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Iraq: Pentagon Opens Criminal Inquiry of Halliburton

by Richard A. Oppel Jr.New York Times
February 24th, 2004

WASHINGTON, Feb. 23 Pentagon officials said Monday night that they have opened a criminal fraud investigation of Halliburton, the giant Texas oil-services concern, in an inquiry that will examine "potential overpricing" of fuel taken into Iraq by one of the company's subcontractors.

A Pentagon official said the investigation is focused on the Halliburton subsidiary Kellogg Brown & Root, which has drawn fire from critics in Congress since the disclosure in December that Pentagon auditors had found evidence that it had allowed a Kuwaiti subcontractor, Altanmia, to overcharge the government by at least $61 million for fuel shipped into Iraq from Kuwait.

A Pentagon spokesman said the Defense Criminal Investigative Service, the criminal investigative arm of the Office of the Inspector General, would act as a result of a referral on Jan. 13 from officials at the Defense Contract Audit Agency.

The disclosure is the latest step in a long-running controversy over the imports, which Halliburton says were made with the approval of the government and were needed because an urgent fuel shortage in postwar Iraq. The company's chief executive until 2000 was Vice President Dick Cheney, and Democrats have sought to capitalize on the controversy over the fuel imports and several other recent negative disclosures by Halliburton.

A Halliburton spokeswoman, Wendy Hall, said the company delivered fuel to Iraq "at the best value, the best price and the best terms." In a statement tonight, Ms. Hall said Halliburton has "not received any notification of a further development in the examination."

Ms. Hall said that "in the current political environment" an investigation "is to be expected." She also said that "it is unfair to accuse Halliburton of paying too much for Kuwaiti fuel when we were told to buy the fuel and given approval to purchase it from a specific supplier."

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