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Kuwait: Halliburton Deal Brings Probe

February 11th, 2004

Kuwait's parliament agreed Wednesday to investigate whether the government misused public funds when it signed a contract with Halliburton Corp. to supply fuel to U.S. troops in Iraq.

Kuwaiti MPs will hold energy minister Sheikh Ahmed Fahd Al-Sabah responsible if it finds violations in the contract between Kellogg Brown and Root (KBR), Kuwait Petroleum Corp. (KPC) and al-Tanmiya, a middleman corporation based in Kuwait.

During the weekend, the energy minister opened a separate criminal investigation into the contract. Some MPs accuse the minister of covering his tracks.

Shortly after the contract was signed in May 2003, allegations arose that it violated the country's contracting rules because it used al-Tanmiya without allowing other companies to bid for the contract.

The U.S. Army hired KBR, which bought fuel from KPC, which used al-Tanmiya to deliver the fuel to U.S. troops in Iraq.

Meanwhile, the Defense Department is investigating whether Halliburton (HAL: Research, Estimates) overcharged for the fuel delivered to Iraqi civilians.

Kuwaiti parliamentarians pulled together the request to conduct their own political investigation, which could lead to the use of certain political options, such as cross-examining the energy minister and forcing Kuwait Petroleum Corp. to open its accounting books.

Earlier this month, Kellogg, Brown and Root agreed to refund the U.S. government $27.4 million for potential overbillings at five dining halls in Iraq and Kuwait, according to the Pentagon.

Several Democratic presidential candidates have blasted the Bush administration for cronyism, decrying contracts in Iraq awarded to Vice President Dick Cheney's former company.

Cheney said that Halliburton is being unfairly maligned for its work in Iraq by political opponents of the Bush administration who are "feeling desperate."

All of the contracting companies doing work in Iraq with the U.S. undergo Pentagon audits. KBR is the largest of those companies with some $8 billion in contracts.

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