Washington - Halliburton has systematically wasted U.S. taxpayer dollars in its operations in Iraq and Kuwait, according to two of the company's former employees who have spoken to congressional investigators.
The two, one of whom is to testify before a Democratic panel today, told investigators from the office of Rep. Henry A. Waxman (D-Los Angeles) that Halliburton supervisors created a culture of overspending in the firm's operations under a $3.7-billion contract to provide food and lodging to U.S. troops.
Referring to Halliburton's "cost-plus" contract, which allows the company to charge the U.S. a fixed percentage fee on top of whatever price it pays for goods, the former employees told Waxman that supervisors ignored prices when making purchases.
As a result, the company paid too much for everything from rented jeeps to cellular phones to specially embroidered towels that cost three times what an ordinary towel would, they said.
"They did not want to control costs at all," said one former employee, who served as a procurement supervisor for the company in Kuwait and agreed to be interviewed on condition that he not be named. "Their motto was, 'Don't worry about costs, it's cost plus.' "
Waxman has asked the Defense Contract Audit Agency to investigate the employees' allegations. A Pentagon spokesman said the request was "under review."
"If their accounts are accurate, the company is systematically overcharging the taxpayer on hundreds of routine requisitions every day," Waxman, the ranking minority member of the House Government Reform Committee, wrote to the audit agency. "While the dollar amounts involved in any single procurement may be small, the cumulative cost to the taxpayer could be enormous."
A Halliburton spokeswoman, who said that the company was investigating the charges, questioned why the employees had not first made internal complaints to report the abuses.
The company said it had checked its logs and could find no reports of allegations similar to the ones the men were making.
"Halliburton takes any charges of improper conduct seriously," spokeswoman Cathy Gist said in a statement. "That is the reason why we have such an aggressive internal audit team that performs forensic-like audits of our contracts. We are investigating the circumstances."
The accusations add to the mounting charges of abuse by Halliburton, a Houston-based company run by Vice President Dick Cheney from 1995 to 2000.
The Pentagon is already investigating accusations that the company overcharged for fuel costs by $61 million. There is also an ongoing audit into whether a Halliburton subcontractor charged $27.4 million for meals that were never served to troops.
Halliburton has also admitted that two employees accepted as much as $6.3 million in bribes for helping a Kuwaiti firm bilk the Pentagon. The company has refunded the money.
In the latest allegations, the two former employees described a culture in which overworked employees faced enormous demands to house, feed and equip U.S. troops, and where cost-cutting was a remote concern, according to a summary made available by Waxman's office. Waxman's office said it had verified that both men had worked for Halliburton.
They said employees had to process more than 100 purchase orders each day, working 12 to 14 hours a day, seven days a week. In the rush to complete the tasks at hand, employees frequently cut corners that could have saved money, the former employees said.
The purchase of cellular phones and temporary housing for troops were rife with waste, the procurement supervisor said. He said he had "suspicions" that some of the contracts involved kickbacks but could provide no evidence.
The supervisor described an arrangement in which Halliburton provided a 10% additional payment on its phone bills to a Kuwaiti company for providing cellular phones - though nothing in the contract between Halliburton and the company called for such payments.
The supervisor provided The Times with copies of both the contract and the related purchase agreement.
He also said Halliburton bought dozens of substandard housing units that were in need of frequent repair, then balked at changing providers when the supervisor located another source of better temporary housing units for less money.
Finally, he said that the company did poorly on a Pentagon audit in June when Halliburton was unable to produce about 500 purchase orders for millions of dollars in goods. The purchase orders were incomplete, lost or misfiled.
"I uncovered a lot of problems," said the man, who said he left the company after he was asked to move to a Halliburton base in Iraq, which he thought was too dangerous.
The other employee, Henry Bunting, who worked as a field buyer in Kuwait and who will testify today before the Senate Democratic Policy Committee, told Waxman's investigators that the company spent up to $7,500 a month to rent ordinary cars and trucks - when such vehicles could be rented for less than $2,000 a month through the Internet. He also said the company had purchased monogrammed towels for $7.50 apiece, when ordinary bath towels could be purchased for $2.50.
The procurement supervisor mentioned other examples. He said Halliburton had purchased several fire engines for $750,000 whose hose mountings did not match the hoses available in Kuwait. As a result, a building burned down when firefighters could not connect a hose to the fire engine, he said.
In another incident, the procurement supervisor said that Halliburton had purchased 25 tons of nails that were too long for a construction project. The nails were dumped in a fenced enclosure in the desert.