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IRAQ: Halliburton Charged Too Much for Fuel, Auditors Say

Democratic Rep. Henry Waxman of California, one of the congressmen who released the audit, said in a statement on Tuesday that Bush administration officials heavily edited a copy of the audit at Halliburton's request before it was sent to U.N.-mandated auditors overseeing the Development Fund for Iraq.

by Sue PlemingReuters
March 15th, 2005

WASHINGTON - Military auditors still have "major" unresolved issues with Halliburton, the Pentagon said on Tuesday, a day after Democratic congressmen released an audit questioning $108 million in costs by the contractor.

A Pentagon spokeswoman said the audit, which found $108 million in questionable fuel delivery costs in Iraq by Halliburton unit Kellogg Brown and Root, was conducted to determine whether "fair and reasonable" prices were charged.

"The majority of costs questioned in this audit report are because DCAA (Defense Contract Audit Agency) auditors believe that KBR paid an unreasonable price for the fuel," the spokeswoman said.

She added that Halliburton's client, the Army Corps of Engineers, was working hard to finalize negotiations on prices charged under the no-bid oil contract awarded before the U.S. invasion of Iraq.

"The major issues in this audit report have not been resolved," she said, without providing details.

Democratic Rep. Henry Waxman of California, one of the congressmen who released the audit, said in a statement on Tuesday that Bush administration officials heavily edited a copy of the audit at Halliburton's request before it was sent to U.N.-mandated auditors overseeing the Development Fund for Iraq.

U.N. auditors have been critical of delays in getting documents and asked for a full accounting on DFI funds, made up of proceeds from Iraq oil sales, frozen assets from foreign governments and surplus from the U.N.'s Oil for Food Program.

More than $1.7 billion in these Iraqi funds were paid to Halliburton to bring fuel to Iraq, which despite being oil rich suffered from a shortage of refined products.

CONCEALING QUERIED COSTS?

Waxman, who released copies of both the redacted and non-edited audits, said documents that were cut attempted to conceal the more than $100 million in queried costs. He asked for a special congressional hearing to discuss the issue.

Halliburton, which was run by Vice President Dick Cheney until he joined the race for the White House in 2000, has said it delivered fuel for the best possible price.

Halliburton spokeswoman Wendy Hall said the Freedom of Information Act allows the company to redact "confidential commercial information." She said the government made the final decision over what should be edited.

"Any attempt to criticize KBR for its role in this perfectly normal and legal part of the contracting process is unfounded and clearly not based in fact," she said.

Hall said KBR would continue to work with its client to prove "once and for all that KBR has delivered vital services for U.S. troops and the Iraqi people at a fair and reasonable cost, given the circumstances."

Army Corps spokeswoman Carol Sanders said the Corps was looking at a series of audits before starting final negotiations with KBR over prices.

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.

The lawyer for an Army Corps of Engineers whistle-blower said his client was set to be interviewed for a second time on April 4 by Pentagon investigators over her claims of contracting abuse involving KBR.

Bunny Greenhouse, the Army Corps' top contracting official, met for a full day in November with the FBI and the Pentagon's Criminal Investigative Division. Much of that questioning focused on the oil contract.

Greenhouse's lawyer, Michael Kohn, said he could not provide further details over the next interview's focus.





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