The Pentagon stood accused of sitting on a damaging report from its own auditors
on a $108.4m (£56.6m) overcharge by Halliburton for its services in Iraq
In a scathing letter to George Bush, Democratic congressmen Henry Waxman of California
and John Dingell of Michigan said the Defence Contract Audit Agency's audit was
completes last October - before the election. They also note that 12 separate
requests to the Pentagon to view the completed audits on the contractor's $2.5bn
contract to supply fuel and other services in post-war Iraq had been ignored.
"We would like to know why this audit report - and audit reports on nine
additional task orders - are being withheld from Congress," they wrote.
"We also want to know what steps you are taking to recover these funds
In a second public letter yesterday, Mr Waxman accused Bush administration
officials of deliberately withholding information on overcharges by Halliburton
from UN auditors - at its behest. Some $1.6bn of the $2.5bn Halliburton contract
was funded from Iraqi oil revenues overseen by the UN.
"The evidence suggests that the US used Iraqi oil proceeds to overpay
Halliburton and then sought to hide the evidence of these overcharges from the
international auditors," the letter says.
The audit, released by the congressmen on Monday, offers the most definitive
glimpse so far of overbilling by Halliburton, once run by the vice president,
In the most startling transaction, it charged the Pentagon $27.5m to ship $82,100
worth of cooking and heating fuel to Iraq from Kuwait - 335 times the actual
cost of the liquified petroleum gas, a charge the Pentagon auditors said was
The firm and its subsidiary, Kellogg, Brown and Root (KBR), face several investigations,
including a fraud inquiry from the justice department. A preliminary Pentagon
audit, focused on the immediate aftermath of the US-led invasion, found KBR
overcharged the Pentagon by $61m for kerosene and other fuels.
Critics of Halliburton are convinced this represents just a fraction of the
The audit released this week covers only one of 10 task orders undertaken under
the $2.5bn no-bid contract awarded immediately after the invasion of Iraq.
However, the overcharges identified in the single task order already dwarf
the $61m (£32m) in previously discovered overcharges. Halliburton charged
army corps of engineers $875m (£457m) to supply fuel from May 2003 to
March 2004. Auditors questioned $108.4m (£56.6m) of those costs.
As the Congressmen note, the auditors criticised charges in nearly every area,
saying the firm misled auditors and failed to supervise sub-contracts. "Halliburton
failed to demonstrate its prices for Kuwaiti fuel were 'fair and reasonable',"
the auditors say. They also note Halliburton refused repeatedly to provide information
on costs of obtaining fuel from Turkey and Jordan, or reveal how it selected
its contractors in Kuwait.
A Halliburton spokeswoman, Wendy Hall, said it was forced into paying, and
charging, high costs because of the security situation following the war. "Transporting
fuel into Iraq was a mission fraught with danger, which increased the prices
that firms were willing to offer for trans portation," she told reporters.
"The report fails to take into account the fact KBR performed an urgent
mission at the army's request and the mission took place in a wartime environment."
The lawyer for an army corps of engineers whistle-blower said that his client
was set to be interviewed for a second time by Pentagon investigators on April
4 over her claims of contracting abuse involving KBR.