- It's obvious that no mainstream news reporter has the
gumption to seriously question Vice President [sic] 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.
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- Pity those journalists because this is the stuff Pulitzer's
are made of. What's even more remarkable is that there are reams of documents
in the public domain showing how Cheney cooked the books when he was CEO
of Halliburton, which makes the vice president [sic] 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.
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- 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.
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- 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.
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- "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.
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- 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 George W. 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.
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- 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.
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- 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.
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- 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 [sic] was aware of who owed us money,
and he helped us collect it," Lesar told Newsweek.
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- Wendy Hall, a spokeswoman for Halliburton, said at the
time that "the vice president [sic] was aware we accrued revenue on
unapproved claims in accordance with generally accepted accounting principles."
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- 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.
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- 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.
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- "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.
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- 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.
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- As if that weren't enough to toss the vice president
[sic] 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.
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- 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.
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- The Washington Post summed up Cheney's tenure at Halliburton
this way on July 16, 2002, following revelations that the vice president
[sic] 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.
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- "The developments at Halliburton since Cheney's
departure leave two possibilities: Either the vice president [sic] 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."
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- Either way, the more evidence that surfaces related to
Cheney's role at Halliburton the more it becomes clear that the vice president
[sic] is unfit to serve a second term in the White House.
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- - 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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- Copyright © 2004 Jason Leopold
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- http://www.onlinejournal.com/Special_Reports/082004Leopold/082004leopold.html
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