A Halliburton subsidiary that has been subjected to numerous investigations for billions of dollars of contracts it has received for work in Iraq has systematically misused federal rules to withhold basic information on its practices from American officials, a federal oversight agency said yesterday.

The contracts awarded to the company, KBR, formerly named Kellogg Brown & Root, are for housing, food, fuel and other necessities to American troops and government officials in Iraq, and for restoring that country's crucial oil infrastructure. The contracts total about $20 billion.

The oversight agency, the Office of the Special Inspector General for Iraq Reconstruction, said KBR refused to disclose information as basic as how many people are fed each day in its dining facilities and how many gallons of fuel are delivered to foreign embassies in Iraq, claiming that the data was proprietary, meaning it would unfairly help its business competitors.

Although KBR has been subjected to a growing number of specific investigations and paid substantial fines, this marks the first time the federal government has weighed in and accused it of systematically engaging in a practice aimed at veiling its business practices in Iraq.

The allegations come at a critical time for the company, as Halliburton is attempting to spin off the subsidiary. And in July, the Army announced that it would terminate KBR's largest contract with the government, and the company says that it will compete to regain some of that business when the government calls for new bids.

Proprietary information is protected by the so-called federal acquisition regulations, known as FAR. But the agency said KBR routinely stamped nearly all of the data it collects on its work as proprietary, impeding not only the investigations into the company's activities but also things as simple as managerial oversight of the work.

"The use of proprietary data markings on reports and information submitted by KBR to the government is an abuse of the FAR and the procurement system," says a memo released yesterday by the special inspector general.

As a result, the memo said, "KBR is not protecting its own data, but is in many instances inappropriately restricting the government's use of information that KBR is required to gather for the government."

The specific examples cited by the inspector general are taken from an $18 billion contract called the Logistics Civil Augmentation Program, informally known as Logcap, under which KBR provides food, fuel, housing, recreational facilities and laundry and other services to American troops, government officials and other contractors in Iraq.

A spokeswoman for Halliburton, Cathy Mann, did not dispute the company's extensive use of the proprietary label but said, "KBR has included proprietary markings on the majority of its data and property in support of its government contracts for the U.S. Army for at least the last decade."

That assertion could not immediately be confirmed with the Army. But in its memo, the inspector general's office said that during the course of its investigation, both Pentagon auditors and Army contracting officers shared serious concerns about the practice.

And a statement released late yesterday by the Army Sustainment Command in Rock Island, Ill., said that it had "implemented corrective actions relative to the concerns raised" in the memo.

Ms. Mann added that KBR believed that the use of proprietary markings in work for the United States government "is not only encouraged, but required" by federal laws restricting the diffusion of American trade secrets abroad.

With the release of the new memo, that argument is unlikely to gain much traction with members of Congress, federal investigators and the numerous critics who have been calling for access to information on KBR's work in Iraq almost since the invasion ended.

"The arrogance is astounding on the part of KBR," said William L. Nash, a retired Army major general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones. "It's time for Congress to step in, because this has just gone too far."

Reaction to the memo on Capitol Hill also revealed that the issue of KBR's performance and investigations of its work are increasingly causing concern on both sides of the political aisle.

Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform and one of the earliest critics of KBR's use of the proprietary label, said the new memo showed how the company had tried to conceal "corporate profiteering during wartime."

Senator Susan Collins, the Maine Republican who is chairwoman of the Homeland Security and Governmental Affairs Committee, said, "I am concerned that the special inspector general has not always had full cooperation and access to the corporate documents that his office needs to carry out its critical mission."

Access to that information, Senator Collins said, "helps to ensure that government contractors fulfill their contractual obligations and that government gets the best value for taxpayer dollars. The improper use of proprietary claims impedes critical transparency and makes it more difficult for the inspector general's office to complete essential audits."

The Special Inspector General for Iraq Reconstruction is Stuart W. Bowen Jr., a Republican whose investigative zeal has surprised some political analysts who believed that he would be reluctant to expose flaws in the administration's reconstruction program and companies like Halliburton. Dick Cheney was that company's chief executive until he left to run for vice president.

Halliburton has blamed KBR for holding down the company's stock performance, and is planning to sell a 20 percent stake in KBR to the public by the end of the year, and then spin off the rest of the shares in the company to Halliburton shareholders in early 2007, thus severing the corporate ties.

Halliburton, though, would retain some responsibility for dealing with continuing federal investigations of KBR's work in Iraq. Documents filed with the Securities and Exchange Commission as part of the public offering have revealed a wide range of investigations into KBR's work in Iraq, raising the possibilities that investors and the parent company could foot the bill for settlements against KBR.

Those documents, which must reveal potential risks to investors, indicate that continuing Justice Department investigations into KBR's work in Iraq have produced grand jury subpoenas for current and former employees.

The company could have other liabilities. Outside Iraq, the papers say, there is a Justice Department investigation into possible overcharges in its work in the Balkans from 1996 to 2000. And the securities commission and the Justice Department are investigating payments in Nigeria that may have violated the Foreign Corrupt Practices Act, which bars the bribing of foreign officials.

There is also an antitrust investigation, and the company says investigations into the Nigerian project found information that "former employees may have engaged in coordinated bidding with one or more competitors on certain foreign construction projects and that such coordination possibly began as early as the mid-1980s."

The memo by the inspector general said that KBR would sometimes provide data to one part of the United States government, like Pentagon auditors, but with the proprietary label that would prevent its release to the public or even to other parts of the government.

In other cases that clearly irritated the inspector general's auditors, KBR would hobble their work by releasing data in the form of gigantic but indigestible tables rather than within the kind of software - like Excel spreadsheets - that would let the auditors do their calculations.

Those findings have raised suspicions that if KBR is going to such lengths to keep the data out of the hands of auditors, then the company must have something to hide, said Frederick D. Barton, a director of the Postconflict Reconstruction Project at the Center for Strategic and International Studies.

"There's been smoke for some time," Mr. Barton said. "This seems to indicate that there was fire as well."

Halliburton stock was weak early in the Bush administration, in part because oil prices fell as the world economy weakened in 2001. But the stock bottomed out at $4.30 in early 2002 and rose sharply thereafter, eventually peaking at $41.98 this April as the oil services industry benefited from increased oil exploration and as the Iraq war got under way.

It dropped as low as $26.33 earlier this month, as oil prices fell. It closed yesterday at $32.15.

Washington - Things began looking sketchier than ever to John Owen as he boarded a nondescript white jet on his way back to Iraq in March 2005 following some downtime in Kuwait City.

Employed by First Kuwaiti Trading & Contracting, the lead builder for the new 592-million-dollar U.S. embassy in Baghdad, Owen remembers being surrounded at the airport by about 50 company labourers freshly hired from the Philippines and India. Everyone was holding boarding passes to Dubai - not to Baghdad.

"I thought there was some sort of mix-up and I was getting on the wrong plane," said the 48-year-old Floridian, who was working as a general construction foreman on the embassy project.

He buttonholed a First Kuwaiti manager standing nearby and asked what was going on. The manager waved his hand, looked around the terminal and whispered to keep quiet.

"'If anyone hears we are going to Baghdad, they won't let us on the plane,'" Owen recalled the manager saying.

The secrecy struck Owen as a little odd, but he grabbed his luggage and moved on. Everyone filed out to the private jet and flew directly to Baghdad. "I figured that they had visas for Kuwait and not Iraq," Owen said in an interview.

The deception had all the appearances of smuggling workers into Iraq, but Owen didn't know at the time that the Philippines, India and other countries had banned or restricted their citizens from working in Iraq because of safety concerns and growing opposition to the war. After 2004, many passports were stamped "Not valid for Iraq".

Nor did Owen know that both the U.S. State Department and the Pentagon were quietly investigating contractors such as First Kuwaiti for labour trafficking and worker abuse. In fact, the international news media had accused First Kuwaiti repeatedly of coercing workers to take jobs in battle-torn Iraq once they had been lured to Kuwait with safer offers.

The Kuwait-headquartered, Lebanese-run company has billed several billion dollars on U.S. contracts since the war began in March 2003. Much of its work is performed by cheap labour largely hired from South Asia and the company has an estimated 7,500 foreign labourers in the theatre of war.

Now, with a highly secretive contract awarded by the U.S. State Department, First Kuwaiti is in the midst of building the most expensive and heavily fortified U.S. embassy in the world. Scheduled to open in 2007, the sprawling complex near the Tigris River will equal Vatican City in size.

But Owen says that working on the project proved to be one of the worst jobs he has ever had in his 27 years of construction work.

Not one of the five different U.S. embassy sites Owen had worked on around the world previously compared to the mess he describes. Armenia, Bulgaria, Angola, Cameroon and Cambodia all had their share of dictators, violence and economic disruption, but the companies building the embassies were always fair and professional, he says. First Kuwaiti is the exception. Brutal and inhumane, he says "I've never seen a project more f*cked up. Every U.S. labour law was broken."

Seven months after signing on with First Kuwaiti in November 2005, he quit.

In his resignation letter last June, Owen told First Kuwaiti and U.S. State Department officials that his managers physically assaulted and beat the construction workers, demonstrated little regard for worker safety, and routinely breached security.

And it was all happening smack in the middle of the U.S.-controlled Green Zone, he said - right under the nose of the State Department that had quietly awarded the controversial embassy contract in July 2005.

Owen also complained of poor sanitation, squalid living conditions and medical malpractice in the labour camps where several thousand low-paid migrant workers lived. Those workers, recruited on the global labour market from the Philippines, India, Pakistan and other poor south Asian countries, earned as little as 10 to 30 dollars a day. As with many U.S.-funded contractors, First Kuwaiti prefers importing labour because it views Iraqi workers as a security headache not worth the trouble.

Despite numerous emails and phone calls about such allegations, neither First Kuwaiti general manager Wadih Al Absi nor his lawyer Angela Styles, the former top White House contract policy advisor, have responded. After a year of requests, State Department officials involved with the project also have ignored or rejected opportunities for comment.

However, on Apr. 4, 2006, the Pentagon issued a new contracting directive following a secret investigation that officially confirms what many South Asian labourers have been complaining about ever since the March 2003 invasion of Iraq.

Some contractors, many working as subcontractors to Halliburton /KBR in Iraq, were found to be using deceptive, bait-and-switch hiring practices and charging recruiting fees that indebted low-paid migrant workers for many months or even years to their employers. Contractors were also accused of providing substandard, crowded sleeping quarters, serving poor food, and circumventing Iraqi immigration procedures.

While the Pentagon declines to specifically name those contractors found to be doing business in this way, it also acknowledged in an Apr. 19 memorandum that it was a widespread practice among contractors in Iraq and Afghanistan to take away workers' passports. Holding onto employee passports - a direct violation of U.S. labour trafficking laws - helped stop workers from leaving war-torn Iraq or taking better jobs with other contractors.

Contractors engaging in the practice, states the memo, must immediately "cease and desist".

"All passports will be returned to employees by 1 May 06. This requirement will be flowed down to each of your subcontractors performing work in this theater," it said.

The Pentagon has yet to announce any penalty for those found to be in violation of U.S. labour trafficking laws or contract requirements.

Halliburton scored almost $1.2 billion in revenue from contracts related to Iraq in the third quarter of 2006, leading one analyst to comment: "Iraq was better than expected... Overall, there is nothing really to question or be skeptical about. I think the results are very good."

Very good indeed. An estimated 655,000 dead Iraqis, over 3,000 dead coalition troops, billions stolen from Iraq's coffers, a country battered by civil war - but Halliburton turned a profit, so the results are very good.

Very good certainly for Vice President Dick Cheney, who resigned from Halliburton in 2000 with a $33.7 million retirement package (not bad for roughly four years of work). In a stunning conflict of interest, Cheney still holds more than 400,000 stock options in the company. Why pursue diplomacy when you can rake in a personal fortune from war?

Yet Cheney isn't the only one who has benefited from the Bush administration's destructive policies. The Bush family has done quite nicely too. Just a few examples:

Bush Sr.

Bush's dad has strong connections to the Carlyle Group, a massive private equity investment firm whose Chairman Emeritus is Frank Carlucci, a former college roommate of Donald Rumsfeld's and former Defense Secretary under Ronald Reagan. Imagine the pull Carlucci has with today's White House...

But Carlucci has another secret weapon - Bush Sr. Amid conflict-of-interest allegations, the elder Bush resigned from the Carlyle Group in 2003, but reportedly remains on retainer, opening doors to lucrative profits in the Middle East and elsewhere. Bush Sr.'s specialty is Saudi Arabia; in fact, he was at a Carlyle investment conference with Osama bin Laden's estranged brother, Shafiq bin Laden, when the 9/11 attacks took place.

Carlyle specializes in military and security investments, and with Bush Jr. in office, the company's profits have soared; it received $677 million in contracts in 2002, then a whopping $2.1 billion in 2003. Carlyle's investors currently enjoy an equity capital pool of over 44 billion dollars.

In January 2006, Bush Sr. wrote China's Foreign Affairs Ministry that it would be "beneficial to the comprehensive development of Sino-US relations" if Beijing approved the sale of a Chinese bank to a consortium which included Carlyle. Bluntly put, Bush Sr. asked China to grant Carlyle a lucrative business deal or risk his son's wrath.

William H. T. "Bucky" Bush

George's "Uncle Bucky" joined the board of military contractor Engineered Support Systems Inc. (ESSI) in 2000 and perhaps not surprisingly, the value of the company's governmental contracts has strongly increased with Bush Jr. in office. Uncle Bucky earns monthly consulting fees as well as options to buy stock at favorable prices, and considering that ESSI's stock tripled two weeks after 9/11 then settled into comfy territory, it's safe to say that George's uncle is doing quite well. In fact, Bucky cashed out on 8,438 stock options in January 2005, earning himself a cool $450,000 in the process. As of 2005, he still owned options on 45,000 more shares of the company's stock and accrues more each year.

War is profitable for ESSI, or as an executive explained: "The increasing likelihood for a prolonged military involvement in Southwest Asia by U.S. forces well into 2006 has created a fertile environment for the type of support ... products and services that we offer."

But lest anyone conclude that Bucky has opened doors for the company, ESSI's vice-president of investor relations explained in 2005, "The fact his nephew is in the White House has absolutely nothing to do with Mr Bush being on our board or with our stock having gone up 1000 per cent in the past five years." Absolutely nothing at all.

Neil Mallon Bush

Neil rose to infamy in the 1980s as director of the Colorado-based Silverado Savings and Loan; after Silverado collapsed due to mismanagement and corruption, US taxpayers were stuck with the billion-dollar bailout, yet Neil managed to escape the crisis with a small fine and no jail time. It helps to have a dad as Vice President.

In 1993, Neil joined Bush Sr. in Kuwait to drum up business in the Middle East, and today, he makes a profit by helping companies cash in on the occupation of Iraq. For example, in late 2003, The Financial Times reported that Neil earned $60,000 per year through the Crest Investment Company, a private firm generating contracts in Iraq. Crest was headed by Jamal Daniel, a longtime Bush family contact, who was also on the advisory board of New Bridge Strategies, a company specifically set up "with the aim of assisting clients to evaluate and take advantage of business opportunities in the Middle East following the conclusion of the U.S.-led war in Iraq."

In 2003, Neil's messy divorce proceedings revealed that he was to get $2 million in stock options from a Chinese semiconductor firm despite having limited education or business experience in that area; critics complained that the Chinese company was buying access to his brother, the president. Neil later testified that on repeated business trips to Asia, he'd had sex with women who showed up at his hotel rooms, presumably prostitutes hired by companies trying to curry favor with the White House.

Neil has also profited from George's disastrous No Child Left Behind educational policy. His company, Ignite! (partially owned by Bush Sr. and funded by Crest Investment) has been awarded with lucrative federal contracts to place its educational products in school districts across the country.

Marvin Pierce Bush

Marvin joined Bush Sr. and Neil on their Middle Eastern sales trip in 1993 and then made a mint in the investment banking business. He is a co-founder of Winston Partners, a private investment firm whose investments in military and security firms profit from Bush's "war on terror."

Having a sibling as president has helped Marvin in other ways, too. He is on the board of HCC Insurance Holdings, Inc., which had insured parts of the World Trade Center; HCC benefited from the 9/11 insurance bailout legislation pushed through by brother George.

Marvin was also on the board of Securacom, a company which provided electronic security for both Dulles International Airport and the World Trade Center on September 11, 2001. Marvin stepped down in 2000, but how intriguing that Bush's brother was so well connected to the security of two critical locations on that fateful day.

In short, the "results are very good" for the Bush dynasty, perhaps even "better than expected," thanks to George's stint in the Oval Office. Dad's still setting up international deals. Uncle Bucky's cashing in his stock options. Brothers Neil and Marvin are laughing all the way to the bank.

It's just the American people who have paid the ultimate price.

Action Ideas:

1. For more on war profiteering, head over to Halliburton Watch (www.halliburtonwatch.org) and Corp Watch (www.corpwatch.org). Catch a screening of the new Robert Greenwald film titled: Iraq for Sale: The War Profiteers.

2. If you're searching for information on contemporary foreign policy issues, coupled with an opportunity to take positive action, check out Women's Action for New Directions (www.wand.org). The site offers in-depth coverage of Hot Topics, such as war and nuclear weapons, as well as fact sheets and other resources. Visit WAND's Take Action! center for petitions to sign and opportunities to contact Congress, the White House and the media about the peace and security issues you care about most.