Bush warns 'oil overcharge' firm

The price of petrol varies depending on who the seller is

US President George W Bush says he expects an oil company once run by his vice-president to return money if it has overcharged for services in Iraq.

Dick Cheney used to head Halliburton, which is under contract to deliver fuel to the US military in Iraq.

A Pentagon audit confirmed that a Halliburton subsidiary - Kellogg, Brown and Root (KBR) - overcharged the department for some of its deliveries.

KBR insists it has acted in accordance with its contractual responsibilities.

If there is an overcharge, like we think there is, we expect that money to be repaid President Bush

Pentagon officials will not divulge the amount of money involved, but correspondents say the figure is around $61m.

They also said the firm had been planning to charge $67m too much for another contract to supply cafeteria services.

The officials said KBR was not suspected of having profited improperly but may have failed to monitor the performance of its subcontractors.

The Pentagon was working with KBR to resolve the fuel-pricing issue, they added.

Stupid mistakes?

The BBC's Nick Childs in the Pentagon says the controversy comes at a difficult time for the Bush administration, which is under fire for limiting bids on a new round of Iraq contracts to countries which supported the US-led war there.

George W Bush is preventing entire nations from bidding on contracts in Iraq so his campaign contributors can continue to overcharge the American taxpayers Democrat Howard Dean

"If there is an overcharge, like we think there is, we expect that money to be repaid," President Bush said.

But Democrat opponents have been quick to renew their charges that the administration is guilty of favouring corporate interests close to the Republican Party.

"George W Bush is preventing entire nations from bidding on contracts in Iraq so his campaign contributors can continue to overcharge the American taxpayers," said presidential hopeful Howard Dean while campaigning in the state of Iowa.

However, one defence official was quoted as saying there was no reason to believe the problems were anything other than "stupid mistakes" by the firm.

Reacting to the accusations of overcharging, Halliburton spokeswoman Wendy Hall said she was confident the company would be able to stand up to any audit of its work in Iraq.

"KBR has acted in full accordance with its fiduciary and contractual responsibilities under the contract," she told Reuters news agency.

No-bid contract

Halliburton says that the dangers of transporting oil to Iraq make it necessary to charge high prices.

Ms Hall said more than 20 of the company's trucks had been damaged or stolen and that nine drivers had been injured and one killed bringing fuel into Iraq.

Halliburton was awarded a contract - for which it did not have to compete against other firms - to rebuild Iraq's oil industry.

The company has received $2bn in work since it was given the contract in March, the Reuters news agency reports.

Some of the fuel payments to Halliburton come out of the Development Fund for Iraq which is meant to pay for humanitarian efforts in the country.

Iraq has one of the world's largest oil reserves but must import fuel because its infrastructure was seriously damaged by more than a decade of sanctions and war.