Criminal probe into Halliburton

Halliburton has a number of contracts to help rebuild Iraq

The Pentagon has begun a criminal investigation into claims a US company overcharged the military for oil delivered to Iraq.

A spokeswoman for the US Defence Department said the inquiry was focused on Kellogg, Brown and Root, a subsidiary of Halliburton.

Halliburton is a massive contractor for the US military in Iraq with deals ranging from construction to laundry.

It was formerly headed by the US Vice-President, Dick Cheney.

The potential overcharging had emerged during "routine evaluation of contract costs submitted for payment" by KBR, according to Pentagon spokeswoman Lieutenant Colonel Rose-Ann Lynch.

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.

Mr Cheney was in charge of the company until 2000.

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

Pratab Chatterjee of California-based pressure group Corporation Watch told the BBC that Halliburton had charged the US military higher fuel prices than other contractors.

"So why was it that this company was given the job?" he said.

Earlier this month Halliburton agreed to pay back $27.4m to the Pentagon, but insists that the decision involves no admission of wrongdoing on its part.

US defence officials said the refund covered 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 for regulating contracts.