WASHINGTON - The Pentagon has asked the Justice Department to join in an investigation of alleged overcharging by US energy and services group Halliburton, a senior US defense official confirmed.

The official, who spoke on condition of anonymity, said the Pentagon's inspector general decided in recent weeks to bring the Justice Department into the investigation because it had reached a point where additional investigative tools were required.

"At a certain point in an investigation, the IG brings in the Justice Department," the official said, saying it was a "fairly routine aspect of these kinds of investigations."

The Pentagon, which lacks the power to indict and press criminal charges, launched a probe in January into allegations Halliburton subsidiary Kellogg Brown and Root (KBR) had overcharged the military for fuel delivered to Iraq by 61 million dollars.

The defense official said investigators were looking into how KBR's subcontractor, a Kuwaiti firm called Altanmia, was selected and whether the proper procedures were followed.

The Wall Street Journal, which first reported the development, quoted a Justice Department official as saying it was "significant."

The paper said a Justice Department investigation could lead to criminal fraud charges and penalties against the Texas-based company once headed by Vice President Dick Cheney.

The US Congress was notified Wednesday of the Pentagon's decision to widen the Halliburton investigation, the daily said.

An unnamed justice official told The Wall Street Journal that the department might inquire whether Halliburton violated the federal Claims Act, by which a company found guilty of defrauding the government can be made to repay as much as three times the amount of the fraud.

The embattled oil services firm on Tuesday issued a statement claiming that its liquidity could be hurt if US government agencies require a further review of its work in Iraq.

During 2003, Iraq-related work provided 3.6 billion dollars in revenues for Halliburton and 85 million in operating profits, the statement said. But the company said it could face a crunch if its billing practices face more review.

"As a result of an increase in the level of work performed in Iraq or the Defense Contract Audit Agency's review of additional aspects of our services performed in Iraq, it is possible that we may, or may be required to, withhold additional invoicing or make refunds to our customer, some of which could be substantial, until these matters are resolved," it said.

"This could materially and adversely affect our liquidity."

Copyright © 2004 Agence France Presse

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