Taxpayer Interests Rank Below Halliburton’s Bottom Line; Lieberman Calls Army Corps Ruling “Indefensible

WASHINGTON – Accusing the Bush Administration of placing the interests of the American taxpayer beneath those of the Halliburton Corp., Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., Tuesday condemned as “indefensible” a Defense Department ruling justifying Halliburton’s Iraqi oil importation overcharges.

Defense Department auditors had preliminarily found that Halliburton overcharged American taxpayers by $61 million through September for importing fuel to Iraq. Yet, according to Tuesday’s edition of The Wall Street Journal, the Army Corps of Engineers quietly ruled on December 19, 2003, that Halliburton’s charges were reasonable – despite the absence of any cost and pricing data justifying the higher prices for fuel imported from Kuwait, compared to fuel imported from Turkey.

“The Corps should be ashamed of itself for siding with the bottom line interests of Halliburton Corp., rather than with the American taxpayer,” Lieberman said. “Its actions are indefensible and smack of a cover-up.”
In fact, Governmental Affairs Committee Staff recently learned from Defense Department auditors that Halliburton’s own internal auditors warned the company was over-charging the government and violating federal procurement regulations.

“The Corps is attempting to let Halliburton, and itself, off the hook by claiming Halliburton’s prices were reasonable, despite all evidence to the contrary,” Lieberman continued. “The Pentagon seems to think it can make this controversy, including its own role in the affair, disappear with the stroke of a pen.

“I am more confident than ever that an independent investigation of the Halliburton no-bid fuel contract and how Corps officials have mishandled this contract is warranted. The American people deserve the truth, not the whitewash the Corps has delivered.”

In early December, the Defense Contract Audit Agency concluded that Halliburton had overcharged American taxpayers by at least $61 million through the end of September 2003 for importing fuel into Iraq. The total overcharges have now reached more than $100 million, and that figure doesn’t include overcharges that were paid for with Iraqi funds. The Defense Department auditors based their estimate of the overcharges on the price Halliburton paid for oil imported from Turkey, which was approximately half the cost of the Kuwaiti fuel.

In response to the audit, Halliburton claimed U.S. officials had ordered it to use a Kuwaiti oil company. However, in a briefing with the staff of the Governmental Affairs Committee, the deputy director of the DCAA rejected Halliburton’s argument and said even if Halliburton had been instructed to use Kuwaiti companies, such instructions would have been inappropriate. He further revealed that Halliburton was refusing to turn over a draft internal audit that warned the company of problems with the fuel contract.

Lieberman previously has called on the Secretary of Defense to evaluate whether Halliburton should be considered for suspension or debarment proceedings and he has called for the Department of Defense Inspector General to investigate thoroughly Halliburton’s pricing practices.