Halliburton Is Faulted by Pentagon on Accounts
Who would have guessed? Even more swindles from Cheney and company!
nytimes.com
By ELIZABETH BECKER
Published: August 12, 2004
WASHINGTON, Aug. 11 - An internal Pentagon audit has found that the Halliburton Company failed to adequately account for some of the $4.2 billion it has received so far for providing logistical support to troops in Iraq and Kuwait.
If the accounting system of Kellogg Brown & Root, the Halliburton subsidiary working in Iraq, is not corrected, the Pentagon may begin withholding hundreds of millions of dollars in payments, according to a statement it released Wednesday.
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The audit, which was completed Aug. 4 and first reported in The Wall Street Journal on Wednesday, found that the KBR accounting system was inadequate in nearly every way in dealing with the costs of providing food, shelter and other support for the troops in what is the single biggest project under contract in Iraq. The audit has not been released.
KBR gave the military inadequate cost estimates, incomplete and inadequate reviews of those estimates, poor employee training and "a lack of current, accurate and complete cost and pricing data," according to the Pentagon, which gave the company 45 days to come up with a new plan.
It was the latest in a series of warnings the Pentagon has issued to KBR since January 2003 about problems in its cost estimates. The Pentagon backed away from two earlier threats to withhold funds, but said this time that it could begin withholding payments as early as Sunday.
Lt. Col. Rose-Ann Lynch, a Pentagon spokeswoman, said she could not confirm how much of the $4.2 billion was in dispute. The Journal put the figure at "more than $1.8 billion."
Halliburton - the largest corporate recipient of government Iraq - related contracts, worth a total of some $8 billion - disputed the findings.
"We disagree with the report," a spokeswoman, Wendy Hall, said in an e-mail message. "This audit has nothing to do with the amounts we have billed the government or which costs will ultimately be determined allowable for our work in Iraq."
Ms. Hall said the audit was being used for political purposes. Vice President Dick Cheney was Halliburton's chief executive from 1995 until becoming Mr. Bush's running mate in 2000, and since the company won its multibillion-dollar contracts last year, Democrats have been charging that the Bush administration has given Halliburton special treatment.
"Only in an election year, when Halliburton is being covered in a political context as opposed to business, does a D.C.A.A. audit dispute become a news story," said Ms. Hall, referring to the Defense Contract Audit Agency of the Pentagon.
A statement issued by the Kerry-Edwards campaign called the report "another Halliburton scandal" costing taxpayers billions of dollars.
"Each time this happens, it raises more credibility issues for this administration about the cozy relationship that Halliburton seems to enjoy with the White House," said Phil Singer, a spokesman for the campaign. "This isn't just about Dick Cheney but about George Bush; it's his administration.''
Scott McClellan, the White House spokesman, dismissed the Democrats' comments as "the same old political attacks that they've been waging for a long time."
The issue was being examined by the Defense Department, he said, adding, "There are oversight measures that are in place."
Representative Henry A. Waxman, Democrat of California and ranking minority member of the House Committee on Government Reform, issued a statement contending that the Pentagon was showing favoritism to Halliburton by not immediately withholding funds.
"Even after eight critical audit reports by three different government agencies, the Pentagon is still waiving procurement rules and extending deadlines for Halliburton to submit accurate cost information," he said. Mr. Waxman also said the Pentagon was withholding the audit from Congress.
At recent Congressional hearings, lawmakers have divided along party lines over the issue of waste and cost overruns in contracts in Iraq.
Representative Thomas M. Davis, Republican of Virginia and chairman of the reform committee, said that he was as devoted to rooting out waste as the other members, but that it should not be a partisan issue.
The Pentagon audit recommended that Halliburton begin providing detailed cost and pricing data for any bills over $100,000.
Ms. Hall, the Halliburton spokeswoman, said she was confident that the issues would be worked out.
Even if the Pentagon begins to withhold money, she said, the company's finances will not be hurt because Halliburton will simply withhold payments to its subcontractors, a possibility written into their contracts. |
