NEW YORK (CNN/Money) -
Halliburton said Friday it has issued a check in the amount of $6.3 million to its customer, the Army Materiel Command, to cover potential overbilling charges by a subcontractor until its investigation of the situation is complete.
"We are cutting a check to the government just in case the overbilling charge bears out. We will bear the cost of the overcharge -- not the government," Randy Harl, president and CEO of Kellogg Brown & Root, said in a statement.
Officials at KBR, a subsidiary of Halliburton contracted to provide services to U.S. troops, may have accepted kickbacks from a Kuwaiti company subcontracted to provide the services, according to the company.
KBR fell under harsh scrutiny last year when allegations surfaced in a Defense Contracting Audit Agency's draft audit that it had overcharged the army by as much as $61 million for gasoline by buying it solely from Kuwait instead of Turkey, where it was cheaper.
KBR denied those allegations, but said the services contract contained an "irregularity" that violated the company's code of ethics.
"The key issue here is self-disclosure and self-reporting," said Halliburton spokeswoman Wendy Hall. "We found it quickly, and we immediately reported it to the inspector general. We do not tolerate this kind of behavior by anyone at any level in any Halliburton company."
The Pentagon has not responded to the news.
Senate Minority Leader Tom Daschle addressed the issue on the Senate floor Friday morning, saying it was "disturbing" and calling for Senate hearings to find out how it happened and why there wasn't better congressional oversight of the process.
Halliburton said the officials involved in the allegations "are no longer employed by the company" and "no senior officials were involved."
Hall said the Department of Defense's Office of Inspector General is reviewing the allegations. KBR is also investigating, she said, and will cooperate with the DOD investigation.
"We can't discuss the specifics of the case because we don't want to say anything that would harm the IG's review," Hall said.
"It is the combination of these audit services that provides our customers the confidence to award and re-award such significant government contracts to our firm," she added. "As a company with a successful history of government contracting, as well as a dedicated set of corporate values and ethics, we continue to uphold honesty and integrity throughout our business practices."
The allegations involved a contract competitively awarded to KBR in 2001 and do not relate to the gasoline contract, which was a no-bid contract. The Pentagon ended that contract on Dec. 31.
Vice President Dick Cheney headed Halliburton from 1995 until he became George Bush's running mate in 2000, leaving the company with a $34 million retirement package.
Shares of Halliburton (HAL: up $0.69 to $28.92, Research, Estimates) gained 69 cents, or 2.4 percent, to $28.92 on Friday.
|
.
