- The Washington Times - Tuesday, October 21, 2003

ASSOCIATED PRESS

Democratic lawmakers released a letter from Iraq’s national oil company yesterday, confirming it pays far less to import gasoline than Halliburton, the Texas contractor that buys petroleum goods for Iraqis with U.S. government money.

Halliburton said it has no choice but to charge Washington more because its contract with the U.S. Army Corps of Engineers requires only short-term deals.

Iraq’s State Oil Marketing Organization said it pays between 90 and 98 cents per gallon to buy oil from neighboring countries and transport it throughout Iraq.

Halliburton charges the government $1.59 and then receives a markup that could boost the price to $1.62 to $1.70, according to Democratic Reps. Henry A. Waxman of California and John D. Dingell of Michigan, who released information supplied by the Iraqi company.

Mr. Waxman and Mr. Dingell have persistently criticized Halliburton’s role in Iraq, contending it is gouging the U.S. Treasury while profiting on a no-bid contract to restore the country’s oil industry.

Vice President Dick Cheney formerly headed the company, whose KBR subsidiary has earned $1.59 billion so far in the Iraq oil contract. The Army Corps of Engineers said it soon will replace the Halliburton contract with two contracts awarded through competitive bidding.

Halliburton spokeswoman Wendy Hall said in a written statement that KBR’s costs are higher because the company’s contracts for gasoline, transportation, depot storage or labor cannot last longer than 30 days.

“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,” the statement said.

She added, “Based on the entire picture, to allege that KBR is overcharging for this needed service insults the KBR employees who are performing this dangerous mission to help bring fuel to the people of Iraq.”

Miss Hall also noted the company’s 2 percent add-on fee is less than the markup for products at a local gas station or supermarket.

The letter from the Iraqi company, which included a price list, was signed by its general manager, Mohammed M. Al-Jibouri. The list said the price of gasoline from next-door Turkey was about 98 cents a gallon, and other prices were as low as 90 cents, depending on the gasoline’s point of origin and where in Iraq it was delivered.

Mr. Waxman and Mr. Dingell said in a letter to the Corps of Engineers that some of the money paid to Halliburton is from the Development Fund for Iraq. That is the successor to the Oil for Food Program, which the United Nations set up for humanitarian reasons during the dozen years Iraq was under international sanctions for failing to carry out U.N. resolutions.

The lawmakers contended that money from the fund has been “squandered by paying inflated prices to Halliburton.”

Mr. Waxman and Mr. Dingell asked the Corps to investigate whether Halliburton is overcharging U.S. taxpayers, to seek reimbursement for any inflated amounts and, if overcharges were confirmed, to disqualify Halliburton from the planned replacement contracts.

Robert Faletti, a Corps spokesman, said the Halliburton contract is audited continuously, and no problems have been uncovered.

“If they are overcharging, we will take appropriate action,” he said.

Mr. Faletti also confirmed that the humanitarian fund is used to help pay for the oil imports, but said this was a decision by the U.S.-run reconstruction authority.

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