Bush Scandals List

360. KBR dodges an audit and ditches the auditor

Charles Smith a civilian headed the Field Support Contracting Division of the US Army. At the end of 2003, he was informed by the Defense Contract Audit Agency (DCAA) that some $1 billion in costs from defense contractor KBR for work in Iraq could not be justified. KBR at the time was a subsidiary of Halliburton, the corporation that Vice President Cheney formerly headed. When Smith raised his concerns, Tina Ballard Deputy Assistant Secretary of the Army began pressuring him to quickly smooth the matter over. Smith didn’t and in August 2004 warned KBR in writing that if it couldn’t justify its expenses, he would not set up review boards to pass on 2 percent bonuses for the company and that he would begin withholding 15% on future payment claims until the matter was resolved. The day after this warning was transmitted, Smith’s military boss Brigadier General Jerome Johnson told him to rescind it and the day after that Smith found he had been moved to a different job. Jeffrey P. Parsons, executive director of the Army Contracting Command stated that “This issue was not decided overnight.” This is very likely true. It was probably discussed over two nights. Subsequently, the Army hired an outside auditing firm RCI Holding to examine the KBR account. Ignoring the DCAA audit and based on only sketchy information from KBR, RCI gave KBR a clean bill of health. This cleared the way for KBR in early 2008 to receive part of a $150 billion 10 year contract for work in Iraq and for Serco, RCI’s parent company, to be KBR’s auditor for that contract. Nope, no conflicts of interest there, nope, none at all, just good old fashioned arm twisting, string pulling, and back scratching. What could be more American and patriotic than that?

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