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Halliburton unit faces Pentagon inquiry
Defense contractor may have overcharged government by more than $100 million in a no-bid oil deal.
March 15, 2005: 10:05 AM EST

NEW YORK (CNN/Money) - A Halliburton Co. unit is facing new questions from Pentagon auditors about bills for supplying fuel to the U.S. military in Iraq as part of a no-bid contract to rebuild the country's oil infrastructure, according to a Wall Street Journal report Tuesday.

The newspaper reports that this new scrutiny comes after other inquiries about the billions the company has billed the military for services rendered in Iraq. A Justice Department probe is examining if the government showed favoritism when awarding the company the oilfield contracts.

The Pentagon's audit with new questions about record keeping for fuel expense bills submitted by Halliburton's (Research) Kellogg Brown & Root (KBR) unit was completed in October but was only made public Monday by Congressional Democrats, according to the Journal.

A Halliburton spokeswoman quoted by the Journal stated that the company is cooperating with the Army to prove it carried out its tasks "at a fair and reasonable cost given the circumstances." Also, the Journal cites Halliburton officials who deny overcharging the government. These officials also stated that the company is working with military officials to resolve billing disputes and that they defend the company's work in Iraq.

The amount in question is part of a larger contract worth $875 million, according to a BBC News report.

Previous Pentagon audits of KBR have stated that it may have overcharged the government $61 million from May through September 2003 for shipments of gasoline, kerosene and other fuels. But this audit looks at a longer period and auditors had more time to pore over the company's procurement paperwork, according to the Journal.

In addition to these issues, the Justice Department has launched an open civil-fraud inquiry to determine if Halliburton overcharged for the fuel shipments, while federal investigators are examining if the Pentagon showed improper favoritism when granting Halliburton the oilfield reconstruction contract, the Journal reported.  Top of page

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