Halliburton's RIO Grande of overcharges

A Defense Department audit reveals more than $100 million in Halliburton overcharges -- and there are still nine audits to go.

By Page Rockwell
Published March 15, 2005 2:34AM (EST)

Congressional Democrats released records Monday from the Defense Contract Audit Agency's investigation of Halliburton, revealing that the company overcharged $108 million for one of 10 services the company performed as part of its Restore Iraqi Oil contract. U.S. Representatives Henry Waxman, D-Calif., and John Dingell, D-Mich., also submitted an open letter to President Bush, calling for the release of audit reports on the remaining nine contract tasks, and asking the Bush administration how it plans to recover the funds from Halliburton.

The battle for transparency has been going on ever since Vice President Cheney's former company nabbed its lucrative no-bid contract: As Rep. Waxman told Salon back in Dec. 2003, he's been asking for an explanation of what appears to be Halliburton's "government-sanctioned profiteering" in U.S.-occupied Iraq. But more than a year later the White House still hasn't answered Congressional inquiries, and though President Bush has promised that audit reports on the RIO contract would be made public, neither Congress nor the public has been privy to them so far.

Monday's letter suggests the reason why: It may be even worse than Waxman thought. The "tens of millions of dollars" in overcharges that the Pentagon mentioned in '03 mushroomed into $108 million in the one task report that Congress got from the DCAA. (In one particularly egregious instance, the company paid subcontractors $27 million to transport $82,000 worth of propane from Kuwait to Iraq; the Congressmen, apparently at a loss for words, quoted California oil economist Phil Verleger: "It's as if they've put the gasoline on the Queen Mary and taken it around the world before they deliver it.") Given that the DoD is still sitting on the other nine audit reports, it seems likely that the total overcharges will dramatically exceed the DoD's '03 estimate.

But unless Congress can get its hands on the other reports, it'll be hard to hold Halliburton accountable. And it's not just American taxpayers who should get a refund -- $1.64 billion of Halliburton's total $2.5 billion tab have come out of Iraqi oil proceeds held in the Development Fund for Iraq. Repayment of overages to the development fund could come in handy for the fledgling democracy, plagued as it is by security problems and a lack of funds to cover basic infrastructure and electricity.

The Pentagon still refuses to freeze Halliburton's contract while investigations are underway. And for its part, Halliburton contends that its charges were fair. Never mind the no-bid contract and the various options it had for lower fuel prices; in a statement to the Associated Press, company spokesperson Wendy Hall went with the "all's fair in love and war" defense: "The [DCAA's] report fails to take into account the fact that [Halliburton subcontractor Kellogg Brown & Root] performed an urgent mission at the Army's request and that the mission took place in a wartime environment."

Page Rockwell

Page Rockwell is Salon's editorial project manager.

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