Farah Stockman has an excellent story about another side of the Halliburton schemes to profit off the Iraq War:
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. 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.
But wait a second. These workers won’t receive Social Security benefits for these years. Simply privatization through this Cayman scheme you say. Won’t the workers know this, bid up their wages, and save the difference in their private retirement accounts? Well – maybe if they know about it:
In interviews with more than a dozen KBR workers registered through the Cayman Islands companies, most said they did not realize that they had been employed by a foreign firm until they arrived in Iraq and were told by their foremen, or until they returned home and applied for unemployment benefits. “They never explained it to us,” said Arthur Faust
I smell litigation and it seems lawyers are already involved. When they asked the Vice President about this little scheme – he referred all questions to his personal attorney. Go figure!