Press Trust of India Posted online: Friday, December 12, 2003 at 1412 hours IST Updated: Friday, December 12, 2003 at 1429 hours IST
New York, December 12: A subsidiary of energy giant Halliburton, formerly run by US vice president Dick Cheney, was found to have overcharged the government by as much as 61 million dollars for fuel delivered to Iraq under a huge no-bid reconstruction contract given to it.
The Pentagon investigation found that the subsidiary, Kellogg, Brown and Root (KBR), also submitted a proposal for cafeteria services that seemed to be inflated by 67 million dollars, but it was rejected, the New York Times reported on Friday quoting officials.
The problems involving Halliburton, where Cheney was the chief executive, were described in a preliminary report by auditors, the officials told the Times.
The Pentagon contracts were awarded without competitive bidding and have a potential value of USD 15.6 billion. Recent estimates by Army have put the current value of Halliburton contracts at about five billion dollars, the Times reported. However, Halliburton denied overcharging and called the inquiry a “routine audit”.
“We welcome a thorough review of any and all of our government contracts”, Dave Lesar, its chairman, president and chief executive, said in an e-mail statement to the paper.
Dov Zakheim, the Pentagon's budget chief, said, “contractor improprieties and/or contract mischarging on department contracts will neither be condoned nor allowed to continue”.
Halliburton, which had more than 12.5 billion dollars in revenues in 2002, has emerged as a symbol for many people who opposed the war in Iraq and who claimed that the interests of such companies with close political ties were given too much consideration by the administration criticism, the Times said.
Criticism intensified when Halliburton received the no-bid contract to provide billions of dollars in services in Iraq, said Times. Administration officials counter that a few companies have the resources and expertise to carry out the work needed.
Military officials were quoted as saying the Pentagon was negotiating with KBR how to resolve the fuel charges. But Michael Thibault, deputy director of the defence contract audit agency, said in a telephonic interview with the Times that a draft report by the agency had recommended that the Army corps of engineers seek reimbursement.
The officials said Halliburton did not appear to have profited from overcharging for fuel, but had instead paid a subcontractor too much for the gasoline in the first place.
Halliburton, the Times said, has also said that one reason it needed to charge a high price for fuel was that it must be delivered in a combat zone. Several KBR workers have been killed or wounded in attacks by Iraqis.
Other questions, in a second contract with the Army, involved unacceptable delays by the subsidiary in providing cost estimates for dozens of projects already under way in Iraq.
