Effect Measure

Congratulations, North Carolina. You are getting brand new $52 million facility for your State Public Health Laboratory and Office of the Chief Medical Examiner, each in separate wings of a 220,000 square foot facility in Raleigh. Sounds great. But if you work there you might want to shower at home and bring bottled water. And better check your benefits. Because the company that got the contract is non other than Kellogg Brown & Root (KBR), until recently a Halliburton subsidiary and notorious Iraq contractor under investigation for shoddy electrical work resulting in the electrocution deaths of 18 US soldiers while showering (the company’s defense? it wasn’t required to follow US electrical codes in Iraq); and exposing workers in a water injection plant to carcinogenic agents. Oh, and the benefits?

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 this tropical tax haven.

More than 21,000 people working for KBR in Iraq – including about 10,500 Americans – are listed as employees of two 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. (Farah Stockman, Boston Globe)

It’s not just unemployment benefits:

Danny Langford, a Texas pipe-fitter who was sent to work in a water treatment plant in southern Iraq in July 2003, said he, too, initially believed that he was an employee of KBR.

But when he allegedly got ill from chemicals at the plant and was terminated that fall, he said, his application for unemployment compensation was rejected because he worked for a foreign company. (Boston Globe)

This is the company owned by the company formerly headed by then VP Dick Cheney that got a secret 2002 contract to reconstruct Iraq’s oil production after a US invasion that hadn’t yet happened. None of KBR’s competitors uses off-shore shell companies to get a bidding advantage by avoiding taxes, but since the contract was no-bid and secret that may not be relevant. But when the Boston Globe went looking for the address of the KBR subsidiary in the Caymans allegedly employing all those US citizens working in Iraq, what they found was some business offices housing Trident Trust, a registered agent that collects $1000 a year to forward mail as act as KBR’s representative. The Globe estimates the arrangement has cost US taxpayers $500 million in Social Security and Medicare revenues.

So as a foreign company, KBR didn’t have to pay the taxes. Sleezy but apparently within the law, which protects foreign companies. But then there’s this:

But there is one circumstance in which KBR does claim the workers as its own: when it comes to receiving the legal immunity extended to employers working in Iraq.

In one previously unreported case, a group of Service Employees International workers accused KBR of knowingly exposing them to cancer-causing chemicals at an Iraqi water treatment plant. Under the Defense Base Act of 1941, a federal workers compensation law, employers working with the military have immunity in most cases from such employee lawsuits.

So congratulations, North Carolina taxpayers. You got yourself one helluva contractor there. Yes, indeed. One hell of a contractor. You might want to check the fine print, though.

Comments

  1. #1 Marcie Hascall Clark
    February 17, 2010

    Very well said, as usual.

  2. #2 Abel Pharmboy
    February 17, 2010

    Revere, thanks for letting me know what’s going on in my own backyard. The local press has been completely silent on this. I’ve tweeted it out today hoping some local reporters dig into it a bit.

  3. #3 Uncle Glenny
    February 17, 2010

    At lease they’re not in a flood plain. Isn’t there some new facility for handling biologically hazardous materials down that way that could be subject to storm surge?

  4. #4 Paula
    February 17, 2010

    Ohmygod. When one hears these details of one of these obscenities (I was going to say “operations” or “gimmicks” but they don’t cover the ghastliness), how gangster-like, morally vile, horrific they are. I’ve been told that the public/corporate intertwinings in the windturbines issue here (a mostly rural Oregon county) have the makings of a NYT story, but they seem all too standard. And with corporate dollars now allowable without limits, as determined by USSC (federally, but doubtless soon at state and county levels), and “development” via corporate trickle-down the main agenda, we are all guinea pigs. South Carolina folks planning an escape, where ya gonna run to, huh? We need a 3rd party again; but I know how the Democrats took the steam away from the Peace and Freedom party in 1968, and we’ve seen the cooptation of the Greens; running 3rd-party people even in local contests isn’t easy, but the other choices . . .

  5. #5 Uncle Glenny
    February 17, 2010

    I just listened to Greenwald discussing Citizens United with Lawrence Lessig. It sounds (I hate audio/video presentations because the slightest interruption/distraction means I miss something) like there’s some ambiguity as to foreign corporations, at least to the extent that further legislation or court rulings may prevent them from taking part in this free-for-all.

    So, hopefully we might be able to tell KBR to go stuff themselves. No taxes, no political influence. I mean, we prevent that (at least votes) of human persons, and they frequently have to pay taxes.

  6. #6 MoM
    February 18, 2010

    RE: the USSC allowing corporate contributions, my concept is that:
    1. Political speech is actual speech, but money is not. Anyone can say anything (political) they want, but they have to say it themselves, they can’t hire it done.
    2. Only those who can vote can contribute money, and they can only contribute to those for whom they can vote. That takes the corporations, the unions and the other special interest groups out of the equation, since they can’t vote. And it takes Revere out of contributing to the campaign of my Representative and Senators, since he doesn’t live in my state. He gets no say in who I elect, and I get no say in who he does. Fair is fair.
    Finally, limit the amount anyone can contribute to any single campaign to a low amount ($1000 for National elections, $500 for Statewide elections, $100 for local elections) or some such.

    Just my 2¢ worth.

  7. #7 M. Randolph Kruger
    February 19, 2010

    First Revere-Cheney shouldnt even be in this post. He hasnt been with KBR or Halliburton for over 10 years. And bunkie if you havent noticed this is a DEMOCRAT President and a DEMOCRAT Congress, putting a facility in for a DEMOCRAT Governor. Well at least the wind blows off shore most of the time and thats good cause the suggested stench of this is being aimed at the Republicans.

    And, my friends these people Revere is so worried about also have the right NOT to go to work for them. It also points out that these people are too stupid to read their own income tax forms when they are sent. A 1099 is different from a W-2 form and the 1099 is for CONTRACT LABOR ONLY !!!! So, lets see we have the Dems out to get people now physically-Now lets hear Katie or Brian spouting about that. Not going to happen.

    ” In the world of income and taxation, corporations, small businesses, and other employers use a variety of forms to record the income earned by an employee or an independent contractor. Typically, employees of a business receive a W-2 form that lists the income they received during the year. This form also contains deductions taken from that income in the form of federal and state taxes, deferred compensation and social security contributions, to name a few. 1099 forms are used for a number of reasons, though, typically, they are given to independent contractors–also known as “freelancers”–as a record of the income they received from a particular business.”

    And for the record, the corporate dollars issue is NOT what the law says…Think not ? Then by all means try donating money to anything but a PAC as a corporation and that includes foreigners and then see how long it takes before they indict your company and the people that directed the payments. Obama’s spin on this is pure shit and he knows it but it sure sounds good if you are trying to destroy your country.

    But lets cut it a bit more….. the defense contractors asked for and got immunity from prosecution of civil or criminal liabilities in the performance of government work overseas. In other words there wasnt a state law to be followed and federal law couldnt be extended to them outside of the country legally because the only way to monitor them was by performance, not the effects on the employees. The employees were protected under the act as well in that they could sue the FEDERAL GOVERNMENT. Duh…. So their rights werent affected, they only had to sue the federal government for compensation and the reason for that is that there was no way to extend the law to include that sort of stuff. Why? Well its because it cant be monitored properly….Like Swine Flu vax. They HAVE to assume the responsibility and frankly thats what it is here and they have every right NOT to go to work for them either. Cant do it properly in a war zone… WTF. Is OSHA going to show up?

    Typical… Guilt by suggestion of wrong doing and obfuscation of the facts and damned sure omit the important stuff.

    Shit, lets go spend another trillion or two.

  8. #8 revere
    February 20, 2010

    Randy: Cheney was at Halliburton when KBR had their offshore tax shelter and a new one was started in the Caymans under his watch. Then when he was VP his former company got a no bid secret contract to plan rebuilding of the oil fields well before the war. if it smells like a turd, it probably is a turd. As for the benefits of being a foreign company, as noted in the extensive Globe article, they only want it when it benefits them. They are a business and they took you and me, taxpayers, for a ride and screwed their employees. It’s not that complicated.

  9. #9 M. Randolph Kruger
    February 21, 2010

    They werent employees… they were subcontractors and those contracts spelled out when they signed what they were going to get and that included screwed if you want to consider that.

    I am sure that the fearless one will try to extend our liabilities even more to these people. They also get and got stubs noting what they were… If there are no deductions from it then it means you are a contractor, and likely we need to check their work because if they were too stupid to figure that one out, then it means the sewer treatment plants they build are substandard too.

    Like I said, just spend another trillion or two and by all means blame it on Bush… We just saved another 1 million government workers jobs.