Pentagon dumps Halliburton deal

The decision, announced yesterday, comes less than a month after Pentagon auditors found Halliburton overcharged US taxpayers by up to $US61 million ($81.3 million) for delivering petrol to Iraq. The contract was awarded without a tender.

The Pentagon auditors found a Halliburton subsidiary, Kellogg, Brown Root (KBR), has been charging $US2.27 a gallon to deliver petrol from Kuwait - nearly double the price of a similar contract for petrol from Turkey at $US1.18.

The discovery of the overcharging prompted accusations from the Democrats that the system of awarding lucrative Iraqi contracts favoured companies with close ties to the White House. Mr Cheney headed Halliburton from 1995 until 2000.

US President George W. Bush tried to hose down the controversy, saying on December 12 that Halliburton should repay the US Government for overcharging, but the company denied it had overpriced.

The Pentagon's Defence Energy Support Centre, which buys fuel for the US military, announced yesterday it would supervise the replacement of Halliburton as a supplier and the awarding of a new contract for fuel imports to Iraq.

KBR has been under fire from the Democrats since the US Army Corps of Engineers awarded the company a no-bid contract in March to repair Iraq's oil infrastructure. KBR has received $US2.2 billion in work orders under the contract, including more than $US800 million to import and distribute fuel.

Iraq's senior Shia ayatollah has issued a fatwa condemning oil smuggling in a move US-led forces hope will curb one of the worst problems facing the country, where people have to queue for days to get petrol despite the fact Iraq has the world's second-largest oil reserves.

Najaf Grand Ayatollah Sistani said: "The current oil crisis is being caused by a group of people aiming to enhance disorder and make illegal money from the people. This is unlawful."

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