A load of crap from an idle brain

Everything about the United State’s war in Afghanistan and Iraq is well documented.  What is little known is the details that goes into the well oiled war machine of the US Army.  A company by name Halliburton, which in the general sense is known to people as a company that is into oil discovery and marketing is very much entrenched in the way the US government goes into war.

Years ago Donald Rumsfeld and Dick Cheney laid the foundations of outsourcing the critical logistics of the American military machienary.  Dick Cheney as the head of Halliburton and Donald Rumsfeld as the person who created the policies necessary for the same.

Today Halliburton-KBR (Kellogg, Brown & Root) which was later on split into two different companies, Halliburton and KBR are the main ones who run the logistics of the American military.  In the process they have totally corrupted the procedures and have billed the American public billions of dollars of fake expenses.

Pratap Chatterjee goes into great detail as to how the Halliburon-KBR combine came about, how it managed to entrench itself into all the contracts of the military logistics, its transgressions, fake billing, over billing, wastage of food, resources, blatant human rights abuses, rapes of its female employees, usage of foreign nationals in war zones with no safety equipment, their exploitation etc.  Its a disturbing read of how in this age of free and available information, all these details have been hid from the public in general.

The book is in the markets for a few years and the fact that it hasnt been challenged or sued is a sure indication that the author has got his facts right and that he has evidence to prove all accusations he presents in the book.  Even though Halliburton-KBR might reject the author’s claims, it does recognise the rot that infests the organisation.

Chatterjee (Iraq Inc.) delves into the nebulous world of the Houston-based Halliburton corporation, tracing the company to its roots, when a fortuitous meeting with a young Lyndon Baines Johnson propelled the Brown and Root Company (which later merged with Halliburton) into Washington power politics. The author details the military contracting that largely funded the company through WWII and into the present-day war in Iraq, intertwining the company’s history with the biographies of Dick Cheney, Donald Rumsfeld and other officials in the Bush administration. Chatterjee provides a laundry list of abuses for which the company has been investigated, including inflated billing of the Pentagon, providing unsafe living conditions for U.S. soldiers, labor exploitation and coverups to avoid congressional inquiry. He concludes with a look at the whistleblowers that brought these scandals into the public eye and the repercussions of the eventual congressional investigation. Chatterjee keeps the pace of the narrative at a quick clip and nimbly marshals his extensive evidence to reveal—without sanctimony or stridency—Halliburton’s record of corruption, political manipulation and human rights abuses.

“Halliburton’s Army” begins citing how $5,000/day oil-well fire-fighters were brought in, despite the Kuwaiti’s offering to do the job for free out of gratitude for Gulf War I and concern for their own environment. The situation rapidly deteriorated – potential whistle-blowers demoted or other wise threatened, overheads running 43-55%, overcharges for fuel – $2.64/gallon, vs. a local Iraqi source at .96/gallon (or even an internal Defense Dept. source at $1.32/gallon), splitting contracts to avoid bidding requirements associated with large dollar amounts, billing for hours not worked, ordering multiple items when just one was needed (cost-plus!), serving overpriced and sometimes outdated food to non-existent troops, failure to treat water with chlorine, using very-high-priced suppliers, electrocuting troops via improper electrical work, failing to pay required disability benefits to those injured on the job, etc.

Source: Halliburton’s Army Amazon page

Halliburton’s Army: How a Well-Connected Texas Oil Company Revolutionized the Way America Makes War
Author – Pratap Chatterjee
Pages – 304
Publisher – Nation Books

The book goes into the details of how much it has cost the United States to go to the war in Iraq and Afghanistan.  The book also explores if the war was necessary; could it have been avoided; could the money invested in the war have been better invested in some other productive activity etc.

Also the author tries to explore if the main reason of the US going to war in Iraq was to get cheaper oil? And if it was the reason, then the US failed miserably.  Also its agenda of foisting its belief of democracy on the middle east has come apart.

Neither is the world any safer.  We are much more under attack from the jehadi groups. Looking at the attempts at hijacking planes, and attempted bombings of the countries, its only safe to say that there hasn’t been a worse foreign policy than what was pursued under the Presidency of George Bush.

Readers may be surprised to learn just how difficult it was for Nobel Prize-winning economist Stiglitz and Kennedy School of Government professor Bilmes to dig up the actual and projected costs of the Iraq War for this thorough piece of accounting. Using “emergency” funds to pay for most of the war, the authors show that the White House has kept even Congress and the Comptroller General from getting a clear idea on the war’s true costs. Other expenses are simply overlooked, one of the largest of which is the $600 billion going toward current and future health care for veterans. These numbers reveal stark truths: improvements in battlefield medicine have prevented many deaths, but seven soldiers are injured for every one that dies (in WWII, this ratio was 1.6 to one). Figuring in macroeconomic costs and interest-the war has been funded with much borrowed money-the cost rises to $4.5 trillion; add Afghanistan, and the bill tops $7 trillion. This shocking expose, capped with 18 proposals for reform, is a must-read for anyone who wants to understand how the war was financed, as well as what it means for troops on the ground and the nation’s future.

The book written by none other than Nobel prize winner for Economics, Joseph Stiglitz goes deep into how the US govt repeatedly fudged accounts, gave out wrong assumptions and projections of money to be spent on the war.  The Defense department according to Stiglitz is one of the most opaque organization in the US govt with no proper audit in place or specification of the money being spent.

According to the most conservative calculations by Stiglitz, the US govt has spent more than 3 trillion dollars on the war in Iraq and Afghanistan.  This when then book came out last year or the year before.  Billions more have flown down the drain.  Some more estimates peg the money spent at almost 4-5 trillion dollars.  All these money could have been invested in the US economy itself and the world wouldn’t have had this economic recession.

The book gets a bit bogged down into the numbers, but is a shocking read at the policy mishaps under the Republican regime.

The Three Trillion Dollar War
Authors – Joseph E Stiglitz & Linda Blimes
Pages – 336
Publisher – WW Norton & Company

+++

With signs of green shoots showing in economies worldwide, India  Inc’s appetite for overseas acquisitions got a fresh lease of life with Reliance Industries’ estimated $10-12 billion offer for a controlling interest in bankrupt LyondellBasell Industries.

The deal by India’s largest private sector company controlled by Mukesh Ambani, if closed, will make it one of the largest petrochemical outfits in the world. It will also be the second largest overseas acquisition by an Indian company, after Tata Steel bought Corus for $13 billion in 2007.

RIL has enough money power to make the deal happen. It has $4 billion in cash and $8 billion in treasury stocks, besides a favourable 0.35:1 debt-equity ratio. It also raised $660 million through treasury stocks sale recently.

In the year to October, Indian comanies acquired overseas assets worth $586 million, a sharp fall from the $13.06 billion in the same period a year ago, according to data from Grant Thornton Deal Tracker.

HSBC believes outbound activity will bounce back. About 70 per cent of HSBC’s pipeline is outbound transactions, which has remained the same as the previous year’s.

Tarun Kataria, managing director and head of corporate, investment banking and markets at HSBC, says India is sitting on the cusp of rapidly growing cross-border M&A activity.

“Indian firms are now well capitalised, are trading at circa 20x multiples, offshore markets are trading at a discount to India and financing is more readily available to Indian corporates than to competing offshore acquirers.”

Rest of the news here

40 years after he took over his family’s vegetable oil company and turned it into a $5 billion company selling IT services, computers, consumer care, lighting and medical equipments, Azim Premji is on the lookout for his next billions.  He sees them coming from renewable sources of energy.  Water and Eco-energy are the two areas of focus for Wipro and that is where they believe the next billions will come for the company.

For those who know Premji, it is not uncommon to see the fifth richest Indian on the Forbes List and the 63-year-old chairman of Wipro switching off the lights before leaving office. It is this commitment to avoid waste that has turned Premji’s attention to ecology and sustainability.

In October 2008, even as it warned of slowing growth in its main software outsourcing business in the backdrop of a global financial crisis, Wipro released a recruitment ad for two new businesses, Wipro Water and Wipro EcoEnergy. The company has spent the previous two years preparing for this diversification, which may turn out to be the company’s third big change. The first was when a 21-year-old Premji took charge at Wipro after his father’s sudden death; the next was when the vanaspati and soap maker transformed itself into a multi-billion dollar information technology giant in the 80s and 90s.

Chief Financial Officer Suresh Senapathy says green services and solutions will bring in up to one out of every four dollars of the company’s revenue, three years from now. In the financial year ending March 2009, Wipro had revenue of more than Rs. 25,000 crore. Even if the revenue were to stagnate, a fourth of it — Rs. 6,250 crore — from ecology is no small amount. The plan also aligns well with Premji’s desire to ease down IT’s profit contribution from 93 percent currently to 70 percent in the next few years.

The new idea was first thought up by the 41-year-old head of Wipro Infrastructure Engineering (WIN), Anurag Behar. The two new ecology businesses will be housed under WIN. In January 2007, Behar made the first formal presentation about the ecology business to Wipro’s board of directors. The board reacted positively but also advised caution: Ecology was a nascent field with rapidly evolving technology and Wipro should not get locked in a technology that ran the risk of becoming obsolete soon.

Wipro has turned its 50-acre campus at Electronic City in Bangalore into a test bed. While 25,000 software engineers write code for Fortune 500 corporations, waste food from the cafeteria turns into methane for lighting burners, harvested rainwater is used to cool air-conditioning towers, a paper pulping plant recycles waste paper into writing pads and a micro windmill lights bulbs along the perimeter of the campus. Wipro’s Sarjapur campus a few kilometres away has India’s largest LED installations — all compact fluorescent lamps have been replaced with LED lights, helping save 75 percent in electricity consumption. Since 2003, Wipro has cut water usage in its offices across India by nearly two-thirds.

Read the full article here

+++

I was thinking that it would be a 1:22 or 1:24 share swap.  That was going to be too much of a loss for me.  1:16 is not bad considering that my average price for RPL is quite ok.  So, over a period of few months the merger will be through and i will be holding the shares of Reliance Industries. A much better opportunity moving towards a more diversified company from a company with interests in just refining.

Was it unexpected? Not really.  For anyone who has knowledge of the past record of Reliance Industries, they have always done this.  Merging their subsidiaries with the parent company.  The only thing i was worried about was the merger ratio.  That’s why i kept buying the RPL stock when it was below 100 rupees only.

Reliance Industries Ltd (RIL), India’s largest company by market capitalisation, has offered one share for every 16 held in Reliance Petroleum (RPL) to merge its refinery subsidiary.  RIL will issue 69.2 million new shares to shareholders of RPL in order to buy back the company and will have 3.7 million shareholders after the merger. RIL’s equity capital will rise to Rs 1,643 crore and the promoter’s holdings will fall by 2 per cent to 47 per cent, the company said in a statement issued today.

Alok Agarwal, RIL’s chief financial officer, told reporters here today that no fresh treasury stock would be created and the parent’s holding in the petroleum unit would be cancelled. Almost 200 million existing treasury shares would continue, he added.

RIL’s absorption of RPL will be tax neutral for both the entities. “This merger is not about tax benefits. As far as taxation is concerned, the SEZ refinery is a separate undertaking. Both refineries will retain their tax benefits,” Agarwal said.

“This is about size, this is about diversification,” Agarwal said, adding the merger would give RIL the ability to take on projects much larger than done before.  RIL has set April 1, 2008 for the date of the amalgamation. The takeover is subject to approvals by the high courts at Mumbai and Ahmedabad.

Full article here.

+++