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Pentagon not likely to punish Halliburton for overcharging taxpayers
22 Oct. 2004

WASHINGTON, Oct. 22 (HalliburtonWatch.org) -- The Wall Street Journal reported today that the Pentagon "is laying the groundwork" for Halliburton to keep "several billion dollars" in taxpayer money even though the company cannot verify where and how the money was spent.

In one of many accounting audits, the Pentagon reported last August that $1.8 billion of Halliburton's expenses in the Middle East have not been verified through standard accounting procedures. So, it threatened to withhold 15 percent of the company's future requests for reimbursement in order to protect taxpayers from overbillings, but the action was never taken.

Today, the Journal reported that Pentagon officials have indicated they "might never be able to account properly for some of [Halliburton's] Iraq work" and that a quick "equitable settlement" of the billing dispute is in the best interest of both parties.

In order to settle the dispute, the Army has decided to spend more taxpayer dollars by hiring an outside consulting firm to make the final decision on how much of Halliburton's bills are truthful and worthy of reimbursement. Once the outside firm makes the final decision, "the Pentagon could drop many of the claims its auditors have made," including claims that Halliburton overbilled taxpayers, the Journal reported. Since Halliburton failed to provide any documentation on where or how expenses were disbursed, an outside consultant is the only way to resolve the dispute between the company and the Pentagon, an Army official told the Journal.

According to the Journal, "some disgruntled Pentagon officials describe the effort to broker an outside settlement with [Halliburton] as unusual in a contract of this magnitude. The company has taken heavy criticism from inside the Defense Department and from Congress for its accounting practices in Iraq."

Halliburton has billed the government $12 billion for work in Iraq. Almost $3 billion of that remains in dispute, according to the Journal. The newspaper said Pentagon records show that $650 million in Halliburton billings is deemed "questionable," a term government auditors use when they see strong evidence of overcharges or contracting irregularities. Another $2 billion is considered "unsupported," meaning that Halliburton remains unable to provide sufficient paperwork.

A Halliburton executive told the Journal, "We have boatloads of documentation for everything," but that it is not organized "in the nice and neat and orderly fashion" that Pentagon auditors are used to in normal contracting environments.

A former Halliburton employee told Congress last July that Halliburton's manual accounting system is inadequate and often results in accidental and sometimes fraudulent overcharges of U.S. taxpayers. "There's no reason in the world why Halliburton can't do real time data management," the former employee said.

The Journal said "The Army aims to settle the matter by March."

More Information:

Pentagon says 43% of Halliburton's Iraq expenses are not verifiable

Two reports explain how Halliburton took taxpayers for a ride in Iraq

Halliburton overcharged for meals by $186 million

Former Army chaplain says KBR places profits before soldiers

Halliburton charges taxpayers for transporting empty cargo in Iraq

Pentagon knew Halliburton was prone to overcharges before awarding no-bid contract

Halliburton's bills at hotel questioned

U.S. General Criticizes Halliburton

Defense audit finds contract issues

Report: Halliburton admits Iraq errors

Halliburton Voluntarily Suspends Billing For the Next Month