Tuesday, April 12, 2005

U.S. Audit Probes $212 Mln in Halliburton Iraq Work


U.S. Audit Probes $212 Mln in Halliburton Iraq Work

By Sue Pleming

WASHINGTON (Reuters) - U.S. oil services giant Halliburton Co. may have overcharged by at least $212 million to get fuel to Iraqi civilians under a no-bid deal with the U.S. military, said Pentagon audits released on Monday.

California Rep. Henry Waxman, a leading critic of Halliburton's work in Iraq, released portions of audits by the Defense Contract Audit Agency (DCAA) that identified overcharges and questioned costs for fuel delivered in Iraq by Halliburton unit Kellogg Brown & Root in 2003 and 2004.

In one case, the overcharges exceeded 47 percent of the total value of one work order, said Waxman in a letter to Rep. Christopher Shays, chairman of the House of Representatives Subcommittee on National Security, Emerging Threats and International Relations.

Halliburton, which was run by Vice President Dick Cheney until he joined the race for the White House in 2000, has said its KBR subsidiary delivered fuel for the best possible price in Iraq and has consistently denied it overcharged.

Neither Halliburton nor the Pentagon immediately responded to questions over the latest audits.

KBR is the U.S. military's biggest contractor in Iraq and is under investigation by several U.S. government departments over whether it overcharged for some services.

Last month, an ex-employee of KBR and a Kuwaiti citizen were indicted for defrauding the U.S. government of more than $3.5 million by inflating the cost of fuel tankers for military operations in Kuwait.

Also last month, the Defense Department said its internal auditors still had major issues with Halliburton after Waxman and others released an audit questioning $108 million in costs.

Waxman, a Democrat, is pressing for hearings on Halliburton's work in Iraq, particularly for the delivery of fuel.

More than $1.7 billion in Iraqi money, drawn from the Development Fund for Iraq (DFI), were paid to Halliburton to bring fuel to Iraq.

The DFI is made up of proceeds from Iraq oil sales, frozen assets from foreign governments and surplus from the United Nation's oil-for-food program, itself the target of numerous investigations.

"The new DCAA audits add to the mounting evidence of waste, fraud and abuse involving the DFI," said Waxman.

KBR brought fuel into Iraq under a no-bid deal it had with the U.S. military. It also has a giant logistics contract with the Army that has so far clocked up more than $7 billion in work and has another deal to rebuild parts of Iraq's oil sector.

originally published Apr 11, 2005