Reports emerged on 12 December claiming that an audit on the US' Halliburton, carried out by the US Department of Defence (DoD), has uncovered 'substantial evidence' of overcharging for services supplied to coalition forces in Iraq - a claim that Halliburton refutes. Reports indicate that Halliburton, through its subsidiary Kellogg Brown & Root (KBR), could have overcharged the US government by as much as $61 million for supplying oil in Iraq and a further $67 million on catering facilities. 'The Defence Contracting Audit Agency (DCAA) is conducting a routine audit and has requested additional information from KBR,' said a statement form Halliburton denying the claims. 'There have been no conclusions reached and this is a normal part of the audit process for the DCAA to raise questions and request additional materials.' However, a statement from the DoD said that the audit had uncovered 'some problems that the department is addressing'.
The audit was ordered by the DoD after US lawmakers on 21 October made public a letter from the Iraq National Oil Company saying that it paid less to import oil from neighbouring countries than KBR, which has been purchasing oil with US government money. At the time of the allegation, KBR was charging Washington $1.59 a gallon, and was receiving a mark-up that could have boosted the price to $1.62 or $1.70, said US Senators Henry Waxman and John Dingell. In comparison, Iraq's State Oil Marketing Organisation was paying about $0.90 and $0.98 cents a gallon. Halliburton initially responded to the allegation by saying that its prices reflected the short-term nature (30-day) of its contracts with suppliers. 'Simple economics dictate that companies who are not bound by these guidelines, and are able to negotiate price on a long-term contract basis, can negotiate lower prices,' said a KBR spokeswoman (MEED 22:10:03).