Halliburton May Have
Overcharged Millions
By MATT KELLEY, Associated Press Writer
WASHINGTON -A Pentagon audit has found
Vice President Dick Cheney 's former company may
have overcharged the Army by $1.09 per gallon for nearly 57 million
gallons of gasoline delivered to citizens in Iraq , senior
defense officials say.
Auditors found potential overcharges of up to
$61 million for gasoline that a Halliburton
subsidiary delivered as part of its no-bid
contract to help rebuild Iraq's oil industry.
But the company apparently didn't profit
from the discrepancy, according to officials
who briefed reporters Thursday on condition
of anonymity. The problem, the officials
said, was that Halliburton may have paid a
Kuwaiti subcontractor too much for the
gasoline in the first place.
Defense Secretary Donald H. Rumsfeld,
speaking Friday to a group of state
legislators, stressed that the Pentagon had
a "fairly normal process" for reviewing
contractors' bills before payment is made.
"We've got auditors that crawl all over these
things, and what you're reading about in the
paper is not an overpayment at all,"
Rumsfeld said, in response to a question
from the audience about media reports on
the audit. "It ... may be a disagreement
between the company and the Department
of Defense ... and
possibly between the company and
subcontractors as to what ought to be
charged, but there has not to my knowledge
been any overpayment."
A Halliburton statement released Thursday said the Kuwaiti company
was the only one that met the Army Corps of Engineers' specifications.
"Halliburton only makes a few cents on the dollar when fuel is delivered
from Kuwait to Iraq," the statement read.
Democratic presidential candidates said the audit demonstrated the
Bush administration's commitment to special and corporate interests.
"We've recently learned what many Americans have suspected for a long
time - special interest contributor Halliburton is overcharging the
American taxpayers," said Howard Dean . "For the
safety of our troops, we need to make sure every penny in Iraq is spent
wisely and efficiently."
Rep. Dick Gephardt also a Democratic presidential
candidate, said the Bush administration's "policy in Iraq of putting the
corporate special interests first is unacceptable." And retired Gen.
Wesley Clark said Bush is "more concerned about
the success of Halliburton than having a success strategy in Iraq."
"Think about what $61 million could buy for our troops in need rather
than lining the pockets of Halliburton executives," said Sen. John Kerry
of Massachusetts. "The Bush administration should
be ashamed that they bent over backwards for their biggest contributors
while leaving American troops in danger."
Sen. John Edwards of North Carolina, another Democratic candidate,
said in a statement, "Halliburton is engaged in war profiteering, plain and
simple. A company that donates huge sums to the president and once
was chaired by the vice president is now war profiteering at taxpayer
expense."
At the White House on Friday, presidential spokesman Scott McClellan
said, "There are oversight measures and procedures in place to make
sure that tax dollars are spent appropriately. And we expect those
measures to be followed and we expect those procedures to be
followed."
The Pentagon officials said Halliburton's Kellogg, Brown & Root
subsidiary also submitted a proposal for cafeteria services that was $67
million too high. The officials said the Pentagon rejected it.
The defense officials said they had no reason to believe the problems
were anything other than "stupid mistakes" by Halliburton. They said the
company and the Pentagon were negotiating a possible settlement of
the matter, which could include repayment by Halliburton.
In the statement Thursday, Halliburton chairman, president and CEO
Dave Lesar said, "We welcome a thorough review of any and all of our
government contracts."
News of the problems came as President Bush
worked to justify his decision to limit $18.6 billion in Iraq reconstruction
contracts to companies from the United States or countries that
supported the war. The move angered governments whose firms were cut
out of the bidding process, including Canada, France, Germany and
Russia.
Many Democrats also have criticized the Halliburton contracts,
suggesting they were a political payoff for a company with strong ties to
the GOP and whose executives gave generously to the Bush campaign.
Cheney and Pentagon officials deny any political
motive for awarding the no-bid contracts to KBR,
which has a long-standing relationship with the
military as a major Pentagon contractor.
Routine audits by the Defense Contract Audit
Agency uncovered the problems.
Pentagon officials said they were concerned about
problems with KBR's contracts, which were awarded
without competitive bidding for up to $15.6 billion
for rebuilding Iraq's oil infrastructure and assisting
U.S. troops there. About $5 billion has been spent or
is obligated to be spent on those contracts so far.
The defense officials, who are involved in the audit of
the contracts, said the Pentagon was negotiating
with KBR over how to resolve the fuel-pricing issue.
They declined to name the Kuwaiti subcontractor
that provided the fuel, saying that company may not
have been notified of the inquiry's findings.
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