Sun, Dec 14, 2003 - Page 7 News List

Halliburton should pay: Bush

CONTRACTS Amid criticism that his political allies have benefited from the Iraq war, the US president said that if overcharging was found, the money should be paid back


President George W. Bush, trying to calm a political storm, said that Vice President Dick Cheney's former company should repay the government if it overcharged for gasoline delivered in Iraq under a controversial prewar contract.

"If there's an overcharge, like we think there is, we expect that money be repaid," the president told reporters on Friday when asked about the Halliburton contract controversy.

Defense Department auditors say the company charged up to US$61 million too much for delivering gasoline to Iraqi citizens under a no-bid contract to rebuild Iraq's dilapidated oil industry. Halliburton denies overcharging.

Meanwhile, an Army spokesman disclosed that companies from France, Germany, Russia and Canada won't be eligible to replace Halliburton as the recipient of the oil reconstruction contract.

The Army Corps of Engineers is reviewing bids and hopes to decide this month who will get the oil reconstruction deals worth up to US$800 million in northern Iraq and US$1.2 billion in the south.

The decision means an additional US$2 billion in contracts in Iraq -- not disclosed before -- would be forbidden to countries that opposed the war, along with the US$18.6 billion in Iraq work the Bush administration declared off limits earlier this week.

The countries that have been left out see the rules as payback, but Bush says limiting contracts to countries that sent troops and money to Iraq makes sense and will encourage more nations to join the US-led coalition.

Democrats have joined the fray, saying Bush is needlessly alienating allies and rewarding political supporters. Cheney headed Halliburton from 1995 until he became Bush's running mate in 2000, and other executives from the company gave generously to the Bush campaign.

"George W. Bush is preventing entire nations from bidding on contracts in Iraq so his campaign contributors can continue to overcharge the American taxpayers," Democratic presidential candidate Howard Dean said while campaigning in Iowa on Friday.

The political impact is still unclear. As long ago as last May, in a CBS-New York Times poll, about half the respondents said they thought the Bush administration gave contracts to companies because they had close Republican ties.

Pentagon officials say they gave Halliburton the prewar oil reconstruction contract because it was essential to start rebuilding quickly after the US-led invasion.

Halliburton already had a competitively bid contract to provide short-notice logistical help for the Army.

Separately under that contract, Halliburton has been paid about US$3 billion for supporting the military with cafeterias, mail delivery and other services.

The oil contract, which started as a relatively small order for fighting oil well fires, has grown into the largest reconstruction contract in Iraq. Halliburton has gotten more than US$2.2 billion so far on that contract -- US$989 million from US taxpayers, US$1.3 billion from the UN's oil-for-food program and US$90 million from seized Iraqi assets.

Together, the 11 other Iraq reconstruction projects awarded to other companies have paid out US$1.7 billion.

The largest part of Halliburton's oil reconstruction contract is providing gasoline and other fuel to Iraqis while the country's oil industry is rebuilt. A Pentagon audit found Halliburton was charging US$1.09 more per gallon for gasoline it trucked into Iraq from Kuwait than for the same fuel it imported from Turkey.

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