Video: More problems for Halliburton

By Lisa Myers Senior investigative correspondent
NBC News
updated 3/8/2004 7:49:42 PM ET 2004-03-09T00:49:42

Halliburton has a multibillion-dollar contract to feed and house U.S. troops in Iraq.  But there are problems. A food subcontractor that runs 10 percent of the dining facilities in Iraq claims it hasn’t been paid by Halliburton for months and is threatening to stop serving hot meals.

The company, Event Source, serves 100,000 meals a day in Iraq under a contract with a Halliburton subsidiary.  vent Source claims Halliburton owes it $87 million, including payment for President Bush's Thanksgiving dinner with the troops.

“When you get stuck out there for $87 million,” explains Event Source Chief Executive Officer Phil Morrell, “it’s a question of economics.”

In an interview with NBC News, Morrell says he’s already laid off employees in the United States and soon will have to feed sandwiches to the troops, instead of hot meals, because his company is running low on money.

Last month, Halliburton was accused of overcharging the government for feeding troops and agreed to forgo further payments until the issue is resolved.     

Morrell says he believes Halliburton and its other food service contractors did overcharge, billing the government not for meals actually served, but for meals a facility could have served.

“In a lot of cases,” says Morrell, “that was two or three times the number of troops who were actually coming in.  And we just thought that was just unethical and decided not to go down that path.”

All this as Halliburton tries to repair its image and its Chairman of the board, President and Chief executive officer Dave Lesar insists in an advertisement, “Criticism is okay - we can take it.” The company points out some problems are inevitable in a war zone.

No one believes troops will actually go hungry.

Monday, Halliburton did not dispute the charges. It says it's auditing all its dining facilities and doing all it can to speed the process.

Lisa Myers is NBC’s senior investigative correspondent.

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