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Report: Halliburton admits Iraq errors
March 11, 2004

SAN FRANCISCO (CBS.MW) - Halliburton has acknowledged to Pentagon auditors that it provided faulty cost estimates last year for $2.7 billion in services to American troops in Iraq and Kuwait, according to a published report. The Associated Press said its story was based on documents released Thursday by the Defense Department.

Those documents were released in response to claims by Houston-based Halliburton that claims made Wednesday by one of the company's strongest congressional critics, Rep. Henry Waxman, was incomplete and misleading in a memorandum Wednesday to colleagues about the latest cost estimate problems, according to the AP.

But at least one document released Thursday by the Pentagon contradicts one of Halliburton's claims in its attack on Waxman, the AP reported.

The Pentagon and the Justice Department are conducting criminal investigations of Halliburton, whose former CEO is Vice President Dick Cheney, in connection with its charges for post-war work in Iraq.

The latest revelation, according to the AP, comes from documents obtained from the Defense Contract Audit Agency. According to the AP, the DCCA found that Halliburton failed to tell contract managers that:

* It had terminated two subcontracts for feeding troops, which affected costs on $1 billion worth of that work.

* It had already awarded subcontracts worth $141.5 million for work it told the military would cost $208.8 million.

William F. Daneke, a manager for Halliburton subsidiary KBR, wrote to the DCAA on Dec. 4 to acknowledge the company didn't provide current, accurate and complete cost data in its Oct. 7 spending proposal, the AP reported. "There are many excuses and reasons available -- but -- in the end, KBR did not include the most current data in our proposal," the AP reported Daneke wrote in the letter.

Halliburton is being investigated for its charges for delivering food and delivering gasoline to the civilian market. Halliburton already has reimbursed the Pentagon for more than $30 million and has set aside another $141 million to pay other possible

Democratic critics say Halliburton is an example of war profiteering; Halliburton says the attacks are politically motivated in an election year in which its former CEO is running for a second term as vice president.

Halliburton closed Thursday at $28.24, down $1,73 or 5.77 percent.


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