"This is a self-inflicted wound, a needless failure to meet transparency obligations," Rep. Christopher Shays, a Republican from Connecticut, told a U.S. House of Representatives panel.

The hearing was called to look at U.S. management of Iraqi funds after the 2003 invasion. An audit by the U.S. Special Inspector General for Iraq Reconstruction found the U.S.-led authority there could not properly account for $8.8 billion of Iraq's money.

Texas-based Halliburton -- run by Vice President Dick Cheney until the 2000 race for the White House -- was paid about $1.7 billion out of these funds to bring in fuel for Iraqis under a sole source deal its unit Kellogg Brown and Root had with the U.S. military.

U.N. auditors asked for a full accounting of Iraqi money given to KBR and documents were finally handed over after much wrangling but portions detailing potential overcharges by KBR were blocked out.

"It hid almost every meaningful number or reference to question an unsupported contract cost, the very matters of most concern to them and, frankly, to us," said Shays.

U.S. congressional committees, including Shay's Government Reform Committee, are investigating the U.N.'s now-defunct oil-for-food program and Shays said moves to hide or edit U.S. documents undermined the U.S. credibility in these probes.

Such moves also made it look as if the Defense Department had something to hide. "Sometimes, lawyers can get you out of jail but can make you look as guilty as hell in the process."

He added: "It really ticks me off. It seems senseless."

DEFENDS MOVE

David Norquist, under deputy secretary of defense, said his department tried to be as transparent as possible in its dealings with U.N.-mandated auditors.

"It was our intent to see that (U.N. auditors) received as full an answer as possible, consistent with the law," said Norquist.

Defense Department officials at the hearing, who were chastised for not preparing written testimony, said lawyers had advised them the KBR information was proprietary and could not be released to the public.

The Army Corps of Engineers, which was in charge of the KBR contract, said KBR made all the redactions and all of these were accepted by the Defense Department.

KBR spokeswoman Cathy Mann said the criticism of the company was unfounded, adding any claims that figures in these audit reports were overcharges are "flat-out wrong."

"These redactions were ultimately reviewed and evaluated by KBR's customer and some were accepted and some were over-ruled. KBR plays no role in this decision-making process," she said.

The Democrats asked the Republican-run committee to subpoena the Pentagon to hand over all records relating to who made the decision to redact the documents and why.

Democrats have in the past accused Halliburton of being given favorable treatment in Iraq because of the company's former ties to Cheney.

Shays, who chaired the hearing, gave the Pentagon until Monday to hand over the documents or face a subpoena.

Democratic Rep. Dennis Kucinich from Ohio said the United States should look at its own record.

"Through systematic mismanagement, a lack of transparency, the U.S. occupation of Iraq has discredited the United States," he said.