Halliburton Probed

Federal prosecutors have opened a criminal probe of whether Halliburton overcharged the Pentagon.

The probe focuses on whether Halliburton unit Kellogg Brown & Root overcharged for delivering gasoline to Iraq [see "The Ten Worst Corporations of 2003," Multinational Monitor, December 2003].

"The Pentagon's decision to investigate criminal wrongdoing by Halliburton is commendable and an important first step," says Chris Kromm, co-director of the Campaign to Stop the War Profiteers. "However, the scope of the scandals surrounding Halliburton and other military contractors demands a full Congressional inquiry into the politics surrounding contract decisions, and the performance of corporations that have been given billions of taxpayer dollars."

The gasoline delivery contract is only one of the many controversies surrounding Halliburton's contract work in Iraq for the U.S. government [see "�Don't Worry About Price,'" this issue].

"Halliburton is a desperate firm," says William Hartung, senior fellow at the World Policy Institute in New York, "with a history of shaky ethical practices that is being allowed to take U.S. taxpayers for a ride in large part because of its cozy relationship with the Army and its powerful friend in the White House, Vice President Cheney."

Halliburton's Wendy Hall says the launch of the criminal investigation was "to be expected � in the current political environment." But she says it was simply "a method of further studying the issue and not a condemnation" of the company's business practices.

Ford Against Pinocchio

Ford Motor Company is demanding the environmental group Bluewater Network stop a media and Internet campaign that depicts its chair and CEO as Pinocchio.

In February, the company sent a cease-and-desist letter to Bluewater, demanding an end to the group's "unlawful conduct."

The ads, which are supported by nearly three dozen environmental groups, accuse Bill Ford, the company's CEO, of breaking a pledge he made in 2000 to increase the fuel mileage of Ford's popular lineup of sport utility vehicles by 25 percent by 2005.

They feature a drawing of Bill Ford with an extra-long nose, and the words, "Bill Ford, Jr. or Pinocchio? Don't Buy His Environmental Rhetoric. Don't Buy His Cars."

In its letter, sent by the law firm of Kirkland & Ellis in Washington, D.C., the company contends, "Your personal attacks on Mr. Ford are gratuitous and offensive, well beyond the scope of responsible civil public dialogue, and strong evidence that you made the misrepresentations with malice."

"The day Mr. Ford broke his pledge to increase fuel mileage was tragic for the environment, but trying to stifle the free speech rights of our citizens isn't going to solve anything," says Russell Long, director of the Bluewater Network and the author of California's landmark law to reduce vehicle greenhouse gas emissions.

"When he took the reins of Ford Motor Company, Mr. Ford promised to preserve and protect the environment, but his average vehicle isn't any better now than it was then. For the past three years, he's also ignored our requests to meet personally to discuss ways to turn this around."

Tax Bribery -- Legal or Not?

Bribery to obtain tax breaks overseas may in fact violate U.S. anti-bribery law, according to a February ruling by a U.S. federal appellate court.

The Fifth Circuit Court of Appeals in Houston overturned a district court ruling in U.S. v. Kay, and sent the case back for further review.

The lower court had ruled that under the Foreign Corrupt Practices Act, it was legal for an executive from a U.S. company to bribe a foreign official to reduce the company's tax burden on customs duties in that country.

However, the appellate court stated that "such bribes could -- but do not necessarily -- come within the ambit of the statute."

The case involves American Rice, Inc., the largest U.S. miller. The company filed for bankruptcy in 1998.

A federal indictment charged David Kay, the company's vice president for marketing, and Douglas Murphy, company CEO, with violating the law by bribing Haitian officials for the purpose of reducing customs duties and taxes.

Lawyers for the defendants argued that the Foreign Corrupt Practices Act prohibits bribes to assist in "retaining or obtaining" business. Since a bribe to reduce customs and tax payments did not fit this precise requirement, the lawyers argued, the statute did not apply.

The district court agreed, throwing out the indictment.

But the appellate court reinstated the indictments, holding that the government has the burden of proving "that the bribery was intended to produce an effect � that would �assist in obtaining or retaining business.'"

It is not enough under the appellate court position for the government to show that the bribes would fatten the company's bottom line.

The law has always been weak and while its backers claim that its passage in 1977 has changed the conduct of U.S. business overseas, no one really knows the impact. The Department of Justice has criminally prosecuted only 30 or so cases in the entire history of the law.

-- Russell Mokhiber