U.S. owes Iraq $208 million, auditor says / Gouging, shoddy work by Halliburton blamed

An auditing board sponsored by the United Nations recommended Friday that the United States repay as much as $208 million to the Iraqi government for contracting work in 2003 and 2004 assigned to Kellogg, Brown & Root, the Halliburton Co. subsidiary.

The work was paid for with Iraqi oil proceeds, but the board says it was either carried out at inflated prices or done poorly. The board did not give examples of poor work.

Some of the work involved postwar fuel imports carried out by KBR that previous audits have criticized as grossly overpriced. But this is the first time that an international auditing group has suggested that the United States repay some of that money to Iraq.

The U.N. group, the International Advisory and Monitoring Board of the Development Fund for Iraq, compiled reports from an array of Pentagon, U.S. government and private auditors to carry out its analysis.

A spokeswoman for Halliburton, Cathy Mann, said the questions raised in the military audits, carried out in the Pentagon's Defense Contract Auditing Agency, had largely focused on issues of paperwork and documentation and alleged nothing about the quality of the work done by KBR. The monitoring board relied heavily on the Pentagon audits in drawing its conclusions.

Mann said, in an e-mail response to questions, that "it would be completely wrong to say or imply that any of these costs that were incurred at the client's direction for its benefit are 'overcharges.' "

The monitoring board, created by the United Nations specifically to oversee the Development Fund -- which includes Iraqi oil revenues and some money seized from Saddam Hussein's government -- said that because the audits were continuing, it was too early to say how much of the $208 million should ultimately be paid back.

The KBR contracts that have drawn fresh scrutiny also cover services other than fuel deliveries, like building and repairing oil pipelines and installing emergency power generators in Iraq. The documents released Friday by the monitoring board do not detail problems with specific tasks in those broad categories but instead summarize a series of newly disclosed audits that call into question $208,491,382 of the company's work in Iraq.

The monitoring board's authority extends only to making recommendations on any reimbursement. It would be up to the U.S. government to decide whether to make the payments, and who should make them.

Vice President Dick Cheney's former role as chief executive of Halliburton has led to repeated charges, uniformly dismissed by Cheney and the company, that it received preferential treatment in receiving Iraq-related contracts.

"The Bush administration repeatedly gave Halliburton special treatment and allowed the company to gouge both U.S. taxpayers and the Iraqi people," Rep. Henry Waxman, D-Los Angeles, the senior Democrat on the House Government Reform Committee, said in a statement on the new audits.

In Iraq on Friday, insurgent attacks -- including one in which the attackers disguised themselves as women -- left at least 16 Iraqis dead.

Al Qaeda in Iraq, the leading insurgency group, said in a statement posted on an Islamist Web site that two Moroccan Embassy employees had been condemned to death, the Associated Press reported. There was no indication Friday that they had been killed.

The U.S. military said Friday that two more soldiers had died the previous day, one in a noncombat incident and one when his convoy struck an explosive.

In the day's deadliest assault, insurgents dressed in women's clothing attacked a police checkpoint in Buhruz, 35 miles north of Baghdad, killing at least six Iraqi police and injuring at least 10 others, U.S. and Iraqi officials said.

The gunmen were armed with Kalashnikov assault rifles, rocket-propelled grenades and mortars, and pulled up in five cars, an Interior Ministry official said. The policemen managed to kill at least two of the gunmen, he added.