Part 3:The Halliburton Agenda...Our Man in Office...Vietnam and Project Rathole

THE HALLIBURTON AGENDA 
The Politics of Oil and Money
By Dan Briody

6 

Our Man in Office 

“I have some money that I want to know what to do with . . . I was wondering . . . just who should be getting it, and I will be collecting more from time to time.” This generous offer was made by George Brown to Lyndon Johnson in January 1960. This transcript of a phone call, placed after more than two decades of what ultimately amounted to illegal campaign contributions to Johnson and his colleagues, demonstrates just how committed the Browns were to their favorite politician. Even after millions of dollars had been raised on Johnson’s behalf, the Browns were still willing and able to give. 

The Browns understood something about the politics of their day that few of their competitors recognized. To really get your money’s worth out of a politician, you have to go all out. Lumping money into a crowded pot gets you nowhere. To really get things done in Washington, you can’t just support your politician—you have to own your politician. “They would contribute substantially as hell if their friend, somebody  who had helped them, had a political campaign,” recalled Ed Clark, longtime Brown & Root attorney. Johnson knew that without Herman Brown’s money, he would never achieve the one thing he had always dreamed of: becoming president of the United States. Johnson knew this because Brown continually reminded him of the power of his money by meeting Johnson’s every financial need. And Brown insisted that Johnson provide a return on his investment by keeping the contracts coming. In fact, taking one look at his voting record on issues like labor laws, corporate taxes, and government regulation made it relatively easy to see that Johnson was working for Brown & Root, not the people of his district or the state. Another indicator was the history of giant and costly public works programs that Johnson had fought to bring to Texas, which inevitably included Brown & Root as the contractor. 

Though the world could see what Johnson was doing for Brown & Root, it was considerably more difficult to see what Brown & Root was doing for Johnson. People familiar with the relationship suspected that money must be changing hands. But few in the laissez-faire political environment of Texas cared enough to follow up on it. It was accepted as the way business was done. Mostly though, Texans just wanted to get in on the action. Other politicians in the state came to know that Lyndon Johnson was the man to see to get some of Herman Brown’s money. Businessmen in the state knew that the way to get political influence was through Herman Brown. If anything was getting done in 1940s Texas, it was going to have to go through either Johnson or Brown, the most powerful team in the state. 

•••

Herman Brown missed out on the opportunity to fund Johnson’s first campaign for Congress in 1937, but he would make up for it quickly in subsequent years. After Johnson won the congressional seat in the Tenth District, he immediately went to work for the Browns, securing them work on the Mansfield Dam, then ramming through successive increases in the contract. The Browns were, of course, very appreciative and eager to show their newly elected representative some gratitude. When Johnson ran for reelection in 1938, Herman Brown persuaded his subcontractors, lawyers, suppliers, workers . . . anyone making money from the Brown & Root machine to support, both financially and electively, the candidate. Lyndon Johnson had as much money as he could spend at his disposal. And he never had a problem getting reelected to Congress again after that.

In addition to the money that Herman Brown contributed to Johnson for his congressional reelection, Brown donated heavily to Johnson’s allies throughout the country. In October 1940, after a whirlwind month of arm-twisting and political back-scratching, Lyndon Johnson won an informal role advising the Democratic Congressional Campaign Committee. The position gave Johnson a new national profile, and put him in a position to help Democratic candidates for Congress all over the country. He immediately called on Brown & Root. George Brown had instructed Johnson never to be timid about asking for favors. Timidity would never again constrain Lyndon Johnson.

Campaign contributions from corporations were illegal in 1940, meaning that the money would have to come from various individuals working for or associated with Brown & Root, each contributing a maximum of $5,000. It was a way around the law; often, the money took a circuitous route through various contributors, but it all originated from Brown & Root. It was just as illegal, but far more difficult for the authorities to track. On the face of it, the contributions looked like individual donations. 

The money began to pour in just five days after Johnson had secured his post on the Committee. In one week, Johnson had marshaled $30,000 from Brown & Root for the Committee, more than the Democratic National Committee itself could drum up. Each contribution included a letter from the donor, specifically designating the candidate for which the money was to be used. Those candidates were handpicked by Johnson himself, many of whom were already actively soliciting Johnson’s help. Letters poured in from desperate Democrats locked in mortal battle with their GOP opponents. Johnson made sure to let each of the lucky candidates know that it was he, not the Committee, who was responsible for their good fortune. Suddenly, dozens of congressional hopefuls found themselves owing Lyndon Johnson, and indirectly Brown & Root, favors. Herman Brown knew that the more powerful Lyndon Johnson became, the more powerful he would be as well. 

The 1940 election was an overwhelming success for the Democrats. Dozens of congressmen owed their seat in the House to Johnson, and President Roosevelt himself was eternally grateful for the role Johnson had played in securing a Roosevelt friendly House. Those elections vaulted Johnson into a new role of national power, with Herman Brown lurking in the shadows behind him. As Caro bluntly puts it, “[Johnson’s] power base wasn’t his congressional district, it was Herman Brown’s bank account.” 

The Browns, having benefited from owning a congressman, knew that aligning with a U.S. senator would be infinitely more advantageous. The Browns had already begun pushing Johnson toward a run. As early as May 1939, George Brown was planting the seed in Johnson’s ambitious brain, writing him, “I have thought about you often out here and don’t know whether or not you have made up your mind about what future course you want to take, but some day in the next few years one of the old ones [senators] is going to pass on, and if you have decided to go that route I think it would be ‘gret’ to do it.” 

••• 

In April 1941, one of the “old ones” did pass on. Morris Sheppard, a Texas senator for 27 years, died of a stroke in his sleep. Johnson knew that it was early for a Senate run. Like his congressional campaign four years earlier, his name was virtually unknown outside of his district. He would be starting all over again, and it would be a long, expensive campaign. But Johnson had something that no other potential candidate in Texas had. He had Brown & Root’s money. 

Winning the open Senate seat was going to be expensive. Johnson needed to plaster his name from county to county, buy radio ads, newspaper ads, and hold public-speaking engagements all over the state. It was going to be one of the most costly Senate campaigns to date. Yet, Brown & Root was undaunted. In May 1941, less than a month after Sheppard had passed away, Brown & Root called together dozens of their business partners and subcontractors at a luncheon in Houston. These were Texas-based companies who had been profiting from Brown &  Root’s lucrative contracts for years. They were indebted to Brown & Root, some of them even dependent on them. And the orders they were given were clear: support the Johnson Senate campaign with everything you can. “I did everything I could to help get him elected,” said George Brown. “Went to rallies and helped get people to speak for him. Organized everybody we could to get a segment—all through the business segment, labor segment, to be for him.” 

The Browns began systematically contributing money to the campaign, collecting more than $100,000 for Johnson in less than one month. In theory, the contributions were illegal—according to the Federal Corrupt Practices Act—but there were any number of ways around the law. At the time, the limit on spending in a Senate campaign was $25,000, none of which could come from a corporation. Of course, Johnson was not the only candidate who brazenly disregarded this law, which was poorly enforced. Bags of cash, envelopes stuffed with $100 bills, accounting sleight-of-hand; all conceivable techniques of hiding the destination of the Browns’ money were employed. Where the Browns got sloppy, or perhaps just greedy, was in looking for ways to mask the corporate contributions as tax-deductible business expenses. Legal fees, excessive bonuses (some as high as $40,000), and “rental fees” were some of the ways that Herman Brown tried to limit the expense of his political contributions. Herman Brown knew that he had to continue supporting Johnson with company money. He just didn’t want it to impact the bottom line quite so much. 

In some cases, the money took roundabout routes in getting to Johnson, a sort of political money-laundering scheme. Lawyers would take bonuses from the Browns, pay the money to someone else in their law firm, take it back in cash, and give it away to the campaign. Some of the money was used to pay campaign expenses directly, never having gone through the campaign headquarters. Radio ads, transportation costs, printing fees, all were routinely paid for by unknown Johnson supporters. And it was more than just money that Brown & Root contributed. Johnson’s rallies were peopled with enthusiastic Brown & Root employees, adding their vocal talents to the cause. At this time, Herman Brown’s influence over other politicians and businessmen in Texas was growing considerably. Brown had become the center of a growing sphere of influence in the state, the Suite 8F crowd—a group of business and political elites who met regularly in Herman Brown’s suite in the Lamar Hotel in Houston. The group began to recognize its collective power over Texas politics in the early 1940s, and as such was often able to close ranks and support united causes. Among the informally initiated were Houston’s leaders in banking, insurance, law, oil, construction, and media. It was becoming a true force in Texas, and Herman Brown was at the center of it. With his forceful temperament and growing fortunes, Brown was able to sway the political beliefs of his wealthy colleagues, giving Johnson wide support from the business community.

Brown kept the money flowing throughout the Senate campaign. When Johnson was showing weakness in the polls, Brown again called on his subcontractors, some of whom were reluctant to spend even more money on what was beginning to look like a losing cause. But Brown put the screws to them. “Now listen, we’ve made you a lot of money,” he would tell them. As things grew increasingly desperate for the Johnson campaign, the money spigot was opened yet wider. Votes were openly purchased in certain districts of the state—it is worth mentioning that certain counties had always put their votes up for sale, and Johnson was not the only Texas politician employing this technique. Time became a factor, and Herman Brown lost patience with some of the covert methods he had used to funnel money to Johnson. He gave $5,000 of his own money directly to Johnson, and began shuffling more through his subcontractors. Though it will never be known how much money Brown & Root contributed to Lyndon Johnson’s 1941 Senate campaign, the experts believe it was upwards of $200,000. Some people believe that Johnson spent $500,000 on that campaign after all was said and done.

Despite having an unlimited amount of Brown & Root’s funds at his disposal, waging the most expensive campaign in the history of Texas politics to date, and calling in favor after favor from Herman Brown, Johnson lost the election to Pappy O’Daniel. Johnson, the Browns, and half the business community in Texas were shocked and devastated by the loss. But losing the election would be nothing compared to what would come after. The Wild West atmosphere and free-wheeling spending of the election had raised a red flag in Washington. The Internal Revenue Service was going to take a closer look. 

••• 

Ironically, if Lyndon Johnson had won the 1941 Senate seat in Texas, life for Brown & Root would have continued much as it had over the previous decade. Johnson likely would have alerted the Browns of contracts coming from the federal government and fought to squeeze every dollar he could out of each contract for his most trusted supporters. Instead, because Johnson 122 Our Man in Office did not win, Brown & Root faced trouble from the federal government. Because Johnson was not Brown & Root’s newly appointed senator from Texas, he would have a very hard time fixing the problem. 

A full year had passed since the madness of the 1941 Senate race, and Lyndon Johnson had settled, grudgingly, back into his role as congressman. Though he still had strong connections in the White House, Johnson knew that he had missed out on an opportunity to gain even more influence in Washington. That was leverage he would sorely miss when in July 1942, the Internal Revenue Service (IRS) noticed some anomalies in Brown & Root’s books and began an investigation. It is arguable whether the investigation would have been pursued if Johnson had been senator, even with the serious suspicions of the IRS and the enormous amounts of money involved. But with Johnson emotionally struggling to recover from a devastating loss, the investigation steamed ahead. 

The IRS was focusing on the large and ambiguous attorney’s fees and employee bonuses that Brown & Root had used to disguise their campaign contributions, thereby enabling them to write them off their taxes. It was essentially a tax evasion investigation and the IRS didn’t know the true destination of the money. The Brown brothers knew the destination of the money, and so did Lyndon Johnson. If the IRS were to continue digging, they would eventually find their way to the Johnson Senate campaign, and Brown & Root would be facing criminal charges for attempting to defraud the government. Worse, Johnson’s political career would go down in flames. A fine they could handle, but neither Johnson nor the Browns could sustain a criminal conviction. The investigation had to be stopped.  

Brown & Root called on Alvin Wirtz to represent them, but they knew that it was really Johnson who would make this go away. Never before had the interests of both the Browns and Johnson been so perfectly aligned. And never before had the stakes been this high. Johnson crafted a plan to halt the investigation by enlisting the support of the president. Johnson and Herman Brown had confidence in Roosevelt’s support given the role both Brown & Root and Johnson had played in securing a Democratic House. And they hoped this confidence was well placed because the president was probably the only chance they had.

Johnson told the president that there was a politically motivated investigation into the Browns’ business in Texas, and that it was intended to end Texas’ support of the New Deal. Brown & Root had been great financial backers of New Deal candidates in Texas and, without their financial backing, the New Dealers would take a hit. The allegations of a political witch-hunt weren’t true, but it didn’t matter. It was the kind of argument that would strike the right chord with the president, who as Johnson and Herman Brown anticipated, discussed the matter with the folks at the IRS leaving Brown & Root confident that this was the last they would hear of the matter.

It wasn’t going to be that easy though. The IRS had seen enough already to believe that this was indeed a very serious issue. They were going to proceed with the investigation. Johnson, regrouping now, began going up the chain of command at the IRS. He met with Commissioner Guy T. Helvering, but Helvering had his hands tied. Helvering told Johnson that the Secretary of the Treasury himself, Henry Morgenthau Jr., was behind the investigation now, and he was not the kind of man that would bend to political tail twisting. 

Johnson called on James Rowe, who had been his liaison to the White House during the 1941 Senate campaign, to get Roosevelt to turn Morgenthau back. But nothing would work. Rowe’s attempts at stalling the investigation were met with Morgenthau smelling blood and turning up the heat. By winter in 1942, the case was starting to come together. IRS agents were interviewing people throughout Texas, setting up shop in Brown & Root’s accounting department, and subpoenaing bank records and check stubs. Bonuses were found worth more than $150,000 that they believed had in some way gotten into the Johnson campaign coffers and had been written off as tax deductions. Brown & Root subsidiaries, like the Victoria Gravel Company, which was paying exorbitant attorney fees to lawyers who in turn paid off Johnson’s campaign expenses, were unearthed. Many of the bonuses began as checks, but by the time the money arrived at campaign headquarters, it was all cash. A typical scam was for an employee or subcontractor to receive a $5,000 payment, cash it, stuff $100 bills into an envelope and mail it straight to the Johnson campaign.

Finally, the investigation reached the very top of the company. By the summer of 1943, IRS agents began interviewing Brown & Root executives. Many were defiant, denying any allegations of impropriety. George Brown played innocent. “We have certainly not directed anybody to give campaign funds. We knew it was not legal to give any political funds, and if anybody working for Brown & Root gave any political funds, it was without our knowledge. Certainly I don’t think it has been charged to Brown & Root. If it has, it certainly shouldn’t have been.” Herman Brown, as straightforward as ever, admitted he had paid only the standard $5,000 personal contribution into the campaign.

Meanwhile, Wirtz and Johnson continued to seek audience with Roosevelt to plead their case for having the investigation terminated. Every attempt to intervene, however, was met with not only resistance, but a redoubling of the IRS’s efforts. By the fall of 1943, panic was beginning to set in at the Brown & Root camp. Morgenthau had opened the investigation up to outside individuals, meaning Johnson officials and possibly even Johnson himself could become targets of interviews and further investigation. Agents began to close in on the Johnson camp, identifying a campaign employee named Wilton Woods who had taken a $7,500 payment from Brown & Root, and, they believed, handed it over to the Johnson campaign. Though Woods originally gave testimony that fed the IRS agents’ suspicions, upon arriving in Washington, DC, in January 1944, he and his attorney—Everett Looney, part of the Suite 8F crowd—declined to comment on all questions posed. 

It was all getting too dangerous for Johnson, and he urgently phoned the president to request a meeting after the Woods interview. The IRS had already determined that Brown & Root owed over $1 million in back taxes, but they were growing increasingly convinced that the company also had partaken in criminal wrongdoing. Finally, on January 13, Johnson was given an audience with the president. Immediately following that meeting, Roosevelt ordered a full report from the IRS on the status of the investigation. The report gave clear evidence of fraud and tax evasion, and even had admissions on the part of some participants of their role. 

The next day, a new agent was assigned to the Brown & Root investigation, one who had not been involved in any way up to that point. After three days of familiarizing himself with the investigation, the new agent decided that there was 126 Our Man in Office insufficient evidence to bring criminal charges against Brown & Root, particularly in light of the role the company played during the war. He recommended a 50 percent penalty, amounting to $549,972. The original team of agents, who had been working on the case for 18 months, were told to drop it when they asked to continue the investigation. After all was said and done, the fine was in fact lowered to $372,000, and that was the last anyone heard of the Brown & Root IRS investigation. 

That the case was dropped, in part, on the basis of Brown & Root’s participation in the war was, of course, laughable. The war business had come to Brown & Root through Johnson’s manipulation of the political system. And it had made Herman and George Brown fantastically wealthy. In researching this mess, I got the impression that had the Browns been making ships that aided in the war effort, or just building roads or dams at home, it wouldn’t have mattered to them, as long as they were making ever-higher profits. The work that made them millionaires was the same reason the company was spared prosecution on potentially illegal campaign contributions and defrauding the government. The power of Brown & Root’s political investments had indeed come full circle. 

••• 

After what they had just been through, you would think that the Brothers Brown would reconsider their political spending habits. Not only had their candidate lost after they had broken every rule of campaign financing and spent hundreds of thousands of their own money, but they had nearly been found guilty of actual crimes, crimes that require jail time. It appeared that the time had come to cool off the relationship a little bit, and that maybe Brown & Root should get back to the business of competing on the basis of its actual merits rather than relying too much on a single political figure. These would have been logical things to conclude. But the truth was that Brown & Root needed politicians to succeed. And Lyndon Johnson needed Brown & Root. The two were inextricably linked, and backing out was no longer an option. 

The IRS investigation of the 1941 Senate campaign had gone unnoticed by the media and the public, but the Texas political scene was growing ever more familiar with Johnson’s coziness with Brown & Root. In 1946, during a reelection campaign for congress, Johnson’s opponent, Hardy Hollers, said what was on many people’s minds. He called Johnson “an errand boy for war-rich contractors.” It was the exact kind of tough political talk that senators and congressmen are today employing in calling for a congressional investigation of Halliburton’s business in Iraq. Hollers went on to say, “If the United States Attorney was on the job, Lyndon Johnson would be in the federal penitentiary instead of in the Congress.” Though Hollers had no political experience, the words resonated with Texans, who had grown weary of corrupt politicians, but knew little else. Johnson was reelected, as almost all Texas congressmen were at that time (until they died), but the race was closer than expected, proving that Hollers had struck a chord. 

But what could Johnson and the Browns do about it? Severing ties was out of the question. There was only one direction to move in, and that was forward, deepening the relationship and furthering both of their aims. That opportunity was presented when Johnson chose to run for Senate again, this time in 1948. The Browns promised to fund the campaign as richly as the first, maybe more. Any money that Johnson needed, he was to have. Because this time, the Browns couldn’t lose. And neither could Johnson. 

Johnson had made it into the second primary. Upon reaching the second primary against Coke Stevenson, the well-liked former governor of Texas, Johnson was way behind in the race, and some in the Johnson camp felt he should concede the race to Stevenson. But it was far too late for quitting. Brown & Root had again funded the campaign up to that point beyond all reasonable limits, and along the way Johnson had waged a smear campaign against Stevenson that had backfired. The campaign was so dirty—with Johnson once again linking his adversary, this time Stevenson, to communist groups—that the Browns feared retaliation from Stevenson if he were to be elected to the Senate. They felt certain that an investigation into their funding of the Johnson campaign would be launched, and that Stevenson would shut them out of Washington, DC, closing all the doors that Johnson had previously opened. It was entirely possible that if Johnson were to lose again, both Johnson and Brown & Root would be finished. According to Ed Clark, Brown & Root’s attorney, “They [Brown & Root] were regulated in a thousand ways, and Stevenson would have run them out of Washington. He would say, if anyone wanted to give them a contract, ‘They’re personally objectionable to me.’ The Browns had to win this. They had to win this. Stevenson was a man of vengeance, and he would have run them out of Washington. Johnson—if he lost, he was going back to being nobody. They were going back to being nobody.” 

The future of Brown & Root was once again in doubt, and once again it was all in the hands of the lanky politician from the Texas Hill Country. Again money flowed, but this time in absurd quantities. Desperation was driving the campaign, and according to Caro’s account, men carrying grocery bags full of hundred dollar bills ($25,000, $40,000, even $50,000) walked from business to business collecting cash donations for Johnson. There were stories of Johnson’s men misplacing sacks with $40,000 inside, or leaving money in a shirt pocket. One thing that the Browns had learned from the last Senate race was that questionable campaign donations were a cash-only business. 

Johnson was flown all over the state in Brown & Root’s plane. The money paid for helicopters to get to smaller towns. He bought media placements and radio spots. Brown & Root called in their subcontractors again, as in the last election, and began applying steady pressure. According to former U.S. Senator Ralph Yarborough, “They were spending money like mad. They were spending money like Texas had never seen. And they did it not only so big but so openly . . . they were utterly brash. And they were brash about how they spent it, and they were utterly ruthless. Brown & Root would do anything.” And they did. 

Historical documents have shown that much of the money the Browns contributed was used to buy votes in South Texas. Ed Clark flew on Brown & Root planes down to “Mexican Country,” where votes could be bought, to do business with the county judges. But even with that advantage, and with election day fast approaching, Johnson still didn’t have enough votes. After the election, on August 28, 1948, Johnson knew he didn’t have enough to win, so he started working the phones, telling people to “find” more votes as the returns continued to trickle in. They did, and Johnson began to catch up, even as many as six days after the polls had closed. Finally, it appeared that Johnson had won the primary by a total of 87 votes, earning Johnson the nickname, “Landslide Lyndon.” 

The drama was not over. Because so many votes had shown up after the election, the Stevenson camp disputed the results in court. The matter was referred to the Texas State Democratic Executive Committee, which would hold a vote at the State Democratic Convention in Fort Worth on who had won the election. Like the popular vote before it, the Executive Committee vote was going to be extremely close. Johnson called Herman Brown.

Brown, ironically, hated politicians, but this was no time to let his principles get in the way. Brown came to the convention and worked the crowd for Johnson. He flew people in from around the state to vote on Johnson’s behalf. “That night in Fort Worth, Herman Brown called in all his chits,” says Caro. “It was necessary that he call them in, he told the recipients of his calls, because if Lyndon Johnson didn’t win in the Executive Committee tomorrow, there might not be any more contracts—or subcontracts. The full, immense, weight of the economic power of Brown & Root was thrown behind Lyndon Johnson that night.” It worked. Johnson won the Executive Committee vote by one, 29 to 28. On January 3, 1949, Lyndon Johnson became a U.S. senator for the state of Texas. 

From his first congressional reelection campaign, through his successful Senate campaign, Brown & Root had supplied the money and the muscle behind Lyndon Johnson’s career. Now that they had gotten him to his highest post yet, they were expecting great things. And they would get them, though George Brown would later play down the benefits of Johnson’s Senate tenure. “In a material way there was no way for him to help us because we had to be low bidder on everything that we got from the government. So the only thing he could do at all would be to give us information that might become available to him as to what appropriations they were thinking about.” But Brown & Root’s relationship with Johnson had gotten them more than just the lucrative contracts from government agencies. It had earned them the respect and loyalty of the entire Houston business community. There was a rising force in Houston politics, at the center of which was Herman Brown. This force was known simply as Suite 8F. 

••• 

During the 1930s and 1940s, a rare and unique group of obscenely wealthy and successful men were in the process of forming one of the most powerful informal special interest groups in history. Though rich and influential businessmen are common in any city, the cohesive group that jelled in Houston in the middle of the twentieth century was exceptional by any measure. The Suite 8F crowd would collectively control the development of Houston and have a far-reaching impact on legislation throughout the state and the country. Combining sheer wealth, a common will, and a broad range of political influence, Suite 8F was nothing less than the reigning governing body of Texas for the better part of three decades. 

Herman Brown’s suite at the Lamar Hotel in downtown Houston became the regular meeting place for a cast of characters that included, aside from both Brown brothers; Jesse H. Jones, a legendary millionaire that came to be known as “Mr. Houston,” who built his fortune on everything from lumber trade to banking to newspaper ownership, and ultimately held several high-ranking posts in national politics including chairman of the Reconstruction Finance Corporation and Secretary of Commerce; Gus Wortham, the founder of the American General Insurance Company and real estate magnate who would serve as the civic leader of the group; James A. Elkins Sr., a judge and cofounder of the massive law firm Vinson and Elkins, who also founded Houston’s largest bank, First City Bancorporation, and funded Wortham’s American General Insurance early on; and James Abercrombie, known simply as Mr. Jim, who founded Cameron Iron Works, one of the top oil tools manufacturers in the world. 

Though that core group served as the guiding force of Suite 8F, the group would have many peripheral members who came and went depending on whether their power was waning or on the rise. Alvin Wirtz, Ed Clark, and former long-time Texas Governor William P. Hobby all spent considerable time with the boys in Suite 8F. John Connally, another former Texas governor, partner at Vinson and Elkins, and Secretary of the Navy, also ran with the Suite 8F crowd. And of course, Lyndon Johnson, the man whose hands held the Browns’ future, was a regular guest at Suite 8F gatherings. Anyone who meant anything to Texas state politics put in their time at Suite 8F. It was a rite of passage, and Herman Brown was the gatekeeper. 

In the beginning, Suite 8F was simply a social gathering place, where friends of the Browns could congregate to have a drink, talk about business and politics, and unwind after long days of work. Gradually, the room began to take on much more importance, however, as deals that shaped the financial and political landscape of Texas were made. Houston historians Joseph Pratt and Christopher Castaneda described the common goals of the group as working toward a “healthy business climate, characterized by a minimum of government regulations, a weak labor movement, a tax system favorable to business investment, the use of government subsidies and supports where needed to spur development, and a conservative approach to the expansion of government social services.” 

The inherent irony in the purpose of the group was that they at once tried to limit the impact of politics on their respective businesses, while using those same politicians and legislation to further their aims. Political candidates in Texas would literally interview at Suite 8F in order to secure the collective support of the group. If successful in gaining the backing of Suite 8F, elective success virtually always followed. Spurning 8F was political suicide. Journalist Harry Hurt wrote that the group met “to relax—drink and play poker—but also to talk politics, exchange ideas, make business decisions, and choose the candidates they would support for public office . . . Their blessing was the blessing of ‘The Establishment.’ Their rule was virtually unchallenged and—they would emphasize—very ‘civic minded’ gerontocracy.” 

Former Mayor of Houston Roy Hofheinz learned the raw power of this “civic-minded gerontocracy” when he was handpicked by the group to run for office. After supporting Oscar Holcombe as mayor for 10 straight terms, Suite 8F grew tired of Holcombe’s desire to step up social programs in the city. The group abruptly switched camps, throwing their support behind Hofheinz, who promised to be a more business-friendly leader. In 1953, riding a wave of support from Suite 8F, Hofheinz unseated Holcombe. 

During his second term, Hofheinz backed a drive to raise property assessments in Houston, a move that angered the members of the 8F elite. All of the Suite 8F crowd owned real estate in Houston, and the move by Hofheinz was seen as ungrateful and in direct conflict with the group’s financial interests. Immediately, Suite 8F, having already proven to Holcombe how crucial their support was by unseating him in 1953, asked Holcombe to come back as mayor and promised their support. In response, Hofheinz told both Houston newspapers that in 1952 he had met with the Suite 8F crowd, in anticipation of his 1953 run for mayor. He said that he was told by Herman Brown that Suite 8F had decided to unseat Holcombe. Hofheinz was assured that he would have the group’s support “and all you have to do is call them down the middle.” With this act, Hofheinz essentially hung himself politically. In 1955, Holcombe beat Hofheinz with 57 percent of the vote, and Suite 8F demonstrated once again where the real power base of Houston resided. 

••• 

The business interests of the Suite 8F crowd overlapped to an absurd degree. They served on the boards of each others’ companies. They merged and acquired companies with each other. In one instance, the Browns owned a controlling share in Houston’s First National Bank. In the 1950s, they were looking for a merger partner, as their investment had fallen on hard times. They started negotiations with Jesse H. Jones, also known as “Uncle Jesse” and “Jesus H. Jones,” who owned the National Bank of Commerce. Jesse lived upstairs from the Suite 8F, in the penthouse suite at the Lamar Hotel. Jesse was older, and even more powerful than the Browns, and he was a tough sell on the bank. He dragged negotiations out, angling for a better price. Finally, the two thought they had sealed a deal, but at the last minute, Jones wanted to renegotiate. George Brown, who had been handling the negotiations, simply drove down the street to City National Bank, owned by James Elkins, and cut a deal with him, creating the largest bank in Houston.

Gus Wortham, who occupied Suite 7F in the Lamar Hotel, funded his American General Insurance Company with money from Judge Elkins and Jesse Jones. The company, in turn, supplied insurance for his friends’ businesses, including a supply of workman’s insurance for the Mansfield Dam, which was built by Brown & Root. He later led the Houston Chamber of Commerce, the organization that would ultimately supplant Suite 8F as the guiding hand of the Houston business community. Vinson and Elkins supplied Brown & Root with legal advice to supplement that of Ed Clark and Alvin Wirtz. Charles Francis, the man that was so crucial in securing Brown & Root’s interests in the Big Inch and Little Big Inch pipelines, later became a partner in Vinson and Elkins. The incestuous nature of the Suite 8F crowd was their strength, and made the group a force that dominated Houston’s development throughout the 1940s and 1950s. 

Though the impact of Suite 8F could be felt nationwide—it was Suite 8F, anchored by Herman Brown, that was behind the strident anti-union laws that were passed during the post World War II era—the full weight of the group was felt in and around Houston. In the late 1950s, the Suite 8F crowd decided it was time that Houston get a new, state-of-the-art jet airport to supplement the smaller Hobby Airport. The aim of the group, as always, was to build Houston into a world-class city, where big business could get done. A major new airport would go a long way toward achieving that aim. Besides, all of the Suite 8F members were frequent travelers, and they had lost patience with Hobby Airport, then called Houston Municipal, and the fog delays that plagued air travel south of the city. 

Acting more like the Texas Legislature than a group of self interested businessmen, the group commissioned studies of potential sites for new airports, despite the fact that Hobby Airport had recently been renovated. They went ahead and quietly purchased land north of the city, and created the Jetero Ranch Company as their corporate body. All of this was done before there was any official proposal for a new airport in Houston. So confident was the Suite 8F crowed that it could make a new airport happen, they didn’t bother to alert anyone else in Houston. They then met with Mayor Holcombe, whom they had installed as mayor two years earlier. At the meeting, the mayor was informed that Suite 8F—not formally, of course, but the members of Suite 8F—had purchased the land with borrowed money and would hold on to it until the city was ready to build the airport. Holcombe, not surprisingly, supported the idea. 

Holcombe arranged to have the city buy the land from Jetero for $1.9 million, and fund the purchase and the subsequent airport construction through the issuance of bonds. But Holcombe left office shortly after and his replacement, Louis Cutrer, was skeptical of Suite 8F’s motives. “You’re not going to tell me that that bunch of high rollers isn’t in this for the money,” he said. “They’re looking for a profit on this.” Cutrer tried to hold up the deal while the Browns tried to spin the airport deal to the public as a “civic service.” Public support for the project waned, and Cutrer asked for an extension on the purchase plan that Holcombe had arranged. Ultimately, it was a futile resistance for Cutrer, and he was forced to make a humiliating public apology to the group for doubting their intentions. The airport purchase went forward as Suite 8F had planned, and Houston Intercontinental Airport opened in 1969. Now Bush Intercontinental Airport, it remains the main terminal serving the Houston area today. 

••• 

Recognizing the power of Suite 8F, senators, congressmen, and businessmen from all over the country regularly visited when in Houston. But the power of Suite 8F was not the actual room in the Lamar Hotel, but the collection of men who occupied it. And the group moved together, in varying combinations of people, from place to place around the state and country. Each year the group could be found, together, at the Kentucky Derby (many of the members invested in race horses). They joined the same social clubs. And they vacationed together, usually at the Palomas Ranch, close to Falfurrias, Texas. The Browns shared the 40,000 acre ranch there with Abercrombie, where the men would retreat to hunt, play cards, and drink. 

The group also frequented the Browns’ ranch in Fort Clark, Texas, a sprawling estate purchased from Army surplus land in West Texas. The Browns would invite senators and congressmen to the ranch for the weekend, dispatching one of their fleet of DC-3s to scoop them up from their respective districts and deposit them on Herman Brown’s home turf. As one DC-3 pilot recalls, “If it wasn’t hunting season, why, it was always political season. That is to say we’d go by Austin and pick up a group of congressmen or senators or something and go out and spend the weekend at Fort Clark and they’d have their big political powwows.” In 1957, Lyndon Johnson wrote Herman Brown in his typical over-the-top manner, to let him know, “I want to go on record that last week at Fort Clark was one of the most enjoyable weeks I have ever spent in my life.” 

Fort Clark was a man’s world, where senators could get falling-down drunk, men could play with guns, and no one would fear the consequences of their actions. Even the journalists who were often invited to join in the festivities would not dare write about their time at Fort Clark. After one visit to Fort Clark, Herman Brown’s son-in-law, Ralph O’Connor, was appalled by some of the behavior these stately men were exhibiting. Brown pulled him aside, and said, “It’s very easy for people to, without knowing it, to say things, to say so-and-so was drunk, sloppy drunk. That’s why these people come down here. He’s a very important man. He’s got to let off steam. I don’t want you to say anything.” 

Closer to Washington, DC, the Browns also owned a ranch in Middleburg, Virginia, where they could court senators and congressmen without flying them all the way out to West Texas. Known simply as “Huntland,” the 450-acre farm gained brief notoriety when in 1955, Lyndon Johnson suffered a heart attack there during a visit. Johnson went to great lengths to conceal his trips to the Browns’ ranches, often telling his secretary not to contact him unless it was an emergency, and never to let a caller know of his whereabouts. 

As the Suite 8F crowd grew in national power through the 1950s, they became a very real force in Washington. Lyndon Johnson was a senator. Alvin Wirtz, who died while attending a University of Texas football game with Herman Brown in 1951, was Under Secretary of the Department of the Interior. Jesse Jones held positions as federal loan administrator, chairman of the Reconstruction Finance Corporation, and secretary of commerce. And George Brown himself served as a member of several high-profile presidential commissions. 

The Presidential Materials Policy Commission, which later came to be known as the Paley Commission, was organized by Harry Truman to study the issue of natural resources in America. The group consisted of five men, and the report they produced in June 1952, entitled “Resources for Freedom,” caused a stir. The report recommended, among other things, government support of drilling and exploration. Brown & Root had been doing considerable work in offshore drilling at the time, and the Paley Commission findings not surprisingly benefited that business. 

George Brown, who evolved into the role of Brown & Root’s liaison to the White House, went on to serve on several other commissions. He was appointed by Eisenhower to advise the Joint Congressional Committee on Atomic Energy. Eisenhower again tapped Brown to join a commission to study conservation of land and water in Texas. In 1959, Brown was appointed to the Commerce Department’s Business Advisory Council. And then in the 1960s, with his old friend Lyndon Johnson in the White House, Brown was appointed to the Space Council that studied issues regarding NASA. Brown was the only businessman on the Space Council, and played a major role in convincing NASA to build its Manned Spacecraft Center in Houston. Brown & Root subsequently won the contract to build the Center. 

The obvious and open manner in which Suite 8F in general, and the Browns in particular, influenced politicians at every level was appalling to many. But there was very little that anyone could do about it. As it has been for centuries, the nature of this kind of political influence is very difficult to pin down. Friends like the Suite 8F crowd did business behind closed doors, leaving no trail behind them. Alvin Wirtz, known for burning his correspondences and instructing their recipients to do the same, set the tone for this group. They must have known what they were doing was wrong, which is why they went to great lengths to conceal their motives. For the keen observer, however, the common will of these men and their intent was plain to see. The deals, the political manipulation, the illegal campaign financing, it was all apparent to anyone willing to admit it to themselves. But often, the truth is the hardest thing to believe, and most citizens, given the choice, preferred to believe that their democracy was intact and their individual needs meant something to their elected representatives. The truth was far from it.

PART III 

From Vietnam to Iraq

7 

Vietnam and Project Rathole 

As striking as the similarities between modern-day Kellogg Brown & Root (KBR) and the company’s distant past are, there is no escaping the fact that history is indeed repeating itself when we look at the role the company played during the Vietnam War and compare it to KBR’s work in Iraq today. From the unpopularity of the wars themselves to the role that powerful vice presidents played in securing massive construction contracts for the company, the parallels of the Vietnam and Iraq Wars are stunning. 

During World War II, self-interest actions by companies like Brown & Root were excused by the media and the public because of the overwhelming need for American support of the war. The words “war profiteering” were never used in those days. Anything less than unmitigated support of America’s troops and the companies that supplied them was deemed unpatriotic. Brown & Root emerged fat with profits—at the end of the 1960s, the company was the largest engineering and construction firm in the country—and it had gained an unsavory national reputation as an influence-peddling war profiteer. 

The years of Vietnam would bring great change to Brown & Root, just as they did for the rest of the country. As the political landscape shifted beneath their feet, the company would endure the loss of their founder, Herman Brown; the heartbreaking sale of the company to Halliburton in 1962, a nasty public battle over a major scientific project for the National Science Foundation, and yet another politically charged bid to win a massive contract to build NASA’s Manned Space Center in Houston. Although the monetary gains were great, the company suffered its greatest loss: its independence and relative innocence. Though Brown & Root was far from without sin leading up to the Vietnam era, they exited the turbulent times publicly tainted by their relationship to then President Lyndon Johnson. What had been a bunch of Texas good old boys scratching each others’ backs became a national political grudge match between the Republicans and the Democrats as Johnson rose in power during the 1960s. Defending their actions became a full-time job for the Brown brothers from Belton. And the brashness of years past melted into a more complex and sensitive understanding by Brown & Root of the nation’s political zeitgeist. 

• • • 

During the 1950s, as Brown & Root was basking in the glow of their new senator, Lyndon Johnson, Howco was undergoing a major expansion overseas. The company, by then well 146 Vietnam and Project Rathole entrenched in the global oil well services business, began to acquire its way around the world. With its hydraulic fracturing division growing into one of the largest parts of its business, the company leveraged its continuing success by moving into new markets in Saudi Arabia, Peru, Columbia, Indonesia, Mexico, Italy, Cuba, Libya, and Iran. From 1951 to 1957, the company’s foreign revenues increased from $7 million to $32 million, and its overall revenue grew from $94.5 million to $194.1 million. The post-war boom was treating the folks at Howco very well as the demand for oil exploded. 

But the good times would not last. By the mid-1950s, demand for oil had begun to wane and recession set in. Oil consumption was dropping at a rate of about 7 percent a year, the first such downward trend since the outbreak of World War II. Erle Halliburton’s health was also in full retreat, and in 1957, the man who as a pauper promised to make a million, died a multimillionaire, leaving behind a company valued at $200 million with 10,000 employees. 

In response to its declining revenue, Howco went on a spending spree in an attempt to diversify the company and safeguard it against fluctuations in the global oil industry. It acquired Welex Jet Services Inc., for just over 359,000 shares of stock in the fall of 1957. In 1958, Howco picked up the Dallas-based Otis Engineering Company, a maker of well-control equipment. Two years later, the company officially changed its name to Halliburton Company, and began the process of courting another Texas-based company that had grown up during the Great Depression—Brown & Root. Though the purchase of Brown & Root in 1962 would leave many financial analysts scratching their heads given the disparate core competencies of the two—and some are still scratching today—the purchase of the Brown brothers’ business carried Halliburton through turbulent times. 

••• 

During the late 1950s, the Browns were experiencing growing pains of their own, though not of the financial kind. By 1957, at the height of Johnson’s power in Washington, Brown & Root’s revenues were $262 million. They had profited from military contracts, including two major contracts to build air bases in France and Spain. The combined values for the French and Spanish contracts, between 1953 and 1961, totaled $472 million. They also built a major naval air base in Guam between 1946 and 1957 that brought in $81 million. All of the faith that the Browns had put in Johnson and all the money they had kicked into his campaigns, were paying off. 

Johnson’s ambitions would take a toll on his personal relationship with Herman Brown and reveal both men’s true feelings about the other. By the late 1950s, Johnson, whose ultimate goal had always been to become president, felt that he had gained enough power and prominence to make a run at the Democratic nomination. Herman Brown was perfectly comfortable with Johnson as Senate majority leader, and felt that Johnson’s plan to run for president was ill-advised, with a slim chance for success. As he had done prior to all of his previous campaigns, Johnson met with the Browns, this time flanked by the powerful Suite 8F crowd, at the ranch at Falfurrias. Johnson opened his presentation by saying, “I want to tell all of you fellows something. I’m thinking about running for president, and if I do, it’s going to cost all of you a lot of money. So I want you to think about it.” Herman Brown didn’t need to think about it, and blasted back at Johnson, calling his idea “the biggest mistake you’ve ever made.”

Johnson continued to plead his case to the men, going so far as to count out the delegate votes he thought he could win. But Brown wasn’t having any of it. He interrupted Johnson and told the men it was time to go hunting. This was one political discussion Herman Brown didn’t want to have. Even after everything they had been through together, it seemed that Brown still didn’t trust Johnson. In Herman Brown’s eyes, Johnson was still just a politician, and as such, a means to an end. It became clear to Johnson, just as it had 30 years prior when Brown squeezed newly elected Congressman Johnson on the Marshall Ford Dam, that Brown was using him. Brown feared that as a presidential candidate, Johnson would have to bow to disparate interest groups, and as a result, dilute his solid support of the Browns. He was right. As Johnson campaigned, the distance between him and front-runner John F. Kennedy increased. In response, Johnson jettisoned his support of a national right-to work law, a broader version of the antilabor legislation that Brown had rammed through the Texas Legislature years earlier and staunchly supported on a national scale. It was the first time that Johnson had let his political ambitions override his need for Herman Brown’s support. 

Despite the widening riff between Johnson and Herman Brown, the presidential hopeful continued to lean on the Browns financially and grew even closer to George Brown, who had longed served as a buffer between his fiery, distrustful brother and his good friend Johnson. When Johnson needed $60,000 to pay for a televised debate against Kennedy, Brown ponied up the cash. Though Herman Brown vehemently opposed Johnson’s presidential bid, the campaign financing from Brown & Root came through as it had in the past. After all, it was too late for the Browns to withdraw their support now. As Senate majority leader and presidential candidate, Johnson’s political power had exceeded the Browns’ financial largesse. The tables had finally turned for Johnson. And despite Herman’s objections, it was not lost on him that having a card-carrying member of the Suite 8F crowd in the Oval Office would have to be good for business. 

But he didn’t win. Johnson fell hopelessly behind in the polls, and essentially conceding defeat, agreed to become Kennedy’s running mate. Herman Brown was incensed. In his mind, the only thing the vice presidency could give Johnson was a higher public profile and less power, two things that Herman Brown had no use for. George agreed. “I just thought it was wasting his time as Vice President when he could be Senate Majority Leader,” said George Brown. “I knew he’d be awfully restless as Vice President.” Further enraging Brown was the fact that Johnson had not consulted with him in advance of this decision. August Belmont, who was in Suite 8F with Herman Brown when the news came over the radio, recalled it this way: “Herman Brown, who had sort of a face the color of those red flowers anyway, he jumped up from his seat and said, ‘Who told him he could do that?’ and ran out of the room.” 

Houston historian and University of Houston professor, Joseph Pratt told me that Johnson’s decision to accept the vice presidency ended his relationship with Herman Brown. “Symbolically the break comes in 1960 when Johnson decides that he can’t run for president and Herman Brown is pissed,” says Pratt. “George Brown was deeply involved in the decision, but Herman had an older, harder, tougher edge. Once Johnson became vice president he moved out of the Browns sphere.” The move was a watershed moment for the politician where he felt he no longer needed Herman Brown’s stamp of approval, that he had essentially outgrown his main benefactor and had catered to his needs for the last time. It was clear that the relationship between Johnson and Herman Brown could not survive mutually exclusive decisions. As long as their interests were aligned, they were close friends, but the moment Johnson spurned his patron, the friendship was revealed for what it was: a business relationship. 

••• 

Herman Brown passed away five days after his 70th birthday, the victim of a ruptured aneurysm, in November 1962. Lyndon Johnson eulogized Brown at the funeral and called him “a builder of his community, his country, and his world.” In preparation for Herman’s death—his health had been failing for years—Herman and George had donated their stock to the Brown Foundation, the charitable arm of the Brown empire that had overseen the brothers’ extensive philanthropy for over a decade. Before the donation in 1962, the Brown brothers owned 95 percent of the stock in the still-private company, all of which was turned over to the foundation. 

In the months leading up to Herman’s death, the Brown brothers had been involved in merger talks with Halliburton. Though it seemed a strange fit, the Browns wanted to sell the company, and they didn’t want to sell it to a competitor. Halliburton certainly seemed a likely candidate. For one thing, Halliburton was an oil field services company and had no experience with the type of heavy construction in which Brown & Root had become a world leader. Brown & Root had done some pipeline work, built some offshore drilling platforms, and owned some petrochemical plants, but beyond that had no experience in the nuts and bolts of the oil business. 

Yet, there were some similarities between the two companies. Halliburton and Brown & Root were both built on the backs of hard-nosed, gritty Texans who had come from nothing. They both were steadfastly open shops that loathed labor unions. And since Halliburton had moved its headquarters from Duncan, Oklahoma, to Dallas in the late 1950s, they were relatively close in proximity. The major difference between the companies was that Halliburton focused on research and development, serving one market well with new technology. Brown & Root was a far more political animal, content to win the big contracts through insider maneuvering, then throw men at it until it was done. Perhaps it was those wildly divergent styles that made them complimentary, but few in the business press at the time saw the connection. 

Neither, perhaps, did Herman Brown. Though it was the Browns who initially approached Halliburton’s board with the idea of a merger long before Herman Brown passed away, the deal was later called off. It is thought that Herman Brown was not comfortable with the acquisition. One month after Herman’s death, George Brown was president of Brown & Root and the acquisition was back on. As the lead negotiator of the transaction, George Brown shepherded the deal through relatively quickly. Halliburton bought 95 percent of the stock in Brown & Root from the Brown Foundation for a price of $36,750,000. Halliburton used an $18 million loan and $15,295,000 of its own cash, plus 70,000 shares of its own stock to fund the deal. The final terms of the deal were announced on Christmas Eve 1962. As part of the negotiation, Halliburton also acquired several other Brown properties, including Highlands Insurance Company, Southwestern Pipe, and Joe D. Hughes trucking company. George Brown was named to the board of Halliburton.

It is hard to imagine a deal of this nature being consummated while both Erle Halliburton and Herman Brown were alive. Erle Halliburton detested the politics that the Browns had so thoroughly embraced and Herman Brown had great trouble turning over the reins of his beloved Brown & Root. But with both men out of the picture, the deal took place in mere weeks. George Brown no doubt took comfort in the fact that Halliburton had a history of granting autonomy and independence to its acquisitions. Indeed Brown & Root maintained this attitude until the late 1990s, when then-CEO Dick Cheney sought to consolidate Halliburton into a more cohesive and streamlined company. But for the 30 years after the merger, business at Brown & Root went on as if Halliburton had never acquired the company, and Herman Brown had never died. 

••• 

Prior to Herman Brown’s death, Brown & Root had begun negotiations for a bizarre new contract being let by the National Science Foundation. This negotiation brought with it the stark realization that with Johnson as the vice president, and later president, Brown & Root was no longer able to fly under the radar. 

The idea, borne out of the 10-year-old National Science Foundation, a government agency that was supposed to be protected from the normal bureaucratic politics of the day, was to drill an impossibly deep hole through the core of the earth and pierce the mantle that lay six miles below the surface. Even as the United States was gearing up for sending a man into outer space, the race was on to delve further into inner space. The Russians were planning a similar experiment, lending a certain competitive urgency to the U.S. project. Scientists believed that by sampling the various layers of earth en route to the mantle, including the mantle itself, they could learn the mysteries of how the earth was formed. A Yugoslavian professor named Andrija Mohorovicic had discovered a transitional layer of earth between the outer crust and the mantle, which came to be known as the “Moho.” It was thought that this layer held valuable data that justified the expenditure of the project, dubbed Project Mohole. In 1961, the four-year project that was expected to cost $15 million began testing off the coast of California. 

The plan was fantastically ambitious. Offshore oil rigs had proven that they could drill in ocean waters hundreds of feet deep to find oil that lay just under the surface. But the areas where the earth’s crust is thinnest, thus making the long drill possible, lay under miles of ocean water; and the distance to be drilled once terra firma had been reached, was beyond anything the oil industry could imagine. Nothing of the sort had ever been attempted, and that interested Brown & Root—the company that repeatedly gravitated toward massive projects in which they had no experience. 

After the testing phase of Project Mohole was completed in 1961, the National Science Foundation recommended that one primary contractor be selected to complete Phase II of the project: the design and building of a rig that could complete the mission. There was no single company that had the capabilities the drilling would demand. Oil companies had some of the  expertise and a great deal of self-interest, both of which would be needed to achieve the goals of Mohole. Though the National Science Foundation was wary of oil interests clouding the scientific motives of the job, they had to admit that oil companies seemed like a logical choice for the job. In July 1961, the National Science Foundation invited the business community to submit proposals, stating that preference would be given to those contractors submitting bids with no fees attached. They received 10 responses, four from oil companies; some with detailed information on how the job would be done. Socony Mobil, allied with General Motors, Texas Instruments, and Standard Oil of California, spent $150,000 researching and developing their bid. 

Brown & Root’s proposal was not among the original bids. The company had missed the initial briefing session in July for those interested in bidding, and they had failed to communicate with the National Science Foundation at any stage prior to the bidding deadline. But when the National Science Foundation officials opened the bids in September 1961, there was the Brown & Root proposal, a last-minute surprise submission that shocked the staff. Brown & Root had no scientific work on its resume, only one PhD on staff, no partners in their proposal, and a handful of shallow-water drilling operations to its credit. Its proposal was full of general marketing materials and short on details directly pertaining to Mohole. And it asked for a fee. When the National Science Foundation rated the proposals, Brown & Root’s ranked fifth, far behind that of Socony Mobil, which the National Science Foundation panel called “in a class by itself; outstanding as to every important aspect.” 

The groups with the top five submissions were asked to revisit their bids and strengthen them in any way they saw fit for the final competition. In the meantime, the National Science Foundation was busy getting its ballooning budget approved by the House Appropriations Subcommittee. The chair of the committee was none other than Texas Congressman Albert Thomas, a member of the Suite 8F crowd and long-time beneficiary of Brown & Roots’ political largesse. Thomas was the man who played a key role in securing the Corpus Christi contract for Brown & Root prior to World War II. He was also the man who had proven to be the largest obstacle to National Science Foundation funding in the past. As the director of the National Science Foundation, Dr. Alan T. Waterman, was delivering his budget justification speech to the committee, he mentioned, casually, that Brown & Root was one of the finalists for Project Mohole. That was all Thomas needed to hear. He called the budget “a work of art.” 

With Thomas’ stamp of approval, Brown & Root won the contract over its higher-ranking competitors, and despite asking for a $1.8 million fee. Originally, competitors were told that submissions that did not include a fee would be given priority. The National Science Foundation wanted a contractor who was interested in the scientific aims of the project and would do the job at cost. But when Dr. Waterman was asked by the press why he chose Brown & Root and their $1.8 million fee, he gave this baffling explanation: “Perhaps we were wrong, but we felt that it was more businesslike to pay a fee.” It was a total reversal from the National Science Foundation’s earlier stance, and it left the other competitors completely dumbfounded. 

The other justification that the National Science Foundation gave for granting the contract to Brown & Root was their expertise in project management, which to that point was unassailable. Brown & Root had garnered a reputation for being able to get a job done, no matter what it was, on time. It is true that many Brown & Root projects saw their budgets soar to unforeseen heights. But the job got done, and for many of Brown & Root’s customers, particularly the military, that was more important than controlling costs. The National Science Foundation, however, was not that kind of customer. 

Even before submitting an overall plan for the project to the National Science Foundation, Brown & Root began ratcheting up the costs. Project Mohole was originally expected to cost $15 million, but by the first year of Brown & Root’s involvement, the budget had bloated to $47 million, then $68 million the following year. As the company’s budget increases met with resistance from the National Science Foundation, the priority status that the Mohole had been promised began to fall. The manager Brown & Root had assigned to the job was abruptly removed and reassigned to lead the NASA Manned Spacecraft Center project. In its first year with the contract, Brown & Root assigned four different lead managers to Project Mohole, and the pace of work was far slower than expected. 

Then the technical difficulties began. Brown & Root planned to build the drilling platform on top of two 500-foot submarines that would support its weight. The scientists from American Miscellaneous Society (AMSOC), an affiliate of the National Science Foundation that had been advising Brown & Root during the planning phase, strongly opposed the idea and rejected it as being too difficult and too costly. They espoused a plan that used two surface ships to support the platform. The two groups bickered incessantly and publicly, and ultimately, Brown & Root took the unprecedented step of discharging the AMSOC advisors in May 1963.

To top off the growing mess, congressmen began questioning the origins of the contract, alleging that political favoritism had played a role. As the budget ballooned and discord between Brown & Root and National Science Foundation reached a fever pitch, lawmakers questioned whether it was prudent to spend $125 million (the ultimate budget for Project Mohole) to basically drill a hole in the ground. But every criticism was met with a stern defense from Albert Thomas, who managed to protect and save the program for years while the technical glitches were supposedly getting worked out. After Thomas’ death in February 1966, there was no one left to defend Brown & Root’s project, and the congressmen attacked what they were now calling “Project Rathole.” 

One of the most vehement opponents of Project Mohole was a young Illinois congressman by the name of Donald Rumsfeld, who alleged that political contributions had played a role in the Mohole contract. Rumsfeld, debating in the House the summer of 1966, after five years of delays and added costs on Mohole, pointed out that the House had rejected further funding of the proposal once already, but its efforts to stop Project Mohole were rebuffed when President Johnson, in 1965, asked the Senate to restore the project. It was obvious, said Rumsfeld, that between Lyndon Johnson and Albert Thomas, Project Mohole was being kept alive through artificial means in an effort to benefit big Democratic backers like the Browns. He pointed out that the Browns had donated $25,000 to the Presidents Club, a major fund-raising arm of the Democratic Party, and alleged that the donations and the still-lingering contract had everything to do with one another. “Perhaps this is all another preposterous coincidence,” he said, but there were “too many preposterous coincidences.” I doubt that Rumsfeld even  knew at the time how far back the mutual back-scratching between the Browns and Johnson went. 

The Browns and Johnson were not surprisingly, if disingenuously, indignant. “You can expect to have periodic charges of this kind until November,” said Johnson of Rumsfeld’s comments, referring to upcoming elections. “They usually come from the party that has been rather strongly rejected by the people,” Johnson said, reminding the public of the previous elections in 1964, when he beat Republican candidate Barry Goldwater in a landslide victory. Contributions, he concluded, “do not influence the awards.” It was too late, however. Rumsfeld’s accusations had hit their mark, and the Senate voted down the continued funding of Project Mohole. 

The irony is that Donald Rumsfeld as Secretary of Defense in 2004 finds himself on the other side of the debate, as a member of an administration that has had to repeatedly defend its choice of Kellogg Brown & Root as its primary contractor in Iraq. Today, the role that Donald Rumsfeld played during the Mohole debacle is being reprised by Henry Waxman, a Democratic Representative from California. In the current flap over Kellogg Brown & Root’s contracts in Iraq, Waxman has sought to uncover more about the nature of Halliburton’s work in Iraq, it’s ongoing relationship to Dick Cheney, and the possibility of political favoritism. And he has been asking many of those questions to the current Secretary of Defense Donald Rumsfeld. Like an unshakeable case of déjà vu, Brown & Root has been kicked around like a political football for decades, first by the Republicans in the 1960s and 1970s, then by Democrats in the 2000s. You would have thought the two parties could have seen eye-to-eye at some point in between and put a stop to the company’s relentless politicking. But there was too much money to be made and too many campaigns to fund. Halliburton always had friends in Washington. 

••• 

Part of the reason that Brown & Root failed to come through on Project Mohole was that the company was distracted. What had been seen as a patriotic mission to help America beat the Russians in the race to inner space was supplanted by the even more patriotic mission of helping America beat Russia to the moon. There were no concerns, just as there never had been, that the company was biting off more than it could chew. Frankly, there was no reason for the company to hold back during the early 1960s. With Johnson in the White House, Albert Thomas holding the purse strings for government agencies (as the chair of the House Appropriations Committee), and George Brown acting on several business advisory councils and presidential commissions, the iron was hot. An article in Life magazine captured the growing national awareness of Johnson’s relationship with Brown & Root when it lampooned a conversation between John F. Kennedy and Lyndon Baines Johnson. Kennedy says to Lyndon after the 1960 election, “Now, Lyndon, I guess we can dig that tunnel to the Vatican,” to which Johnson replies, “Okay, so long as Brown & Root get the contract.” 

After 40 years of setting up a favorable political environment both locally and nationally, the Browns put their varied talents and strengths on display when it went after the high-profile contract for NASA’s Manned Spacecraft Center. Brown & Root’s dream team for securing the NASA contract started with, as usual, Lyndon Johnson, the vice president of the United States in 1961 and the chairman of the National Aeronautics and Space Council, advising the president on space-race issues. Johnson also had been the chairman of the Senate’s Space Committee in the 1950s, while he was Senate Majority Leader. In the spring of 1961, Johnson had appointed George Brown to be the only civilian member of the Space Council, a committee that advised the administration of NASA-related decisions. Albert Thomas was already the chairman of the House Appropriations Committee, which held considerable influence over NASA’s budget. And finally, James Webb, the director of NASA beginning in February 1961, was a very close friend of Lyndon Johnson. In some ways, Brown & Root had won the contract for the Manned Spacecraft Center before the center was even conceived. “Albert and Lyndon worked as a team,” said George Brown. 

The first order of business was to convince NASA to locate its center in Houston. Competition had been keen among several different states, including President Kennedy’s home state of Massachusetts. But Brown & Root’s influence was even greater than that of the president in this case. NASA knew that if Houston was passed up again as it had been in 1958 for the Goddard Space Flight Center (Maryland), Albert Thomas would wield his power over NASA’s budget. That alone would have been enough for NASA to choose Houston as the site. 

Meanwhile, George Brown was convincing the Space Council of Houston’s viability as a site. He arranged for his friend Morgan Davis, the chairman of oil giant Humble Oil & Refining, to donate a thousand acres to Rice University, Albert Thomas’ alma mater (and George Brown’s as well). Rice would then offer the land up to NASA and work closely with the organization in cultivating a space program that would attract the necessary scientific talent to the Houston area. Brown was the chairman of the Rice board and as such enlisted the Rice faculty’s support for the plan. 

Between Johnson, Thomas, and Brown, NASA Director James Webb didn’t stand a chance. He selected Houston as the site for the center in September 1961, months before would-be competitors could even submit a bid. It was a full-court press from day one, and Webb, not even a year on the job (a job he owed to Johnson to begin with) made the only politically viable choice he could. 

Now that the Manned Spacecraft Center was to be based in Houston, the next order of business for Brown & Root was to win the building contract. The Army Corps of Engineers quickly whittled a list of 175 architectural and engineering firms down to one it felt was the most suitable. The winner? Brown & Root, a contractor without strengths in either architecture or engineering. There were the requisite outcries of political favoritism from the spurned competitors, but since none of the competitors really believed that anybody but Brown & Root was going to build the Manned Spacecraft Center, the contract award hardly came as a surprise. Brown & Root picked up $2.3 million on the architecture contract, but tacked on dozens of millions more over the years as its joint venture work with Northrop Corporation continued to service the center, later named the Johnson Manned Spacecraft Center. 

The Johnson Center is one of the last monuments to Brown & Root’s dominance in the United States—it is the symbol of the Browns’ ability to manipulate the political system to their benefit. There were many symbols dotting the domestic landscape: the Mansfield Dam; Corpus Christi Air Base; and the Inch pipe lines to name a few. But as Vietnam clouded the political environment, Brown & Root would get pulled overseas and into a new line of work that would forever change the nature of the company. 

••• 

The contracts for both Project Mohole and the Johnson Manned Spacecraft Center would be dwarfed by what was to come in Vietnam. In a stunning parallel, both Johnson and George W. Bush would escalate the wars that defined their presidencies based on questionable evidence. And both escalations would result in a bonanza of contracts for Brown & Root. While George W. Bush struggles with the political fallout of the war on terrorism and claims that Iraq was prepared to use weapons of mass destruction, he might do well to learn from a fellow Texan’s presidency 40 years earlier, when Lyndon B. Johnson escalated the Vietnam War by blowing the Gulf of Tonkin incident out of proportion, or from his own father’s memoir, A World Transformed where the former president explained his reticence to invade Iraq during the Persian Gulf War, writing: “. . . we had been self-consciously trying to set a pattern for handling aggression in the post–Cold War world. Going in and occupying Iraq, thus unilaterally exceeding the United Nations’ mandate, would have destroyed the precedent of international response to aggression that we hoped to establish. Had we gone the invasion route, the United States could conceivably still be an occupying power in a bitterly hostile land. It would have been a dramatically different—and perhaps barren—outcome.” Johnson, who became president in 1963 after Kennedy’s assassination and who was elected with broad support in 1964, used the Gulf of Tonkin incident, a minor fracas in retrospect, to justify the sending of ground troops into Vietnam. The result of that move was the need for billions of dollars worth of bases, airstrips, ports, and bridges. Enter Brown & Root. 

In 1965, a year after Johnson stepped up America’s participation in Vietnam, Brown & Root joined three other construction and project management behemoths, Raymond International, Morris-Knudsen, and J.A. Jones to form one of the largest civilian-based military construction conglomerates in history. The group, which came to be known collectively as RMK-BRJ, went on to do more than $2 billion worth of work in Vietnam, of which Brown & Root took a 20 percent cut. The contract was cost plus 1.7 percent, meaning that the consortium would be reimbursed all costs, plus an additional 1.7 percent profit, a method of contracting that encourages the contractor to markedly increase costs, thereby increasing their profit. The world would be reintroduced to this concept nearly 40 years later when Kellogg Brown & Root won the same type of contract in Iraq. 

RMK-BRJ literally changed the face of Vietnam, clearing out wide swaths of jungle for airplane landing strips, dredging channels for ships, and building American bases from Da Nang to Saigon. As part of the single most lucrative contract the company had ever entered into, Brown & Root was in Vietnam from 1965 to 1972 pulling down $380 million in revenue in the process. But the gains had a cost. 

The Vietnam contract had Brown & Root written all over it. Similar to the priorities in Iraq in 2003, the emphasis was on speed, not cost. RMK-BRJ was building everything from roads to entire cities for the American military. Because of the rapid  buildup of troops in Vietnam—up to 165,000 in 1966 from just a few dozen thousand prior to Johnson’s escalation—the army found it impossible to move men and supplies around the country. Ports were backed up for weeks and in some cases roads didn’t even exist. RMK-BRJ built two 10,000-foot jet runways and two deep-water piers in Da Nang; a permanent jet runway in Chulai; two jet runways in Phanrang; ammunition and fuel storage facilities; barracks; helicopter landing pads; pipelines; hospitals; communications facilities; and warehouses. In short, the construction conglomerate built everything the American military needed in Vietnam. They did 97 percent of the construction work in the country during the seven years they operated there. The remaining 3 percent went to local Vietnamese contractors. 

They were moving enough dirt to dig the Suez Canal and paving enough roads to surface the Jersey Turnpike every 30 days. They had a small army of their own in the country, 51,000 at the height of operations in 1967, the largest employer in Vietnam. Twenty-three employees died and more than a hundred were wounded. But their efforts were not in vain. The supply problems dissipated. The ports opened up. Vietnam became a modern country practically overnight. Then it got ugly. 

Even as early as 1966, reports started reaching back to the homeland that the United States was pouring money into a sieve called Vietnam. One study by the New York Times found that nearly 40 percent of the billions being spend in Vietnam was being stolen, used in bribes, or outright wasted at the rate of half a million dollars a day. RMK-BRJ came under fire for not kiting costs and wasting upward of $5 million in its first year in the country. Its workers were manipulating currency and selling goods on the black market. Dozens of employees were sent home as punishment. By 1968, when most of the country had grown weary of the war, Senator Abraham A. Ribicoff, Democrat from Connecticut, filed a report with the Senate’s Permanent Subcommittee on Investigations alleging kickbacks in the construction consortiums in Vietnam claiming that millions were being “squandered because of inefficiency, dishonesty, corruption, and foolishness.” He ordered an immediate General Accounting Office investigation into RMK-BRJ. 

The GAO investigation, completed in 1967, charged RMK-BRJ with losing $120 million during its first five years in Vietnam. It said that “normal management controls were virtually abandoned,” and that millions were lost due to lax security. After decades of receiving accolades from government agencies and the military, Brown & Root was coming under fire for wastefulness and inefficiency. The Pentagon actually acknowledged some of the blame in 1966, admitting that it had misled the contractor, low-balling the estimated costs of the construction. By 1968, Johnson’s last year as president, RMK-BRJ was significantly scaling back its operation to about 15,000 employees. The public impression was that Brown & Root was part of a war-profiteering machine that monopolized work in Vietnam, mistreated workers, and wasted millions of taxpayers’ dollars. But it would get even worse. 

Brown & Root became the symbol of war-profiteering to opponents of the war. And as the antiwar protests ramped up throughout the 1960s, George Brown became the face of the war profiteer. In 1971, the protests reached a fever pitch, and Brown found himself the target of a particularly hateful outburst. He was to be honored by the University of Texas as a distinguished alumnus, despite having only attended the school temporarily. Students rallied and protested his appearance. During the ceremony, students rushed on stage and handed Brown a “special award,” a picture of the infamous tiger cages, horribly inhumane prison cells built by the French government 75 years earlier to hold prisoners. RMK-BRJ was hired by the military to build new, more humane prison cells to replace the tiger cages. Forty years later, Kellogg Brown & Root would again be called to build prisons for another unpopular war when the army contracted the company to build the terrorist prison in Guantanamo Bay, Cuba, after the September 11, 2001, attacks, a place where detainees have been held for more than two years. Brown’s association with the tiger cages was unfair, given that his company was merely hired to replace them. But subtle distinction was not a luxury that protestors of the day indulged in.

What was truly unfair was categorizing George Brown as a war profiteer since he had repeatedly advised Johnson against the escalation in Vietnam, believing that the war would destroy Brown and Johnson both. But Johnson didn’t listen and the war raged on into the 1970s. Brown was dogged by protestors everywhere he went, despite the fact that he was removed from Brown & Root’s day-to-day activities. Even Brown’s alma mater, Rice University, could not stem the tide of protestors when Brown visited the campus. It was a stark contrast to the repeated applause Brown received for his company’s work during World War II. 

The controversy and criticism was a small price to pay, however, for a company that had vaulted suddenly to the top of its industry. Mohole, NASA, and Vietnam had done for Brown & Root (which was part of Halliburton, but still operated independently) what the Mansfield Dam and World War II couldn’t: It made them the largest construction company in the United States. In 1947, Brown & Root was the forty-seventh largest construction company in the country. By 1965, they were number two, and by 1969, number one, with sales of $1.6 billion. Most of the momentum took place while Johnson was president, a coincidence that was not lost on the competition. The rapid rise brought on a fit of jealousy from Brown & Root’s biggest rival, Bechtel of San Francisco. “Brown & Root . . . had gotten most of the choice projects during LBJ’s administration, from constructing the Space Center in Houston to building the infrastructure for the Vietnam War. Bechtel, by contrast, had come away with only comparative crumbs.” Bechtel found itself in a position to protest Kellogg Brown & Root’s ties to the government again in 2003 when the Iraq contracts were awarded. Bechtel pulled out of the running for certain contracts because the company felt the structure of the bidding favored Kellogg Brown & Root. 

The 1960s and 1970s saw the end of the Brown brothers’ involvement in their beloved company’s affairs. It also saw an unrelenting tide of political controversy beset the company and hound it right into the 1980s. Amazingly, throughout it all, the company achieved stunning financial success. As the events of the Iraq War will attest, controversy and bad publicity do not necessarily mean sagging profits. In fact, it has been quite the opposite for Brown & Root. The more controversy, the more profit. The Bush administration has been able to deflect these controversies repeatedly with a well-timed statue-toppling or dramatic landing on an aircraft carrier. In the meantime, Halliburton and Kellogg Brown & Root are keeping the meter running in Iraq, with the value of their contract now reaching $2 billion and counting.

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