Auditors Want Halliburton Funds Withheld

Pentagon auditors have recommended withholding nearly $160 million in payments to Halliburton (search) Corp., saying the company charged the military for meals in and around Iraq that were never served.

Vice President Dick Cheney's former company released a statement Monday night saying it hoped to persuade Army officials to reject the auditors' recommendation.

The alleged overcharging for meals last year is one of several suspected improprieties with the contract work in Iraq of Halliburton subsidiary KBR (search), formerly known as Kellogg, Brown & Root. Authorities are investigating allegations of overcharging for fuel delivered to Iraq, kickbacks involving two former KBR workers and other management problems.

Investigators for the Defense Contract Audit Agency (search), or DCAA, concluded last week that KBR charged the military for thousands of meals it never provided to troops under its contract to provide logistical services to forces in the region.

The DCAA said in a statement Monday that it recommended withholding more than $159 million from future payments to KBR.

Halliburton, which has said it set aside $141 million to deal with the meal dispute, repeated its assertions that the facts are on its side.

''We have no doubt that we will ultimately be reimbursed for these costs because our contractual position is so strong,'' company spokeswoman Wendy Hall said in the statement.

DCAA auditors cited several instances where KBR billed the government for hundreds more meals than it actually served. Halliburton says the method of accounting for meal costs is improper.

Hall and other company officials have said KBR did its best to keep up with rapidly fluctuating troop levels in and around Iraq as the war progressed.

The Wall Street Journal first reported the auditors' findings on its Web site.

The auditors cited Halliburton for having inadequate methods to oversee its spending and its work with subcontractors.

Halliburton's other problems include:

- Allegations of a kickback scheme by two former workers in Kuwait that prompted Halliburton to reimburse the Pentagon $6.3 million.

-Faulty cost estimates on the $2.7 billion contract to serve troops in Iraq, including failing to tell the Pentagon that KBR fired two subcontractors. KBR admitted those mistakes in a letter to the DCAA.

-A separate DCAA audit that accused KBR of overcharging by $61 million for gasoline delivered to serve the civilian market in Iraq last year. Halliburton has said the charges were proper.