Halliburton spokeswoman Wendy Hall defended the company's dangerous work in Iraq on Thursday and welcomed a "thorough review of any and all of our government contracts".

Clocking up nearly $6 billion in US military business in Iraq so far, Hall confirmed its unit Kellogg Brown and Root had closely followed procurement rules.

"As the fuel overcharging allegations have surfaced in recent months, the Army Corps of Engineers - which oversees the KBR contract - has said ongoing audits have shown no signs of overcharging or any other impropriety," she told journalists.

Military auditors said on Wednesday they had asked the Pentagon's inspector general to look into an "irregularity" over fuel brought into Iraq by Halliburton's unit KBR,
suggesting the auditors suspected wrongdoing.

"They have noted the suspected irregularity to the inspector general and the IG will now take and do with it what they see fit," a defence official told journalists on Thursday.

Investigation?

The official did not know whether a formal investigation would be launched and could not say whether the referral was linked to a draft audit reported earlier.

That audit found KBR may have been overcharged by $61 million to bring fuel into Iraq via Kuwaiti subcontractor Altanmia Commercial Marketing Co.

"The Army Corps of Engineers - which oversees the KBR contract - has said ongoing audits have shown no signs of overcharging or any other impropriety"

Wendy Hall,
Halliburton spokeswoman

The fuel pricing issue has dogged Halliburton for months after Democrats raised questions over why the company was charging nearly double the going rate to bring in fuel via Kuwait rather than the cheaper route, Turkey.

Hall said KBR imported about 4 million litres of benzene per day from Turkey and 4 million from Kuwait into Iraq, which despite being oil-rich suffers from a dire shortage of refined fuel.

In addition, the company also imported liquid propane gas, kerosene and diesel.

New contracts

News of the inspector general's referral came at an important time for Halliburton, which has bid on two new contracts that replace its no-bid deal handed out last March by the Army Corps of Engineers to rebuild Iraq's oil industry.

So far, that deal has amounted to about $2.3 billion in business.

The new contracts, worth a total of $2 billion, are due to be announced by Saturday following several delays.

KBR has another contract with the US military which involves providing logistical support to US troops, from doing laundry and delivering mail to building barracks.

That contract is worth $3.7 billion so far, with nearly all of those funds dedicated to Iraq.

Army saves costs

Earlier this week, the US military handed out another contract to KBR, giving it a $1.5 billion construction and engineering deal for work covering 25 countries from Iraq and the Horn of Africa to Afghanistan.

In a bid to reduce costs, the Army said last month it would take over Halliburton's job of bringing fuel into Iraq and gave it to the military's own fuel agency, the Defence Energy Support Centre which is expected to have its contractors in place by April.

The Army Corps of Engineers has stood by KBR and filed a "waiver" last month that relieved KBR from providing certified pricing data for the sole source contract it was using to bring in fuel from Kuwait.