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Pentagon Criticizes Halliburton Fees
LA Times
T. Christian Miller and Mark Mazzetti, Times Staff Writers
March 2005

WASHINGTON — Pentagon auditors sharply criticized Halliburton Corp. for more than $100 million in questionable costs related to the delivery of fuel to Iraq in the early days of the war, according to a report released today.

Among other items, the Pentagon's Defense Contract Audit Agency attacked a Halliburton bill of $27.5 million for the delivery of $82,100 worth of liquefied petroleum gas, calling it "illogical."

The report also faulted Halliburton for misleading auditors, poorly managing multimillion-dollar subcontracts and failing to deliver key documents to justify the prices paid for fuel.

The Pentagon audit report from October 2004 is the most definitive yet to suggest that Halliburton may have overcharged the U.S. government on its $2.5-billion contract to supply fuel and protect Iraq's oil infrastructure.

The findings prompted a blistering attack on the Bush administration by Rep. Henry Waxman (D-Santa Monica), whose office released the audit. Halliburton, once run by Vice President Dick Cheney, was the focus of repeated Democrat attacks during the presidential campaign.

"We would like to know when and how you plan to recover the overcharges from Halliburton and restore them to U.S. taxpayers and the Iraqi people," Waxman wrote in a letter to Bush.

The Army Corp of Engineers, which oversees Halliburton's contract, declined to comment on the audit, which is considered confidential. A spokesman said the Army Corps was still negotiating final payments to Halliburton.

"We will consider both the DCAA audits and all other information available to us in reaching a final government negotiating position," said Carol Sanders, an Army Corps spokesman.

A spokeswoman for the Houston-based oil services giant called the audit part of the "normal contracting process." She said auditors did not adequately take into account that KBR, a Halliburton subsidiary, was delivering fuel in the middle of a war zone.

She also said Halliburton had supplied all necessary documents to auditors, and paid a fair price for fuel.

"The facts show that KBR delivered fuel crucial to the Iraqi people when failure was not an option," said Wendy Hall, a corporate spokeswoman. "At a time when neither government agencies nor other companies could or would have delivered, KBR faced the challenges and fulfilled this urgent mission, and we did so within the appropriate bounds of government contracting."

Halliburton's fuel contract became the subject of controversy soon after it was awarded in March 2003 without the competitive bidding designed to protect U.S. taxpayer dollars.

The contract was designed to protect Iraq's oil infrastructure from sabotage. Instead, the government used the contract to order Halliburton to buy fuel to stave off civil unrest that broke out after Saddam Hussein's fall. Halliburton shipped in gas, kerosene and other fuels from Kuwait, Jordan and Turkey, spending nearly $1.5 billion of Iraqis' money to prevent shortages.

Pentagon officials have said they gave the company the contract without bidding because of the urgent need. Questions remain over the role of Bush administration appointees in the awarding of the contract. At least two career civil servants have raised the possibility that political pressure was applied in different parts of the contracting process.

Democrats focused on the purchase of fuel, prompting the DCAA to release a preliminary audit in December 2003 that raised questions about $61 million in spending.

The audit was completed in October 2004, one month before the November election. Army Corps officials said they did not respond to Waxman's previous requests to release audit information because the payment negotiations were still taking place. Two more audits have been completed since the October 2004 audit.

The auditors raised several concerns over $108 million in costs contained in Halliburton's billing, including $69 million in costs associated with fuel obtained from a Kuwaiti subcontractor, Altanmia.

The auditors criticized Halliburton for not renegotiating its initial contract with Altanmia, which was signed in the frenzied months after the March 19 invasion began. According to e-mail messages obtained by The Times, it was signed under pressure from the U.S. ambassador to Kuwait, Richard Jones.

It also contradicted a Halliburton claim that the fuel contract with Altanmia was competitively bid because Altanmia was the only company in Kuwait with a license to deliver the fuel at the time.

"The other bids are irrelevant," the audit stated.

Auditors also said Halliburton never supplied documentation for its costs concerning the fuel, and that the company had made inaccurate statements to describe its process.

For instance, Halliburton told auditors it consulted with the company's internal "worldwide suppliers listing" to determine whether fuel prices were fair. Upon investigation, auditors found that the company did not maintain such a listing.

"KBR did not always provide accurate information" to auditors, the audit said.

Finally, the audit criticized Halliburton's charge for transporting the liquefied petroleum gas. It suggested that the charge may have been a "misclassification," and urged Halliburton to review it.

Commentary:
Have you ever wondered how a company can rip off the taxpayer so many times and still get one contract after another. It's called cronyism and it's against the law. But hey, who's keeping track of the crimes committed by Bush and Co? Not the war media that's for sure.

I like these lines; "Finally, the audit criticized Halliburton's charge for transporting the liquefied petroleum gas. It suggested that the charge may have been a "misclassification," and urged Halliburton to review it." Another way of writing it is say something like, "The military is bowing down on bended knee and begging Halliburton to stop stealing."