Halliburton In Oz: Publicly Funded War Profiteer

What began as a class assignment for Nick Calacouras, a final-year journalism student at the University of Technology Sydney — a small investigative project into subcontractors who handle Australia's foreign aid turned into a research project that swallowed eight months of his life. It also led to the most comprehensive account to be published so far on the Australian operations of the controversial US corporation Halliburton.

Halliburton is the No. 1 corporate beneficiary of the war against Iraq, raking in US$18 billion in contracts to rebuild the country's oil industry and providing logistical services to the US occupation troops, according to the US-based Corpwatch's 2004 alternative annual report on Halliburton, Houston, We Have A Problem.

Halliburton's activities are critically scrutinized on the website http://www.halliburtonwatch.org, where the report can be read.

Calacouras told Green Left Weekly that he started unravelling Halliburton's contracts “and stumbled upon other government contracts in defence, transport, essential services by Halliburton subsidiaries or Halliburton-linked companies. It was so amazing it soon became my life, all I could think about or talk about.”

An article, co-written with Calacouras' lecturer and respected investigative journalist Wendy Bacon, was published on page 14 of the March 1 Sydney Morning Herald under the innocuous title “A profit powerhouse”. On the SMH's website the article is listed in the “Business” section.

Calacouras and Bacon revealed that Halliburton's involvement in Australian military contracts has grown exponentially in recent years: “In 2003, the defence minister, Robert Hill, commissioned a report on overhauling the Defence Materiel Organisation (DMO), the operation responsible for procuring military hardware.

“Hill appointed the 2003 South Australian of the Year, Malcolm Kinnaird, to head the review team. Kinnaird was a consultant for Halliburton's KBR Australia subsidiary and had been a director from 1979 to 1999. He is still a KBR consultant and has a joint company, Kinhill Investments, with the US giant.

“The Kinnaird report recommended increased private sector involvement in the defence force activities and the creation of a defence procurement advisory board to help implement the new agenda. Early last year, Hill appointed Kinnaird to that board.

“In 2003, Halliburton subsidiaries successfully tendered for defence contracts worth $18 million, up from about $2.5 million in 2000, according to defence department and Australian government [notices] gazette contract databases.

“Last year KBR won more than 150 defence contracts.”

Calacouras explained to GLW that while it is possible for anyone to search those databases, they are hard to navigate and are not accurately or promptly maintained. At least one major mistake was uncovered during their investigation.

The details of many of these contracts are kept confidential by the government, but it is known that KBR provides construction management, educational, computer, professional and other services to a wide range of army, navy and air force operations, including Australia's Baghdad military facilities. The defence department refused to grant security clearance for details of such projects — including at least one in Iraq — when approached by Calacouras and Bacon.

As they wrote in the SMH: “Details of many projects are sketchy. It's known that KBR has been involved in a number of projects including some kind of trials at Woomera last year; the long-range Tactical Air Defence Radar System; high-frequency communication systems; and a standing offer for logistics for contract ‘1354622', which is not specified.

“KBR was recently awarded a $120,000 contract to provide logistical support for the first phase of the Air7000 project to develop unmanned reconnaissance aircraft for border security. By 2015 unmanned aircraft will replace the current drones at a cost of $5.5 billion, protecting maritime assets such as the Southern Ocean fisheries and oil and gas installations on the North-West Shelf.”

Given the notoriety of Halliburton over its friends in high places in the US government, notably US Vice President Dick Cheney (Halliburton's CEO prior to running for public office in 20010) some media attention has focused on the appointment of Kinnaird to the defence procurement advisory board.

“Before embarking on the DMO review, Kinnaird says, in accordance with government procedures he informed the defence minister, the DMO and the defence department of his continuing association with KBR. Kinnaird also says his partial ownership with Halliburton of Kinhill Investments is in the process of liquidation”, wrote Calacouras and Bacon. However, details of this were unavailable via the Australian Securities and Investment Commission database.

“Our relationship with KBR Halliburton has been good”, Hill told the SMH. “In relation to Malcolm Kinnaird, we very much appreciate the assistance he has given to defence. He has been an extraordinarily valuable adviser in the reform of the DMO and we see no conflict of interest.”

Challenged by SBS TV's Dateline program last October about Halliburton's role in defence procurement in Australia — in the light of US government contracts being awarded to Halliburton without the competition of tender process — Hill said: “There are allegations against them but they're — that's not all that unusual in terms of international business.”

However, Dateline reported that Halliburton has also received Australian defence contracts without them going to tender — at least 20 in the previous four months.

“There's got to be a specific benefit in that decision that outweighs the benefit of another contest and a competition for the work”, Hill responded.

Halliburton is also involved in major public infrastructure projects such as the Darwin-Adelaide rail link — completed in September 2003 with about $480 million subsidies from the federal, Northern Territory and South Australian governments. Through a number of subsidiaries, Halliburton has a 40% stake in the company that gets to own and run it for 50 years.

Apart from attracting large government subsidies to the corporate subcontrators involved, the rail link has drawn attention for its apparent lack of immediate commercial use. Activists in Adelaide's NoWar coalition suspect it may have a primarily military logistics function.

Other Halliburton Australian public infrastructure projects revealed by Calacouras and Bacon include:

* An alliance with Western Australia's Water Corporation to maintain Perth's water assets.

* A standing offer for KBR to provide risk management and security strategic advice to the federal health department.

* Organisation of the Melbourne Grand Prix.

* Planning the athletes' village at Homebush Bay in the lead-up to the 2000 Sydney Olympics.

* Private-sector infrastructure projects, including a $260 million underground pipeline for BHP from Port Campbell in Victoria to Adelaide; and a $630 million ammonia plant on Burrup Peninsula for an Indian consortium.

According to Calacouras and Bacon, Kinnaird's company, Kinhill Engineering — which KBR bought in 1997 — has become a core part of Halliburton's Asia-Pacific operations. The magazine In-business South Australia notes on its website: “Although KBR is based in Houston, Texas, the headquarters of the global infrastructure division (one of five including government operations, operations & maintenance, onshore oil & gas and offshore oil & gas) is in Adelaide. Adelaide is also the head office for the company's Asia-Pacific operations.

“In Australia, the company was formerly Kinhill Pty Ltd. The change of ownership has opened up opportunities that wouldn't have been possible otherwise; anticipated growth during the next three to five years and will provide excellent opportunities for the development and promotion of Australian talent. KBR is also contributing to the Australian economy — including $64 million per annum in salaries alone.

“KBR based its global infrastructure division in Adelaide partly because it sees Australia as a gateway to Asia, but also because of what Australia has to offer. It believes the business environment in Australia is good, the company's workforce ‘fantastic', and that engineering capabilities here are as good as those anywhere in the world.”

Halliburton's KBR is expanding fast in the region and is doing it with the help of federal government's overseas aid agency, AusAID. In the past two years KBR has secured $58 million worth of projects through AusAID.

“Contracts include $13.5 million for a natural disaster mitigation and water resources project in Vietnam and $22 million for a water supply and sanitation program in India”, wrote Calacouras and Bacon in their SMH article.

“More recently KBR has won several contracts for the planning of a memorial hospital in Bali and, in November, a five-year, $13.5 million contract to maintain roads in Papua New Guinea.”

The $58 million figure is probably an understatement of Halliburton's slice of the Australian government aid pie. Calacouras explained to GLW: “This is the figure for the total contracts allocated to Halliburton or its subsidiaries but it does not include subcontracts let out to Halliburton from other organisations who have contracts from AusAid.” That's covered by “commercial in confidence”.

The biggest contractor for AusAid's $1.9 billion 2003-04 aid budget is SAGRIC International, Tim O'Connor of AidWatch told GLW. According to Calacouras, SAGRIC has previously subcontracted to Halliburton.

Recently KBR opened an engineering office in Jakarta to support its petrochemical, gas, oil, fertiliser and refinery interests in Indonesia. PT Brown & Root Indonesia, a KBR subsidiary, has just won a US$1.8 billion contract with Japanese and Indonesian partners to build a liquefied natural gas plant in West Papua.

“Although no announcements have been made about contracts to distribute Australia's billion-dollar tsunami aid package, the new office puts KBR in the box seat”, wrote Calacouras and Bacon.

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