US: A Pentagon investigation has found evidence that Halliburton, the US company formerly headed by Vice President Dick Cheney, has been overcharging the US government a total of $128 million on two contracts for work in Iraq, writes Conor O'Clery, North America Editor, in Washington
The disclosure was made at a hurridly called news conference at the Pentagon on Thursday evening, and comes as a huge embarrasment to the Bush administration at a time when it is under harsh criticism at home and abroad for excluding allies from Iraqi contracts.
The Pentagon said it had found evidence that the company overcharged the US government $61 million for petrol delivered to Iraq, and would have been overpaid $67 million to a subsidiary Kellogg, Brown & Root to supply army canteens if auditors hadn't raised questions, US officials said. The Defence Department has awarded Iraq-related contracts to Halliburton worth $5 billion without competitive bidding.
Democratic candidates seized on the disclosure, with front- runner Mr Howard Dean commenting: "We've recently learned what many Americans have suspected for a long time - special interest contributor Halliburton is overcharging the American taxpayers."
Retired Gen Wesley Clark said Mr Bush is "more concerned about the success of Halliburton than having a success strategy in Iraq".
The huge Texas-baseed company overcharged the US Army by $1.09 per gallon for nearly 57 million gallons of petrol transported from Kuwait to Iraq, Department of Defence officials said.
This follows a New York Times report earlier in the week that the US government is paying Halliburton $2.64 a gallon for petrol from Kuwait, more than twice what others are paying.
"We've got auditors that crawl all over these things, and what you're reading about in the paper is not an overpayment at all," US Defence Secretary Donald Rumsfeld told a group of Congress members yesterday, in direct contradiction to what his officials told reporters.
There could be disagreement over what ought to be charged "but there has not to my knowledge been any overpayment", he said.
Halliburton said that it had to charge high prices to deliver fuel to a combat zone. "Halliburton only makes a few cents on the dollar when fuel is delivered from Kuwait to Iraq," the company said.
The second contract involved a proposal for cafeteria services that was $67 million too high, and which was sent back by the Pentagon. The disclosure of possible war-profiteerring by a favoured American firm could not come at a worse time for the administration. In a scathing editorial yesterday, the Washington Post called the Bush initiative to restrict contract bids to coalition partners "arrogant and self-defeating" and a product of the "spiteful unilateralism" that has characterised the administration's handling of postwar Iraq.
It said the latest slap at Germany, France, Canada and other countries excluded from bidding for $18 billion in contracts reversed at a stroke months of patient efforts to overcome the divisions its Iraq policy created.
It also criticised Mr Bush for his "sarcastic gibe" when told that German Chancellor Gerhard Schroeder believed the decision might violate international law. The president responded "International law? I better call my lawyer."
"Efforts to repair US relations with Europe and sinking American prestige around the world will be set back once again," said the Post.
"And what will Mr Bush have gained? Better ask his lawyer."
Mr Bush is sending former Secretary of State James Baker to world capitals next week to ask them to forgive Iraq's pre-Saddam Hussein debt and to hold out the prospect of access to US contracts in return.
Vice-President Dick Cheney left Halliburton when he became Mr Bush's running mate in 2000 and has said he played no role in contracts for his former company.