THE US: The US Army will withhold a percentage of its payments to Halliburton, a company which was formerly linked with the US Vice-President, Mr Dick Cheney.
As a result of a billing dispute over services provided to US troops in Iraq, ranging from laundry to lunches, the army will withhold 15 per cent of future invoices.
A military spokeswoman said the withholding could amount to about $60 million a month in payments to the Halliburton subsidiary, Kellogg Brown and Root (KBR), the Army's biggest contractor in Iraq. KBR has been accused of overcharging the military for oil and food services in Iraq and Kuwait.
Ms Linda Theis, a spokeswoman for the Army Field Support Command in Rock Island, Illinois, said: "The withhold will not affect any past invoices but will be applied to future ones from tomorrow, August 18th."
Halliburton said the company would fight the Army's decision in court and argue that the withholding should not apply to any of its Iraq work, the bill for which, according to a government estimate, could top $18 billion.
"Halliburton is confident the government action is not justified and expects that its legal arguments will be upheld in litigation," a company statement said.
The threat to dock payments has hung over the company for months because of a dispute over whether KBR properly documented bills for feeding and housing troops in Iraq and Kuwait.
Halliburton shares slid by more than 4 per cent, or $1.14, to $26.65 in morning trade on the New York Stock Exchange yesterday. The shares have fallen by 16 per cent since the beginning of the month.
Halliburton, which was run by Mr Dick Cheney from 1995 to 2000 before he became US vice president, said it believed the impact of the withholding would be mitigated since KBR planned, in turn, to slap a 15 per cent withholding of payments to subcontractors.
So far, Halliburton has been paid more than $4.3 billion under its logistics contract in Iraq, doing tasks that range from delivering post to building bases and cooking meals.
Halliburton's work has been under intense scrutiny in Iraq, with allegations that the company overcharged for some services, such as meals and providing fuel to Iraqi civilians.
The company says it is the victim of a political smear campaign during this presidential election season because of its former ties to Mr Cheney and attributes some of its high prices to the fact that it has been working in a war zone.