Stickler's for the Rules

18 miners killed this year, and safety nominee says the laws are fine

The contract also opens the way for Halliburton to develop a plan "to react to a national emergency, such as a natural disaster."

Meanwhile Halliburton, which has been accused of faulty operations in Iraq before, is now in trouble over the water it supplies to military camps.

The AP reports internal documents reveal the water supplied by Halliburton to a U.S. base in Iraq was contaminated, and Halliburton didn't tell troops and civilians at the Ramadi base, called Camp Junction City. "We exposed a base camp population (military and civilian) to a water source that was not treated," said a July 15, 2005, memo by William Granger, the official for Halliburton's KBR subsidiary who was in charge of water quality in Iraq and Kuwait, according to the AP.

"The level of contamination was roughly 2X the normal contamination of untreated water from the Euphrates River," Granger said in one document. He said the exposure had gone on for "possibly a year," and added, "I am not sure if any attempt to notify the exposed population was ever made."

A Halliburton spokesperson last month denied any wrongdoing by the company, saying, "KBR has conducted its own inspection of the water at the site in question and has found no evidence to substantiate the allegations made by these former employees. Although these individuals claim to have been adversely affected by the water at the site, they have provided no medical evidence to substantiate their claims."

But the water issue is by no means the company's only problem in the region, where its KBR subsidiary has contracts worth as much as $18 billion. A 2004 audit of KBR by the Pentagon's Defense Contract Audit Agency discovered $108 million in "questioned costs" in Halliburton's "Restore Iraq Oil" project. In June 2005, Rory Mayberry, a former food production manager, told a group of Democratic senators that KBR routinely sold expired food rations to the army. He said KBR falsified the number of meals and submitted false claims for reimbursement, and did so to make up for past amounts auditors had disallowed.

Additional reporting: Michael Roston, Colin Gustafson

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