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Halliburton pays us 6b for overcharging { January 24 2004 }

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   http://www.washingtonpost.com/wp-dyn/articles/A42626-2004Jan23.html?nav=hptop_ts

http://www.washingtonpost.com/wp-dyn/articles/A42626-2004Jan23.html?nav=hptop_ts

Halliburton Suspects Overbilling, Pays U.S.

By Jackie Spinner
Washington Post Staff Writer
Saturday, January 24, 2004; Page E01

Halliburton Co. said yesterday that it has paid the government $6.3 million to cover potential overcharging by a subcontractor for work in Iraq and alleged kickbacks.

The amount covers possible overbilling by a Kuwaiti firm as well as "improper payments" to one or two employees of KBR, a Halliburton subsidiary that has a broad Defense Department contract to provide food, shelter and other logistical support to the U.S. military in Iraq and other parts of the world, the company said.

"We will bear the cost of the potential overcharge, not the government," Randy Harl, KBR president and chief executive, said in a statement. Halliburton said it uncovered the problem and kickback scheme during a routine audit and reported it to the Defense Department inspector general.

The firm sent a check to the Army Materiel Command, which administers the wide-ranging logistics contract, "just in case the overbilling charge bears out," it said. KBR has been awarded $3.8 billion in work under the contract, which it won in 2001.

While saying it had fired the employees involved, Halliburton declined to provide further details on what goods or services the Kuwaiti subcontractor was providing or how much the employees may have pocketed. The Wall Street Journal reported the alleged scheme yesterday.

A spokeswoman for the Pentagon inspector general declined to comment.

The issue is not related to the controversy over a separate KBR contract dealing with Iraq's reconstruction. Pentagon auditors last week asked the inspector general to investigate a deal between KBR and a Kuwaiti supplier to import fuel into Iraq under a no-bid contract. A draft audit report last month found that KBR may have overcharged the government at least $61 million under that arrangement. KBR has denied wrongdoing, and the Corps of Engineers said its audits have turned up nothing improper.

KBR has been awarded more than $2.2 billion in contracts to rebuild Iraq's infrastructure under the no-bid contract. Last week it was awarded a competitively bid reconstruction contract, worth up to $1.2 billion, to continue repairs to the nation's oil facilities in the south.

Rep. Henry A. Waxman (D-Calif.) said yesterday that KBR should not have been awarded more work while there were outstanding questions about the other contracts, including the latest kickback allegations.

"It is incomprehensible that the administration could give Halliburton another billion-dollar contract without fully investigating such criminal wrongdoing," Waxman said in a letter to Rep. Thomas M. Davis III (R-Va.) chairman of the House Government Reform Committee, in which he asked for hearings on the Halliburton contracts. Dick Cheney was chief executive of Halliburton before being elected vice president.

Meanwhile, a congressional report released yesterday raised questions about how much Iraq will be able to pay for the reconstruction of its infrastructure.

The report, by the Congressional Budget Office, found that Iraq will need maximum production from its oil industry and "substantial relief" from its international debt obligations or it will not be able to pay for any of the rebuilding efforts. It noted that Iraq hopes to earn almost $19 billion a year from oil by 2006. "But reaching the level of production that the Iraqi government envisions and sustaining it over time will depend on improving the security situation as well as investing in the oil fields and infrastructure," the report said.


© 2004 The Washington Post Company


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