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Halliburton faces criminal probe
Pentagon examines fraud allegations against Kellogg Brown & Root; focus on fuel overpricing.
February 24, 2004: 9:28 AM EST

WASHINGTON (CNN) - The Pentagon's investigation into allegations a Halliburton subsidiary may have overcharged for gasoline delivered to Iraq last year is now a criminal probe, the Pentagon said Monday.

"The Defense Criminal Investigative Service, the criminal investigative arm of the Inspector General's office, is investigating allegations of fraud on the part of Kellogg Brown and Root (KBR), including the potential overpricing of fuel delivered to Baghdad by a KBR subcontractor," a Pentagon statement said.

Last December, the Pentagon's Defense Contract Audit Agency found Halliburton may have overcharged as much as $61 million on its no-bid government contract for fuel brought into Iraq from Kuwait.

The Pentagon auditors -- noting that fuel from Turkey was cheaper by more than $1 a gallon -- questioned whether KBR adequately shopped around for the best price.

In January, the case was referred to the Inspector General of the Defense Contract Audit Agency, which referred it to the DoD Inspector General, which has turned the probe over to criminal investigators.

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Halliburton insists it was the company's suggestion to start buying the cheaper gas from Turkey, saving the U.S. government some $100 million.

A Halliburton press release claimed "... 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."

The Pentagon said the investigation is continuing and that there are "no timelines set for the investigation."

"We take seriously our accountability to the American taxpayer," a spokesman said.  Top of page




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