Long before KBR, a one-time subsidiary of Halliburton, got into trouble over its government contracts during the Iraq war, the firm was part of a tax controversy involving Lyndon Johnson before he became president of the United States.

 

In 1941, the firm—then known as Brown & Root—made large, unreported contributions to Johnson’s failed U.S. Senate campaign. An IRS investigator got wind of the scheme and launched where would turn out to be a three-year investigation. His final report cited tax deficiencies of $1.1 million and a penalty of nearly $500,000. But Brown & Root ended up paying only $372,000, and nothing in the way of indictments or unwanted publicity surfaced.

 

Why?

 

Johnson, then a congressman from Texas, had connections in the Franklin D. Roosevelt White House, which led to the IRS Chief of Intelligence ordering his agents to end the investigation.

-Noel Brinkerhoff

 

"How High Can an Income Tax Fix Go?" The LBJ Tax Scandal that You've Probably Never Heard of. (by Maureen Callahan, Mudd Manuscript Library Blog)