WASHINGTON – President Bush said Friday that he believes Halliburton Inc. overcharged the Pentagon in Iraq and that the company once led by Vice President Dick Cheney should repay any such overcharge.
Democrats said the preliminary findings by a Pentagon audit – that Halliburton may have overcharged the Army by $61 million for gasoline – proved that the Bush administration was giving favorable treatment to its friends and supporters. But Bush said the findings, released Thursday, demonstrated the government was closely monitoring its contracts.
“I appreciate the Pentagon looking out after the taxpayers’ money,” Bush said after promoting Alphonso Jackson to be his new Secretary of Housing and Urban Development. “And if there’s an overcharge, like we think there is, we expect that money to be repaid.”
The audit found Halliburton, of which Cheney was chief executive before becoming Bush’s running mate, may have overcharged the Army by $1.09 per gallon on nearly 57 million gallons of gasoline delivered to citizens in Iraq by buying from Kuwait instead of Turkey. The charges were part of a no-bid contract Halliburton received for rebuilding the Iraqi oil industry.
A Halliburton executive said Friday that the company’s subsidiary, Kellogg, Brown and Root, picked the lowest eligible bidder. The executive said KBR was required by the Army Corps of Engineer to purchase some of the higher-priced Kuwaiti fuel and was only permitted to do business in Kuwait with companies approved by the government-owned Kuwait National Petroleum Co.
Halliburton has until Dec. 17 to respond to the Pentagon’s draft audit report. The audit agency then will release a final report to the Army Corps, which would decide whether to seek reimbursement. “Until the contracting officer makes a decision, there is no dispute with the government,” the executive said.
Democratic presidential candidates on Friday accused Bush of cronyism. Sen. Joe Lieberman, D-Conn., said the deal was lining “the pockets of well-connected corporations,” while Sen. John Edwards, D-N.C., charged that Halliburton of “war profiteering.”
The preliminary findings the Defense Department made public on Thursday were part of a routine audit of two contracts that KBR has with the government, including an Iraq oil reconstruction contract awarded in March worth up to $7 billion. The results do not suggest that KBR necessarily did anything wrong, a Defense official noted in laying out the findings.
Speaking at a news conference Friday, Defense Secretary Donald Rumsfeld said the government hadn’t yet paid the money in question to the Halliburton unit. “We’ve got auditors that crawl all over these things,” he said.
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