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Pentagon starts probe into halliburton claims { February 23 2004 }

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Pentagon starts probe into Halliburton claims
By Demetri Sevastopulo in Washington
Published: February 23 2004 23:39 | Last Updated: February 24 2004 0:58

The Pentagon has launched a criminal inquiry into allegations of fraud at Kellogg Brown & Root, a subsidiary of Halliburton, the oil services company formerly run by Dick Cheney, US vice-president.

The Pentagon inspector-general had been considering a request from military auditors to investigate an Iraq contract awarded to KBR, including allegations that the company overcharged the US government for fuel imports into Iraq.

On Monday, it was confirmed that the inspector-general had launched an investigation into the matter. "The Defense Criminal Investigative Service, the criminal investigative arm of the office of the inspector-general, is investigating allegations of fraud on the part of Kellogg Brown & Root, including the potential overpricing of fuel delivered to Baghdad by a KBR subcontractor," a Pentagon official said.

Halliburton has been at the centre of criticism of the postwar reconstruction process in Iraq with Democrats calling for hearings into the company's activities.

The Pentagon probe comes as Halliburton tries to repair its corporate image, which has been tarnished by allegations of irregularities in Iraq contracts. It recently launched a television advertising campaign in which David Lesar, chief executive, says Halliburton was awarded contracts in Iraq because of "what" and not "who" it knows.

Halliburton on Monday said it had not been informed about the decision to open an investigation. "If it is true, this is a normal, routine step in any kind of high-profile inquiry," said Wendy Hall, Halliburton spokeswoman. "In the current political environment, it is to be expected."

In December, Pentagon auditors found KBR had overcharged the US government by $61m for fuel imported from Kuwait into Iraq. The Army Corps of Engineers, which managed the contract, later appeared to exonerate the company, saying its prices were reasonable. But the following month the auditors asked the inspector-general to open an investigation.

Last month Halliburton was forced to repay the government $6.3m after it confirmed that two employees appeared to have accepted kickbacks from a Kuwaiti subcontractor. The Bush administration knew of the problems when it awarded Halliburton another contract, potentially worth $1.2bn, to repair oilfields in southern Iraq.

Stuart Bowen, inspector-general at the Coalition Provisional Authority, must report to Congress on Iraq contracts by the end of March. With presidential election drawing closer, Democrats are likely to quiz Mr Bowen on Halliburton's deals because of its previous links to Mr Cheney.




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