Pentagon Probes Halliburton for Fraud, Price Gouging


The Pentagon said it has opened a criminal investigation of fraud allegations against a unit of Vice President Cheney’s former firm Halliburton Co., including possible overpricing of fuel delivered to Iraq.

Reuters reported the investigation was focused on Halliburton subsidiary Kellogg Brown and Root Inc., the U.S. military’s biggest contractor in Iraq, which has become a lightning rod for Democratic criticism during this presidential election year.

“The Defense Criminal Investigative Service, the criminal investigative arm of the Inspector General’s office, is investigating allegations on the part of KBR of fraud, including the potential overpricing of fuel delivered to Baghdad by a KBR subcontractor,” a Pentagon spokeswoman said.

Halliburton spokeswoman Wendy Hall said the company had not received any notification of the alleged fraud probe, adding it was important to understand the “difference between fact and allegation.”

“In the current political environment, it is to be expected,” Hall said of the latest development. “The facts show KBR delivered fuel to Iraq at the best value, best price and at the best terms,” she said.

Halliburton, a Houston-based oil services company, has more than $8 billion in deals in Iraq, covering everything from doing laundry, building bases and providing meals to helping rebuild the oil industry. The contracts have drawn sharp comment from Democrats because of the company’s ties with Cheney, who was chief executive officer from 1995 to 2000.

Potential overpricing of fuel was first raised in a draft audit by the military last year that found evidence the company might have over-billed by at least $61 million for fuel brought into Iraq by a Kuwaiti subcontractor. Kuwaiti authorities are also probing the fuel deal.

Reuters reported that Halliburton launched a new ad campaign yesterday to show off its work in Iraq and to “address misstatements put forward during the 2004 presidential campaigns.”


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