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Army will withhold payment to Halliburton due to suspicious bills
17 Aug. 2004

WASHINGTON, Aug. 17 (HalliburtonWatch.org) -- The U.S. Army has decided to withhold 15 percent of future payments to Halliburton because the company apparently billed taxpayers for work that was never undertaken or completed, Reuters reports. Halliburton had said yesterday that the Army would give it more time to explain the suspicious bills, but today's news indicates that was not the case. The company told Reuters that its claim yesterday that Army officials had given it more time to explain the suspicious bills "were accurate at the time based on clear oral assurances from senior Pentagon representatives."

The Pentagon last week told Halliburton's KBR subsidiary that $1.8 billion in bills from the company's work in the the Middle East are not verifiable. The $1.8 billion represents 43 percent of Halliburton's total bills submitted to the Pentagon for reimbursement. The company was given until Aug. 15 to justify those bills, but failed to meet that deadline. It also failed to meet two previous deadlines that had been extended, Reuters reported.

If Halliburton fails to justify its expenses, the Pentagon can withhold up to 15 percent of requested reimbursements. The Army estimated that KBR work orders with a future value of $8.2 billion could be affected by a 15 percent withholding, or $60 million per month. So far, Halliburton has received $4.3 billion from the Pentagon for its work under the Army's LOGCAP contract. Under LOGCAP, Halliburton's KBR subsidiary is charged with feeding the troops, transporting military supplies and personnel, and constructing military housing -- mostly in Iraq and Kuwait.

The withholding of payments will affect future, not past, invoices submitted by Halliburton.

"At the end of the day, we do not expect this will have a significant or sustained impact on liquidity," said Cris Gaut, chief financial officer, in a news release. "There are very few companies in the world that could or would adapt this quickly while, at the same time, financing an operation of this magnitude."

Halliburton will take legal action against the Pentagon over the dispute. The company wants a judge to rule that the 15 percent withholding does not apply to its LOGCAP and Restore Iraqi Oil I and II contracts with the Army, which constitute the bulk of its work in the Middle East.

More Information:

Army grants Halliburton more time to explain suspicious bills

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

HalliburtonWatch: Halliburton overcharged for meals by $186 million

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

HalliburtonWatch: Gasoline Overcharges

HalliburtonWatch: Government widens criminal probe of Halliburton's gas overcharges