A former employee of a Halliburton subsidiary has been indicted on charges of defrauding the US military of more than $3.5m for fuel in Iraq.
KBR was criticised in a recently-released audit report
Jeff Alex Mazon, 36, an ex-procurement manager for Kellogg, Brown and Root (KBR), is due to appear in a federal court in Atlanta on 10 counts of fraud.
Kuwaiti businessman Ali Hijazi has also been indicted on the same charges.
Halliburton, once run by Vice-President Dick Cheney, is under renewed pressure over its work for the Pentagon in Iraq.
An audit report investigating $108m-worth of questionable fuel delivery costs in Iraq was released on Monday by Congressional Democrats critical of Halliburton's work in Iraq.
Mr Mazon, of Georgia, and Mr Hijazi are accused of defrauding the US government of more than $3.5m by devising a scheme to overcharge the military for fuel.
It is alleged Mr Mazon, while working in Kuwait between December 2002 and June 2003, inflated a bid by Mr Hijazi's LaNouvelle General Trading and Contract Company for a subcontract to store fuel and other operations.
He also inflated a rival Kuwaiti company's competing bid, but made sure LaNouvelle's bid was the lower of the two, the indictment alleged.
They are both charged with four counts of fraud against the US and six counts of wire fraud.
Mr Hijazi, who is not a US citizen, has not been arrested, the Justice Department said.
Halliburton said, in a comment on the indictments, that its own internal auditors suspected wrongdoing more than a year ago and immediately reported it to the US government.
"They key issue here is self-disclosure and self-reporting," said spokeswoman Wendy Hall by email, Reuters news agency reported.
A Defense Contract Audit Agency report, released on Monday, criticised KBR for failing to provide clear records of its costs.
It was examining more than $108m (£56m) of a contract extension which was worth $875m.
The Pentagon said on Tuesday military auditors still had "major" unresolved issues with Halliburton, Reuters reported.