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Government widens criminal probe of Halliburton's gas overcharges
19 July 2004

WASHINGTON, June 19 (HalliburtonWatch.org) -- The Criminal Division of the U.S. Department of Justice issued a subpoena to a former employee of Halliburton's KBR unit to determine whether the company criminally overcharged for gasoline imported into Iraq, the company reported today. KBR, along with its Kuwaiti subcontractor Altanmia Commercial Marketing Co., allegedly overcharged the government by $61 million. Each company charged the government $2.64 per gallon but competitors were importing gasoline for less than half that price. For example, the Iraqi state oil company had been transporting gasoline from Kuwait to Iraq for less than half of KBR's price.

In Dec. 2003, the Defense Contract Audit Agency (DCAA) confirmed in a preliminary audit that Halliburton had overcharged the U.S. government by at least $61 million through Sept. 2003. Although the DCAA later concluded the overcharges were proper, it asked the Pentagon's inspector general to investigate the matter and said the fuel importation contract was given to Altanmia "under unusual circumstances." The inspector general's investigation continues today in addition to the Justice Department's investigation. Congressman Henry Waxman (D-CA) says evidence exists which indicates officials with Altanmia are close friends of high officials in the Kuwaiti government, which indicates the gasoline importation contract might have been awarded to Altanmia only because of cronyism, not merit.

A separate investigation by Democrats on the House Committee on Government Reform found the gasoline overcharges were closer to $167 million, rather than $61 million as found by the Pentagon.

Amid the controversy -- on December 30, 2003 -- the Pentagon fired Halliburton from the gasoline importation contract and assigned it to an office within the Pentagon, the Defense Energy Support Center (DESC). The result, according to Democrats in Congress, was a 50 percent reduction in gasoline prices.

More Information:

House Committee on Government Reform, Minority Staff Report: Halliburton's Gasoline Overcharges (pdf)

Rep. Waxman's letter to NSA's Condi Rice (pdf)

HalliburtonWatch: Gasoline overcharges