Pentagon auditors question Halliburton war charges

WASHINGTON – Pentagon auditors have questioned nearly $122 million in costs claimed by Halliburton under contracts to rebuild Iraq’s oil industry and supply fuel to its citizens, according to records released Monday.

The Democratic congressman who released the audits said the Bush administration had withheld the amounts of the questioned costs from the U.N. board overseeing Iraq reconstruction. California Rep. Henry Waxman is a longtime critic of the administration’s treatment of Halliburton, which Vice President Dick Cheney headed from 1995 to 2000.

Cheney and the Pentagon have said the vice president plays no role in contract decisions. Both the company and the Defense Department say Halliburton was not given preferential treatment.

“Halliburton has been a good steward of the taxpayers’ dollars,” company spokeswoman Beverly Scippa said Monday. She said Halliburton has cooperated with the audits.

“This is all part of the normal contracting process, and it is important to note that the auditors’ role is advisory only,” Scippa said in a statement.

Waxman released a series of Defense Contract Auditing Agency audits of Halliburton contracts under the Restore Iraqi Oil program. Halliburton subsidiary KBR was paid more than $2.5 billion under RIO in 2003 and 2004.

Most of the latest questioned charges – $77 million – came between December 2003 and March 2004 from Halliburton’s subcontract with a Kuwaiti fuel supplier that has repeatedly come under criticism by auditors and critics. One of the first audits of Halliburton’s Iraq work questioned $61 million in charges for fuel from the same supplier in 2003.

Halliburton has defended its handling of that subcontract, saying the Kuwaiti government would not allow it to negotiate for better prices or choose another supplier. The Pentagon auditors said Halliburton should not have relied on a hastily signed contract from May 2003 to govern the price it paid for Kuwaiti fuel for nearly a year.

Another $11 million was money Halliburton paid Turkish fuel suppliers in retroactive compensation for a jump in oil prices. The Pentagon auditors said the retroactive price hike was not allowed by KBR’s contracts.

Although Turkish suppliers handled a fraction of the fuel supplied to Iraq, the audits said the overcharges were substantial – nearly $500,000 just for March 2 and 3, 2004, for example.