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USA: Government Ties Helped Cheney and Halliburton Make Millions

by John RegaBloomberg News
October 6th, 2000

WASHINGTON -- Dick Cheney, Republican nominee for vice president, balked at giving the government any credit for his success as chairman of Halliburton Co., saying in last night's debate ''the government had absolutely nothing to do with it.''

While the comment came in a light-hearted exchange with his Democratic opponent Joe Lieberman, Cheney's reply left out how closely Dallas-based Halliburton's fortunes are linked to the U.S. government. The world's largest oil services firm is a leading U.S. defense contractor and has benefited from financial guarantees granted by U.S. agencies that promote exports.

During Cheney's five years as chairman and chief executive, Halliburton was identified as a potential participant in 10 loans or loan guarantees -- valued at a total of $1.8 billion -- awarded by the U.S. Export-Import Bank to foreign companies, according to Ex-Im Bank records.

Earlier this year, Cheney personally contacted a senior Ex-Im Bank official in support of $500 million in loan guarantees to Russia's OAO Tyumen Oil Co., according to bank documents obtained through a Freedom of Information Act request.

Cheney contacted Ex-Im Bank Chairman James Harmon about developments in the deliberations, according to internal bank e-mail messages. In a Jan. 27 conversation summarized by Harmon in one e-mail, Cheney expressed hope that other companies would push the proposal past a State Department objection and ''asked if I had any suggestions or thoughts.''


Loan Guarantees

The Tyumen loan guarantees were approved in March by the Ex-Im Bank, a U.S. government agency that helps finance sales of U.S. goods abroad. Tyumen planned to use the loan guarantees to buy services from Halliburton, among other companies, to develop and rehabilitate a Siberian oil field.

In 1997, Cheney publicly hailed the Ex-Im Bank and its past assistance to Halliburton and other U.S. businesses.

''The emerging global marketplace makes what you do as an institution, here, at the Ex-Im Bank, all the more important in sustaining a healthy, competitive U.S. economy,'' Cheney told the agency in a May 1997 speech to its annual conference, according to a transcript of his remarks at the bank's Web site.

''I look back at Halliburton's track record with Ex-Im Bank,'' he said, according to the transcript. ''I see that we have in recent years been involved in projects in the following (countries) supported, in part, through Ex-Im activities: Algeria, Angola, Colombia, the Philippines, Russia, the Czech Republic, Thailand, China, Turkey, Turkmenistan, Kuwait, India, Kenya, the Congo, Brazil, Argentina, Trinidad and Tobago, Venezuela, Indonesia, Malaysia, and Mexico.''

He added, ''Export financing agencies are a key element in making this possible, helping U.S. businesses blend private sector resources with the full faith and credit of the U.S. government.''


Pentagon Contracts

Halliburton also has emerged as a leading defense contractor. From 1996 through 1999, the U.S. Defense Department granted Halliburton contracts valued at about $1.8 billion, according to department records.

The Pentagon ranked Halliburton the No. 17 recipient of ''prime contract awards'' in fiscal 1999, with $657.5 million. In 1998, the company received $285.8 million in contracts, $290.5 million in 1997 and $573.6 million in 1996, the records showed.

The centerpiece of Halliburton's military work is its Brown & Root Energy Services unit that supplies logistical support to U.S. military operations in the Balkans. Using its expertise supporting workers in far-flung oil fields, Brown & Root feeds U.S. troops and cleans their laundry.

The Overseas Private Investment Corp., another U.S. government agency that boosts business investments in emerging markets, also has helped Halliburton.

In March 1997, OPIC provided ''political risk insurance,'' with up to $200 million of coverage, to a Halliburton subsidiary for development of natural gas in Bangladesh, according to an OPIC news release. The Halliburton unit owns a 25 percent stake in the project.


No Mention

Cheney made no reference to these government programs that benefited his former company when he claimed that his personal income over the past eight years owed nothing to the government.

His campaign reaffirmed his statement today. Cheney's spokesman Dirk Vande Beek said Cheney's business ''wasn't successful because the government gave them something.''

Cheney has reported earning $20.2 million in adjusted gross income from 1993, when he left his job as U.S. defense secretary, through 1999. In August, after his selection as the Republican vice presidential nominee, Cheney realized an $18.5 million profit by exercising some of the stock options received as compensation from Halliburton, according to regulatory filings. He recorded a $3 million gain on a similar transaction in May.

Cheney's claim to have made his fortune without government help came in an exchange about the accomplishments of President Bill Clinton and Vice President Al Gore. Lieberman parried Cheney's criticism by noting the strong economy and by claiming that many Americans had benefited from it.

''And I'm pleased to see, Dick, from the newspapers, that you're better off than you were eight years ago, too,'' Lieberman said with a smile.

Cheney quipped back, ''And most of it -- and I can tell you, Joe, that the government had absolutely nothing to do with it.''


Leadership

Today, Cheney spokesman Vande Beek said Halliburton was ''successful because the men and women of Halliburton worked hard,'' along with ''the secretary's leadership.''

Vande Beek, who worked at Halliburton three years before following Cheney to the Republican campaign, said government contracts and other work backed by government financing ''is a small percentage'' of the company's business.

A Halliburton spokeswoman couldn't immediately comment on the portion of business related to government work. Halliburton earned $438 million on $14.8 billion of sales last year as its stock climbed 36 percent. The shares have risen 9.2 percent this year.

The Clinton-Gore campaign saw a likely government hand in some of Halliburton's success.

''My guess is any review of Halliburton would reveal they or some of their subsidiaries received very, very significant, substantial contracts from entities associated with the government,'' said Gore spokesman Chris Lehane. ''More than that, the fact that we've had low interest rates helped the stock market, and that was certainly to Mr. Cheney's benefit.''

Vande Beek said Cheney's remark in the debate was aimed at highlighting his experience in the private sector, in contrast with his opponents' careers, largely in government. Cheney and running mate George W. Bush -- an oil company executive and baseball team owner before he became Texas governor -- are ''two people that have had to meet payroll'' and take care of shareholders.

''They understand what most Americans have to deal with'' in running a company, or working for one, Vande Beek said. ''That's something Gore and Lieberman don't have to offer.''





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