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Bush: If Halliburton overcharged the government, it will have to repay

From Jamie McIntyre
CNN Washington Bureau

Vice President Dick Cheney
Vice President Dick Cheney

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WASHINGTON (CNN) -- President Bush Friday said if any company involved in Iraqi reconstruction has overcharged the government, it will have to repay the extra funds.

"If there's an overcharge, like we think there is, we expect that money to be repaid," the president said when asked by a reporter about a Pentagon audit that may have uncovered a potential overcharge by Halliburton, the oil services company once run by Vice President Dick Cheney.

"I appreciate the Pentagon looking out after the taxpayers money. They felt like there was an overcharge issue, they put the issue right out there on the table for everybody to see, and they're doing good work," Bush said.

"We're going to make sure that as we spend the money in Iraq, it's spent well and spent wisely. Their investigation will lay the facts out for everybody to see, and if there's an overcharge, like we think there is, we expect that money to be repaid," he said.

The Pentagon audit has raised questions about whether a subsidiary of Halliburton overcharged the U.S. government $61 million for gasoline imported from Kuwait to Iraq.

The Pentagon said Thursday a routine review turned up the potential overcharge by subsidiary Kellogg, Brown and Root, which was awarded a no-bid contract in March to rebuild Iraq's oil industry.

But there is no allegation that Halliburton unduly profited from the overpriced gas.

The audit questions if Halliburton paid above-market rates to a Kuwaiti subcontractor when it paid $2.27 per gallon for the gas. Another supplier bought gas at $1.18 per gallon from Turkey.

Halliburton says the higher cost was due to having to negotiate a short-term contract, at a time when there weren't enough trucks in Kuwait to deliver the fuel. It says trucks had to be brought in and shipping in a war zone pushed up the transportation and security costs as well.

In a statement, Halliburton insisted those costs are "pass through costs" and said the company "only recovers a few cents on the dollar."

Congressional critics, who accuse the company of price gouging, don't believe the claims.

"There have been indications for some months now that taxpayer interests aren't protected," said Sen. Ron Wyden, D-Oregon. "I'm glad the Defense Department is finally coming to ask some tough questions. They should have been raising these issues many months ago."

Pentagon Comptroller Dov Zakhein insists his auditors have been hard-nosed.

"Contractor improprieties and/or contract mischarging ... will neither be condoned nor allowed to continue," Zakhein said in a statement.

Meanwhile, the contract is being reviewed, and Halliburton will have to justify the sum. If the government does not believe the cost is legitimate, the bill will be disallowed.

In that case, Halliburton would have to assume the debt, or it could go back to the Kuwaiti subcontractor to try to address the issue.

Auditors also found another potential Halliburton overcharge of $67 million for dining halls in Iraq, but they say that seems to a billing error.

That bill has not been paid.

Democratic presidential candidates are already jumping on the issue.

Howard Dean called Halliburton "a special interest contributor that is overcharging taxpayers" and Dick Gephardt charged that Cheney's former employer is "bilking the taxpayers."

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