Bechtel, Halliburton drive up costs while local contractors, workers are shut out
One year after Hurricane Katrina, one thing is clear: the term “masters of deceit” could be accurately applied to the Bush administration for its handling of the Gulf Coast reconstruction. Despite the president’s photo-op appearances in the region on Aug. 29, his promises ring hollow when compared to the facts on the ground.
A report released Aug. 17 by CorpWatch, titled “Big Easy Money,” details a litany of abuses of money and power by Bush cronies jumping on the gravy train. It is a familiar cast of characters, including many of the same firms that have looted and bungled the reconstruction of Afghanistan and Iraq, such as Bechtel, Service Corp. International and Halliburton. The report dubs them “disaster profiteers” who, as in Iraq, have been given “cost-plus” contracts “that allow them to collect a profit on everything they spend, which is an incentive to overspend.”
The corporations receiving the lucrative contracts have used non-local contractors, driving up costs and reducing revenues for the devastated communities, the report says. African American contractors were excluded even when they offered to do the work for free for the good of the community — for example, cleaning up dead bodies after the storm.
CorpWatch reports that corporations received astronomical contracts for cleanup work, but, by using “contracting pyramids,” reduced the money actually spent on cleanup to a fraction of the amount the companies received from U.S. taxpayers.
For example, AshBritt received a $500 million contract for debris removal, amounting to about $23 per cubic yard of debris removed. This contract was subcontracted four times. The New Jersey firm that ended up doing the work was only paid $3 per cubic yard.
In some cases, local firms received subcontracts but were paid only a fraction of the original contract. One company received $150,000 on a $3.1 million contract.
Divisive and abusive hiring practices are another problem. Opportunity Agenda, a social justice advocacy group, notes, “Many African American survivors of the hurricane were shut out of reconstruction jobs due to failed housing policies, discrimination, and the lack of transportation and other services.” At the same time, the group says, “Interviews with reconstruction workers in New Orleans — many of whom are immigrant laborers who are vulnerable to abusive employment practices — revealed that large numbers have experienced problems of wage theft and nonpayment for labor, leaving low-income workers even more economically vulnerable.”
Rosana Cruz, Gulf Coast field coordinator for the National Immigration Law Center, told CorpWatch, “The level of assault against workers feels like a war.”
New Orleans teacher Gwen Adams lost all her possessions to Katrina. But, says an AFL-CIO blog, “the worst damage to her life has come through what some call Katrina’s second crisis — legislative and other action that, under the guise of making room in the budget for rebuilding costs, cut social programs, undermine survivors’ chances of returning home and fail to support them in starting over elsewhere.”
When the state shut down the public schools after the storm, Adams, who taught in New Orleans for 25 years, was one of some 4,500 teachers, mostly members of the United Teachers of New Orleans/AFT, who were forced to retire or lost their jobs.
Before Katrina, New Orleans had 128 public schools. Only 53 will be open this month. Thirty-three are autonomous charter schools, the largest number in the nation. Only five are run by the school district. The rest are run by the state-controlled Recovery School District. Employees in those schools have no union representation.
Adams said the real motive was to break the union: “They had been trying to break the union for years. They just used the hurricane as an excuse. Now without a union, they can tell the teachers to work on Saturday. I have a friend who teaches at one of the schools who is not scheduled for a lunch break one day a week. School officials told her that could be her ‘diet day.’”
Meanwhile, ABC News reported allegations of massive fraud by State Farm Insurance in an effort to minimize payouts to policyholders in Mississippi. Two independent adjusters who had worked for State Farm said supervisors pressured outside engineers to prepare reports concluding that damage was caused by water, not covered under State Farm policies, rather than by the wind.
The allegations, if proven, would validate the claims of thousands of homeowners who have been unable to collect enough insurance money to rebuild their homes.
Mississippi is still struggling to get help for areas wiped out by the storm. Jaribou Hill, executive director of the Mississippi Workers’ Center for Human Rights, said the catastrophe has made racial disparities that existed before the storm more pronounced.
Rather than rebuilding low-income housing, priority is being put on casinos, which offer low-wage jobs that help keep people in poverty, Hill said. “They are rebuilding for the sake of profit, not for the rebuilding of people’s lives.”