Generated Title: Halliburton's Iraq War Windfall: Revisiting the Numbers Behind the Controversy
Halliburton. The name alone conjures images of war profiteering and government cronyism, particularly in relation to the Iraq War. But what do the actual numbers tell us about Halliburton's involvement, and how much of the outrage is justified by the data? Let's dive in, shall we?
The narrative, as presented in Jeffrey St. Clair’s book excerpt, is damning. Halliburton, under the leadership of then-CEO Dick Cheney, allegedly bilked the US government out of hundreds of millions, perhaps billions, of dollars through overcharges and shady dealings. The most glaring example cited is a $27.5 million charge for shipping cooking gas and heating fuel valued at a mere $82,000. That’s an overcharge of over 33,000% (or 335 times the value, as the original report stated -- a self-correction for precision). It's enough to make any taxpayer’s blood boil.
Digging Deeper into the Data
But let's not stop at the headlines. The article notes a Defense Contract Audit Agency report that found Halliburton overbilled the government by $108.4 million on just "one task order" related to fuel supplies. It also mentions a Democratic Policy Committee estimate that Halliburton's total overcharges in Iraq exceeded $1 billion. These are significant sums, no doubt. However, it's crucial to consider the context.
Halliburton's overall contracts in Iraq totaled billions. The article mentions a $2.5 billion contract for fuel supplies and other services, and later a new $5 billion contract. So, while a billion dollars in overcharges is egregious, it represents a smaller percentage of the total revenue than the headlines might suggest. What percentage? Roughly 20% of the initial $5 billion in contracts.
The core issue isn’t just the amount of the alleged overbilling, but the method of contracting. These "cost-plus" contracts, where the government pays all costs plus a guaranteed profit, are ripe for abuse. The article highlights how Halliburton billed the Pentagon for $85.98 per sheet of plywood it bought for $14. That’s a markup of over 500%. (And it's the kind of detail that sticks in your craw, isn't it?).
The article also points out that Halliburton outsourced much of its work to subcontractors, some of whom were accused of bribery and overbilling. Halliburton, in turn, simply passed these inflated costs on to the Pentagon, adding its own profit margin. The higher the costs, the bigger the profits. It's a perverse incentive structure that practically invites corruption.
The Political Dimension
The article makes a clear case that Halliburton's success was intertwined with political connections, particularly those of Lyndon B. Johnson (LBJ) and Dick Cheney. LBJ, as a congressman and later senator, allegedly steered lucrative contracts to Brown & Root (which later merged with Halliburton) in exchange for campaign contributions and other favors. Cheney, as CEO of Halliburton and later Vice President, is accused of using his influence to secure no-bid contracts for his former company. Dick Cheney, Iraq and the Making of Halliburton
Halliburton's political ties are undeniable. The company hired former Pentagon officials as lobbyists and made generous campaign contributions to both Republicans and Democrats. This raises serious questions about whether Halliburton's contracts were awarded on merit or based on political favoritism.
Now, I've looked at hundreds of these filings, and the level of access Halliburton enjoyed in the lead-up to the Iraq War is still unusual. The article notes that a Halliburton executive was even invited to attend a secret Pentagon meeting to discuss the reconstruction of Iraq's oil infrastructure. This level of access is not normal, and it suggests that Halliburton had a significant advantage over its competitors.
A Methodological Critique: The Data We Don't Have
But let's pause for a moment and consider the data we don't have. The article relies heavily on government audits and reports, but these documents are often incomplete or redacted. It's difficult to get a complete picture of Halliburton's operations in Iraq without access to all the relevant data. How were these audits conducted? What methodologies did they use? What data was excluded? These are all important questions that need to be answered.
Furthermore, it's worth questioning how the "value" of certain services was determined. Was the $82,000 value of the cooking gas and heating fuel a fair market price, or was it an artificially low estimate? Similarly, how did auditors determine that Halliburton overbilled for laundry services? Were they comparing prices to other bases in Iraq, or to commercial laundry services in the United States? The devil, as always, is in the details.
A More Recent Perspective
It’s worth noting that Wall Street sentiment, according to recent articles, seems to have shifted dramatically, with analysts suggesting the company's struggles represent a cyclical bottom rather than a structural decline. Michael Burry's recent bullish bets on Halliburton also add another layer to the narrative. This renewed enthusiasm comes as Halliburton trades near $27 per share, essentially flat for 2025, while the broader market has surged 16.5%. Michael Burry adds bullish bets on Pfizer, Halliburton, Molina, and Lululemon (PFE:NYSE)
So, What's the Real Story?
Halliburton's involvement in the Iraq War was undoubtedly controversial, and the data suggests that the company engaged in questionable practices, including overbilling and exploiting its political connections. While the exact amount of the alleged overcharges is difficult to determine, it's clear that Halliburton profited handsomely from the war, and that the "cost-plus" contracting system incentivized waste and abuse. But the outrage needs to be tempered by the fact that Halliburton's alleged transgressions are a fraction of the total revenue. What's more, Wall Street analysts are now bullish on the stock, suggesting that the company's fortunes may be turning around. So, while Halliburton's past may be checkered, its future may be brighter.
