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Halliburton overcharges taxpayers to import gas into Iraq

Halliburton's KBR subsidiary is billing the Army between $1.62 and $1.70 per gallon, while Iraqis are charged between 4 cents and 15 cents at the pump.
Dems: Halliburton Overcharging for Gas
Larry Margasak, Associated Press, October 16,

WASHINGTON--Halliburton, the Houston company with a no-bid contract to restore Iraq's oil industry, is charging U.S. taxpayers exorbitant prices to import gasoline into Iraq, two Democratic congressmen said Wednesday.

Reps. Henry Waxman, D-Calif., and John Dingell, D-Mich., wrote the Bush administration that the company's KBR subsidiary is billing the Army between $1.62 and $1.70 per gallon, while Iraqis are charged between 4 cents and 15 cents at the pump.

"Although Iraq has the second largest oil reserves in the world, the U.S. taxpayer is, in effect, subsidizing over 90 percent of the cost of gasoline sold in Iraq," the lawmakers said in the latest Democratic attacks against the company formerly led by Vice President Dick Cheney.

The charges cover the purchase and transportation of the petroleum from Kuwait and other countries.

Halliburton, originally hired to extinguish oil fires, has received the expanded role of restoring Iraq's oil industry. The company has been paid $1.4 billion through September for its work.

The U.S. Army Corps of Engineers, which chose Halliburton, has received competitive bids for a replacement contract that could be awarded this month.

Agency spokesman Robert Faletti said he could not confirm the figures that Waxman and Dingell cited in a letter to Joshua Bolten, director of the Office of Management and Budget.

He added, however, that the contract is being audited by Congress and the Army.

"I have a feeling this one is going to be audited more often and closer than any contract we've ever done," he said. "So far, they have found no major red flags, no significant errors."

He said the Halliburton subsidiary buys gasoline on the spot market at the best possible price.

Added Halliburton spokeswoman Wendy Hall: "KBR is not responsible for establishing the price Iraqi motorists pay for gasoline at the pump."

She said the company negotiates "fair and competitive prices" and must transport the gasoline in a hostile environment.

Waxman and Dingell said the corps informed them the Army paid Halliburton more than $300 million to import some 190 million gallons of gasoline into Iraq--an average of about $1.59 per gallon.

Halliburton then adds a fee that boosts the cost to $1.62 to $1.70 per gallon--nearly a dollar more than the price in the Mideast, the letter said.

In a further move against Halliburton, Sen. Frank Lautenberg, D-N.J., announced Wednesday he would propose barring the government from awarding Iraq reconstruction contracts to companies that maintain close financial ties to the president, vice president or members of the president's Cabinet.

Lautenberg wants the measure added to an $87 billion reconstruction bill for Iraq and Afghanistan.

Cheney receives deferred payments from Halliburton and also has stock options.

Cheney's office has said the vice president had no role in the contract and that the deferred payments were for his services while he headed the company.

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