Archive for Friday, March 12, 2004

Justice Department starts inquiry of Halliburton contracts

March 12, 2004

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— Halliburton Co., the biggest contractor for rebuilding Iraq, faced escalating scrutiny Thursday over allegations that it systematically overbilled the U.S. government.

The company faced sharp questions on Capitol Hill, and the Justice Department launched an inquiry that could bring civil or criminal charges.

At issue is whether Halliburton, formerly led by Vice President Dick Cheney, overcharged $61 million for gasoline and routinely provided incomplete or inaccurate information on costs of gasoline and other services.

Halliburton has "been gouging the taxpayer," Rep. Henry A. Waxman, the senior Democrat on the House Government Reform Committee, said at a hearing Thursday. "The end result is that it costs the taxpayer twice as much when Halliburton imports fuel as it costs when the government does."

The Justice Department's is the third inquiry into the Pentagon's contracts with Halliburton, worth up to $18 billion. The Pentagon began two audits last fall that found "significant" flaws in Halliburton's billing practices. The Defense Department inspector general's office later launched its own inquiry.

Last month, sources say, the Pentagon sent the matter to the Justice Department for review. The Justice investigation could have the most far-reaching effects on Halliburton, which could be subjected to subpoenas, fines or charges.

The investigation might also complicate President Bush's re-election campaign if it creates the perception that well-connected U.S. businesses, especially one with close links to the administration, are profiting improperly in postwar Iraq.

Wendy Hall, a Halliburton spokeswoman, played down Thursday the significance of the Justice Department's role. She predicted that Halliburton and its subsidiary KBR, which is handling the gasoline contract, would be cleared by any inquiry.

"There have been no conclusions reached, and the facts show that KBR delivered fuel to Iraq at the best value, the best price, and the best terms and in ways completely consistent with government procurement policies," Hall said.

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