Who Let the Dogs In? (41 page)

T
HE
SECURITIES AND EXCHANGE
Commission is now investigating Halliburton—the company formerly run by Vice President Dick Cheney—for accounting irregularities. What took so long?

Dick Cheney’s record at Halliburton is one of the most undercovered stories of the past three years. When you consider all the time and ink spent on Whitewater, the neglect of the Cheney-Halliburton story is unfathomable.

The proximate cause of the SEC investigation is an “aggressive accounting practice” at Halliburton approved by the accounting firm Arthur Andersen—a little matter of counting revenue that had not yet been received, $100 million worth.
The New York Times
reports two former executives of Dresser Industries, which merged with Halliburton in 1998, say Halliburton used the accounting sham to cover up its losses. Dresser may have thought it got a bad deal in that merger because of that $100 million “anticipation” on the credit line, but the deal turned out to be much more sour for Halliburton.

Cheney bought himself a former Dresser subsidiary facing 292,000 claims for asbestos-caused health problems. He said at the time the merger was “one of the most exciting things I’ve ever been involved in” and predicted it would benefit Halliburton’s customers, employees, and shareholders. The first thing that happened was Halliburton eliminated ten thousand jobs. (It was always amusing to hear Cheney on the campaign trail in 2000 claiming he had been out in the private sector “creating jobs.”)

According to executives at Halliburton, Cheney knew about the asbestos liability before the merger and considered the risk. Because of the liability, Halliburton’s stock has fallen from over $60 to under $20. In January, the company had to deny rumors it was going into bankruptcy. In other words, Cheney pretty well ruined the business. Of course, what the company wants to do now is have Congress pass a new law limiting asbestos liability.

Even more interesting is Halliburton’s governmental record under Cheney. In an August 2000 report, the Center for Public Integrity noted that Cheney had said publicly the United States should lift restrictions on American corporations in countries listed by the government as sponsoring terrorism. Hey, that was then, this is now.

Despite repeatedly claiming his company would not do business with Iraq—he was defense secretary during the Persian Gulf War—Halliburton racked up $23.8 million in sales to Iraq in ’98 and ’99. It did so by using two European subsidiaries, so Halliburton was not directly violating the sanctions against Iraq. Hey, it was business.

And striking another blow for freedom from government interference, Cheney led Halliburton into the top ranks of corporate welfare hogs, benefiting from almost $2 billion in taxpayer-insured loans from the U.S. Export-Import Bank and the Overseas Private Investment Corp. In the five years before Cheney joined the company, it got a measly $100 million in government loans. Cheney also specialized in getting government contracts for the firm. During his five years as CEO, Halliburton got $2.3 billion in contracts, compared to only $1.2 billion in the five years before he took over.

Most of the government work was done by Halliburton subsidiary Brown & Root, the construction firm, thus reinstating a fine old Texas tradition. Brown & Root was Lyndon Johnson’s major money source: It was to LBJ what Enron was to George W.

This brings to mind a famous story from the Kennedy-Johnson campaign in 1960 relished by Texans. It’s after the election, and the Democrats win. Kennedy and Johnson are sittin’ in the Oval Office the first day, and the phone rings. It’s the pope of Rome (Texans used to specify “of Rome,” lest you should confuse him with some other pope) on the phone. He says, “John, my boy, the Vatican roof is leaking something fierce, we were hopin’ y’all might fix it for us.”

“Of course, Mr. Pope, sir. Just let me check with my vice president. Lyndon, the pope’s on the phone and wants to know if we can fix the Vatican roof for him.”

“That’s fine with me,” says Johnson. “Just make sure Brown & Root gets the contract.”

Nice to see tradition reassert itself.

June 2002

Hypocrisies

It’s the little things, the itty-bitty things. It’s the little things that really piss me off.

SONG BY ROBERT EARL KEEN

G
OSH
, SILLY US,
getting in a swivet over war and peace. The president is on vacation! He’s giving interviews to
Runner’s World,
not
Meet the Press.
He and Defense Secretary Rumsfeld didn’t even
talk
about Iraq during their meeting at Crawford. It was all the media’s fault. We were “churning,” we were in “a frenzy.” Heck, Bush himself has never even mentioned war with Iraq, much less going it alone.

We don’t have to worry, so party hearty, and try not to make a big deal out of the fact that Bush’s lawyers are now claiming he can launch an attack on Iraq without congressional approval
because the permission given by Congress to his father in 1991 to wage war in the Persian Gulf is still in effect.

Since that’s all cleared up, here are a few little nuggets you might like to chew on:

•  Bush went to Pennsylvania to meet with the nine coal miners rescued earlier this summer to congratulate them. He also cut the budget for the Mine Safety and Health Administration by $4.7 million out of $118 million total: enforcement was cut, as were mine inspections for coal dust (which causes black lung disease), and the chest X-ray program was cut entirely. Bush filled five of the top positions at MSHA with coal industry executives.

•  Earlier this month, the Associated Press used a computer analysis to dig up some interesting news about congressional spending patterns. Since the Republicans took over Congress in 1994, tens of billions of dollars in federal spending have moved from Democratic to GOP districts. Last year, there was an average of $612 million more spending for congressional districts represented by Republicans than by Democrats. AP also reports that when Democrats last controlled the House and wrote the budget, the average Democratic district got $35 million more than the average Republican district.

That’s quite a shift, and the AP says the change was “driven mostly by Republican policies that moved spending from poor rural and urban areas to the more affluent suburbs and “GOP-leaning farm country. . . . In terms of services, that translates into more business loans and farm subsidies, and fewer public housing grants and food stamps.”

Now one could take the attitude of Majority Leader Dick Armey, who was quoted by the AP on this subject as saying, “To the victor goes the spoils.” On the other hand, that means more government subsidies are going to people who need them less. The recently passed farm bill, a subject on which I find myself in complete harmony with the
National Review,
weighed in at $190 billion, a grossly disproportionate share going to corporate farmers: Ten percent of farmers will get 69 percent of the subsidies, according to
The New York Times.
President Bush signed the $190 billion horror and then made a great show, at his public relations event in Waco, of vetoing $5 billion in what he deemed was unnecessary spending in the homeland security bill.

•  The media have achieved such a perfect he said–she said knot of confusion on the story of Bush and Harken energy, it would be a wonder if the public ever gets any of it straight. Even though the Center for Public Integrity has posted the relevant documents from Harken on its website (www.publici.org), the news has been buried under a scrum of pundits shouting, “It’s old news” or “Is not, it’s new news.” All I can say is, if Slick Willie Clinton had ever eeled out from under information like this, Rush Limbaugh would’ve had a heart attack.

Just for the record, George W. Bush had not just one but four Harken stock transactions worth more than $1 million during the time he was on the board. And in each case he was months over deadline in reporting the matter to the Securities and Exchange Commission. Second, newly posted documents show that Bush, who claims he had no idea Harken was in trouble when he dumped his stock in late June 1990, was in fact warned twice: Harken’s CEO sent him a memo on June 7 predicting that Harken would run out of money before the end of the month and that it would then be in violation of numerous debt agreements.

Even more egregious, Bush was clearly involved in the phony Aloha Petroleum deal. Aloha was a Harken subsidiary that was sold to a partnership of Harken insiders at an inflated price, a perfect little gem of an example of the kind of fake, pump-the-bottom-line transaction later perfected by Enron. Bush’s business career is a small-scale model of exactly the corrupt corporate practices now under fire.

In case you missed the theme here, it’s hypocrisy.

August 2002

More Hypocrisy

E
XCUSE
ME: I DON’T
want to be tacky or anything, but hasn’t it occurred to anyone in Washington that sending Vice President Dick Cheney out to champion an invasion of Iraq on the grounds that Saddam Hussein is a “murderous dictator” is somewhere between bad taste and flaming hypocrisy?

When Dick Cheney was CEO of the oil-field supply firm Halliburton, the company did $23.8 million in business with Saddam Hussein, the evildoer “prepared to share his weapons of mass destruction with terrorists.”

So if Saddam is “the world’s worst leader,” how come Cheney sold him the equipment to get his dilapidated oil fields up and running so he to could afford to build weapons of mass destruction?

In 1998, the United Nations passed a resolution allowing Iraq to buy spare parts for its oil fields, but other sanctions remained in place, and the United States has consistently pressured the U.N. to stop exports of medicine and other needed supplies on the grounds they could have “dual use.” As the former secretary of defense under Bush the Elder, Cheney was in a particularly vulnerable position on the hypocrisy of doing business with Iraq.

Using two subsidiaries, Dresser-Rand and Ingersoll-Dresser, Halliburton helped rebuild Saddam’s war-damaged oil fields. The combined value of these contracts for parts and equipment was greater than that of any other American company doing business with Iraq—companies including Schlumberger, Flowserve, Fisher-Rosemount, General Electric. They acted through foreign subsidiaries or associated companies in France, Belgium, Germany, India, Switzerland, Bahrain, Egypt, and the Netherlands.

In several cases, it is clear the European companies did no more than loan their names to American firms for the purpose of dealing with Hussein. Iraq then became America’s second-largest Middle Eastern oil supplier.

This story was initially reported by the
Financial Times
of London more than two years ago and has since been more extensively reported in the European press. But as we have seen with the case of Harken Energy and many other stories, there is a difference between a story having been reported and having attention being paid to it (a distinction many journalists have trouble with). Thus the administration was able to dismiss the new information on shady dealings at Harken as “old news” because not much attention was ever paid when the old news was new.