Pentagon Hostilities

By Adam Zagorin; Timothy J. Burger

As if charges of cronyism weren't bad enough, the inside story of the government's decision to award a controversial no-bid contract to Halliburton is taking on overtones of even uglier "isms": racism and sexism. Whistle-blower Bunnatine (Bunny) Greenhouse, the most senior civilian contracting official in the Army Corps of Engineers, is battling the Army's attempt to demote her after she objected in writing not just to, but literally on approval documents for the up to $7 billion contract awarded to a Halliburton subsidiary in March 2003 for the repair of Iraq's oil wells. (The FBI is investigating whether Greenhouse's allegations of favoritism, first reported in TIME last week, merit an expansion of its criminal investigation into Halliburton for overcharging the Pentagon.) Meanwhile, TIME has obtained a new document that suggests Greenhouse, who is African American and the sister of NBA great Elvin Hayes, may have been operating in a racially hostile environment. Lieut. General Joseph Ballard, her former boss, said in a sworn affidavit that when he was Corps commander, colleagues told him that "members of the upper Corps management made racist remarks" about her and that a senior official repeatedly said he "was going to get 'that bitch fired.'" Ballard, who retired in good standing in 2000, made those statements in a September 2003 Army personnel proceeding against Greenhouse that cleared her of any wrongdoing. Calling her job performance "outstanding," Ballard, who is black, added that he strongly believed her race and gender "ruffled a lot of feathers in the Corps Command and also contributed to the disparate and highly critical treatment she has received." Asked for comment, a Corps spokesman told TIME, "Army policy is to treat all employees fairly and with dignity and respect." --By Adam Zagorin and Timothy J. Burger