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Ex-Halliburton employees tell of overbilling

The Texas oil services giant, which is being examined by the military for possibly overcharging for services, has consistently denied allegations of overbilling.
/ Source: Reuters

Two ex-Halliburton employees told Democratic lawmakers that Vice President Dick Cheney's old energy company "routinely overcharged" for work it did for the U.S. military, the congressmen said on Thursday.

The Texas oil services giant, which is being examined by the military for possibly overcharging for services, has consistently denied allegations of overbilling.

Halliburton did not immediately respond to the allegations made by the two former employees or questions over why they had left the company.

The two ex-employees, who contacted U.S. Rep. Henry Waxman, a California Democrat who has been critical of Halliburton, worked for the Texas firm's procurement office in Kuwait. Waxman's office said the two quit for personal reasons.

Waxman and another Democrat, Rep. John Dingell of Michigan, wrote about the "whistle-blowers" in a letter to the Defense Contract Audit Agency, which is already looking into whether one of the company's subsidiaries overcharged for fuel it took into Iraq and for meals served to U.S. troops in the region.

Examples of wasteful spending given by the ex-employees ranged from leasing ordinary vehicles for $7,500 a month to seeking embroidered towels at a cost of $7.50 a piece when ordinary ones would have cost about a third of the price.

"What is most disturbing about these allegations from the whistle-blowers is the regular and routine nature of the overcharging," the lawmakers wrote in the letter to DCAA Director William Reed.

Halliburton unit Kellogg Brown and Root has a logistics contract with the U.S. military that has so far received more than $3.7 billion in business, most in Iraq. It also has contracts worth nearly $4 billion to rebuild Iraq's oil industry.

One of the employees, a field buyer identified as Henry Bunting, was to address a Senate Democratic Policy Committee hearing on Friday about alleged Iraq contracting abuses. Bunting could not be reached for comment.

The other whistleblower, a procurement supervisor, was not identified by name.

Halliburton is the U.S. military's biggest contractor in Iraq and the Pentagon's seventh biggest contractor overall, having been propelled from 37th place last year to this prime spot because of its Iraq business.

The letter said senior Halliburton officials frequently told the employees high prices charged by vendors were not a problem.

"One whistleblower said that a Halliburton motto was: 'Don't worry about price. It's cost plus," said the letter, referring to the practice of charging for a service and then adding a percentage fee as profit.

Halliburton has come under scrutiny by a number of U.S. government departments during the 2004 election year, leading the company to accuse Democrats of political mudslinging because of the company's former ties to Cheney.

Aside from military auditors' questions, the U.S. Treasury, the Justice Department and the U.S. Securities and Exchange Commission are all looking into a range of issues, from allegedly paying kickbacks in Nigeria to whether the company broke U.S. laws by dealing with Iran via a foreign subsidiary.

The company has consistently said all its dealings have been in line with U.S. laws and strongly denies wrongdoing, except in the case of one or two former employees who it said may have paid $6.3 million in kickbacks to a Kuwaiti subcontractor.