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To the Editor:
It is not news that U.S. tax dollars pouring into the coffers of contractors in Iraq for the purpose of rebuilding Iraqi infrastructure are accomplishing little.
Excerpts from Government Accounting Office reports GAO-07-525T and GAO-07-677 tell us that “from fiscal years 2003 through 2006, the United States spent about $5.1 billion to rebuild the (Iraq) oil and electricity sectors. The United States also spent an additional $3.8 billion in Iraqi funds on these sectors. However, Iraq will need billions of additional dollars to rebuild these sectors. Despite four years of effort and the substantial resources expended, production in both sectors has consistently fallen below U.S. program goals. A variety of security, corruption, legal and planning challenges have impeded U.S. and Iraqi efforts to restore Iraq’s oil and electricity sectors. Corruption, smuggling and other illicit activities result in revenue losses and low cost recovery.”
Now we read in The Boston Globe that not only are these funds misused, but that Kellogg Brown & Root, the nation’s top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in the Cayman Islands.
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More than 21,000 people working for KBR in Iraq, including about 10,500 Americans, are listed as employees of two shell companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean. Neither company has an office or phone number in the Cayman Islands.
The Defense Department has known since at least 2004 that KBR was avoiding taxes by declaring its American workers as employees of Cayman Islands shell companies, and officials said the move allowed KBR to perform the work more cheaply, saving defense dollars.
But the use of the loophole results in a significantly greater loss of revenue to the government as a whole, particularly to the Social Security and Medicare trust funds. And the creation of shell companies in places such as the Cayman Islands to avoid taxes has long been attacked by members of Congress.
With an estimated $16 billion in contracts, KBR is by far the largest contractor in Iraq, with eight times the work of its nearest competitor.
This war and its consequences continue to destroy the economies of both the United States and Iraq.
Mary Jo Ballator
Hereford
Yep wrote on Mar 23, 2008 8:04 PM: