Watch CBSN Live

Halliburton: We Saved Gov't Money

Vice President Dick Cheney's former company said Thursday it has saved the Pentagon money rather than overcharging for fuel delivered to Iraq as Defense Department auditors have alleged.

Meanwhile, Sen. Joe Lieberman, a Democratic presidential contender, said a Pentagon official had told him Halliburton auditors also had warned the company about possible overcharging.

Halliburton said in a statement it expected to be cleared by the Defense Department of overcharging for gasoline it trucked into Iraq from Kuwait. Last week, Pentagon auditors said they suspected a Halliburton subsidiary, KBR, had overcharged the department by about $61 million on a no-bid contract to supply gasoline to Iraqi citizens.

Pentagon officials said the source of the overcharging was the high price charged by a Kuwaiti firm which supplied the gas to Halliburton. Halliburton said the Kuwaiti firm was the only one approved as a supplier by the U.S. Army Corps of Engineers, which oversees the contract.

Pentagon officials have also said the Kuwaiti company was the only one approved by the Kuwaiti government to export gasoline from the oil-rich monarchy. Lieberman identified the firm as the Altanmia Commercial Marketing Co.

Halliburton said it had suggested getting gasoline supplies from Turkey, which charged a lower price. Pentagon auditors said Halliburton charged $1.09 per gallon more for gasoline from Kuwait than from Turkey.

Turkey is now the source of about two-thirds of the gasoline distributed in Iraq, Halliburton said. Using the Turkish supplier instead of the Kuwaiti firm has saved the U.S. government about $164 million, Halliburton said.

Lieberman said he met with Michael Thibault, an official with the Defense Contract Audit Agency, which is investigating the Halliburton contract. Lieberman said Thibault told him DCAA auditors found a Halliburton draft audit warning that the Kuwaiti company was charging excessive prices and the procedures may have violated U.S. contracting regulations.

Halliburton spokeswoman Wendy Hall did not return telephone and e-mail messages seeking comment on Lieberman's allegations. Thibault did not return a telephone message left at his office.

Halliburton's statement said the gasoline from Kuwait also cost more because it had to be trucked farther in dangerous territory. Three Halliburton drivers have been killed, 10 employees wounded and 60 pieces of equipment damaged in attacks on fuel convoys, the company said.

Pentagon officials declined comment on Halliburton's statement but confirmed the company had sent its response to Defense Department auditors

Last week, President Bush said he thought Halliburton had overcharged and he expected the company to reimburse the government.

Democrats have criticized Halliburton's contracts in Iraq, which have netted the company about $5 billion this year. Several Democrats in Congress have called for further investigation of the company and its Iraq contracts.

Cheney headed Halliburton from 1995 until he quit in 2000 to become Bush's running mate. He has said he severed all ties with the company.

Halliburton got its contract to rebuild Iraq's dilapidated oil industry as an outgrowth of a contract with the Army. It was to provide emergency logistical help for situations such as the Iraq war. The Corps of Engineers opened the oil rebuilding process to competitive bidding earlier this year and is preparing to award $2 billion in replacement contracts.

View CBS News In