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Halliburton employs intermediary companies to provide electronic equipment and other goods in order to fill its orders quickly, and one such arrangement has already run into trouble. KBR used Altanmia Commercial Marketing, a Kuwaiti firm with ties to the country's ruling family, rather than the Kuwaiti national oil company, to fill some of its initial fuel orders. That deal is now the subject of an investigation by the Kuwaiti government and is also being looked into by the Pentagon, which says Altanmia's markup--about $1 per gal.--resulted in a $61 million overcharge. Halliburton says it used Altanmia only for fuel orders that had to be filled quickly, and then only with the approval of the U.S. military. Altanmia did not respond to a request for comment. Rex Wempen, co-founder of the U.S. Chamber of Commerce in Iraq, sees a political motive in the U.S. order. "It was part of the Kuwaitis' diplomatic price for supporting the war," he says.
Whistle-blowers say inefficiency is encouraged by the nature of Halliburton's cost-plus contract, which ensures that the company will be repaid for expenses. Henry Bunting, 59, a former Army staff sergeant in Vietnam, handled procurement contracts for Halliburton from a base in Kuwait. He says he was actively discouraged from bidding. "We were not looking for the best price," Bunting told TIME. "The supervisors said time and again, 'Don't worry about the price. Halliburton will get reimbursed.'" Disgusted, Bunting quit and went home last summer. He testified before Congress in February on Iraqi contract practices. A Halliburton spokeswoman denied overcharging by the company and said there is no record that Bunt-ing called the firm's hotline to register his concerns.
While the Pentagon and Halliburton say there is no widespread kickback problem, the company has begun to change the way it awards contracts. At the outset, during the first few months of the occupation, KBR "didn't put in place any measures for detecting kickbacks," says a lawyer in Baghdad who represents contractors working in Iraq. Now, he says, KBR looks more closely at its suppliers and Department of Defense criminal investigators are actively investigating any allegations of misconduct.
That may not be enough to quiet the widespread sentiment in Baghdad, among ordinary Iraqis, that the reconstruction process has become another murky theater of corruption. Muhanad Nassiri, an architect, said his firm has bid on a dozen contracts, including one for a security system for the Iraqi National Museum, but has never been successful. "All the tenders are terminated early, and all the tenders are given to the same companies," another Iraqi businessman says. "If you look at the awards list, you will find many of the same names." KBR has acknowledged that it uses the same vendors repeatedly but argues that it often values reliability over other factors. "We don't always give the award to the lowest bidder," says a KBR representative in Baghdad.