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A Halliburton Primer
Thursday, July 11, 2002


Following President Bush's demand for more corporate accountability, public interest group Judicial Watch, Inc., filed suit against Vice President Cheney and the Halliburton Company, alleging accounting fraud during Cheney's stewardship of Halliburton in the 1990s. The U.S. Securities and Exchange Commission is also investigating Halliburton's accounting practices.


Judicial Watch Sues Cheney, Halliburton (AP, July 10, 2002)

Following is a brief explanation of Cheney's involvment with Halliburton and the pending lawsuit and SEC investigation.

What is Halliburton Co.?

The Dallas-based Halliburton Company provides products and services to the petroleum and energy industries to aid in the exploration, development and production of natural resources. Halliburton KBR, the company's engineering and construction division, designs, builds and provides additional services for the energy industry, governments and civil infrastructure. Halliburton employs 85,000 people in over 100 countries.

Halliburton came under fire in the early '90s for supplying Libya and Iraq with oil drilling equipment which could be used to detonate nuclear weapons. Halliburton Logging Services, a former subsidiary, was charged with shipping six pulse neutron generators through Italy to Libya. In 1995, the company pled guilty to criminal charges that it violated the U.S. ban on exports to Libya. Halliburton was fined $1.2 million and will pay $2.61 million in civil penalties.


Halliburton Energy Services
What was Vice President Cheney's involvement with Halliburton?

Cheney was tapped in 1995 to lead Halliburton as chairman and chief executive officer while the company was a second-tier firm within the oil and energy industries. As secretary of defense during the Persian Gulf War, Cheney made international contacts which Halliburton executives hoped would propel the company to the industry's fore. Under his leadership, the company did expand overseas, swelling its domestic portfolio into foreign markets. Cheney also led the aggressive acquisition of competitors, an offensive strategy which occurred during a period of falling oil prices. The largest merger was with Dresser Industries for $5.4 billion in 1998 – the same month in which layoffs cut nine percent of the work force.

During his chairmanship of Halliburton, Cheney criticized U.S. sanctions against "rogue" nations such as Iran and Libya in a 1998 speech. According to a July 26, 2000, Washington Post story, Cheney complained the sanctions "are nearly always motivated by domestic political pressure, the need for Congress to appeal to some domestic constituency."

Cheney's work with Halliburton yielded large financial reward. In May 2000 he sold stock holdings in the company worth $5 million. When he retired from Halliburton during the 2000 presidential campaign, Cheney was awarded a retirement package worth $20 million.

Why is Halliburton under investigation by the SEC?

A little more than a month ago, Halliburton announced that the SEC had begun a probe into the company's booking of cost overruns on energy-related construction jobs. This practice accounted for the overruns as revenue, even if customers had not yet approved the charges, and inflated Halliburton profits by almost $100 million in 1998.

According to a June 2, 2002, Washington Post story, Halliburton said a shift in its mix of business mandated the new accounting policy, and that it conformed to generally accepted accounting principles. The accounting change was approved by Halliburton auditor Arthur Andersen.


U.S. Securities and Exchange Commission
The Post's coverage of the accounting industry
What is Judicial Watch?

Judicial Watch, Inc., is a self-described "nonpartisan" group which "investigates and prosecutes corruption by government officials," according to a press release. However, the organization has tilted conservative since its founding in 1994 by bringing numerous cases against former President Bill Clinton and his administration while offering legal representation for Paula Jones and Gennifer Flowers. The group also investigated the 2000 election Florida ballot dispute and currently has several cases pending against U.S. government agencies. Judicial Watch is a nonprofit group based in Washington, D.C., with satellite offices around the country.


Judicial Watch
What is Judicial Watch's lawsuit against Cheney?

Judicial Watch filed suit this week on behalf of shareholders against Cheney and 13 other Halliburton directors, as well as Halliburton itself and its accounting firm, Arthur Andersen LLP and Arthur Andersen Worldwide. The suit charges Cheney and Halliburton with fraudulent accounting practices and misleading press releases resulting in the overvaluation of the company's shares, leading to shareholder losses. The lawsuit alleges Halliburton overstated revenues by $445 million from 1999 through the end of 2001.

Two shareholders, Stephen S. Stephens of Indiana and Lyle and Deanna J. Lionbarger of New Mexico, have been listed as plaintiffs. The suit was filed in U.S. District Court in Dallas.***


Judicial Watch's filed complaint
Compiled by Anne Rittman

© 2002 The Washington Post Company


 ***washingtonpost.com
 

Jack Kelly: The Halliburton huff

The oil services firm did nothing wrong in Iraq

Sunday, January 11, 2004

By Jack Kelly, Pittsburgh Post-Gazette

Web logger John Cole noted a fascinating difference between the news accounts accusing Halliburton of overcharging on a contract to deliver oil in Iraq, and the accounts of Halliburton's subsequent exoneration.

Here's the AP's Matt Kelley on the original charge: "A Pentagon audit has found Vice President Dick Cheney's former company may have overcharged the Army by $1.09 a gallon for nearly 57 million gallons of gasoline delivered to citizens in Iraq, senior defense officials say."

Here's Reuters: "A Pentagon audit of Halliburton, the oil services firm once run by Vice President Dick Cheney, has found evidence the company may have overcharged for fuel it brought into Iraq from Kuwait, military sources said on Thursday.

And now the AP on Halliburton's exoneration: "The Army apparently has sided with Halliburton in a dispute over the company's charges for fuel in Iraq."

And here's Reuters again: "The U.S. Army said on Tuesday it had granted Halliburton a special waiver to bring fuel into Iraq under a no-bid deal with a Kuwaiti supplier despite a draft Pentagon audit that found evidence of overcharging for fuel."

When Halliburton was exonerated, Cheney -- prominently featured in the accusation stories -- apparently was back in his bunker at an undisclosed location.

There is no Halliburton scandal. But Democrats and their allies in the news media think that if they blow enough smoke, people will think there must be a fire somewhere.

They imply that Halliburton has been getting government contracts it does not deserve because of the influence of Cheney. They imply further that he has been putting the interests of his former firm ahead of the interests of the United States.

This is absurd. Cheney's only possible motivation for doing so would be greed. But if greed were his primary motivation, why would he give up a job that paid him nearly $1 million a year in salary -- and much more than that in annual bonuses and stock options -- for a job that pays less than $200,000 a year?

Cheney served in Congress for 12 years and as secretary of defense for four years before becoming Halliburton's CEO, and did so without a hint of scandal. Unless there is powerful evidence to the contrary, we should assume that his primary motivation for public service is public service, even if we disagree with his views.

There is not a shred of evidence to indicate that Cheney has intervened to obtain contracts for his former firm, or that the contracting officers in the Department of Defense -- who are career civil servants -- have been awarding contracts in response to political pressure. The smear of Cheney is also a smear of them.

Nor is there evidence to indicate that Halliburton is undeserving of the contracts it has won, has performed poorly on them or profited excessively from them. Halliburton's Kellogg, Brown & Root (KBR) subsidiary has decades of experience in major construction projects in the Middle East. It is thus ostensibly better qualified for rebuilding Iraq than, say, the Marin County Marijuana Growers Association. The Army said KBR got the Iraqi oil field contract because it was the only firm that possessed the skills, resources and security clearances necessary to do the job.

The great growth in KBR's government work took place during the Clinton administration. By the end of Clinton's second term, one of every seven Pentagon dollars passed through KBR, according to Dan Baum in The New York Times magazine. Those harping about Halliburton now saw nothing untoward about Halliburton then.

Those in high dudgeon about Halliburton also had little to say when former Clinton Treasury Secretary Robert Rubin sought favors for Enron, a client of his firm. (Bush turned him down.) But then, Rubin is a Democrat.

It's not so much that there is a double standard. When the truth clashes with their political ambitions, the fever-swamp left has no standards at all.


Haliburton is not really a Republican or Democratic business. It is just a business. One that was run by Cheney, who ran it without politics. Because Cheney ran it (he no longer has any connections) democrats will distort any shifty business practice to smear Cheney and on the reverse because democrats will distort any shifty Haliburton business practice to smear Cheney, Republicans go into overdrive to defend this company more than is required.

http://www.freerepublic.com/focus/f-news/1055656/posts

After watching the debates I'm convinced our politicians are most concerned with getting elected.  Facts only get in the way.  I came across this site this morning for anyone that might have an interest :

http://www.factcheck.org/article.aspx?docID=272

Peace

Alnilam