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updated 7/26/2004 4:28:43 PM ET 2004-07-26T20:28:43

The Pentagon has already awarded Halliburton Co., the controversial military contractor, deals worth up to $18 billion for its work in Iraq.  But now former Halliburton insiders have come forward with new allegations of massive waste of taxpayer money.

Marie deYoung, a former Army chaplain who worked for Halliburton, was so upset by attacks on the company she e-mailed the CEO in December with a strategy on how to fight the "political slurs."  But today, after five months inside Halliburton's operation in Kuwait, deYoung has radically changed her opinion. "It’s just a gravy train," she said.

DeYoung audited accounts for Halliburton’s subsidiary KBR.  She claims there was no effort to hold down costs because all costs were passed on directly to taxpayers.  She repeatedly complained to superiors of waste and fraud.  The company's response, according to deYoung was: "We can be as dumb and stupid as we want in the first year of a war, nobody’s going to care."

DeYoung produced documents detailing alleged waste even on routine services: $50,000 a month for soda, at $45 a case; $1 million a month to clean clothes — or $100 for each 15-pound bag of laundry.

"That money could have been used to take care of soldiers," she said.

DeYoung also claims people were paid to do nothing.  Mike West says he was one of them.  Paid $82,000 a year to be a labor foreman in Iraq, West claims he never had any laborers to supervise. "They said just log 12 hours a day and walk around and look busy," he said. "OK, so we did."

Both deYoung and West have since left the company.  Pentagon documents obtained by NBC News support the whistleblowers' charges.  In December auditors complained of Halliburton's "serious deficiencies," including "lack of cost control and cost consciousness."  Some examples:

  • Purchase of hundreds of high-end SUVs and pickups, loaded with options like CD players, which "most KBR employees do not need." 
  • "Duplication ... and gold-plating" in purchases of computers and high-tech equipment.
  • Halliburton employees living in 5-star hotels.

The company declined an interview but suggests in an e-mail to NBC News that critics are politically motivated: "When Halliburton succeeds, Iraq progresses. Sadly, a few people don't want either of those results."

Halliburton also said the soda problem has been "corrected," and the laundry charges are being investigated, but insists it's "absolutely not true" the company is cavalier about taxpayer money.

Whistleblower deYoung thinks the problem is obvious. "They're using the war as an excuse, but it's not the war," she said.  "It was very bad management."

Pentagon auditors apparently agree.  They're withholding $186 million from the company and threatening to hold back even more unless Halliburton corrects the problems.

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