Pentagon Auditors Call for Further Halliburton Probe

WASHINGTON – Pentagon (search) auditors have called for a further investigation into possible overcharging in Iraq by Vice President Dick Cheney's (search) former company, a defense official said Wednesday.

The Defense Contract Audit Agency (search) asked the Pentagon's inspector general to investigate Halliburton (search), the official said, speaking on condition of anonymity.

Auditors determined last month that a Halliburton subsidiary may have overcharged the military by $61 million for gasoline delivered to civilians in Iraq.

The auditors questioned Halliburton subsidiary KBR's decision to pay double the price for gasoline it bought in Kuwait than gas it bought in Turkey for the same contract.

Halliburton has denied any wrongdoing. The company said in a statement Wednesday it had not been notified of the decision to refer the case for further investigation.

The call for investigation by the inspector general's office indicates DCAA auditors found indications of wrongdoing that go beyond accounting mistakes. The official who discussed the DCAA request for a further probe said he did not know why the auditors wanted a follow-up investigation.

KBR delivers fuel to civilians in Iraq as part of its contract to rebuild the country's crumbling oil industry. Because Iraq's ability to refine gasoline was blocked by the war and postwar sabotage, the largest part of the oil industry contract has been delivering U.S.-subsidized fuel to Iraqis.

The Pentagon auditors found that KBR paid more than $1 per gallon more for gas from Kuwait than for gas from Turkey.

Halliburton says it had to buy gas from Kuwait's Altanmia Marketing Co. because it was the only firm authorized by the Kuwaiti government to sell fuel. Halliburton says it saved the military more than $100 million by buying the majority of Iraq's fuel from Turkey.

Halliburton got the oil industry contract without bidding as part of its deal to provide the Army with emergency logistical services. The U.S. Army Corps of Engineers plans to award a replacement contract through competitive bidding later this spring.

Democrats have called for further investigations of the matter and criticized the Halliburton contract as evidence of the Bush administration's rewarding its corporate friends. Cheney ran Halliburton from 1995 until he quit in 2000 to become Bush's running mate, and the company's executives donated thousands of dollars to the Bush campaign.

White House and Pentagon officials say political considerations do not affect the Defense Department's contract decisions. Cheney, a former defense secretary, is not involved in those decisions.

Halliburton has called the Democrats' criticisms unwarranted and politically motivated.

The Wall Street Journal first reported the Pentagon auditor's request for an investigation on its Web site Wednesday night.