Iraq work overcharge blamed on supplier

Pentagon calls Halliburton error an honest mistake

December 18, 2003|By John Hendren | John Hendren,LOS ANGELES TIMES

WASHINGTON - The Pentagon's comptroller said yesterday he saw "no basis whatsoever" to believe Vice President Dick Cheney's former company deliberately overcharged the Pentagon for oil deliveries to Iraq.

Instead, the potential overcharge appeared to stem from an outdated accounting and cost-estimating system within Halliburton Co., said the comptroller, Dov Zakheim. The company's KBR unit, formerly known as Kellogg, Brown & Root Inc., failed to analyze fully the price it was charged by a Kuwaiti supplier, he said.

A recent Defense Department audit found that KBR sought as much as $61 million in excess charges for oil deliveries to Iraq.

An aide said Zakheim told defense writers at a breakfast that "the issue is not one of concealment. The issue is that they've got a rather antiquated accounting system."

The Pentagon has said that any overbilling would come out of Halliburton's pockets. The oil and gas company, which is based in Houston, could then try to wrest the money back from a Kuwaiti subcontractor suspected of overcharging it for the oil.

"If auditors determine that there was X dollars in overpricing, then it's the company that will be out, not the taxpayer," Zakheim said.

He is the latest Bush administration official to suggest that the apparent overcharging was initiated not by Halliburton but by a Kuwaiti subcontractor.

The Los Angeles Times is a Tribune Publishing newspaper.

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