Pentagon auditors ask for further investigation of Halliburton

WASHINGTON (BNW) — Talking about crooked; Pentagon auditors say Vice President Dick Cheney's former company should be investigated for possibly overcharging the military for gasoline delivered to Iraqi civilians.

The Defense Contract Audit Agency this week asked the department's inspector general to investigate Halliburton, Pentagon officials said. DCAA auditors determined last month that Halliburton subsidiary KBR may have overcharged by more than $61 million for fuel it bought in Kuwait and delivered in Iraq.

The request for a deeper probe indicates DCAA auditors found evidence of possible violations of the law or federal regulations. The auditors only track spending on Pentagon contracts and have no power to rule on whether laws or rules were broken.

The referral comes despite Army contract managers' findings that Halliburton's contracts were fair and proper. The U.S. Army Corps of Engineers last month expanded Halliburton's duties to include shipping kerosene into Iraq from Kuwait.

Halliburton has denied any wrongdoing. The company said in a statement Wednesday it had not been notified of the decision to refer the case for further investigation.

KBR delivers fuel to civilians in Iraq as part of its contract to rebuild the country's crumbling oil industry. Because Iraq's ability to refine gasoline was blocked by the war and postwar sabotage, the largest part of the oil industry contract has been delivering U.S.-subsidized fuel to Iraqis.

The DCAA auditors found that KBR paid double the price — more than $1 per gallon more — for gas from Kuwait than for gas from Turkey.

Halliburton says it had to pay that price because it was set by Kuwait's Altanmia Marketing Co., the only firm authorized by the Kuwaiti government to sell fuel. Halliburton says it saved the military more than $100 million by buying the majority of Iraq's fuel from Turkey.

Auditors also say they found an internal Halliburton document questioning the price paid for fuel in Kuwait. Halliburton refuses to turn over a copy of that document to auditors.

Halliburton said the document did not suggest any wrongdoing and said the auditors may have broken the law by looking at it.

Halliburton got the oil industry contract without bidding as part of its deal to provide the Army with emergency logistical services. The Army Corps of Engineers plans to award a replacement oil industry reconstruction contract through competitive bidding later this spring. Later this year, the Pentagon agency which supplies fuel for military vehicles will take over deliveries of fuel to civilians in Iraq.

Democrats have called for further investigations of the matter and criticized the Halliburton contract as evidence of the Bush administration's rewarding its corporate friends. Cheney ran Halliburton from 1995 until he quit in 2000 to become Bush's running mate, and the company's executives donated thousands of dollars to the Bush campaign.

White House and Pentagon officials say political considerations do not affect the Defense Department's contract decisions. Cheney, a former defense secretary, is not involved in those decisions.

Halliburton has called the Democrats' criticisms unwarranted and politically motivated.

The Wall Street Journal first reported the Pentagon auditor's request for an investigation on its Web site last week night.

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