updated 1/23/2004 1:39:25 PM ET 2004-01-23T18:39:25

Two Halliburton Co. officials accepted up to $6 million in kickbacks from a Kuwaiti company that was awarded contracts to supply U.S. troops in Iraq, according to a newspaper report.

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Halliburton disclosed the alleged impropriety to the Pentagon inspector general's office this week, The Wall Street Journal reported on its Web site Friday.

The two employees, who have been fired, worked for Halliburton subsidiary Kellogg Brown & Root in Kuwait, the same division of the company involved in a highly scrutinized gasoline contract, the Journal said.

The newspaper said the new allegations do not involve the gasoline controversy, in which the company charged the Army more than double the price for fuel brought in from Kuwait than for gas from Turkey.

Neither Halliburton nor U.S. officials would discuss the specifics of the new alleged misconduct, in which an undisclosed Kuwaiti company allegedly gave kickbacks to the two Halliburton employees after winning lucrative subcontracts.

The disclosure is the first firm indication of corruption involving U.S.-funded projects in Iraq and raises new questions about Halliburton's dealings there, the newspaper said.

Halliburton told the Journal that the company had quickly told the Pentagon about the impropriety, which it said was "detected through the company's internal control procedures."

"The key issue here is self-disclosure and self-reporting," a Halliburton spokeswoman said.

"Halliburton internal auditors found the irregularity, which is a violation of our company's philosophy, policy and our code of ethics," she told the Journal. "We found it quickly, and we immediately reported it to the inspector general. We do not tolerate this kind of behavior by anyone at any level in any Halliburton company."

Democrats have demanded further investigations into contracts awarded to Halliburton, which was formerly run by Vice President Dick Cheney and has donated to the Bush campaign.

Critics have cited the Halliburton's contracts as evidence of the Bush administration's favoritism to corporate friends. White House and Pentagon officials say the Defense Department's contract decisions are not affected by political concerns.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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