Halliburton Unit to Pay $8 Million for Overbilling

KBR Settlement Ends Kosovo Case
By Griff Witte
Washington Post
Nov. 30, 2006

A Halliburton subsidiary agreed to pay the government $8 million to resolve accusations of overbilling related to the firm's work for the Army in the Balkans, the Justice Department said yesterday.

The allegations against KBR, formerly known as Kellogg Brown & Root, stemmed from orders placed with 10 foreign subcontractors that were working for KBR on military logistics support in 1999 and 2000. The accusations, made under the federal False Claims Act, included double-billing, inflating prices and providing products that didn't fit the Army's needs during the construction of Camp Bondsteel in Kosovo.

"The Department of Justice remains committed to vigorously pursuing allegations of procurement abuses affecting the military," Assistant Attorney General Peter D. Keisler said in a written statement.

KBR, which is being spun off by Halliburton, said in a written statement that the company was "pleased" with the resolution. "The government closed its investigations without making allegations of fraud or filing a complaint."

According to the company, it paid the government $2.1 million in 2001 as the result of an internal investigation.

The $8 million settlement is relatively small by the standards of other False Claims Act cases, said Patrick Burns, communications director of Taxpayers Against Fraud. Burns also noted that the settlement had been a long time coming, and said that the government needs to pay more attention to recent allegations of fraud in Iraq.

"At a certain point, justice delayed is justice denied," said Burns, whose nonprofit group promotes use of the False Claims Act, which dates to the Civil War. "People are going to say, 'When were we in the Balkans?' "

Several False Claims Act cases related to work in Iraq are pending, but none has resulted in a contractor having to repay money to the United States. In one lawsuit, whistle-blowers accused the firm Custer Battles of using its contracts in Iraq to cheat the government. A federal jury decided in March that the company should pay a $10 million penalty. But in August, a judge threw out the decision, ruling that the Coalition Provisional Authority, which ran Iraq at the time of the alleged fraud, was not a U.S. government entity.

KBR, the U.S. military's largest contractor in Iraq, is at the heart of several other pending False Claims Act cases, and its work is the subject of numerous federal investigations. Congressional Democrats have been particularly critical of Halliburton, which was run by Dick Cheney before he became vice president.