The Master Builder

(4 of 5)

While the Pentagon and Halliburton say there is no widespread kickback problem, the company has begun to change the way it awards contracts. At the outset, during the first few months of the occupation, KBR "didn't put in place any measures for detecting kickbacks," says a lawyer in Baghdad who represents contractors working in Iraq. Now, he says, KBR looks more closely at its suppliers and Department of Defense criminal investigators are actively investigating any allegations of misconduct.

That may not be enough to quiet the widespread sentiment in Baghdad, among ordinary Iraqis, that the reconstruction process has become another murky theater of corruption. Muhanad Nassiri, an architect, said his firm has bid on a dozen contracts, including one for a security system for the Iraqi National Museum, but has never been successful. "All the tenders are terminated early, and all the tenders are given to the same companies," another Iraqi businessman says. "If you look at the awards list, you will find many of the same names." KBR has acknowledged that it uses the same vendors repeatedly but argues that it often values reliability over other factors. "We don't always give the award to the lowest bidder," says a KBR representative in Baghdad.

Many Iraqi businesspeople argue that the entire system of awarding subcontracts is flawed. In a country where cell-phone networks are rudimentary and Internet access is a luxury, all potential Iraqi subcontractors must register their interest on the Web. Requests for proposals are commonly issued less than two weeks before they are due, and site visits are frequently not allowed, making it difficult to estimate costs accurately.

Since last summer, KBR has held weekly meetings in Baghdad at which it unveils its latest contracting offers. The sessions have grown more and more heated. Anthony Zinni, former head of the U.S. Central Command (Centcom) and a retired Marine Corps general, is critical of the Bush Administration's Iraq policy and traces Iraqis' growing bitterness to one simple issue: jobs. "Why aren't Iraqis driving trucks for their own reconstruction and redevelopment?" he asks.

Halliburton says it does employ Iraqis--6,000 of them — as subcontractors in Iraq. But Iraqis say they are frozen out of the most lucrative subcontracting work and are particularly angered that the projects are going to companies in neighboring Arab countries, such as Saudi Arabia, Jordan, Kuwait and Egypt. "Iraqi companies are getting small contracts, like a few schools or a building renovation," says Halim, the construction executive. "But other Arabic countries are getting the bigger ones." KBR in Baghdad has no record of Halim's firm and says it is awarding about 90% of its subcontracting work to Iraqi-owned companies.

For some Iraqis, the prevailing sense that the reconstruction process isn't bringing enough benefits is as big a concern as security. Stories of corruption and opaque practices are overshadowing the real accomplishments scored by Halliburton and other companies in some aspects of the reconstruction. "To be fair, they did a good job," says Thamir Abbas Ghadhban, an adviser to Iraqi Oil Minister Ibrahim Bahr al-Ulum. "They got us electrical generators and parts for the Garmat Ali water-purification plant in Basra."