A former employee of a Halliburton subsidiary claims that she was
fired for revealing to her managers that the company was charging the
government fraudulently inflated costs for military facilities it ran
in Iraq, according to court papers unsealed yesterday.

At bases in Anbar Province, the desert homeland of Iraq's bitter
Sunni-led insurgency, company employees faked head counts to inflate
its charges for operating recreational and dining facilities, and led
a relatively lavish lifestyle by appropriating food and equipment
meant for the troops, the papers charge.

The suit in federal court by the former employee, Julie McBride, is
the second corporate whistleblower case to emerge from Iraq. In the
first, a jury found the security company Custer Battles guilty of
inflating invoices by $3 million, but the case is now going to appeal
after a judge held up the settlement.

A spokeswoman for Halliburton, Cathy Mann, said that there had been no
wrongdoing by the subsidiary, KBR, formerly known as Kellogg Brown &
Root.

"The claims included in this lawsuit clearly demonstrate a complete
misinterpretation of facts as well as a lack of understanding of KBR's
contractual agreements with its customer, the U.S. Army," Ms. Mann
said in a written statement.

Ms. Mann said that the company's charges to the government did not
depend on head counts and that KBR employees were contractually
entitled to use the food and recreational equipment at camps in Iraq,
just as the troops were.

Those assertions were disputed by a lawyer in the case, Alan Grayson,
of Grayson & Kubli in McLean, Va., the same firm that represented
whistleblowers in the Custer Battles case. He asserted that the KBR
employees enjoyed indulgences ranging from cases of soda and tubs of
food to big-screen TV's and exercise equipment.

The case is being brought under the False Claims Act, which allows the
government to collect triple any damages that a jury might award. The
law allows Ms. McBride, as a whistleblower, to collect anywhere from
15 to 30 percent of that assessment if her case is successful. Ms.
McBride was not immediately available for comment, but Mr. Grayson
said that she is a former lawyer who has two children and now lives in
Los Angeles.