WASHINGTON
- The Pentagon said on Monday it opened a criminal investigation of
fraud allegations against a unit of Vice President Dick Cheney's
old company Halliburton Co. involving potential overpricing of
fuel delivered to Iraq.
The investigation was focused on Halliburton subsidiary Kellogg Brown
and Root, a Pentagon spokeswoman said.
"The Defense Criminal Investigative Service, the criminal
investigative arm of the Inspector General's office, is investigating
allegations on the part of KBR of fraud, including the potential
overpricing of fuel delivered to Baghdad by a KBR subcontractor," a
Pentagon spokeswoman said.
Halliburton, an oil services company based in Houston, is the biggest
contractor for the U.S. military in Iraq. It has more than $8 billion in
deals covering everything from doing laundry, building bases and
providing meals to helping rebuild the oil industry.
The contracts have drawn intense scrutiny from Democrats because of the
firm's ties with Cheney, who ran the company from 1995 to 2000.
There was no immediate comment from Halliburton or the White House.
Potential
overpricing of fuel was first raised in a draft audit by the military
last year that found evidence the company might have overcharged for
fuel brought into Iraq from Kuwait by at least $61 million.
The company has said it charged the best price possible to deliver the
fuel under very dangerous circumstances and has strongly denied any
wrongdoing.
US Still Paying Millions to Group That Provided
False Iraqi Intelligence
By Jonathan S. Landay, Warren P. Strobel and John Walcott *
Knight-Ridder
The Department of Defense is continuing to pay millions of
dollars for information from the former Iraqi opposition group that
produced some of the exaggerated and fabricated intelligence President
Bush used to argue his case for war.
The Pentagon has set aside between $3 million and $4 million
this year for the Information Collection Program of the Iraqi
National Congress, or INC, led by Ahmed Chalabi, said two senior
U.S. officials and a U.S. defense official.
They spoke on condition of anonymity because intelligence programs are
classified.
The continuing support for the INC comes amid seven separate
investigations into pre-war intelligence that Iraq was hiding illicit
weapons and had links to al-Qaida and other terrorist groups. A probe by
the Senate Intelligence Committee is now examining the INC's
role.
The decision not to shut off funding for the INC's information gathering
effort could become another liability for Bush as the presidential
campaign heats up and, furthermore suggests that some within the
administration are intent on securing a key role for Chalabi in Iraq's
political future.
Chalabi, who built close ties to officials in Vice President Cheney's
office and among top Pentagon officials, is on the Iraqi Governing
Council, a body of 25 Iraqis installed by the United States to help
administer the country following the ouster of Saddam Hussein last
April.
The former businessman, who lobbied for years for a U.S.-backed military
effort to topple Saddam, is publicly committed to making peace with
Israel and providing bases in the heart of the oil-rich Middle East for
use by U.S. forces fighting the war on terrorism.
The INC's Information Collection Program started in 2001 and was
"designed to collect, analyze and disseminate information"
from inside Iraq, according to a letter the group sent in June 2002 to
the staff of the Senate Appropriations Committee.
Some of the INC's information alleged that Saddam was rebuilding his
nuclear weapons program, which was destroyed by U.N. inspectors after
the 1991 Gulf War, and was stockpiling banned chemical and biological
weapons, according to the letter.
The
letter, a copy of which was obtained by Knight Ridder, said the
information went directly to "U.S. government recipients" who
included William Luti, a senior official in Secretary of Defense
Donald H. Rumsfeld's office, and John Hannah, a top national
security aide to Cheney.
The letter appeared to contradict denials made last year by top Pentagon
officials that they were receiving intelligence on Iraq that bypassed
established channels and vetting procedures.
The INC also supplied information from its collection program to leading
news organizations in the United States, Europe and the Middle East,
according to the letter to the Senate committee staff.
The State Department and the CIA, which soured on Chalabi in the 1990s,
viewed the INC's information as highly unreliable because it was coming
from a source with a strong self-interest in convincing the United
States to topple Saddam.
The Defense Intelligence Agency (DIA) has concluded since the invasion
that defectors turned over by the INC provided little worthwhile
information, and that at least one of them, the source of an allegation
that Saddam had mobile biological warfare laboratories, was a
fabricator. A defense official said the INC did provide some valuable
material on Saddam's military and security apparatus.
Even so, dubious INC-supplied information found its way into the Bush
administration's arguments for war, which included charges that Saddam
was concealing illicit arms stockpiles and was supporting al-Qaida.
No illicit weapons have yet been found, and senior U.S. officials say
there is no compelling evidence that Saddam cooperated with al-Qaida to
attack Americans.
The Information Collection Program is now overseen by the DIA, the
Pentagon's main intelligence arm, which took over when the State
Department decided to give it up in late 2002.
The defense official defended the current support of the INC effort,
saying that it has been of some help to the CIA-led Iraq Survey Group, a
team that is trying to determine what happened to Iraq's chemical,
biological and nuclear weapons programs.
INC-supplied informants also have identified insurgents who have been
waging a guerrilla war that has claimed the lives of more than 500 U.S.
troops and hundreds of Iraqis, he said.
"To call all of it (INC intelligence) useless is too
negative," said the defense official, who described the Information
Collection Program as a "massive" undertaking.
"You never take anything at face value," he continued.
"When the INC gives information, we absolutely pursue it. You never
know what that golden nugget is going to be."
But a senior administration official questioned whether the United
States should still be funding the program.
"A huge amount of what was collected hasn't panned out," he
said. "Some of it has turned out to have been either wrong or
fabricated."
The senior administration official also sought to justify the initial
decision to support the program.
Prior to the invasion, U.S. intelligence agencies had no better human
sources in Iraq, and had no choice but to rely on the INC, minority
Kurdish guerrilla groups and other sources who claimed to have knowledge
of Saddam's illegal arms programs, ties to terrorist groups and his
military forces, he said.
"The evidence now suggests that at some points along the way, we
may have been duped by people who wanted to encourage military action
for their own reasons," he conceded.
Chalabi apparently is less concerned about the past
"We are heroes in error," Chalabi was quoted as saying
recently in Baghdad by The Daily Telegraph of London. "As far as
we're concerned we've been entirely successful. That tyrant Saddam is
gone and the Americans are in Baghdad. What was said before is not
important. The Bush administration is looking for a scapegoat. We're
ready to fall on our swords if he wants."
In a related development, U.S. officials said that on top of the
Pentagon funds, Chalabi's organization asked the State Department in
August for $5 million in unspent financing that was approved by Congress
before the war.
The $5
million has not been released, they said.
The request for the money follows the awarding to the INC of $3.1
million in April 2003 following the fall of Baghdad, according to a
State Department statement.
State Department lawyers questioned the decision to turn over the $3.1
million, said a State Department official. But senior aides,
anticipating an outcry from Chalabi's supporters in the administration
and in Congress, opted to release the money, said the official, who
spoke on condition of anonymity.
