U.S. Envoy Pressed for Costly Fuel, Memo Says

The U.S. ambassador to Kuwait pressured other American officials to force Halliburton Co. to continue buying fuel from a Kuwaiti company that was allegedly overpriced, according to State Department documents released Wednesday.

Then-Ambassador Richard H. Jones urged the purchase of additional fuel from Altanmia Commercial Marketing Co. last year, contending that quick action was needed so that a Halliburton subsidiary, KBR, could head off a critical fuel shortage in Iraq.

His demand also was aimed at settling a heated business dispute between the two companies over previous fuel supplies. Altanmia complained that Halliburton officials had solicited kickbacks, had smuggled oil and, in one case, had forced a hotel to buy a diamond-encrusted Cartier watch for an executive’s wife. Halliburton accused the company of failing to perform, the documents show.

“Please tell KBR to get off their butts and conclude deals with Kuwait NOW!” Jones wrote in the December 2003 e-mail to an unidentified U.S. official. “Tell them we want a deal done with Altanmia within 24 hours and don’t take any excuses.”

Halliburton’s fuel purchases from Altanmia are at the center of an ongoing criminal investigation into whether the Houston-based oil industry company overcharged U.S. taxpayers by $61 million for millions of gallons of fuel. The e-mails seemed to bolster Halliburton’s contention that it tried to buy cheaper fuel from Turkey, but was instructed by the U.S. government to buy higher-priced fuel from Kuwait.

The e-mails also renewed concerns about the conduct of Halliburton officials in Iraq and Kuwait. Halliburton fired two employees this year after learning that they had demanded as much as $6.1 million in kickbacks as part of another contract. And the documents raised questions about whether Jones and other U.S. officials had influenced the contracting process, which is supposed to be free from bias to protect taxpayer dollars.

A U.S. Army Corps of Engineers contracting official has complained about being pressured by higher-ups to order Halliburton to buy fuel exclusively from Altanmia.

The State Department did not return repeated calls for comment Wednesday. Jones, who became a top official in the U.S.-led Coalition Provisional Authority that ruled Iraq before sovereignty was given back to Iraqis in June, did not respond to an e-mail request.

A Halliburton spokeswoman said that the company was not aware of the accusations leveled against its employees by the Kuwaiti firm and that it followed U.S. government requests in purchasing the fuel.

“The facts show that KBR delivered fuel to Iraq at the best value, the best price, and the best terms and in ways completely consistent with government procurement policies,” said Wendy Hall, the corporate spokeswoman, in a statement.

Rep. Henry A. Waxman (D-Los Angeles) released portions of more than 400 documents on Halliburton’s fuel contract Wednesday. The name of the U.S. official to whom Jones addressed his e-mail in December was edited out. Waxman said the House Government Reform Committee should hold hearings on the new accusations.

Democrats’ charges of favoritism and wrongdoing involving Halliburton played a role in the presidential campaign because Vice President Dick Cheney was CEO of the company between 1995 and 2000.

“The elections are over, but the fact that U.S. taxpayers have been overpaying for the work done in Iraq is something that we still have to be concerned about,” Waxman said. “Even the Republicans should be concerned about it.”

A spokesman said that Rep. Thomas M. Davis (R-Va.), chairman of the committee, was considering the request but was still reviewing the documents.

“To jump to conclusions as Mr. Waxman has done, would be irresponsible,” said David Marin, spokesman for the Republican majority on the committee, which has previously held hearings on Halliburton and its government contracts.

The e-mails offer details of the chaos and sense of urgency that surrounded the fuel contract, which was worth up to $7 billion when it was awarded to Halliburton in March 2003 without competitive bidding.

Soon after the invasion, Halliburton signed a subcontract to buy fuel for delivery into Iraq from Altanmia, a Kuwaiti company with no previous experience in supplying fuel.

By summer 2003, the two companies had gotten into a dispute over whether Altanmia had fulfilled its end of the bargain, and Halliburton was shopping for other fuel suppliers.

The Kuwaiti company complained to the U.S. Embassy that Halliburton was planning to exclude it from bidding on a follow-up contract because it had refused to pay Halliburton executives kickbacks and bribes, according to the documents.

Altanmia officials accused Halliburton executives of smuggling Iraqi oil into neighboring markets.

Altanmia General Manager Waleed Humaidhi later emphasized that no one from Halliburton had directly asked for any “extra-contractual considerations.” In a memo, a U.S. Embassy official quoted Humaidhi as saying that “it was their assumption that ‘political’ or ‘kickback’ considerations must be behind KBR’s complaint” about the company’s performance. Humaidhi could not be reached for comment.

Altanmia also accused a Halliburton executive of demanding a Cartier watch for his wife from a subcontractor.

Halliburton spokeswoman Hall said that the $2,600 watch had been stolen from a hotel housing Halliburton employees and that the executive had simply asked that it be replaced.

The squabbling continued through the fall of 2003, threatening the delivery of fuel supplies into Iraq, where long gas lines had resulted in civil unrest.

U.S. Embassy officials became increasingly concerned at the delay, leading to demands from Jones -- who had by then taken on additional duties as a deputy to the top U.S. official in Baghdad, civilian administrator L. Paul Bremer III -- that the U.S. Army Corps of Engineers contracting officials order Halliburton to buy the fuel.