Dick Cheney's Halliburton: a corporate case study

It's generally assumed Halliburton profited mightily when Dick Cheney was running it. In fact, that's wrong. But he did

Former US vice president Dick Cheney
Former US Vice-President Dick Cheney. The US supreme court has cleared the way for a class action lawsuit to be brought by a group of Halliburton shareholders who allege they were misled by the company, then headed by Cheney, over the purchase of a firm with asbestos liabilities. Photograph: Ben Sklar/Getty

What did Dick Cheney know?

The US supreme court decided earlier this week that it will allow a nine-year-old lawsuit against Halliburton to proceed. The case isn't about Iraq, or even the Nigerian bribery scandal, but about asbestos and whether or not company management misled shareholders.

Most people assume that Halliburton made a fortune when Cheney, who had just left his previous job as secretary of defence, took over the company in 1995. Halliburton had, after all, just scored its first $1bn military logistics contract in war-torn Bosnia and Kosovo. But in reality, the company made a gigantic loss because of a very bad deal that Cheney made for Halliburton – by buying a company called Dresser Industries in 1998. All told, Halliburton paid out $2.8bn in cash because Cheney and his advisers had neglected to pay much attention to the asbestos liability of Dresser. The stock price of Halliburton rose from about $12 a share in 1996, to a high of $25, before plunging to about $7 a share in 2002.

A lawsuit filed in that year – which covers all investors who bought shares between 3 June 1999 and 7 December 2001 – alleges that Halliburton management misled investors about the potential asbestos liabilities. A New Orleans judge ruled last year that the lawsuit couldn't proceed as a class action (where a few people sue on behalf of a larger group they claim to represent) unless the plaintiffs could first show that the company's alleged misstatements had inflated the company's stock price.

On Monday, the supreme court overturned the earlier ruling and gave the shareholders permission to proceed. Chief Justice John Roberts wrote in his statement:

"The question presented in this case is whether securities fraud plaintiffs must also prove loss causation in order to obtain class certification. We hold that they need not."

Halliburton maintains that it does not believe it will have to pay out. "Halliburton has not accrued any amounts related to this matter because it does not believe that a loss is probable. Further, an estimate of possible loss or range of loss related to this matter cannot be made," the company said in a statement.

If the shareholders can prove that Cheney or his advisers knew about the liability and did not tell anyone, the company could be in deep trouble. On the other hand, if they did not realise that Dresser Industries was in financial trouble, it merely suggests that Cheney was a very bad businessman.

There is some evidence that the board was definitely not paying close attention at the time. A federal investigation of Halliburton's pension plans showed that the company had charged some costs of Halliburton's top bosses' pension and bonus plans to the workers' pension fund, spending about $2.6m in total between 1 June 1999 and 1 January 2004. Two such violations took place while Cheney was the company's CEO.

The company also failed to pay out a part of the pensions that was owed to employees who came to work at Halliburton when Cheney bought up Dresser. When the workers complained to investigators at the UD department of labour, Halliburton returned the money to the affected people and returned the money it had spent from the workers' pension funds.

But it is unlikely that Cheney will ever testify. He has, after all, wriggled out of testifying on the Nigeria bribery scandal, and nobody has ever brought charges against him for the much-commented-on war-profiteering in Iraq.

If Halliburton and its shareholders lost money at the time, not so Cheney. In the five years he worked at the company, he received $12.5m in salary. He also held $39m-worth of stock options when he quit the company in 2000 – a fortune for a man with no previous experience in running a multinational company. In addition, Halliburton's board of directors voted to award him early retirement when he quit his job, even though he was too young to qualify under his contract. That flexibility enabled him to leave with a retirement package, including stock and options, worth millions more than if he had simply resigned. Plus, Halliburton paid out Cheney an extra $1m during the time he served as vice-president.

Cheney cashed in his remaining stock options gradually, starting with selling 100,000 Halliburton shares in May 2000, for an immediate profit of $3m. In 2005, Cheney exercised most of what remained of his Halliburton stock options for a $6.9m profit, all of which he donated to charity. (Most of it was donated to the Richard B Cheney Cardiac Institute at George Washington University.)

It is unlikely that the plaintiffs in the class action lawsuit will ever get a penny back from Cheney's Halliburton now, but there are some immediate winners. "The supreme court's unanimous opinion sends a strong signal that lower courts cannot use class certification as a procedural device to block investors from vindicating their statutory rights," Pace University law school professor Jill Gross told Reuters.

• Full disclosure: I own one share of Halliburton stock; but it was purchased three years after the period that the lawsuit covers


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Comments in chronological order (Total 41 comments)

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  • IGotThatPMA

    8 June 2011 8:42PM

    If Halliburton and its shareholders lost money at the time, not so Cheney. In the five years he worked at the company, he received $12.5m in salary. He also held $39m-worth of stock options when he quit the company in 2000 – a fortune for a man with no previous experience in running a multinational company.

    Cheney's experience as Vice President of The United States of America is a little bit stronger on a CV than running an international company.

    This isn't about shareholders losing money, this is about politics and a familiar boogeyman being trotted out at the US approaches election time.

  • chiefwiley

    8 June 2011 9:42PM

    Cheney cashed in his remaining stock options gradually, starting with selling 100,000 Halliburton shares in May 2000, for an immediate profit of $3m. In 2005, Cheney exercised most of what remained of his Halliburton stock options for a $6.9m profit, all of which he donated to charity.

    So any money he made, he gave away.

    On Monday, the supreme court overturned the earlier ruling and gave the shareholders permission to proceed. Chief Justice John Roberts wrote in his statement:

    "The question presented in this case is whether securities fraud plaintiffs must also prove loss causation in order to obtain class certification. We hold that they need not."

    Halliburton maintains that it does not believe it will have to pay out. "Halliburton has not accrued any amounts related to this matter because it does not believe that a loss is probable. Further, an estimate of possible loss or range of loss related to this matter cannot be made," the company said in a statement.

    And there is no certainty that anybody was harmed, but the group suing is allowed to keep it alive as an effort to attain class action. They don't need to prove that Cheney had anything to do with their losses, if any.

    So this will be wobbling around amidst next year's election campaign as we are again reminded about the evil Halliburton and Darth Cheney. As a gentle reminder, Lady Bird Johnson was Halliburton's largest individual shareowner after its merger with KBR (Boots and Coots) of Texas.

    How this supposed to help is beyond me, but somebody is making a buck or two keeping it alive.

  • foilist

    8 June 2011 11:42PM

    it merely suggests that Cheney was a very bad businessman.


    Oh come on!!!!!
    Cheney was a career politian rather than a businessman!!! He certainly wasn't an oil man in any way! Halliburton recruited him for his personal contacts- the contacts that meant Halliburton's Engineering, Procurment, Installation, Commissioning (EPIC) subsidiary, Brown and Root, started winning large US government contracts from Brown and Root's main rival, Bechtel (and Bechtel were/ are very well connected- people like Caspar Weinberger and George Shultz moved from Bechtel's board to high office and back several times).

    I never really saw the reason behind the Dresser - Halliburton merger. Dresser had sold Atlas Wireline previously which is the only oilfield service not really provided by Halliburton and a huge chunk of Dresser was equipment manufacturing, which had no real attraction to an oilfield services/ engineering & construction company like Halliburton. And indeed Halliburton sold on the bulk of Dresser just a few years after the merger.... the only bit that was kept was Kellog, Dresser's EPIC subsidiary, which was merged with Brown and Root to form KBR. So leaving aside the asbestos liabilities, eventually the merger didn't really make sense to Halliburton either.

    But the late 90's was the time of the mega-merger in the oil industry: BP- Amoco-ARCO; Exxon- Mobil; Chevron- Texaco; Sedco Forex- Transocean; Schlumberger purchase of CAMCO and so on, so perhaps the Halliburton shareholders just got caught up in the frenzy? And after all, Cheney was largely recuited for his contacts book, not his business acumen and it was Cheney's contacts that are supposed to have swung this deal.... he did what he was asked too!!!!!!

  • ngavc

    9 June 2011 12:59AM

    Well connected politician makes a quick buck while his party is out of power. Old story.

    Running a successful business takes more smarts and experience than a government job. That's why government needs to leave it alone, especially one with ingrained hostility towards the institution like the current president.

  • jon55

    9 June 2011 1:01AM

    @ foilist,

    Oh come on!!!!!
    Cheney was a career politian rather than a businessman!!! He certainly wasn't an oil man in any way! Halliburton recruited him for his personal contacts

    Happens n the UK to. Politicians here, especially ex front bench, are given so called jobs with big business that pay a lot of money. Recent example being ex minister Ruth Kelly being hired by HSBC, it'll be her task to lobby against banking regulation.
    And it's not just for their contacts and influence that politicians are hired by business. But also because it sends a message to current politicians, that if you govern the country as big business wants, you'll be rewarded, but oppose corporate vested interests and you won't be invited to join the gravy train. That's why the last Labour government, and the present coalition regime haven't proposed meaningful regulation of banking.

  • mismeasure

    9 June 2011 1:33AM

    Running a successful business takes more smarts and experience than a government job. That's why government needs to leave it alone, especially one with ingrained hostility towards the institution like the current president.

    That doesn't make any sense. But then neither does this:

    "Halliburton has not accrued any amounts related to this matter because it does not believe that a loss is probable. Further, an estimate of possible loss or range of loss related to this matter cannot be made,"

    The anti-language of corporate sociopathy.

  • ngavc

    9 June 2011 2:04AM

    mismeasure
    9 June 2011 1:33AM

    Accounting rules require an accrual for likely settlement costs. This is a serious decision that becomes a component of the valuation of a company, so it impacts real people investing real money. Unlike governments, businesses can't just print the stuff. Take some business courses - you'll learn something, possibly a little much-needed respect.

  • David91

    9 June 2011 2:54AM

    It would seem unlikely that any business would pay a high market valuation if they knew or suspected it had a large outstanding liability to compensate asbestos victims. It feels more like rank incompetence in failing to apply the normal standards of due diligence and then trying to cover it up when the oversight was discovered. Investors should always expect share volatility. The issue is therefore going to be when those with the duty of disclosure became aware of the problem and what they then did or failed to do.

  • Creditman

    9 June 2011 6:44AM

    The view from across the pond.

    @IGoThatPMA

    Yeah, this article is a smoked over hit piece.

    Results: Zero.

    Author should be working on something relevant.

  • Magpiesview

    9 June 2011 8:39AM

    It appears that the shareholders are sueing for some form of fraud or malfeasance. What I don't understand is why they are not sueing under old fashioned negligence. (Romford v Lister) - although it is hugely worrying to learn that shareholders are apparantly prevented from taking action against CEO's in any event.

  • chiefwiley

    9 June 2011 11:26AM

    It appears that the shareholders are sueing for some form of fraud or malfeasance. What I don't understand is why they are not sueing under old fashioned negligence. (Romford v Lister) - although it is hugely worrying to learn that shareholders are apparantly prevented from taking action against CEO's in any event.

    Let's be blunt, here. Halliburton is an old service and support company that works on projects world wide. It has always been a player in the oil business, more so since it was merged with KBR, for which Ladybird Johnson was a major shareholder. The company was run largely by Texas Democrats, but hired Dick Cheney when he first left government, when it wished to find the contacts necessarily to move or expand in broader directions.

    It became a target in the current atmosphere of the 24/7/365 Permanent Campaign when the political class decided that, since Dick Cheney had been an employee, it would make a convenient villain. (In the modern political theater, a dastardly villain is always necessary.) It doesn't take much money, only a law firm to file a suit and some willing reporters, and the blogosphere jumps on in an ongoing stampede to "take out" a company that was once a Democratic icon.

    If we come to a place and a position where it is possible and even likely that lawsuits can be sought and continued as much for political reasons as for any real malfeasance, why the hell would any rational personal ever want to serve as an officer or director of one? I realize that many of you absolutely "hate" anybody who has anything to do with running any corporation, but somebody has to do it and take the risks necessary to sustain and expand the business.

    Put into a sports anology, if you heavily punished every strikeout on a baseball field and nicely rewarded every home run, Babe Ruth would have been gone early in his career as he had two strikeouts for every home run.

    Investing in the stock market is a known risk. If you allow every shareholder to sue everybody involved in a corporation every time the share value goes down for any reason, the lawyers would get rich by beggering everybody else. In the real world, your losses are limited to the value of the shares you purchased, but obviously somebody is trying to find a way to turn both a political profit and a personal one by developing some implied promise that losses will never occur or, if they did, that they were fully predictable and somebody owes them restitution for them.

    Look up Halliburton, and you will discover that it is a widely held S&P company whose shares are probably held BY YOUR RETIREMENT PLAN AND AS RESERVES BY YOUR INSURANCE COMPANY.

    If you are cheering this ongoing activity because it is related to your lab-created hate of Dick Cheney, realize that you are just another well-trained lab rat in the political world that is increasingly irrelevant to any real world application but ongoing political theater. This article by itself represents that theater nicely.

    Disclosure: The Ohio Public Employers Retirement System holds Halliburton shares, as the state teacher's retirement system, so both myself and my spouse (and millions of others) are invested in its success.

  • capmint1

    9 June 2011 11:59AM

    chiefwiley

    Cheney cashed in his remaining stock options gradually, starting with selling 100,000 Halliburton shares in May 2000, for an immediate profit of $3m. In 2005, Cheney exercised most of what remained of his Halliburton stock options for a $6.9m profit, all of which he donated to charity.

    So any money he made, he gave away.

    well, if you read the whole paragraph, being a pedant, he kept his salary, $12.5m, $1m retainer; in relation to the stock option, at the time he left Haliburton, he held 433,333 shares of unexercised stock options; so he didn't give it all away; and according to one source violated ethics laws as reported by CNN money:

    On the Sept. 14, 2003 edition of NBC's Meet the Press, Vice President Dick Cheney said, "And since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven't had, now, for over three years."


    http://money.cnn.com/2003/09/25/news/companies/cheney/index.htm

    Personally I don't class either Cheney or Rumsfeld as 'evil', but I would expect them to abide by ethics laws and declare any vested interests. In fairness to Rumsfeld, he did declare his interest in Gileard.

  • chiefwiley

    9 June 2011 12:28PM

    Personally I don't class either Cheney or Rumsfeld as 'evil', but I would expect them to abide by ethics laws and declare any vested interests. In fairness to Rumsfeld, he did declare his interest in Gileard.

    I suspect with a little research you will discover that Cheney met the government's required disclosure rules as well. I have become very suspicious of a source that turns out to be limited to a comment on some television show, Disclosure forms are voluminous and are public records. I had my accountant prepare them when I ran for Ohio State Senate. They are not something that can be covered entirely in a one-liner on a TV interview show.

    Dick Cheney left office when Joe Biden became Vice President. This obsession is getting staler every day. I don't think any of this will register with any swing voter in any coming election, so I am confused as to what the object of its continuation might be. People who like Cheney will continue to do so. People who hate him will remain hateful toward him. And people who are simply uninterested have other more pressing issues to worry about.

  • foilist

    9 June 2011 1:13PM

    It became a target in the current atmosphere of the 24/7/365 Permanent Campaign when the political class decided that, since Dick Cheney had been an employee, it would make a convenient villain. (In the modern political theater, a dastardly villain is always necessary.)

    I'd go along with that... and disagreeing with Cheney's political opinions (ie the neo conservative doctrine) wasn't enough. Suddenly Cheney became an oilman (he's not even from Texas!) and invading Iraq was done at the behest of "oilman" Cheney and Halliburton and so on.... And then there was the endless controversies about Halliburton being awarded various US government linked contracts under 'questionable' grounds.... like restoring Iraqi oil production (Halliburton's position of oilfield services AND engineering & contruction is unique: there are bigger and better oil service companies like Schlumberger and there are bigger and perhaps better engineering companies like Bechtel and Foster Wheeler, but no other company combines both sets of expertise).

    I mean look at this Nigeria bribe scandle.... a JV company of a subsidiary of a corporation Halliburton bought was involved in paying bribes years before Cheney was CEO of Halliburton, but somehow he's implicated? Why? Because he's Dick Cheney!

    And so we get comments like stoneshepherds:

    There is no God so Cheney won't end up in jail... get used to it.

    I'm not sure why Cheney should end up in jail oither than stoneshepherd can't accept that the Bush administration won two elections and so he wants someone, preferably the "dark lord" Cheney to pay (I do in truth find it hard to believe George Bush won twice myself, but simply accept that democracy doesn't always come out the way an individual would like!)

  • capmint1

    9 June 2011 2:07PM

    cheifwiley

    I suspect with a little research you will discover that Cheney met the government's required disclosure rules as well. I have become very suspicious of a source that turns out to be limited to a comment on some television show, Disclosure forms are voluminous and are public records. I had my accountant prepare them when I ran for Ohio State Senate. They are not something that can be covered entirely in a one-liner on a TV interview show.

    fair point about media taking something out of context, if you reread my post, it was about meeting ethics laws (which maybe the case) but also around declaring interests, the CNN link only asks that Cheney comes clean, the statement

    'I've severed all my ties with the company, gotten rid of all my financial interest'

    is simply untrue. It isn't the first time a politician lied, and it won't be the last. That doesnt make him evil dark lord, just a politician.

    Foilist, cheifwiley

    I mean look at this Nigeria bribe scandle.... a JV company of a subsidiary of a corporation Halliburton bought was involved in paying bribes years before Cheney was CEO of Halliburton, but somehow he's implicated? Why? Because he's Dick Cheney!


    its an interesting point, so what responsibility, if any did CEO Tony Haywood for BP, by the time you get to the rig, it was a sub-sub-sub contractor so he would have little or no responsibility of what happened on the Deepwater rig. The question is tricky, as corporate responsbility, gets mixed with legal, ethic, moral, and political; and it was the last that meant he lost his job.

    The analogy I'd use is Operation Eagle Claw, Carter had no hand in the planning and execution of the Iran Hostage rescue, he had no responsibilities (that was the brave men and woman including Cheifwiley), but he was accountable. CEO Tony Haywood, set out the governance model and likewise, Cheney at Haliburton, not some evil empire, just a number of bad business decisions and questionable public statements and questionable use of political links.

  • demonrho

    9 June 2011 2:31PM

    But it is unlikely that Cheney will ever testify. He has, after all, wriggled out of testifying on the Nigeria bribery scandal, and nobody has ever brought charges against him for the much-commented-on war-profiteering in Iraq.

    Come on, leave poor Cheney alone. Sure, he probably made a couple of mistakes. But it's not like he's the type of guy who would mistake a human being for a quail and blast him in the face with a shotgun, or anything.

  • CautiousOptimist

    9 June 2011 3:08PM

    Am I the only one who found the lede on this article to make no sense?

    It's generally assumed Halliburton profited mightily when Dick Cheney was running it. In fact, that's wrong. But he did

    The economy is tanking, we are in 4 wars now, unemployment is up, but DICK CHENEY MADE MONEY 10 YEARS AGO!!!!!!!!

    Look! Shiny thing!

    Did anyone watch Jon Stewart last night? The moment of Zen perfectly encapsulated what is wrong with American media.

  • DeltaFoxWhiskyMike

    9 June 2011 3:34PM

    capmint1:


    Fair enough. Still, it is very old news to a rapidly diminishing audience of true believers. I suspect to everybody else it looks like an obsession bordering on a compulsion to belabor it. For every new convert to the cause, more than one will wander off as their eyes glaze over from the excessive repetition of long repeated points about a topic they have long since moved away from.

    I really don't to read any more about Monica Lewinski, either, but she has magically been resurrected here because that is how it works. My old news beats your old news while the rest of us snooze.

  • chiefwiley

    9 June 2011 4:34PM

    When I was commissioned from staff sergeant to second lieutenant back in the Vietnam era, I was instructed that my commission required me to use independent judgement in the national interest. I also picked up the obligation to support and defend the similar activities of my fellow officers in both the Air Force and the other branches.

    What we did not get was an obligation to any activities before or after our watch. Not Custer. Not Pickett, Sherman, or Grant. Nor do I worry about stuff that has happened since I retired. Not my watch. Not my theater. Not my particular war.

    That is why I wonder about the reasons why somebody like Cheney is named as a defendent in a suit regarding something that the plaintiffs admit had nothing to do with him and didn't happen because of any activity on his part.

    Politics has made every game this ugly, and we have players in both parties who denounce the tactic while embracing it. Close on their heels are the bit players on the internet who are quick to sing from this very discordant hymnal. No wonder politics and politicians are held in such low repute. No wonder journalists are quickly falling to the same low level of public confidence. It's all a game to them, and they are busy scoring meaningless points while the country is sinking.

    We are no longer content to beat them in political battles. We have to keep the beatings underway long after there is any point whatever to their continuation.

    Carter was the guy who ordered the hostage rescue. A problem of excess complexity and weather ruined his chances. Yet he was the guy in charge and took the hit. We all did. I was a "loaner." My immediate commander at the time had no idea where I was at the time, nor could I tell him when I finally got back what had happened. It got me a transfer, as it did a lot of others.

    Cheney seems for all of this to be just a convenient target to be a media villain to keep the story alive. As the back history notes, there is no demonstrable proof that anybody lost a dime from any of this, but the potential that somebody might have lost uncountable gains because no internal estimate was made of unknowable contingent liabilities.

    This is the crap that makes lawyers rich and makes businesses almost unmanageable. And it is crap politics.

    We have a story in the paper today that one of the branches of government is acting against another over mostly rural sewers and septic systems. Not much has changed except that the cities are expanding even while their sewers are decaying, and they are looking for unsuspecting new sources of revenue to help pay for overhauls and upgrades. The blame is being heaped on people minding their own business.

    You can be as accepting as you care to be about these kind of stories. I care not to be. Military officers, corporate officers, and elected officers do have obligations and liabilities, but to make them extend into the past and uncharted future might well make them undoable. Any lawyer who ultimately loses a suit like this after foisting it on the country should be flogged.

  • adult

    9 June 2011 4:56PM

    Most of the same people here objecting to this story were congratulating the Breitbart credibility yesterday. When you're reponsible to the shareholders, which seems to be the point of this somewhat muddled article, that responsibility doesn't end when you leave office.

  • chiefwiley

    9 June 2011 5:13PM

    The responsibility begins when you take the office, not years prior. And a requirement to estimate unknown and unknowable losses based on a lawsuit that claims that no loss needs to have been sustained to be successful seems, at least to me, to be wandering into uncharted territories. How does one become responsible for that which need not be proven yet still somehow needed to be estimated as a potential liability when nobody had ever claimed nor demonstrated any loss?

    Somewhat muddled is the crux of it. It does involve lawyers and money. My investment is in Halliburton. I don't invest in lawyers, yet they seem content to suck funds from the current shareholders on behalf of somebody who might have lost money in the distant past.

    Everybody who buys and sells stock is a potential gainer or loser. The corporate obligation is to the current shareholders. I don't see how this strange effort serves those interests in any way.

  • Valencienne

    9 June 2011 5:36PM

    Cheney's experience as Vice President of The United States of America is a little bit stronger on a CV than running an international company.

    Indeed. When he ran Halliburton, he merely fucked up the company.

    As VP, he helped fuck up the country and the world.

    Talk about stepping up!

  • capmint1

    9 June 2011 7:08PM

    you make some very valid points. I would only add that the decsision to buy, cheney should have instructed his accountants to do due diligence on the asbestos liability that's what they get paid for. In case of Fred goodwin he paid for AIG and lost his job at rbs. Cheney made a bad investment the question is did us and the borad know and did they cover is imho valid. Corruption whether civil or political is more widespread when the regulatory framework is stripped away or ineffective look at enron, or bae systems and Blair blocking sfa though I'd accept that in case of bp there was scapegoat and case not proved for cheney
    J

  • adult

    9 June 2011 7:09PM

    A lawsuit filed in that year – which covers all investors who bought shares between 3 June 1999 and 7 December 2001 – alleges that Halliburton management misled investors about the potential asbestos liabilities

    Note "that year".

  • chiefwiley

    9 June 2011 8:02PM

    I guess if you pick a given set of start and stop dates you could just about prove anything. In 1996, Halliburton was about $13.00 a share. Ten years later it was $39.00 a share. A year ago it was $25 or so and now it is about $50. Thousands of stocks have moved up and down the indexes, for internal and external reasons.

    For the people that bought on December 7, 2001, their share values had grown sevenfold five years later. If the early attacks on Halliburton had a largely political component that no company could predict, is the responsibility that of the candidate they were attacking by proxy or that of the attackers?

    Even today the name Halliburton has an unnecessary political drag because of the tactic, which apparently will be allowed to continue.

    Do you have a personal or political interest that the current shareholders of Halliburton should be punished because some in 2001 sold at a loss? I suspect that, since it is largely corporate and fund owned, the number of individual shareholders who sold in 2001 would be vanishingly small, yet sufficient in numbers to attract political lawyers eager to score points and perhaps a big payday at the expense of those who added to their shares or simply held them as a long term investment.

    It is unlikely that the plaintiffs in the class action lawsuit will ever get a penny back from Cheney's Halliburton now,

    So we are left with the reality that this is a "message" lawsuit, and the message is almost entirely political. People who didn't sell their shares have only been harmed by the company's expenses in defending a pointless lawsuit. Otherwise their investment is about even with the market as a whole and specifically they are "up" in the long haul.

  • adult

    9 June 2011 8:17PM

    Chief, this is a securities fraud lawsuit. I'm a bit concerned about the number of times you are inserting the words "political" here, and I certainly fail to see the basis for that term.

  • chiefwiley

    9 June 2011 9:08PM

    adult:

    When a suit like this is continued with little to no chance of a positive outcome for the plaintiffs, you can call it anything you want including a securities fraud lawsuit. If t=you have some idea that anything is what somebody calls it and nothing else, you need to pay closer attention. The plaintiffs seem to have cherry picked dates, inserted a defendent they admit was ininvolved in the incidents that promulgated their complaint, and assert that no loss must be established to continue fishing for fraud.

    That it shows up as a Guardian article prominently mentioning Cheney is a dead giveaway that it has at least a secondary motive for existance. Do you think that everybody who files such cases always has some noble motive? I don't. Remember that at least half the shares in the current group of stockholders are Democrats and get over your built in prejudice that has been nurtured since Cheney was nominated for VP.

    It's a game. You don't have to play, though they expect you to.

  • adult

    10 June 2011 12:22AM

    Well I'm not all-seeing, Chief, so I just go by the article headlines. And the US Supreme Court has ok'd this suit to continue; all of them.

  • foilist

    10 June 2011 9:54AM

    @ capmint-

    its an interesting point, so what responsibility, if any did CEO Tony Haywood for BP, by the time you get to the rig, it was a sub-sub-sub contractor so he would have little or no responsibility of what happened on the Deepwater rig. The question is tricky, as corporate responsbility, gets mixed with legal, ethic, moral, and political; and it was the last that meant he lost his job.

    Well that's what RACI charts are about. Tony Hayward of BP had almost zero accountability for the Deepwater Horizon.... my guess is that Mr Hayward's only link to the Macondo well was approving BP USA's exploration budget and making sure BP's engineering policies were sound (and remember that the senate report said there was nothing fundamentally flawed with the Macondo well design- they only highighted poor risk managment during the well design & construction process). Indeed Mr Hayward's appeareance in front of the Senate committe had all the appearance of a lynching. I think Mr Hayward even said that the first time he heard of the Macondo well was when he was told that BP had made a second big discovery in the deep water GoM, a few weeks before it blew out.

    But Mr Hayward resigned, which was the right thing to do, because he was responsible. And that sort of thing goes with the salary and perks of a CEO. Unfortinately, not many government ministers seem to think the same way any more.

    But in relation to the Nigerian Bribe Scandal, is Dick Cheney even responsible? Before Halliburton buys Dresser, before Cheney is even CEO of Halliburton, a Dresser subsidiary, MW Kellog, forms a JV company with Snam and Technip and some Japanese company. This JV company then pays bribes in Nigeria (which sadly, isn't unusual at all!). Cheney then heads up Halliburton and the bribes continue. Halliburton then buys Dresser and the bribes possibly continue.... but apparently Cheney is responsible for bribes paid by a different company from the one he headed up, that may have continued after Halliburton bought Dresser. Why? because no-one anywhere would recognise the name of the MW Kellog or Dresser CEO, but Cheney... he's got name recognition, 'cos he's the dark sith lord!!! it's all a bit sad.....

  • capmint1

    10 June 2011 10:10AM

    cheif,adult

    thanks for your posts, I have to agree with Chief that there is a political element; there always is to an extent with large high profile multinationals (see BP, or bank baliouts).

    what attracts my interest to defence contractor and procurement is the potential element of fraud; I would use the less controversial example of BaE Systems and Tony Blair blocking the SFA investigation into sale of Typhoon to Saudi, US Justice subsequent successful prosecution of 2,591 alleged accounting irregularities, and subsequent out of court settlement ($400m + £40m, and £30m):
    http://www.independent.co.uk/news/business/news/bae-to-pay-final-79m-fine-over-us-violations-2285551.html

    It also transpired afterwards that 'commission' paid to unnamed official was Prince Bandar, and the threat of withholding Saudi intelligence was the reason Tony Blair blocked the SFA investigation (it came out afterwards through German press)
    http://www.guardian.co.uk/world/2008/feb/15/bae.armstrade

    What links defence contracts is that BaE, Lockheed and Halliburton all have very high level govt contacts, and in case of BaE systems very little competition (it accounted for 10 out of the 15 largest MOD contracts, two (carriers and Nimrod) represent £10bn, Trident another £30bn+, and it was never referred to Monoplies and Mergers Commission, like Haliburton it hires ex high level contacts (ex defence cheifs who signed these contracts and had an implicit conflict of interest with their new employer). The usual approach to avoid such conflicts would be to declare an interest upfront and either divest (i.e. sell any financial interests) or recuse (i.e. exclude yourself from any meeting where you have a conflict of interest). Rumsfeld did so for Gilard. The question about Halibuton and Cheney is a little less clear; going back to a point made by chief

    I suspect with a little research you will discover that Cheney met the government's required disclosure rules as well.

    I can find reference to Cheney Financial Disclosure, but the links I have seen dont work, that includes the White House Press office (though before anyone raises a conspiracy, it is a new administration). The potential conflict of interest arises around Cheney retaining his stock options, I can find reference that he set up a charitable trust (3 charities) but not the actual source documents. The following link provides coverage of the issue from a view of defending Cheney, it also states 'Both the President and Vice President are specifically exempted from federal conflict-of-interest laws' (can anyone help out on that?)
    http://www.factcheck.org/article261.html

  • capmint1

    10 June 2011 10:42AM

    foilist

    But Mr Hayward resigned, which was the right thing to do, because he was responsible. And that sort of thing goes with the salary and perks of a CEO. Unfortinately, not many government ministers seem to think the same way any more

    I did a quick back of the fag packet RACI and that was my initial view, but I dont have the industry specific knowledge, so thanks for your detailed response and clarifying.

    I guess UK ministers and RACI gets a little complicated due to cabinet adopting the whole collective responsbility approach, the only notable exceptions I can recall of a minister resigning are Hesletine in relation to sale of Westland helicopters; and Cook over invasion of Iraq (though not on his ethical foreign policy and sale of BaE Hawks to Indonesia).

    But in relation to the Nigerian Bribe Scandal, is Dick Cheney even responsible?


    I don't have a firm view, the analogy I would use is to UK banking crisis. The case against Dick, we can agree that he was in no way accountable for the initial fraud, but by buying Dresser; it was a bad investment a la Sir Fred and AIG; by possibly allowing fraud to continue showed bad governance like Haywood (but contingent on being able to prove the fraud happened on his watch).

    the case for Dick, would be HBOS and Nick Hornby; the latter was widely scapegoated by press and media, but the rot had set in before during Sir James Crosby (ex CEO HBOS and FSA) and only came to light after a whistleblower from Group Regulatory Risk.

    I'm not out to nail any sith lords; my interest is in corporate fraud and regulation and role of whistleblowers. I'd say that corporate fraud; or allegations relating to Haliburton form a long and not very distiguished list; I posted on BaE but see also AJE report into Beoing (US Justice not protecting whistlblowers, FAA allowing Boeing to self regulate its subcontractors shows a bad pattern of regulation; and you only have to turn on the news to see how widespread fraud and corruption are (sport, FAA, Seth Blather, Olympics, its probably easier to say which aren't like indoor bowling; likewise politicians, in Europe we have Berlusconi, and Sarkozy; but also in Kosovo, Thaci links to KLA and organ smuggling; and every MENA dictor from Ben Ali, to Mubarak; and SE Asia, Thaksin, but also Russia oligarghs).

    http://english.aljazeera.net/programmes/peopleandpower/2010/12/20101214104637901849.html

  • chiefwiley

    10 June 2011 1:07PM

    capmint1:

    I am glad you found the Annenberg site and linked it. Oftepeople involved in political discussions are perfectly aware that there are precise legal definitions of such terms as "financial interest" as regard to a political office. Normally when you file papers to run for an office, the state or federal controlling authority gives you a reference list of documents you must file, the definitions for the terms, and a schedule that you must follow with the dates you must meet.

    I reviewed the fact checking site, one of the best, by the way, and it is both clear and accurate. This is a rarity in the modern campaign era in which there are a number of fake fact checking sites for the lazy and uninformed. In my own campaign finance forms, I had no obligation to list stock options for which I had no control over their value. They were an asset of unknown worth.

    As noted in Annenburg, the whole topic of Cheney's tenure at Halliburton and his pay was a continuing topic of the Kerry campaign, as it was of the Gore campaign. I always thought it was odd that two candidates whose worth was largely based on marriage of inheritance at the time were carping about the earnings of a competitor who had a private sector employer -- something neither Gore nor Kerry had much familiarity with.

    This article demonstrates that some people never give up on a topic, long after it has lost all topicality. There might be a buck or two for some lawyers in the long run, but I sincerely doubt that any former or current shareholders of Halliburton will gain a thing from an effort that has gone all the way to the Supreme Court.

    The concept that litigants need not prove loss causality to sue is going to be a considerable burden on every corporation anywhere. For what it is worth, it looks to me like a money grab with political overtones. I can't see how anything like that can be good news to anybody with a stock based retirement program.

  • chiefwiley

    10 June 2011 1:10PM

    "Often people"

    The battery is dying on my wireless keyboard, so I am losing an occasional string of keystrokes. The price of progress, but I'll have to add AA batteries to my shopping list.

  • capmint1

    10 June 2011 2:21PM

    cheifwiley
    thanks again for your response, I enjoy reading them. Just to clarify my position, I'm not some die hard anti neo con but I am against their agenda. At the sametime, I try not to reach or overstate my position; agree that factchecker provides a very good overview, tho a little partisan but no one one these days is impartial; and it gives a robust defence of Cheney, its never as black and white as people want to believe.

    to go off post slightly, I have an informal list of CiF posters, what I call sme, foilist worked at Schlumberger, he gets my vote for sme on CiF for oil (most people just say its about oil and dont do the research), I really appreciate your view as I see it as an honest pragmatic view on both US politics and military, I also like Chinaboulder for China, and someoneintheknow is my preferred view I when it comes to outlining the conspiracy theory (you might want to dismiss, but as he is a forensic accountant he does provide some good sources).

    I had no obligation to list stock options for which I had no control over their value. They were an asset of unknown worth.

    being a pedant, and with respect* your situation is different, you weren't CEO or VP and therefore in no situation to influence the stock option.

    lawyers, like politicians and bankers, always get paid; to quote Galbraith, there is no such thing as a free lunch

    * not in the political sense of that word, I mean actual respect, as from the limited info I can gather, your a decent and affable chap, and wish more people like you were in higher office

  • chiefwiley

    10 June 2011 3:21PM

    capmint1:

    In a past life, I was a military police batallion commander, and my wife was an intelligence officer for an MP brigade. My brother in law was a forensic accountant and supervising agent for the FBI, and so was my wife's brother-in-law. We have two nephews who are Secret Service agents. They say this kind of thing runs in families, and I am inclined to believe it.

    My big failing on these threads is that I never learned to type, so sometimes I can't keep up with the back and forth as quickly as I'd like.

    My frustration with many of the posters is that their lives are entirely political. In the very real world of working in an elected office, especially at my level, none of it is. We have meetings during which the administrators, the council, and audience members will stand around in a chattering lump to figure out how to get something to work, then take our seats and pass it. At our village parade, I set up the parade order, drove wrapup in the parade representing Block Watch, then drove the VFW color guard back to their cars. I went to see the mayor of the town next door, and I found him weeding the veteran's park, just as I found the mayor of a town to our east running the swimming pool when the cashier quit.

    I ran for state senate last year, but sharply lowered my efforts and expenses when I discovered that the party had pre-endorsed a fellow candidate in the primary. Our primary winner (it wasn't him) lost to the Republican.
    The winner spent nearly $800,000 of accountable money backed by likely a similar amount of unaccountable money for Ohio Senate District 3. He is the guy you have seen on TV running the committee overseeing changes to Ohio state employees unions.

    I was ripped at the selection and steering committees for being insuffiently supportive (not 100%) of hot button issues, few of which attract any interest or have any impact on my constituents. I don't have a fragile ego, but I do have better uses of my time.

    My wife is an elected Republican, and during our village festival last year at one time we had both candidates for the state house and the winning candidate for the US house in my front lawn putting up campaign signs. The ones who win invest the time.

    I fully agree with your list of plausible posters. What is also useful in a perverse way is the implausible ones. These and their ilk are people I have to deal with daily, and their posts and the replies are like a graduate education on handling them. That's why I faithfully click on nearly every link and read all the source data I have time for. My "favorites" button is many pages deep, including nonsense I think nobody can possibly believe, except that they do and I have to manage it somehow.

    At least I have an interesting hobby that doesn't involve knocking golf balls into a lake somewhere.

  • capmint1

    10 June 2011 4:34PM

    chief

    I just wish that US presidential and senate elections had a cap so that it wasn't about the largest war chest and vested interests and more about issues. Democracy has come a long way since the original senate, and even in Rome they had campaigning issues, now its a lot worse, multi million dollar ad campaigns and billions in vested interest groups; smear campaigns etc.

    I agree with you on the day to day running of govt, I worked on a large multi billion pound contract, ran some HM Treasury reviews and worked with Nu 10 press office, nothing conspiracy like, the contracts were all ran to standand EU OJEU notice process (open tender contracts); nothing I could see in terms of bribes; but due to the sheer size of the programme, it went over on time and cost (as do 80% of large scale programmes).

    My concern is that when it comes to defence, the usual rules just don't seem to apply. The usual set of standards and controls, Parliamentary controls are robust, but due to conflict of interest, and also very little competition in UK (small firms like Vickers that built Challenger were brought up by BaE; Thales is French but via jv made the carriers, even Lockheed and JSF, had to have partners and Bae are a strategic partner so get access to propriety tech which has got Senate annoyed; as they get upset with sharing tech like stealth (although the Isreali might have helped China on the J-10, alongside the downed F117 in Bosnia) apologies I digress.

    the lack of competition is a feature of Europe, but in US you have no bid and cost plus, with very little chance of effective audit in a war zone (you posted reasons why, which I understand) but it was a lesson in how not to run a contract. The same could apply to Homeland Security, I really have to question the integrity when billions are spent but they forget to check the holdall luggage.

    have to go, look fwd to your next post.

    the one good thing about democracy is freedom of speech, we can read and write any rubbish, and we don't get locked up for it; thats the one great thing about the written constition, its really robust.

    some random facts, not sure if your a fan of history, but my hometown is Washington, Sunderland, Tyne and Wear. Your capital is named after it and due to its historic importance as master shipbuilders (until Thatcher closed down Swan Hunter), the library cornerstone was laid by your ex President Ullsyes Grant, and Stan Laurel was also educated down the road.

    http://en.wikipedia.org/wiki/Washington,_Tyne_and_Wear

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