FOR IMMEDIATE RELEASE: Wednesday, January 21, 2004

FOR MORE INFORMATION: Chris Kromm: 919-419-8311 x26 and Pratap Chatterjee: 510-271-8080

NEW INVESTIGATION REVEALS “RECONSTRUCTION RACKET” IN IRAQ

Southern Exposure team travels to Iraq; uncovers cost-overruns, unfinished and shoddy

work, and growing Iraqi anger at fraud and waste in U.S.-led “reconstruction”

DURHAM, N.C. – A team of investigative reporters in Iraq have found a pattern of waste, fraud and abuse among U.S. companies receiving multi-billion-dollar “reconstruction” contracts in the country, including massive over-charges for projects; shoddy work or a failure to complete tasks; and ignoring local experts who contend they could do the job better and cheaper.

The in-depth report by Pratap Chatterjee and Herbert Docena, published in the latest issue of Southern Exposure magazine (www.southernstudies.org), is one of the first on-the-ground accounts of how U.S. taxpayer money given to Bechtel, Halliburton and other companies is being spent.

The investigative team spent three weeks in Iraq visiting project sites, analyzing contracts, and interviewing dozens of administrators, contract workers, and U.S. officials. Among the findings:

n Despite over eight months of work and billions of dollars spent, key pieces of Iraq’s infrastructure – power plants, telephone exchanges, and sewage and sanitation systems – have either not been repaired, or have been fixed so poorly that they don’t function.

n San Francisco-based Bechtel has been given tens of millions to repair Iraq’s schools. Yet many haven’t been touched, and several schools that Bechtel claims to have repaired are in shambles. One “repaired” school was overflowing with unflushed sewage; a teacher at the school also reported that “the American contractors took away our Japanese fans and replaced them with Syrian fans that don’t work” – billing the U.S. government for the work.

n Inflated overhead costs and a byzantine maze of sub-contracts have left little money for the everyday workers carrying out projects. In one contract for police operations, Iraqi guards received only 10% of the money allotted for their salaries; Indian cooks for Halliburton subsidiary Kellogg, Brown & Root reported making just three dollars a day.

The report also reveals further details of Halliburton’s contracts: for example, that of Halliburton’s $2.2 billion in contracts, only about 10% has gone to meeting community needs – the rest being spent on servicing U.S. troops and rebuilding oil pipelines. Halliburton has also spent over $40 million in the unsuccessful search for weapons of mass destruction.

“A handful of well-connected corporations are making a killing off the devastation in Iraq” observes Chris Kromm, publisher of Southern Exposure. “The politics and process behind these deals have always been questionable. Now we have first-hand evidence that they’re not even doing their jobs.”

Also featured in the winter 2003/2004 issue of Southern Exposure, on sale this month, is an expose of the increasingly powerful Washington arms lobby by investigative reporter Jason Vest.

Southern Exposure is published by the Institute for Southern Studies, a non-profit research center based in Durham, N.C. SE is a past winner of the National Magazine Award and George Polk Award, and a 2003 nominee for the Independent Press Award in Local/Regional Reporting.

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