Jan. 15 -- Halliburton chose a high-priced Kuwaiti
supplier for gasoline in Iraq just one day after
considering bids from only three companies,
an Army document says.
Army Corps of Engineers document, obtained Thursday
by The Associated Press, raises new questions
about Vice President Dick Cheney's former company
two days after Pentagon auditors requested an
investigation of possible criminal wrongdoing.
has denied doing anything wrong and called criticism
of its actions unfair and politically motivated.
Defense Contract Audit Agency on Tuesday asked
the Pentagon's inspector general to investigate
a "suspected irregularity" involving the Halliburton
contract to provide gasoline to civilians in
Iraq. Auditors had said last month that Halliburton
and its Kuwaiti fuel supplier, the Altanmia
Marketing Co., may have overcharged the Army
by $61 million between May and September.
referral to the inspector general indicates
the auditors suspect illegal activity. The investigation
will center on actions by government workers,
not the company, a senior defense official said
Thursday on condition of anonymity.
Army Corps of Engineers, which oversees the
contract, has backed Halliburton. Corps officials
last month ruled that Halliburton subsidiary
KBR didn't have to justify the price it was
paying Altanmia for fuel.
latest document to surface is a Corps of Engineers
memo to DCAA last week called a "business case"
justifying the fuel costs. Halliburton charged
the Army more than double the cost for fuel
it trucked into Iraq from Kuwait than for fuel
it bought in Turkey.
has claimed that Altanmia was the only company
approved by the Kuwaiti government to sell fuel
the Corps of Engineers document doesn't say
that. It says Altanmia had to get Kuwaiti government
approval for its sales to Halliburton because
it had never sold fuel before. The Army document
does not mention any demand by Kuwait that only
Altanmia could be used as a supplier.
got a contract to repair Iraq's crumbling oil
industry as part of its contract to provide
emergency construction and other services to
the Army. On May 4, military commanders in Iraq
told Halliburton to start supplying gasoline
in Iraq because crowds in long lines at gas
stations were becoming unruly.
day, Halliburton asked three Kuwaiti firms to
bid for that business. On May 5, Halliburton
placed its first order with Altanmia, the Army
memo says. The Army memo says Altanmia was the
low bidder of the three but does not name the
other two companies or say what their bids were.
Army memo says Corps of Engineers officials
weren't required to determine that Altanmia
was the lowest-cost subcontractor. It says the
urgent need for fuel in Iraq meant the contract
had to be completed quickly, and the danger
to fuel convoys could be one reason the Kuwaiti
price was so high.
gas lines were a visible symptom of the failure
of the coalition forces to maintain order or
restore basic services to the Iraqi people,"
the Army memo says. "Those objecting to the
war used the lack of fuel as indication that
Iraq had fared better under the previous regime.
to provide the fuel was not an option."
spokeswoman Wendy Hall said Thursday that the
company followed proper procedures in the contract.
was a critical mission, and it was dangerous
because of the violence throughout the country,"
Hall said in a statement. "We received the assignment,
and were instructed to begin imports immediately.
Regular fuel delivery did begin very shortly
thereafter, and we believe it prevented or alleviated
a national crisis."
Henry Waxman, the top Democrat on the House
Government Reform Committee, said Thursday that
another Pentagon agency and an Iraqi oil company
pay less than half of Altanmia's price for fuel
trucked into Iraq from Kuwait.
and other Democrats have called for further
investigations of the matter and criticized
the Halliburton contract as evidence of the
Bush administration's rewarding its corporate
friends. Cheney ran Halliburton from 1995 until
he quit in 2000 to become Bush's running mate,
and the company's executives donated thousands
of dollars to the Bush campaign.
continues to supply fuel to Iraq's civilian
market under the Army contract while another
Pentagon agency, the Defense Energy Support
Center, prepares to take over that job. The
Army hopes to replace Halliburton's contract
to rebuild Iraq's oil industry through a competitive
bid process that should be complete later this
House and Pentagon officials say political considerations
do not affect the Defense Department's contract
decisions. Cheney, a former defense secretary,
is not involved in those decisions.
2004 The Associated Press. All rights reserved.