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VP Cheney's former company says it saved Pentagon money

Friday, December 19, 2003

WASHINGTON -- Vice President Dick Cheney's former company said Thursday it has saved the Pentagon money even as new allegations surfaced that Halliburton's own auditors warned of possible overcharging for fuel delivered to Iraq.

Halliburton said in a statement it expected to be cleared by the Defense Department of overcharging for gasoline it trucked into Iraq from Kuwait. Last week, Pentagon auditors said they suspected a Halliburton subsidiary, KBR, had overcharged the department by about $61 million on a no-bid contract to supply gasoline to Iraqi citizens.

Pentagon officials said the source of the overcharging was the high price charged by a Kuwaiti firm that supplied the gas to Halliburton. Halliburton, a Houston-based oil services company, said the Kuwaiti firm was the only one approved as a supplier by the U.S. Army Corps of Engineers, which oversees the contract.

Pentagon officials have also said the Kuwaiti company was the only one approved by the Kuwaiti government to export gasoline from the oil-rich monarchy. Democratic presidential candidate Joe Lieberman identified the firm as the Altanmia Commercial Marketing Co.

The Connecticut senator said auditors found Halliburton officials had questioned the contract and called again for another investigation of the company.

Lieberman said his staff met with Michael Thibault, an official with the Defense Contract Audit Agency, which is investigating the Halliburton contract. Lieberman said Thibault told him DCAA auditors found a Halliburton draft audit warning that the Kuwaiti company was charging excessive prices and the procedures may have violated U.S. contracting regulations.

Halliburton spokeswoman Wendy Hall said all internal company documents related to internal audits of the contract were given to the Defense Department. She would not confirm that Halliburton's auditors warned of possible overcharging.

We do not intend to debate these issues within the context of a political campaign, for either party," Hall said in an e-mail. "The DCAA has received a full and open report as a response to the (Pentagon) draft audit."

Thibault did not return a telephone message left at his office Thursday.

Halliburton's statement said it had suggested getting gasoline supplies from Turkey, which charged less. Pentagon auditors said Halliburton charged $1.09 a gallon more for gasoline from Kuwait than from Turkey.

Turkey is now the source of about two-thirds of the gasoline distributed in Iraq, Halliburton said. Using the Turkish supplier instead of the Kuwaiti firm has saved the U.S. government about $164 million, Halliburton said.

Halliburton said the gasoline from Kuwait also cost more because it had to be trucked farther in dangerous territory. Three Halliburton drivers have been killed, 10 employees wounded and 60 pieces of equipment damaged in attacks on fuel convoys, the company said.

Pentagon officials declined comment on Halliburton's statement but confirmed the company had sent its response to Defense Department auditors.

Last week, President Bush said he thought Halliburton had overcharged and he expected the company to reimburse the government.

Democrats have criticized Halliburton's contracts in Iraq, which have netted the company about $5 billion this year. Several Democrats in Congress have called for further investigation of the company and its Iraq contracts.

Cheney headed Halliburton from 1995 until he quit in 2000 to become Bush's running mate. He has said he severed all ties with the company.

Halliburton got its contract to rebuild Iraq's dilapidated oil industry as an outgrowth of a contract with the Army. It was to provide emergency logistical help for situations such as the Iraq war. The Corps of Engineers opened the oil rebuilding process to competitive bidding earlier this year and is preparing to award $2 billion in replacement contracts.


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