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Iraq: Army Allows Halliburton to Supply Iraq Fuel Without Disclosure

by Matt KelleyAssociated Press
January 6th, 2004

The Army has allowed Halliburton to increase the supplies of fuel delivered to Iraq without giving the usual data to justify its cost, a spokesman said Tuesday.

The December action by the Army Corps of Engineers does not exonerate Vice President Dick Cheney's former company in a dispute with the Pentagon over fuel prices, Army corps spokesman Ross Adkins said Tuesday.

But the decision does mean that Halliburton subsidiary KBR does not have to provide price figures for the increased flow of gasoline and kerosene it buys in Kuwait and delivers to Iraqi civilian markets, Adkins said. He said Halliburton's Kuwaiti supplier, the Altanmia Marketing Co., refused to provide the price data required under U.S. contracting regulations.

Altanmia is the only company authorized by the Kuwaiti government to sell fuel for delivery in Iraq.

Pentagon auditors have said KBR may have overcharged the Army by $67 million for fuel it bought from Altanmia and delivered into Iraq between April and October. The Kuwaiti price was more than $1 per gallon more than fuel KBR bought in Turkey.

Halliburton has said it had no choice but to pay what Altanmia charged. The company said it saved the Pentagon more than $100 million by suggesting shipping fuel at a lower price from Turkey, which now provides about two-thirds of the gasoline sold in Iraq.

The Pentagon audit into the contract, run by a separate agency outside the Army, is continuing.

Turkey cannot supply any more gasoline to Iraq, which has been plagued by fuel shortages, the company and the Army say. That's why the Army asked Halliburton last month to buy more gasoline and begin buying kerosene from Kuwait, Adkins said.

Democratic presidential candidates have seized on the dispute to criticize the Bush administration for its ties to Halliburton and have called for more investigations of the company. Cheney quit as head of the company in 2000 to become Bush's running mate and Halliburton executives donated thousands of dollars to Bush's campaign.

Halliburton continues to supply fuel to Iraq's civilian market under the Army contract while another Pentagon agency, the Defense Energy Support Center, prepares to take over that job. The Army hopes to replace Halliburton's contract to rebuild Iraq's oil industry through a competitive bid process which should be complete later this spring.

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