How
Dick Cheney Got Away With $35 Million Right Before the Govt Launched a
Probe into Halliburton
-
- By
Jason Leopold
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It’s
obvious that no mainstream news reporter has the gumption to seriously
question Vice President Dick Cheney’s ethics when he was chief
executive of Halliburton, the oil-field services company that is
currently embroiled in a scandal with the Pentagon due to its
questionable accounting practices related to its work in war-torn
Iraq
.
Pity
those journalists because this is the stuff Pulitzer’s are made of.
What’s even more remarkable is that there’s reams of documents in
the public domain showing how Cheney cooked the books when he was CEO of
Halliburton, which makes the vice president look like Ken Lay’s twin
brother. The evidence is beginning to collect dust. To tell the story of
how Cheney’s Halliburton used accounting sleight of hand to fool
investors all you need to do is connect the dots, which is what this
story will do.
Let’s
start with a bit of old news. A couple of weeks ago Halliburton agreed
to pay a $7.5 million fine to settle a U.S. Securities and Exchange
Commission probe related to a 1998 change in the way Halliburton
accounted for construction revenue.
The
commission says the undisclosed accounting change caused Halliburton's
public statements regarding its income in 1998 and 1999 to be materially
misleading, boosting Halliburton’s profits on paper by $120 million.
“In
the absence of any disclosure, the investing public was deprived of a
full opportunity to assess Halliburton's reported income - more
particularly, the precise nature of that income, and its comparability
to Halliburton's income in prior periods,” according to the
commission.
Cheney
was CEO of Halliburton from 1995 to 2000. The SEC said Cheney cooperated
with the agency’s investigation and as such he wasn’t penalized for
his role in the charade. No big surprise there. All five of the SEC
commissioners were appointed by President Bush. Dozens of the
administration’s crimes have gone unpunished in the past three years.
But dig a little more and you’ll see just how deep the rabbit hole
goes.
Cheney
has said publicly that he was unaware of Halliburton’s accounting
machinations while he was CEO of the company. His Sgt. Schultz defense
has been used before by the likes of Gary Winnick of Global Crossing,
Dennis Kozlowski of Tyco, John Regas of Adelphia and Ken Lay of Enron,
all of whom have been prosecuted by the Justice Department for cooking
the books at their respective companies.
A
story in the July 22, 2002 issue of Newsweek sets the record straight
and proves that Cheney knew full well that Halliburton was engaging in
accounting trickery to boost its stock and standing on Wall Street and
he should be held accountable just like those other corporate evildoers.
In
an interview with two of Newsweek’s reporters, Halliburton CEO David
Lesar defended his company’s bookkeeping and said that former CEO Dick
Cheney was aware of the firm's accounting methods. Lesar says “Cheney
knew that the firm was counting projected cost-overrun payments as
revenues, “The vice president was aware of who owed us money, and he
helped us collect it,” Lesar told Newsweek.
Wendy
Hall, a spokeswoman for Halliburton, said at the time that “the vice
president was aware we accrued revenue on unapproved claims in
accordance with generally accepted accounting principles.”
By
the way, those “generally accepted accounting principles” is what
Enron used to cook its books and is why the company’s top two leaders
have been charged with a whole of range of crimes by the Justice
Department.
Just
as disturbing is the fact that Cheney had now defunct auditor, Arthur
Anderson, which unraveled in 2002 after the company was found guilty of
obstruction of justice for destroying documents related to its role in
the Enron debacle, approve Halliburton’s accounting methods. Cheney
was so grateful to
Anderson
that he agreed to appear in a promotional video for
Anderson
and spoke glowingly about the company for going above and beyond routine
audits for Halliburton.
“One
of the things I like that they do for us is that, in effect, I get good
advice, if you will, from their people based upon how we're doing
business and how we're operating, over and above the, just sort of the
normal by-the-books audit arrangement,” said Cheney in the 1996 tape.
In
a separate but equally corrupt act of corporate malfeasance, a
French judge is pouring over evidence to determine whether Cheney may
have been responsible under French law for at least one of four bribery
payments exchanged between a Halliburton subsidiary and Nigerian
officials to obtain contracts for liquefied natural projects. Under
French law, “the head of a company can be charged with 'misuse of
corporate assets' for bribes paid by any employee - even if the
executive didn't know about the improper payments.” The U.S. Justice
Department is also investigating the issue.
As
if that weren’t enough to toss the vice president and his boss out of
office, the Justice Department is also investigating whether Halliburton
violated sanctions that prohibit
U.S.
corporations and businesses from engaging in commercial, financial, or
trade transactions with
Iran
while Cheney headed the company. For the record, Cheney personally
lobbied Congress in 1996 to lift those sanctions and when Congress
denied the request Halliburton opened a
Cayman
Island
subsidiary so it could do business in
Iran
by skirting
U.S.
law.
In
July 2004, a federal grand jury issued a subpoena to Halliburton seeking
information about its work in
Iran
. Government officials told the Washington Post such cases are referred
to Justice only when there is evidence "intentional or
willful" violations have occurred.
The
Washington Post summed up Cheney’s tenure at Halliburton this way on
July 16, 2002 following revelations that the vice president made a $35
million windfall from his sales of Halliburton stock, right before the
company’s share price crashed on the announcement that it was
being investigated by a grand jury related to the company overbilling
the federal government for its work at Fort Ord in California (which
also took place under Cheney’s watch), an issue that is identical to
current charges that the company has overbilled the government for its
work in Iraq.
“The
developments at Halliburton since Cheney's departure leave two
possibilities: Either the vice president did not know of the magnitude
of problems at the oilfield services company he ran for five years, or
he sold his shares in August 2000 knowing the company was likely headed
for a fall.”
Either
way, the more evidence that surfaces related to Cheney’s role at
Halliburton the more it becomes clear that the vice president is unfit
to serve a second term in the White House.
©
2004 Jason Leopold
Jason
Leopold is the former
Los Angeles
bureau chief of Dow Jones Newswires where he spent two years covering the
energy crisis and the Enron bankruptcy. He just finished writing a book
about the crisis, due out in December through Rowman & Littlefield.
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