Rhetoric and Reality
Chris over at En Banc points to this article about how Halliburton has been probed for overbilling. I can't tell if he thinks it's damning or not; certainly Howard Dean does:
"We've recently learned what many Americans have suspected for a long time -- special-interest contributor Halliburton is overcharging the American taxpayers," said former Vermont governor Howard Dean, a leading Democratic presidential contender. "Now this president is preventing entire nations from bidding on contracts in Iraq so that his campaign contributors can continue to overcharge the American taxpayers."Ignore for a moment the fact that it's inconsistent of Dean to be all for 'buy American' if you're a steel manufacturer, but not support a similar policy for massive government contracts in Iraq. Even pass by the obvious question of why the EU, and particularly France, should get an economic windfall from a policy they bitterly opposed, absent some evidence it will be particularly useful. What are these accusations of dire overbilling? Apparently passing on the costs of a third-party contract for oil through Kuwait, and a communications error:
Halliburton's problem with the contract, a Pentagon official said, was that it failed to adequately evaluate the costs and operations of its Kuwaiti subcontractor. On the contract to operate mess halls, the official said that Halliburton told the Pentagon its subcontractor price would be $220 million. But auditors examining Halliburton's operations found that at that time, the company already had awarded a subcontract under which the cost was actually $67 million lower than that."You'd have to be pretty stupid" to do this on purpose, the official said, implying that it was an easy discrepancy to catch. He said he believes this was "a clear, obvious, miscommunication error" that resulted from a "disconnect" between the company's operations in the Mideast and its contracting office at its Houston headquarters.
At least that 'error in communication' is the kind of thing that happens in contractor/subcontractor situations, and why you audit. (Indeed, this has some relevance to my Contracts exam, in which contractor relationships are making common appearance.) Unless Dean has more information than the Washington Post, he's ascribing malice to what is most likely simple error.
Here's a prediction: the results of the audit will show no intent to defraud, but instead either simple errors or (in the case of the oil overbilling) a case of restrictive conditions in government contracts increasing requirements costs.
Here's another: if the prediction above is wrong, I'll publish an entry linking back to this indicating my error. However, Howard Dean will never hold himself accountable for an accusation of fraud. Nor will most Deaniacs. Indeed, finding no fraud will merely be more proof of greater 'corruption.'
Comments
Posted by: martin | December 13, 2003 5:12 AM
Posted by: A. Rickey | December 13, 2003 11:31 AM
Posted by: A. Rickey | December 13, 2003 11:34 AM
Posted by: martin | December 14, 2003 2:15 PM
Posted by: ambimb | December 19, 2003 5:00 AM
Posted by: A. Rickey | December 22, 2003 12:22 AM