Bush expects oil deal refund

Subsidiary of Halliburton may have overcharged $61 million for fuel in Iraq

President praises Pentagon audit

Critics say case bolsters claims of favoritism for administration's backers

December 13, 2003|By David L. Greene | David L. Greene,SUN NATIONAL STAFF

WASHINGTON - President Bush made clear yesterday that he believed a subsidiary of the politically connected Halliburton Co. overcharged the Pentagon millions of dollars for supplying fuel to Iraq and, if it did, would have to repay the government.

"If there is an overcharge like we think there is, we expect that money to be repaid," Bush said sternly.

The president spoke to reporters after a ceremony in the Roosevelt Room to announce his choice of Alphonso Jackson to be the new secretary of housing and urban development, replacing Mel Martinez, who resigned to explore a run for a Florida seat in the Senate.

Bush's blunt remarks seemed to be an effort to dispel any perception that Halliburton, of which Vice President Dick Cheney served as chief executive, was receiving favorable treatment from the White House in the bestowing of contracts to help rebuild Iraq.

Bush was responding to questions about a Pentagon audit, details of which were reported yesterday. The audit found evidence that Halliburton subsidiary Kellogg, Brown & Root overcharged the Pentagon as much as $61 million in contracts to transport oil from Kuwait to Iraq.

Altogether, Halliburton has about $5 billion in contracts to rebuild the war-torn country that were awarded without competitive bidding. White House aides have insisted that Halliburton is one of the few major corporations suited to do much of the work.

The Pentagon audit did not accuse Halliburton of profiteering, saying the company had paid a subcontractor too much. But it bolstered Democratic critics who accuse the administration of being beholden to its wealthy donors in the energy industry and to the companies that are winning lucrative contracts to reconstruct Iraq. Any widespread perception that well-connected U.S. businesses are being enriched in the postwar efforts might complicate Bush's re-election campaign.

Democrats have long sought to portray the president, a former oil man, as tied to big business. Yesterday, Howard Dean, who leads his rival presidential contenders in several key states, said that "our role on the world stage and the safety of our troops should not be for sale."

The former Vermont governor suggested that Bush is in an awkward position. Indeed, a day earlier, the president defended his new policy of barring countries that refused to fight alongside the United States from receiving reconstruction contracts. He asserted that U.S. taxpayers should expect their money to go only to countries that helped U.S. forces.

But yesterday, Bush had to respond to accusations that a company once led by his vice president might have been overcharging those same tax-paying citizens.

"Bush is preventing entire nations from bidding on contracts in Iraq so his campaign contributors can continue to overcharge the American taxpayers," Dean said. He called on the government to enlist help in Iraqi reconstruction from "allies that this president has alienated," adding that foreign policy should not be based on "the personal petulance of President Bush."

Sen. John Edwards of North Carolina, another presidential candidate, argued that "a company that donates huge sums of money to the president and once was chaired by the vice president is now war profiteering, at taxpayer expense."

The president spoke in the afternoon after his spokesman, Scott McClellan, sought to distance the White House from the Halliburton contract.

"We expect the Pentagon to look at this and get to the bottom of it," McClellan said. He then directed further questions on the matter to the Pentagon.

In his remarks, Bush praised the Pentagon for publicly announcing the audit's findings and highlighted the fact that, in doing so, his administration had responded quickly to the possible overcharge by Halliburton.

"I appreciate the Pentagon looking out after the taxpayers' money," the president said. "They put the issue right out there on the table for everybody to see, and they're doing good work. We're going to make sure that as we spend the money in Iraq, that it's spent well and spent wisely."

A Halliburton spokeswoman, Wendy Hall, pointed out that the company was not being accused by the Pentagon of "fraud or any other kind of intentional wrongdoing." She said the company was standing by its position that there was no clear evidence of an overcharge, and added that Halliburton welcomed further investigation.

"Any contract that is this large and grows this fast is, of course, going to be subject to question," David Lesar, Halliburton's chairman and chief executive, said in an e-mail statement sent by the company yesterday.

"We will work with all government agencies to establish that our contracts are not only good for the United States, but also the company is the best and most qualified contractor to perform these difficult and dangerous tasks."

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