Thursday, March 30, 2006

Halliburton, in trouble again, to float KBR - Business - Business -

NEW YORK: Halliburton, the American energy and construction group which used to be run by US vice-president Dick Cheney, is understood to have hired Goldman Sachs to run the $US9 billion ($12.8 billion) float of its Kellogg Brown & Root subsidiary.

KBR has been heavily criticised for its dominant role in war-torn Iraq as major contractor to the US military, the contracts won apparently without arms' length tenders being called, and for heavily overcharging.

In Washington on Tuesday frustrated US Government auditors pleaded, cajoled and finally threatened Halliburton executives who repeatedly failed to comply with government reporting requirements under a key Iraq contract with a $US1.2 billion potential price tag, newly released documents show.

The documents, along with a report, were issued on Tuesday by the Democratic staff of the House Committee on Government Reform.

The 15-page report cites findings by auditors that Halliburton overcharged - "apparently intentionally" - on the contract by using hidden calculations and attempted, in one instance, to invoice the US Government for $US26 million in costs it did not incur.

The report blamed the Department of Defence for awarding the contract despite warnings from auditors that Halliburton's cost estimating system had "significant deficiencies".

Halliburton remains the largest private contractor in Iraq.

The contract, awarded in January 2004, was one of three Iraq contracts awarded to Halliburton.

While the other two agreements - one for supplies for US troops and the other for fuel and oil industry repairs - have faced heavy criticism as no-bid contracts, Mr Waxman and his staff said Tuesday's report was the first to focus on the third Halliburton contract, for the repair of oilfields in southern Iraq, which was awarded after a competitive bidding process.

Melissa Norcross, a spokeswoman for Halliburton, dismissed the report as "partisan".

Halliburton is planning to float 20 per cent of KBR in the next few months and the remaining 80 per cent in a year's time. KBR has been selling some of its assets, including Kellogg Brown Root Production Services, based in Aberdeen, Scotland, for £100 million ($248 million) to its own management two weeks ago.

The sale came amid renewed speculation about the future of the Plymouth-based Devonport group in the UK, which refits Britain's nuclear submarine fleet and is 51 per cent owned by KBR