home click for info

Bush administration pays Halliburton $199 million in Iraq overcharges
30 Jan. 2006

WASHINGTON, Jan. 30 (HalliburtonWatch.org) -- The Bush administration settled a dispute between the Pentagon and Halliburton by agreeing to pay the company nearly all of $208 million in costs in Iraq and Kuwait that were criticized in one of the official military audits of the company, an international accounting agency announced today.

The settlement, announced by the International Advisory Monitoring Board (IAMB) -- an independent accounting agency that monitors Iraq's oil finances -- allows Halliburton to keep $199 million of the $208 million in gasoline costs paid by the Pentagon, but disputed in the audit.

The money was paid to Halliburton's KBR subsidiary from Iraq's oil funds under Task Order Number 5 of the no-bid Iraqi oil reconstruction contract secretly awarded to the company in March 2003. Under Task Order 5, the military paid KBR for transporting fuel throughout Iraq and Kuwait.

In all, KBR was paid $1.4 billion from Iraqi funds disbursed by the U.S. coalition that governed Iraq from April 2003 through June 2004.

KBR has amassed nearly $16 billion in total revenue from contracts in Iraq, mostly from funds appropriated by the U.S. Congress.

Government audits have repeatedly criticized KBR's pricing and accounting methods but, in 2005, the Pentagon paid the company $1.4 billion in Iraq costs disputed by its own auditors. Last May, the military even paid $72 million in bonus payments to "reward" KBR's work in Iraq.

The Bush administration initially concealed critical conclusions in the Task Order 5 audit, including KBR's $208 million fuel overcharge and another $62 million in "unreasonable" fuel transport costs. In addition, at the request of Halliburton, the audit released to the IAMB was heavily redacted to exclude sentences such as "KBR did not demonstrate the prices for Kuwaiti fuel and transportation were fair and reasonable" and "KBR was unable to demonstrate the proposal was based on actual costs" and "KBR was unable to reconcile the proposed costs to its accounting records."

The IAMB said it hopes in the future to investigate other sole-source contracts given to Halliburton to "determine whether excess costs were incurred" at the expense of taxpayers and the Iraqi people.