Halliburton in Pentagon payback

Halliburton said it had problems estimating demand for meals

Halliburton, the giant US energy group once run by Vice-President Dick Cheney, has agreed to pay back $27.4m (£15m) to the Pentagon, US defence officials say.

The refund covers possible overcharging on a contract to supply meals to the US military in Iraq and Kuwait.

Halliburton has temporarily stopped charging the US military for meals until they agree on a better method.

UK defence officials said on Tuesday that Halliburton had won a £12m deal to ship military supplies to Iraq.

Fine-tuning

The potential overcharging had emerged during "routine evaluation of contract costs submitted for payment" by the Halliburton group's Kellogg Brown and Root subsidiary, according to Pentagon spokeswoman Lieutenant Colonel Rose-Ann Lynch.

"We are pleased KBR is willing to step forward to offer reimbursement in advance of any findings," Reuters news agency cited another Pentagon official as saying.

On Monday, Halliburton said KBR was working with the Pentagon auditors to "improve the counting method" for meals served to troops in the Middle East.

Halliburton said that "this is not any sort of admission" of wrongdoing.

It explained that meal bills for the US military had been drawn up on the basis of estimates, rather than actual meals served, and that this system was now being fine-tuned.

Halliburton has agreed to repay $16m of payments received for meals at Camp Arifjan in Kuwait and $11.4m for meals at other camps in the region.

Under fire

Halliburton's activities in Iraq have attracted intense scrutiny from critics of the Iraq war on the look out for any signs of corporate favouritism from the Bush Administration. Vice President Dick Cheney headed Halliburton for five years, until 2000.

Halliburton has admitted to errors, sacking two KBR employees in Iraq last month for taking bribes worth up to $6m (£3.3m) from a Kuwaiti firm.

Pentagon officials from the Defense Contracting Audit Agency are checking allegations that KBR overcharged the US military for fuel deliveries to Iraq.

A spokeswoman for the UK's Ministry of Defence said KBR had won a logistics contract on the grounds of "performance, responsiveness and overall value for money", adding that the contract was subject to regular performance checks.