible for their misdeeds. But the administration should also be held accountable for its failure to root out the corruption. The American people are now suffering the consequences of President Bush’s decision to appoint overseers who are partisan, conflicted, and unqualified. And the problems did not simply go away after the transfer of power to Iraqis on June 30 — U.S. taxpayer-funded private contracting work is scheduled to go on indefinitely. How much more taxpayer money will be siphoned off before the Bush administration is willing to admit they have a problem?

David Sirota is the director of strategic communications at the Center for American Progress. He formerly served as chief spokesman for Democrats on the U.S. House Appropriations Committee. Judd Legum is the deputy research director at the Center for American Progress.