Halliburton fires two employees over kickback charges

Company president promises to repay Pentagon $6 million

January 24, 2004|By John Hendren | John Hendren,LOS ANGELES TIMES

WASHINGTON - Halliburton, Vice President Dick Cheney's former company, said yesterday that it had fired two employees who allegedly accepted kickbacks in return for helping a subcontractor overbill the Pentagon's Iraq reconstruction program by $6.3 million.

Halliburton officials said they informed Pentagon Inspector General Joseph Schmitz last week that an internal audit found that two employees of the company's Kellogg, Brown & Root subsidiary might have accepted improper payments from a Kuwaiti subcontractor as part of an effort to bilk the Pentagon.

The incident could give ammunition to critics of the war in Iraq and President Bush's political opponents.

Halliburton, which Cheney served as chief executive immediately before becoming vice president, is already under investigation by the Pentagon for possible overbilling for gasoline in Iraq.

Democrats responded to the new allegations by calling for a congressional investigation of the company, which has received numerous contracts worth billions for work in Iraq.

President and Chief Executive Randy Harl said in a statement yesterday that the $6.3 million in possible overcharges would be paid back even before a Pentagon investigation, adding: "We will bear the cost of the potential overcharge - not the government."

On Capitol Hill, Senate Minority Leader Tom Daschle of South Dakota and other Democrats pounced on the allegations as evidence that Congress needs to investigate all Halliburton contracts in the Persian Gulf.

Cheney has repeatedly denied that he has influenced decisions to award contracts to Halliburton, and the White House appeared yesterday to dismiss calls for a congressional probe. White House spokesman Scott McClellan called Democrats' complaints "election-year politicking." He said Bush expected the Pentagon to resolve any outstanding questions.

"The president has made it very clear that he expects the Department of Defense to get to the bottom of that matter, and ... if the federal government was overcharged, that Halliburton should repay that money," McClellan said.

Some military analysts said that calls for halting Halliburton's contracts are unrealistic.

"This is unlikely to have any effect on the company or on its business relations to the government or its common practices in Iraq," said Dan Goure, a former Pentagon official and defense analyst at the Lexington Institute, an Arlington, Va., public policy group.

"The only thing that prevents government vehicles from running out of gas and the whole country shutting down is Halliburton. ... You could no more shut the contracts down than disband NASA while the shuttle is in space," Goure said.

Some military analysts have said there are few alternatives to Halliburton, because few companies have the wherewithal to mobilize the resources necessary to support the world's largest military halfway across the globe.

Houston-based Halliburton provides construction, engineering and logistics services to the oil and gas industry. It has contracted with the Pentagon for more than 50 years.

The Los Angeles Times is a Tribune Publishing newspaper.

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