AMMAN, Jordan (AP) – A U.N. auditing board has recommended that the United States reimburse Iraq up to $208.5 million for contracting work carried out by KBR, a subsidiary of Halliburton, in the last two years.

The International Advisory and Monitoring Board of the Development Fund for Iraq said in a report that the work, paid for with Iraqi oil proceeds, was either overpriced or done poorly by the Virginia-based company.

Compiled from an array of Pentagon, United States government and private auditors, the report did not specify how or what work has been done poorly.

Halliburton said its subsidiary had cooperated with the auditing process and that questions raised had to do with documentation rather than the costs incurred by the company. It pointed to findings by the Pentagon’s Defense Contract Audit Agency.

“Many of DCAA’s questions have been about the quality of supporting documentation for costs that KBR clearly incurred,” Halliburton spokeswoman Cathy Mann said in an e-mailed statement.

“Therefore, it would be completely wrong to say or imply that any of these costs that were incurred at the client’s direction for its benefit are ‘overcharges.”‘

The International Advisory and Monitoring Board, which was set up in 2003 to ensure the transparent operation of the development fund, recommended in a statement Friday that “the U.S. Government seek resolution with the Iraqi Government concerning the use of resources … which might be in contradiction with U.N. Security Council Resolution 1483.”

That resolution transferred authority for expenditures from Iraq’s oil revenue from the United Nations to the Development Fund for Iraq.

The fund was controlled by the United States and Britain, Iraq’s occupying powers, until the June 28, 2004, transfer of sovereignty to the new interim government, when it was handed over to Iraq’s new leaders.

The report said because the audits were continuing, it was premature to specify how much of the $208,491,382 must ultimately be paid back.

But the board said that once its analysis was completed, it “recommends that amounts disbursed to contractors that cannot be supported as fair be reimbursed expeditiously.”

Mann said KBR continues to work with its client, the U.S. Army Corps of Engineers, regarding the settlement of government audits of fuel costs and other disputed issues.

“As these negotiations continue, KBR will confirm the total of all outcomes once complete. No timeline has been set for resolution of these issues,” she said.

The Iraqi government said it will pursue such funds identified by the IAMB report as part of its policy to recoup money squandered during Saddam Hussein’s regime or by international bodies following the 2003 U.S.-led invasion of the country.

“We have a policy to go after Iraqi funds whether they were abused by members of the former government or spent by international bodies,” said Laith Kubba, a spokesman for Iraqi Prime Minister Ibrahim al-Jafaari.

“Whether we will succeed in getting it back, we don’t now. There’s a will to pursue this money,” Kubba added.

A U.S. military official in Baghdad declined comment.

In Washington, U.S. Rep. Henry Waxman of California, one of the leading Democratic critics of Halliburton, said the international auditors “have every right to expect a full refund of Halliburton’s egregious overcharges.”

“For more than a year, administration officials concealed Halliburton’s overcharges from international auditors responsible for monitoring the use of Iraqi funds. The Bush administration repeatedly gave Halliburton special treatment and allowed the company to gouge both U.S. taxpayers and the Iraqi people.”

Kubba said Iraqis have been complaining for months about projects that should have cost $5,000, such as painting schools, that ended up costing $100,000.

“Having too many middlemen doing contracts to too many subcontractors has wasted money and resulted in little return to the Iraqi people,” he said.

He said the waste of Iraqi money would be an issue in parliamentary elections slated for Dec. 15.

“I’m sure once we have an elected assembly and a government for a four-year term, they’ll be looking at all these issues,” Kubba said.

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AP-ES-11-05-05 1456EST

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