Halliburton May Have Overcharged Millions

[Guest Cerebus]

Halliburton May Have Overcharged Millions

 

By MATT KELLEY, Associated Press Writer

 

WASHINGTON - A Pentagon (news - web sites) audit has found Vice President Dick Cheney (news - web sites)'s former company may have overcharged the Army by $1.09 per gallon for nearly 57 million gallons of gasoline delivered to citizens in Iraq (news - web sites), senior defense officials say.

 

Auditors found potential overcharges of up to $61 million for gasoline that a Halliburton subsidiary delivered as part of its no-bid contract to help rebuild Iraq's oil industry.

 

But the company apparently didn't profit from the discrepancy, according to officials who briefed reporters Thursday on condition of anonymity. The problem, the officials said, was that Halliburton may have paid a Kuwaiti subcontractor too much for the gasoline in the first place.

 

A Halliburton statement released Thursday said the Kuwaiti company was the only one that met the Army Corps of Engineers' specifications. "Halliburton only makes a few cents on the dollar when fuel is delivered from Kuwait to Iraq," the statement read.

 

Democratic presidential candidates said the audit demonstrated the Bush administration's commitment to special and corporate interests.

 

"We've recently learned what many Americans have suspected for a long time — special interest contributor Halliburton is overcharging the American taxpayers," said Howard Dean (news - web sites). "For the safety of our troops, we need to make sure every penny in Iraq is spent wisely and efficiently."

 

Rep. Dick Gephardt (news - web sites), also a Democratic presidential candidate, said the Bush administration's "policy in Iraq of putting the corporate special interests first is unacceptable." And retired Gen. Wesley Clark (news - web sites) said Bush is "more concerned about the success of Halliburton than having a success strategy in Iraq."

 

At the White House on Friday, presidential spokesman Scott McClellan said, "There are oversight measures and procedures in place to make sure that tax dollars are spent appropriately. And we expect those measures to be followed and we expect those procedures to be followed."

 

The Pentagon officials said Halliburton's Kellogg, Brown & Root subsidiary also submitted a proposal for cafeteria services that was $67 million too high. The officials said the Pentagon rejected it.

 

The defense officials said they had no reason to believe the problems were anything other than "stupid mistakes" by Halliburton. They said the company and the Pentagon were negotiating a possible settlement of the matter, which could include repayment by Halliburton.

 

In the statement Thursday, Halliburton chairman, president and CEO Dave Lesar said, "We welcome a thorough review of any and all of our government contracts."

 

News of the problems came as President Bush (news - web sites) worked to justify his decision to limit $18.6 billion in Iraq reconstruction contracts to companies from the United States or countries that supported the war. The move angered governments whose firms were cut out of the bidding process, including Canada, France, Germany and Russia.

 

Many Democrats also have criticized the Halliburton contracts, suggesting they were a political payoff for a company with strong ties to the GOP and whose executives gave generously to the Bush campaign.

 

Sen. Frank Lautenberg, D-N.J., called Thursday for Senate hearings on the Pentagon's findings.

 

"I have long been troubled by the continued growth of the Pentagon's no-bid contract with Halliburton, and the delay in the Pentagon's promise to compete this contract competitively," Lautenberg wrote to Senate Government Affairs Committee Chairwoman Susan Collins, R-Maine.

 

Cheney and Pentagon officials deny any political motive for awarding the no-bid contracts to KBR, which has a long-standing relationship with the military as a major Pentagon contractor.

 

Routine audits by the Defense Contract Audit Agency uncovered the problems.

 

Pentagon officials said they were concerned about problems with KBR's contracts, which were awarded without competitive bidding for up to $15.6 billion for rebuilding Iraq's oil infrastructure and assisting U.S. troops there. About $5 billion has been spent or is obligated to be spent on those contracts so far.

 

"Contractor improprieties and/or contract mischarging on department contracts will neither be condoned nor allowed to continue," said Dov Zakheim, the Pentagon's budget chief.

 

The defense officials, who are involved in the audit of the contracts, said the Pentagon was negotiating with KBR over how to resolve the fuel-pricing issue. They declined to name the Kuwaiti subcontractor that provided the fuel, saying that company may not have been notified of the inquiry's findings.

 

The possible overcharging involved 56.6 million gallons of gasoline KBR supplied in Iraq from the end of the war until Sept. 30, the Pentagon officials said. The officials said KBR was charging $2.27 a gallon for gasoline while another contract for gas delivered from Turkey was for $1.18 a gallon.

 

The United States subsidized the price of the gasoline, meaning Iraqis only paid the prewar price of 4 cents per gallon.

 

The Army is to open its KBR contracts to competitive bidding next month. The contracts evolved from work to put out oilfield fires into overseeing reconstruction of Iraq's oil infrastructure and providing fuel for the country. KBR also provides support services to U.S. troops in Iraq, such as serving hot meals.

 

Halliburton has said it needs to charge a high price for fuel because it must be delivered in a combat zone. Several KBR workers have been killed or wounded in attacks by Iraqi insurgents.

 

 

[kkktookmybabyaway 0]

Oh for Christ's sakes.

 

A Pentagon audit has found Vice President Dick Cheney's former company

 

I'm sure Tricky Dick was working on commission.

 

But if it turns out Halliburton deliberately did this to make a profit (getting kickbacks from the Kuwaiti subcontractor that may have overcharged them in the first place), then they should be punished.

 

"For the safety of our troops, we need to make sure every penny in Iraq is spent wisely and efficiently."

 

Should have just said this, Howie...

[NoCalMike 0]

Wow, this is sooooooooo suprising.....

 

But hey, they are the most qualified.......it had nothing to do with ANYTHING else.....

[sfaJack 0]

Oh, Christ, the audit isn't even fully complete yet. Let's wait until the whole thing is finished before we go declaring KBR to be a big evil here.

[Justice 0]

CNN.com

 

But there is no allegation that Halliburton unduly profited from the overpriced gas.

 

The audit questions if Halliburton paid above-market rates to a Kuwaiti subcontractor when it paid $2.27 per gallon for the gas. Another supplier bought gas at $1.18 per gallon from Turkey.

 

Halliburton says the higher cost was due to having to negotiate a short-term contract, at a time when there weren't enough trucks in Kuwait to deliver the fuel. It says trucks had to be brought in and shipping in a war zone pushed up the transportation and security costs as well.

 

OMG COMMIE NEWZ NETWORKZ LOL 2K3!@!U*(#)!@*_#!

 

Wow, this is sooooooooo suprising..... 

 

But hey, they are the most qualified.......it had nothing to do with ANYTHING else.....

 

Of course, you guys have never shown WHY someone else is more qualified, but hey, let's keep the vague conspiracy theories rolling.

[Jobber of the Week 0]

But hey, they are the most qualified.......it had nothing to do with ANYTHING else.....

Yeah, well can you think of a company that can serve turkey in a cafeteria line like Haliburton can?

 

No? Didn't think so.

[Cartman 0]

The best part about this thread is the desperate attempts by Righties to try and defend this in any way possible.

[Guest Salacious Crumb]

The best part about this thread is the desperate attempts by Righties to try and defend this in any way possible.

What exactly is there to defend? Or are you just conviently forgetting what the CNN article said? If they had to pay out the ass to get and deliver it then of course they're going to have to charge more for it.

[sfaJack 0]

The best part about this thread is the desperate attempts by Righties to try and defend this in any way possible.

What "attempts?" I see no one defending anything.

 

Unless you count one call for waiting until the audit is even FINISHED before indicting Halliburton and one call for any one of the "lefties" to suggest why another company would be better qualified than Halliburton to do this job as "defending" then I'm afraid you're out of luck for now.

 

Nice try, though.

[NoCalMike 0]

maybe it has something to do with haliburton being handed the contracts, rather then go through the regular process, and the fact of why we were told they were just handed the contracts. So it isn't really up to me to point out another company more qualified.

[kkktookmybabyaway 0]

The best part about this thread is the desperate attempts by Righties to try and defend this in any way possible.

Conservatie Brigade troops AT ATTENTION!!!

 

 

OK, sfaJack, you launch an frontal attack with the following:

 

Oh, Christ, the audit isn't even fully complete yet. Let's wait until the whole thing is finished before we go declaring KBR to be a big evil here.

 

Powerplay, you fire off a:

 

OMG COMMIE NEWZ NETWORKZ LOL 2K3!@!U*(#)!@*_#!

 

followed by a:

 

Of course, you guys have never shown WHY someone else is more qualified, but hey, let's keep the vague conspiracy theories rolling.

 

After we have softened the enemy up, I'll roll the tanks in with:

 

Oh for Christ's sakes...I'm sure Tricky Dick was working on commission.

 

But if it turns out Halliburton deliberately did this to make a profit (getting kickbacks from the Kuwaiti subcontractor that may have overcharged them in the first place), then they should be punished.

 

Remember, we all need to band together in our hour of need -- COMPANY MARCH...

[Guest MikeSC]

maybe it has something to do with haliburton being handed the contracts, rather then go through the regular process, and the fact of why we were told they were just handed the contracts. So it isn't really up to me to point out another company more qualified.

Of course, they gave a valid reason for it and they didn't make a profit off of the problem --- so why, precisely, is this "news"?

=Mike

[kkktookmybabyaway 0]

They gave a valid reason for it and they didn't make a profit off of the problem --- so why, precisely, is this "news"?

=Mike

It's HALLIBURTON.

 

Duh.

 

Quit grasping at straws, Mike...

[Jobber of the Week 0]

For once, I have to agree.

 

 

Where's all the anger focused on the fact that all these unnecessary dollars flowed into Kuwait?

[Guest MikeSC]

They gave a valid reason for it and they didn't make a profit off of the problem --- so why, precisely, is this "news"?

              =Mike

It's HALLIBURTON.

 

Duh.

 

Quit grasping at straws, Mike...

I am stumped as to how to continue this.

 

I don't think "FAUXNEWS2003LOL!" would really fit here --- and while this MIGHT be viewed as a military thing, I don't think we can work John Kerry's service into this.

 

I feel powerless.

-=Mike

[Guest Cerebus]

Update, Conservative Brigade Supreme Commander says that Halliburton has to pay the overcharges.

[Guest MikeSC]

Update, Conservative Brigade Supreme Commander says that Halliburton has to pay the overcharges.

But, but, but...

 

I thought Bush was OWNED by them.

 

And, for the love of God, can SOMEBODY in the press mention Haliburton WITHOUT the term "Cheney's former company"?

 

I mean, hearing them call Gore and Dean centrists is bad enough.

-=Mike

[Vern Gagne 0]

maybe it has something to do with haliburton being handed the contracts, rather then go through the regular process, and the fact of why we were told they were just handed the contracts. So it isn't really up to me to point out another company more qualified.

Taking all kinds of bids takes along time. So giving the contract to Haliburtion immediatley saved money, and time.

[sfaJack 0]

Looks like all you liberal conspirators might have to find something else to whine about...

 

http://webreprints.djreprints.com/890250434404.html

 

 

U.S. Officials May Have Steered Halliburton to Kuwaiti Supplier

 

By CHIP CUMMINS

Staff Reporter of THE WALL STREET JOURNAL

 

U.S. and Kuwaiti government officials may have tried to steer Halliburton Co. and the U.S. Army Corps of Engineers to continue working with a Kuwaiti subcontractor that Pentagon officials point to as the source of potential overcharging in Iraq, according to documents and a person familiar with the situation.

 

The new information injects uncertainty into whether Halliburton is to blame for possible cost overruns in a $1.2 billion program to supply Iraq with emergency gasoline supplies. While much is still unclear about the role played by Kuwaiti and U.S. aides, Pentagon officials said last week that initial findings of a routine audit showed that Halliburton's Kellogg Brown & Root unit may have overcharged the government as much as $61 million for gasoline imports from Kuwait to Iraq.

 

President Bush said Friday that if the Pentagon finds Halliburton overcharged the government, the U.S. will "expect that money to be repaid."

 

Auditors found that the cost of gasoline purchased by KBR from a subcontractor in Kuwait was almost twice as expensive as gasoline KBR purchased from a Turkish subcontractor. Corps of Engineers officials said KBR was ordered to move gasoline both from the north and south into Iraq to ensure security of supply. Halliburton officials said the Corps of Engineers ordered purchases from Kuwait. Pentagon officials said they don't believe KBR pocketed the money, but faulted the company for apparently not finding a subcontractor that could deliver gasoline at better prices.

 

But Corps of Engineers documents, copies of which were reviewed by The Wall Street Journal, indicate KBR attempted to negotiate lower rates from their Kuwaiti subcontractor -- Altanmia Commercial Marketing Co. -- earlier this month, and also tried to line up alternate contractors inside Kuwait as early as October. In a letter to KBR, a senior contract negotiator for the Corps of Engineers cited possible "political pressures" from the Kuwaiti government and the U.S. embassy in Kuwait to negotiate future fuel-import business exclusively with Altanmia.

 

KBR, which was awarded a no-bid contract to provide emergency oil-field repair work during the U.S.-led invasion of Iraq, assumed the job of importing large amounts of gasoline and other petroleum products to meet war-related shortages in Iraq in the spring. The no-bid contract has attracted criticism in Washington because Vice President Dick Cheney led Halliburton until he stepped down to run for office with President Bush in 2000. The White House and Pentagon have denied allegations that KBR was granted special treatment because of its ties.

 

KBR's fuel-import assignment has mushroomed into one of the costliest projects in Iraqi reconstruction efforts, with the bill running over $1.2 billion so far. KBR and the Corps of Engineers came under heavy pressure weeks after Baghdad fell in early April to find a way to import large amounts of gasoline, cooking gas and other fuels quickly into Iraq. Looting and sabotage kept refineries and pipelines from operating, triggering long lines at the pump and fanning discontent with the U.S.-led occupation.

 

KBR officials received initial bids from at least two other subcontractors, but Altanmia won out because it could deliver the fuel at the best price, according to a person familiar with the situation. After the subcontract was awarded, KBR received permission from Kuwait's oil ministry for Altanmia to buy Kuwaiti gasoline and transport it to Iraq.

 

In a letter dated Nov. 1, Mary C. Robertson, a senior contracting officer at the Corps of Engineers, wrote to Kuwait's oil ministry to endorse a KBR recommendation that a second company, Kuwait Establishment Co., handle some of the work.

 

In a second letter, to KBR, dated Dec. 6, Ms. Robertson noted that Kuwaiti officials hadn't yet granted permission for a second company to deliver fuel, making Altanmia the only company eligible for the work. She said she also understood that KBR and Altanmia had been negotiating unsuccessfully for "the past three days and nights" to lower prices.

 

The negotiations appear to have commenced before KBR officials received a draft copy of the audit, but after they had been notified that Pentagon officials would conduct a more in-depth review of the fuel-procurement program.

 

In the second letter, Ms. Robertson said she wouldn't direct KBR to negotiate exclusively with Altanmia for future gasoline imports. "Since the U.S. government is paying for these services, I will not succumb to the political pressures from the [government of Kuwait] or the U.S. embassy to go against my integrity and pay a higher price for fuel than necessary," the letter states.

 

In her correspondence, Ms. Robertson, whose official title at the Corps of Engineers is administrative contracting officer, doesn't specifically characterize the political pressure, and it isn't clear why Kuwaiti and U.S. officials would try to steer business to Altanmia. A person familiar with the situation said the U.S. ambassador to Kuwait, Richard H. Jones, asked officials at KBR and the Corps of Engineers to complete a deal with Altanmia for future gasoline imports, even if the company couldn't agree to lower rates. Mr. Jones, a career diplomat, also serves as a deputy to L. Paul Bremer, the top U.S. administrator in Iraq.

 

In a statement, a spokesman for the U.S. embassy in Kuwait said the embassy "wasn't involved in the Army Corps of Engineers' selection of its counterpart company for the purchase of humanitarian fuels in Iraq, nor have we pressured them on any aspect of their dealings with these companies."

 

Calls to the Kuwaiti oil ministry were referred to Issa al-Aoun, the ministry's undersecretary. Mr. Aoun didn't return phone calls.

 

Col. Emmett Dubose, commander of the Corps of Engineers' oil-field repair task force, said Ms. Robertson's letter may reflect a misperception on her part about the U.S. embassy's role in the fuel-import contract because of the contract's complicated nature. American embassies often provide information about local companies for U.S. government contracting jobs, Col. Dubose said. In the case of Iraqi fuel imports, he said, embassy staff had also made clear that the Kuwaiti government wouldn't grant permission to any other company besides Altanmia.

 

"What we've been told is that if you want to do the contract in the way we're talking about, the Kuwaiti government has said this is the company you have to deal with," Col. Dubose said. "Some people can call that pressure ... but that is probably not the intent," he said.

 

Col. Dubose said Ms. Robertson, a civilian Corps of Engineers official, was on personal leave from Baghdad, and repeated attempts to reach her over the weekend were unsuccessful.

 

According to credit reports, Altanmia is a registered Kuwait firm specializing as investment consultants, real-estate developers and representative agents for companies trading in military and nuclear, biological and chemical equipment. The records indicate Altanmia's lead shareholder is Najeeb A. al-Humaizi, a member of a prominent Kuwaiti family. Mr. Humaizi didn't return calls to his office seeking comment.

 

In addition to the oil-field contract, KBR also won a competitively bid contract to provide logistical services to the military. Defense officials said last week that they identified two major issues with the two Iraqi contracts and have submitted questions for Halliburton to answer later this month. The other issue concerned an apparent billing mistake in the logistics contract related to providing dining halls.

 

KBR's oil-services contract is valued at about $2.26 billion so far, with a maximum allowable value of $7 billion. More than half of the current value comes from the cost of importing petroleum products into Iraq from neighboring Kuwait and Turkey.

 

Pentagon auditors found KBR charged $2.27 per gallon for gasoline from Kuwait, much higher that the $1.18 they charged from Turkey. To come up with the overcharge estimate, defense officials appear to have multiplied the per-gallon price differential by 56.6 million, or the number of gallons of Kuwaiti gasoline purchased by KBR up to the end of September.

 

But market experts and officials at the Corps of Engineers -- KBR's client for the fuel-import contract -- said that if KBR was required to buy fuel from Kuwait, the estimate of possible overcharges is too simplistic.

 

Despite having massive oil reserves, Kuwait has limited gasoline-refining capacity and imports gasoline, making the fuel relatively expensive.

[2GOLD 0]

Are we really having a discussion about which overly rich company deserved a contract to give gas to Iraqis?

 

And even the Army just says they aren't upset with the cost really, just the fact that they didn't find a better price for delivery. So really, shouldn't the company that overcharged Halliburton be the real villian?

 

Oh right, a republican in office is involved so it becomes a huge news story. My mistake.

 

God, I hate both sides.