updated 2/16/2004 2:04:01 PM ET 2004-02-16T19:04:01

Oil-rich Kuwait’s parliament formed a committee on Monday with broad powers to probe a multi-million-dollar deal to supply U.S. oil services firm Halliburton Co. with fuel for the U.S. army in Iraq.

Parliament unanimously approved a request lodged last week by more than 20 members of Parliament to form the committee to investigate whether there had been any wrongdoing, waste of public funds or if any officials at state-owned Kuwait Petroleum Corp, in charge of the Gulf Arab state’s oil sector, had profited illegally from the deal.

“The National Assembly has approved the formation of a parliamentary committee to investigate the Halliburton case,” House Speaker Jassem al-Kharafi told parliament before reading out the names of the five deputies on the committee.

A U.S. draft audit has found evidence a subsidiary of Halliburton, Kellogg Brown and Root (KBR), might have overcharged by $61 million for bringing oil and gas products into Iraq via the Kuwaiti subcontractor, Altanmia Commercial Marketing Co.

In the United States, Halliburton welcomed “another independent examination of this issue because there have been a lot of erroneous reports in the U.S. and international media,” spokeswoman Wendy Hall said.

“The facts show that KBR delivered fuel to Iraq at the best value, the best price, and the best terms and in ways completely consistent with government procurement policies,” she said in an e-mailed reply to a query from Reuters.

Halliburton, through KBR, is also providing food services for troops in Iraq and on Monday.

It said on Monday it had temporarily suspended certain invoicing of subcontractor services as it reconciled a discrepancy between meals ordered by the Department of Defense and the number of meals actually served to soldiers.

Kuwait’s energy minister Sheikh Ahmad al-Fahd al-Sabah had denied any wrongdoing by KPC and Prime Minister Sheikh Sabah al-Ahmad al-Sabah said his government backed the move to institute a parliamentary investigation.

“We welcome the formation of the parliamentary committee to discuss the case so that the Kuwaiti people will know with complete transparency if there are any charges,” the prime minister told the 50-member assembly house.

Several MPs, reacting to recent news that the energy minister had referred the contract to supply Halliburton to the public prosecutor to investigate any wrongdoing, had said the move was hasty and that the house needed to launch its own investigation.

Arguing that the allegations of wrongdoing were based on “unfounded rumors,” the minister has said that KPC has not breached any laws and that the local subcontractor was chosen by the Americans not by KPC. He said he referred the case to clear the names of senior officials accused of corruption.

Some MPs have said that according to some estimates, Altanmia gets $759,567 every day under the deal, nearly twice the $386,910 that state-owned KPCs gets for selling the fuel.

The MPs said the case has hurt Kuwait’s reputation and may prompt the Americans to seek other fuelling sources. They said any Kuwaiti official guilty of corruption must be sacked.

“This case is important to public opinion in Kuwait,” veteran MP and former speaker Ahmad al-Sadoun said. “What is important to us is clearing Kuwait of any wrongdoing.”

Kuwait’s parliament is powerful and lawmakers can grill government officials. It has in the past launched probes into allegations of corruption and misgovernment.

The committee should be able to seek the help of the State Audit Bureau and all experts and government or parliamentary employees and others deemed necessary.

The committee, which has 60 days from Monday to report its findings, plans to hold its first meeting Wednesday.

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

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