White House accused of overpaying 'cronies'

The Bush administration has been accused of paying almost three times the market value for petrol imported into Iraq from Kuwait, with profits falling mostly to Halliburton, the Texas oil services company headed by Dick Cheney before he became Vice-President.

Two influential Democratic congressmen, Henry Waxman of California and John Dingell of Michigan, wrote to the White House yesterday to demand an explanation for why the United States was paying Halliburton $2.65 a gallon for oil, which it then sold on to Iraqi consumers at four to 15 cents a gallon. Petroleum experts told the two congressmen the cost of transporting the fuel across the Kuwaiti border should be less than $1 a gallon.

"The US government is paying nearly three times more for gasoline from Kuwait than it should, and then it is reselling this gasoline at a huge loss inside Iraq," the congressmen said in a letter to Condoleezza Rice, the National Security Adviser. "Whether this is due to incompetence, malfeasance, or some other reason, the waste of taxpayer dollars must be stopped."

Halliburton dismissed what it called "false statements being made about fuel purchases for the people of Iraq. Delivery of the fuels is difficult and hazardous in a hostile environment," said a company spokeswoman. "It is expensive to purchase, ship, and deliver fuel into a war situation, especially when you are limited by short-duration contracting."

Mr Waxman, an ardent critic of the administration in general and Vice-President Cheney in particular, has previously denounced the Halliburton petrol deal as "highway robbery".