Dick Cheney- Corporate Criminal

Pentagon: Halliburton May Have Overcharged in Iraq

Dec 11, 10:28 pm ET
By Sue Pleming

WASHINGTON (Reuters) - A Pentagon audit of Halliburton, the oil services firm once run by Vice President Dick Cheney, found the company may have overbilled the U.S. government by more than $120 million on Iraq contracts, U.S. defense officials said on Thursday.

Defense officials said Halliburton's Kellogg Brown and Root unit, which has denied wrongdoing, may have been overcharged by a Kuwaiti sub-contractor by $61 million for fuel brought into Iraq from Kuwait under a deal signed in March with the U.S. Army Corps of Engineers to rebuild Iraq's oil industry.

That no-competition deal, which has clocked up about $2 billion in business so far, is set to be replaced by two new, competitively bid contracts to rebuild Iraq's oil sector.

After several delays, a decision on those $2 billion contracts is expected by mid-January and military sources said the audit would likely be considered when Halliburton's proposal was reviewed for the follow-on deals.

Under another KBR 10-year contract to provide logistical support for troops, the auditors found what they deemed a $67 million overcharge for dining facilities throughout the region. The overcharge was denied before taxpayers were billed.

"DCAA (Defense Contract Audit Agency) audits have found some problems that the department is addressing" with KBR, Dov Zakheim, the Pentagon's chief financial officer, said in a written statement.

Halliburton said it was supplying documentation requested by the auditors. "KBR has acted in full accordance with its fiduciary and contractual responsibilities under the contract," said Halliburton spokeswoman Wendy Hall.


A senior defense official said Kellogg Brown and Root may have been paying the Kuwaiti company as much as $2.20 per gallon for unleaded gasoline, compared with $1.18 in other contracts.

KBR is not suspected of improperly pocketing any taxpayer funds in either case but may have failed to ensure its subcontractors performed as required, defense officials said.

In addition to allegations of over-pricing, auditors were also looking into delays in providing details of pricing, a military source told Reuters.

"There are significant issues regarding the timeliness and adequacy of price proposals," the source said.

So far the company has generated about $2 billion in business from the March contract and more than $2 billion from the logistics contract for which it supplies services ranging from delivering mail to doing laundry for U.S. troops.

Democratic lawmakers have complained loudly to the Bush administration about the amount of work given to Halliburton in Iraq and have accused the White House of cronyism because of Cheney's former links to the firm, a claim the vice-president has vigorously denied.

Democratic presidential hopefuls Howard Dean and Wesley Clark sought to make mileage from the audit findings.

Dean, referring to the Bush administration decision to bar Iraq war opponents from bidding on lucrative reconstruction contracts, said in a statement: "Now this president is preventing entire nations from bidding on contracts in Iraq so that his campaign contributors can continue to overcharge American taxpayers."

Clark spokesman Chris Lehane said: "George W. Bush is a president for Big Oil, of Big Oil, and 'buy' Big Oil. He is more concerned about the success of Halliburton than having a success strategy in Iraq."

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