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Halliburton's billing system for work in Iraq hit by audit

Weak oversight of subcontractors, invoice woes cited

WASHINGTON -- Pentagon auditors have found "deficiencies" in Halliburton's billing system for billions of dollars worth of work in Iraq, according to a military audit released by a Democratic lawmaker yesterday.

The audit on Halliburton subsidiary Kellogg Brown and Root, the US military's biggest contractor in Iraq, was released by California Representative Henry Waxman to back up claims of misuse of US taxpayer funds in Iraq by the Texas firm, which was run by Dick Cheney from 1995 to 2000, before he was elected vice president of the United States.

The May 13 audit report cited "system deficiencies" that resulted in invoicing misstatements and said a follow-up audit would be done in six months to see whether corrective action had been taken.

The Defense Contract Audit Agency is doing several other reports, covering issues such as a dispute over prices charged to the military for food delivered to troops.

In addition, investigators are looking into whether Kellogg Brown and Root overcharged for fuel.

The May audit also said the company did not have adequate controls over subcontractors' bills, and criticized it for inadequate oversight of subcontractors' work.

A Halliburton spokeswoman, Wendy Hall, said that the company has worked continuously to improve its performance and its systems.

"We have established a number of policies and procedures to assure that the company's procurement process operates with integrity, efficiency, and effectiveness," she said.

Waxman's office released statements from five former employees of Halliburton and one subcontractor who complained of waste, fraud, and abuse by the company in Iraq.

"These individuals have firsthand knowledge of egregious examples of waste, fraud and abuse involving Halliburton's Iraq contracts," Waxman said in a letter to Republican Representative Tom Davis of Virginia, head of the House Committee on Government Reform.

The committee is holding a hearing on Iraq contracts today, and Waxman strongly objected to Davis that these "whistle-blowers" were not allowed to testify.

David Marin, a spokesman for the committee, said Davis was "disappointed and flabbergasted" by Waxman's letter, adding that the committee had spent hours talking to the six individuals.

"Some of them offered compelling testimony which we think requires follow-up, but others were clearly either disgruntled former employees or had some ax to grind," Marin said.

David Wilson, a former convoy commander for Halliburton, and James Warren, a Halliburton truck driver, described instances in which they said new $85,000 Halliburton trucks were "abandoned or torched" if they had minor mechanical problems.

In a related development, New Jersey Senator Frank Lautenberg called for US Attorney General John Ashcroft to appoint a special counsel to investigate whether Cheney helped Halliburton get deals in Iraq.

Cheney's spokesman, Kevin Kellems, declined to comment on Lautenberg's call for a special counsel, but said the vice president stood by his previous statements denying that he has done anything improper.

"The vice president and his staff do not get involved in decisions concerning pending government contracts with Halliburton," Kellems said.

In a letter to Cheney on Sunday, Waxman said one of Cheney's key staffers, Lewis Libby, and other senior administration officials were briefed about the Defense Department's plan to award Iraq deals to Halliburton.

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