The company has been accused of winning political favours since Dick Cheney, its former chief executive, decamped to become the running mate of George W. Bush in 2000. John Kerry, the Democratic candidate for president, has over the past few weeks added his voice to months of criticism from his party about the company's contracts for the US government in Iraq. Mr Kerry repeated the allegation that Halliburton overcharged for services in Iraq, where it is the biggest Pentagon contractor. It is one of a host of claims that the company maintains are untrue, politically motivated and all the more unfair given that 45 of its staff and sub-contractors have been killed while working in Iraq. Halliburton is not a central issue in the election - in spite of Mr Kerry's attempts to put Iraq back at centre stage - but pollsters claim that allegations of favouritism reinforce liberal voters' dislike for Mr Bush and Mr Cheney. "It's a reminder of the problems in Iraq, and an easy way of talking to voters about it," said Karlyn Bowman, a fellow at the American Enterprise Institute, a Washington-based think-tank. "It's one of those things that might help [Democrats] turn out the base." The barbs clearly sting Halliburton. "The best thing we could have is for early November to come and go," said Dave Lesar, its chairman, president and chief executive officer. But last week, Halliburton sought to fight back. At a meeting for investors and analysts, it issued its most detailed rebuttal yet of the many allegations about its work in Iraq. Crucially, it also outlined plans for the first time to dispose of KBR, the business at the source of its business difficulties and image problem, through a possible sale, spin-off or initial public offering. KBR, formerly known as Kellogg Brown & Root, has become an albatross around Halliburton's neck. The engineering and logistics unit is the Pentagon's prime civilian contractor in Iraq, first dealing with the country's broken oil infrastructure, and then feeding and housing military and other staff. Revenues from the Pentagon have soared since Mr Cheney's arrival at the White House, feeding the allegations of cronyism. Pentagon contracts boosted KBR's revenues by $3.1bn (£1.7bn) last year - 40 per cent of the unit's total - and a further $3.8bn in the first six months of 2004. But KBR has been no friend to Halliburton shareholders, losing money over the past three years as it moved to settle $4.2bn in asbestos-related claims inherited from a 1998 acquisition made during Mr Cheney's watch. Halliburton expects to settle the asbestos claims by the end of the year, freeing executives to decide what to do with the troublesome business. Despite the cronyism allegations, the company's contracts in Iraq are much less profitable than its core energy business. They are expected to have generated more than $13bn in sales by the time they start to expire in 2006 but most offer low margins - less than 2 per cent on average in 2003 and just 1.4 per cent this year for the logistics work. As a result, last week's news of the disposal plans drew a positive response from the markets. Analysts point to the business rationale of separating KBR, to unlock the value in the operation and focus attention on Halliburton's more profitable business of providing drilling and pumping services to oil companies. The rising oil price has boosted oil exploration budgets by 10 per cent this year - with a similar rise expected in 2005 - providing more work for companies such as Halliburton, and allowing them to increase prices. Asbestos claims and the negative sentiment surrounding its work in Iraq have left Halliburton's share price trailing its peers. The stock closed on Friday at 24.5 times forecast 2004 earnings, compared with a multiple of 32.9 at larger rival Schlumberger, and 30.3 at Baker Hughes. Mr Lesar said it might offload KBR, unless this gap closed. Analysts at Deutsche Bank value KBR at up to $2.15bn, while others believe it could be worth closer to $3bn by the time management decides what to do with the business next year. Mr Lesar said he has already received expressions of interest, and expects more. Halliburton has made its move to shift the fate of KBR away from the media and the Kerry campaign towards Wall Street. "A lot of this will go away after the election," Mr Lesar told investors. "A year from now, most people won't even know who Halliburton is." PIN//FT