Halliburton 'Over Billing' Controversy

Case Studies | Case Study in Business, Management, Operations, Strategy, Marketing, Finance, Corporate Governance, Economics, Project Management, Insurence, Free Management Case Study, Case Study

ICMR HOME | Case Studies Collection

Case Details:

Case Code : BECG042
Case Length : 15 Pages
Period : 1997-2004
Pub. Date : 2004
Teaching Note :Not Available
Organization : Halliburton Company
Industry : Oil and Energy
Countries : US, Iraq

To download Halliburton 'Over Billing' Controversy case study (Case Code: BECG042) click on the button below, and select the case from the list of available cases:

Buy With PayPal

Price:

For delivery in electronic format: Rs. 500 ;
For delivery through Shipping & Handling Charges extra: Rs. 500 +Shipping & Handling Charges extra

» Business Ethics Case Studies
» Case Studies Collection
» ICMR Home
» Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Case Studies by Industry
» Case Studies by Company

Custom Search

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Chat with us

Please leave your feedback

<< Previous

"The Pentagon audit confirms what we've known for months: Halliburton has been gouging taxpayers, and the White House has been letting them get away with it."¹

- Henry Waxman, Democrat Elected from State of California, US.

"No company is busier in Iraq than Halliburton. And no company in Iraq is as busy battling to clear its name."²

- James Cox, Journalist, USA Today.

The Allegations

On March 20, 2003, the US led coalition forces attacked Iraq in pursuance of 'Operation Iraqi Freedom.'³ The war ended in two months.

For all the various requirements of the pre-war and post-war period, the US government declared that it had awarded no-bid contracts⁴ to Halliburton Company (Halliburton)⁵ Analysts and media reports questioned the US government's decision to award contracts to Halliburton.

They said that the company had a tainted past and was infamous for its unethical business practices. The major opposition came from the Democrats (the leading opposition party of the Republican government in the US). They alleged that the contracts had been awarded to Halliburton mainly because of the ties that the Vice President Dick Cheney (Cheney)⁶ had with the company.

Business Ethics Case Studies | Case Study in Management, Operations, Strategies, Business Ethics, Case Studies

However, Kellogg Brown & Root (KBR), the engineering and construction subsidiary of Halliburton that was supposed to carry out the military contracts denied these allegations. KBR said that it had bagged the contract because of its excellent track record and expertise. The company mentioned, "KBR was selected for this award based on the fact that KBR is the only contractor that could commence implementing the complex contingency plan on extremely short notice."⁷

Dave Lesar (Lesar), the CEO of Halliburton said, "We are proud of our record and of our employees who serve the military. We receive contracts to make omelets and build infrastructure because of our unique skill sets."⁸ In August 2003, the Department of Defense (DoD) of the US complained that the food that was cooked and served to the US troops in Iraq was done so in an extremely unhygienic conditions. A report⁹ mentioned that the food was cooked with 'rotting meats and vegetables' and with 'blood all over the floor,' and was served in 'dirty pans,' 'dirty grills,' and 'dirty salad bars.' Moreover, the DoD also charged KBR with over billing of oil that it imported to Iraq. The DoD said that KBR had overcharged to the tune of $61 mn. The auditors with DoD alleged that the company charged $1.09 per gallon more for gasoline.

Halliburton 'Over Billing' Controversy - Next Page>>

Custom Search

Business Ethics and Corporate Governance Textbook
Textbooks Collection

Business Ethics and Corporate Governance Workbook
Workbooks Collection

Case Studies in Business Ethics - Vol. I

Case Study Volumes Collection

1] Douglas Jehl, Halliburton overcharges government in Iraq, New York Times, December 12, 2003.

2] James Cox, Halliburton CEO says firm saves money for Pentagon, USA Today, March 19, 2004.

3] The US government believed that Osama Bin Laden led terrorist organization, Al-Qaida, which was responsible for the September 11, 2001 terrorist attacks on the World Trade Centre in the US may obtain weapons of mass destruction (WMD) from Iraq. As Iraq was ruled by Saddam Hussain (Hussain), who was openly hostile to the US, the US officials considered it a severe threat to the country's security, and felt the need for pre-emptive war against Iraq to prevent further damage from occurring in the US. In March 2003, the US declared war against Iraq (the second war, the first being in January 1991), called 'Operation Iraqi Freedom,' aimed at freeing Iraq from the ruling Hussain government and gaining control over the WMD. The war ended in May 2003, following the capture of Tikrit, the birthplace of Hussain. Hussain was captured by the US army in December 2003.

4] A no-bid contract is a military or government contract that is made directly with a corporation, bypassing the standard process of bidding. These contracts can be finalized much more quickly than a typical contract. However, they are often viewed with suspicion when the company to which the contract has been issued has any ties with the administration in power at the time.

5] The Houston-based Halliburton Company provides products and services to the petroleum and energy industries to aid in the exploration, development and production of natural resources. Halliburton KBR, the company's engineering and construction division, designs, builds and provides additional services for the energy industry, governments and civil infrastructure.

6] Born on January 30, 1941 in Lincoln, Nebraska (US), Dick Cheney is the Vice-president of USA. He had been the CEO of Halliburton during 1995 to 2000.

7] Press Release, KBR implements plan for extinguishing oil well fires in Iraq, www.halliburton.com, March 24, 2003.

8] Piling on Halliburton, The Washington Post, March 03, 2004.

9] Contractor served troops dirty food in dirty kitchens, www.taipeitimes.com, December 14, 2003.