CorpWatch : Halliburton

Halliburton

by Charlie Cray, Crocodyl.org

For the latest company profile on Halliburton, visit our corporate malfeasance wiki, Crocodyl.org.

Halliburton is a leader in the oil services industry, it provides engineering and construction services for oil extraction and development. After separating from Kellogg, Brown & Root (KBR) in 2007, it is no longer in the business of providing military logistics support.

Global Fortune 500 position: 310

Ownership status: Publicly traded

Number of employees worldwide: After splitting from KBR Halliburton continues to be one of the world’s largest oil and gas services companies, with nearly 50,000 employees in approximately 70 countries.

Chief executive officer: David Lesar, President, CEO and Chairman of the Board.

Website: http://www.halliburton.com/

Tel: 713 759 2605

Corporate accountability

Accountability overview:

For coverage of Halliburton and its KBR subsidiary's involvement in Iraq and other corporate accountability, see Halliburton Watch, which links to numerous reports by CorpWatch, congressional committee investigations, related books etc.

Bribery

Halliburton officials have been accused of coordinating a scheme to bribe Nigerian government officials over a period of years in association with the Bonny Island liquid natural gas (LNG) project. Bribing foreign governments is a criminal offense under the U.S. Foreign Corrupt Practices Act.

Albert Jack Stanley, a company official who was later fired by Halliburton after investigators say he received $5 million in "improper" payments from an outside attorney working for the company -- Jeffrey Tesler. The Independent (UK) reported that "Mr Stanley had been appointed to his senior role at Halliburton by Mr. (Dick) Cheney when he was chief executive between 1995 and 2000." (The Independent, Oct. 3, 2004.) The Wall Street Journal confirmed that Cheney "named Mr. Stanley … to a top post at the company in 1998." (Wall Street Journal, Sept. 29, 2004.)

Stanley reported to David Lesar, then Halliburton's president and chief operating officer, and currently the company's CEO. Lesar reported to Cheney when Cheney was chief executive. (Dallas Morning News, Sept. 8, 2004.) (Important Note: Lesar is an accountant and former Arthur Andersen partner, meaning he may have been in a position to ask about the purpose of payments to Tesler when they occurred.) According to the Dallas Morning News, "Mr. Cheney ran Halliburton when one of four suspicious payments occurred." (Dallas Morning News, Sept. 8, 2004.)

For a detailed timeline of the Nigeria Bonny Island bribery case, see Halliburton Watch.org.

Tax issues:

On March 4, 2004, Senators Levin (D-MI) and Dorgan (D-ND) released a GAO report on tax avoidance by federal contractors. At the time, Halliburton had 17 subsidiaries in tax haven countries, including 13 in the Cayman Islands which does not impose a corporate tax.

In 2002, Citizen Works Citizen Works found that Halliburton ranked 8th Among the Fortune 500 companies with the most offshore tax haven subsidiaries.

Dorgan, who chairs the Senate Democratic Policy Committee, has also noted that Halliburton avoids accountability by hiring employees under its subsidiary in the Cayman Islands, a tax haven country in the Caribbean, which allows for avoidance of U.S. tax, worker safety and other laws. "We've had a report showing a large percentage of corporations doing business with the federal government that are creating subsidiaries in tax haven countries," he said. "They want all of the largesse of contracting with our government and none of the responsibilities of paying taxes."

During Dick Cheney's tenure as Halliburton's CEO, the number of company subsidiaries located in offshore tax havens increased from 9 (in 1995) to 44 (in 1999). One of these subsidiaries (Halliburton Products and Services Ltd.), was incorporated in the Caiman Islands, and was used to get around sanctions on doing business in Iran. (Erwin Seba, Reuters, March 20, 2003)

When Halliburton announced it was relocating its corporate headquarters from Houston to Dubai, critics suggested the move might help the company avoid paying its fair share of taxes.

Martin Sullivan, contributing editor at the nonpartisan Tax Notes magazine, told MSNBC that relocating to the no-tax jurisdiction of Dubai would change Halliburton's tax situation "significantly" even though the company would still be registered in the US. By re-locating its CEO and other top executives to Dubai, Halliburton can argue that a portion of its profits should be attributed to the no-tax jurisdiction, he said.

Members of Congress called for an investigation. Sen. Byron Dorgan (D-ND) said, "I want to know, is Halliburton trying to run away from bad publicity on their contracts? Are they trying to run away from the obligation to pay US taxes? Or are they trying to set up a corporate presence in Dubai so that they can avoid the restrictions that currently exist on doing business with prohibited countries like Iran?"

Sen. Patrick Leahy (D-VT) said, "This is an insult to the US soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years."

And Rep. Henry Waxman, chairman of the powerful House Committee on Oversight and Government Reform, asked Halliburton to explain the reasons for the move. "I want to understand the ramifications for U.S. taxpayers and national security," he said.

Also see "Halliburton's Tax Haven Explained" by HalliburtonWatch.org.

Labor:

Much of Halliburton/KBR's government business in Iraq and Kuwait, already worth tens of billions, is being carried out by the world's poor people. Many of these people are underpaid, working for wages that are one-tenth of what U.S. workers receive, thereby creating more profits on the margins for Halliburton and its subcontractors. For example, NPR reported in October 2007 a Pakistani dishwasher at a forward operating base in Diyala was being paid $1.25 an hour for two years work for the Saudi-based food-services firm, Tamimi, a KBR subcontractor.

Much of Halliburton's work is conducted by foreign subsidiaries, which means that even U.S. employees may find it difficult to file claims against the company for break of contract in places like Iraq should they wish to do so. Under Texas law, employees may not be entitled to unemployment benefits who were employed by a Halliburton subsidiary that is incorporated in a "foreign" nation. In one case, the Texas Workforce Commission ruled against a former Halliburton employee by concluding: "The claimant is not entitled to unemployment benefits because [Halliburton's foreign subsidiary] does not satisfy the definition for an 'American employer' under the [Texas] statute."

Political influence:

Vice President Dick Cheney told NBC's Meet the Press "I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts" that Halliburton received in Iraq.

But an internal Pentagon email later obtained by Time magazine indicates that months before the war "action" on the Iraqi oil contract was "coordinated" with Cheney's office. Two months before the U.S.-led invasion of Iraq, the Wall Street Journal reported, "The Bush administration is eager to secure Iraq's oil fields and rehabilitate them, industry officials say. They say Mr. Cheney's staff hosted an informational meeting with industry executives in October, with Exxon Mobil Corp., Chevron Texaco Corp., ConocoPhillips and Halliburton among the companies represented. Both the Bush administration and the companies say such a meeting never took place." (Thaddeus Herrick, "U.S. Oil Wants to Work in Iraq," Wall Street Journal, Jan. 17, 2003.)

In addition, Cheney has resisted public requests for disclosure of documents relating to his secret Energy Task Force that proved he was investigating Iraq's oil fields prior to the war. Some of the documents were released only after a judge ordered Cheney to make them public.

Whether or not Cheney's office influenced the decision to give KBR a no-bid contract to repair Iraq's oil infrastructure, the Army Corps of Engineers top civilian contracting official, Bunnatine Greenhouse, told a congressional committee that "[T]he abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have witnessed during the course of my professional career." (Greenhouse was demoted after blowing the whistle, despite a stellar work performance record.)

KBR, Inc., won more than $16 billion in U.S. government contracts for work in Iraq and Afghanistan from 2004 to 2006—far more than any other company, according to "Windfalls of War II", a 2007 analysis by the Center for Public Integrity.

For details about the waste, fraud and other abuses committed by KBR/Halliburton through its war-related contracts, see Halliburton Watch.org, CorpWatch, The House Committee on Oversight and Government Reform,and The Senate Democratic Policy Committee.

For information on Halliburton's lobbyists, visit Halliburton Watch

Other Examples

Soon after Hurricane Katrina, former FEMA head Joe Albaugh, a Halliburton registered lobbyist, encamped in Baton Rouge, Louisiana, "helping his clients get business from perhaps the worst natural disaster in the nation's history." (Washington Post September 8, 2005; Page A27)

Charles Domini, a retired three-star general hired by Cheney in 1995 to work as vice president of business development for Kellogg Brown & Root, has been on both sides of the revolving door between Halliburton and the military. He was a general with the Army in 1992 when it first awarded Halliburton its most lucrative contract, known as LOGCAP. Then, after Halliburton was fired by the Army in 1997, Domini was an employee of Halliburton when the Army re-hired the company to handle the LOGCAP contract.

Domini is only one example of the symbiotic relationship between Halliburton and the military. His promotion to chief lobbyist in 2001 occurred because the former chief lobbyist, Dave Gribbin, retired from Halliburton to join Cheney in the Bush administration. Gribbin has a long history with Cheney that includes working for him in Congress, the Pentagon, Halliburton and now in the White House.

Brief company history:

Halliburton's history began in the Texas/Oklahoma "oil patch" shortly after the end of World War I. Earl Halliburton of Tennessee came to Oklahoma to develop and refine a new process known as "oil well cementing." The process involves sending cement down an oil well to create a wall to seal-out water and other unwanted contaminants. The oil well cementing process, still used today, stabilizes the oil well and thereby allows drillers to extract oil more easily and efficiently.

Brown & Root, was established in 1919 and incorporated in Delaware in 1924. Two brothers, George and Herman Brown, and their brother-in-law, Dan Root, started the firm by paving roads. It was basically a cement company and nothing more. But the brothers soon began manufacturing complex oil platforms, dams and Navy warships.

Starting in the 1930s Brown & Root hitched its fortune in part (and vice versa) to the career of Lyndon B. Johnson, then an ambitious young congressman who helped the company secure federal contracts for a dam project back in Texas.

Halliburton and Brown and Root merged in 1963 under the name Halliburton, maintaining separate businesses inside one loose corporate structure -- the engineering and contracting side (Brown & Root) and the oil services side (Halliburton). In the late 1970s and early 1980s oil price fluctuations forced the company to more fully integrate the disparate operations into one streamlined firm.

Brown and Root rode LBJ's coattails into the Vietnam War, where it obtained numerous military construction contracts, including a contract to construct the infamous "tiger cages." The arrival of Dick Cheney as CEO in 1995 helped the company climb the ladder of the largest federal contractors from number 73 before his arrival to the 18th-largest defense contractor. Under Cheney's tenure as CEO, Halliburton's revenue from federal government contracts nearly doubled. Government-backed loans from the Export-Import bank increased from $100 million to $1.5 billion.

Halliburton saw its revenue increase 30 percent to $16 billion in 2003, largely because of its military contracts in the middle east. Halliburton was the number one U.S. Army contractor in 2003 with the total value of its Army contracts valued at $3,731,725,648. Dan Briody, in his book The Halliburton Agenda, described Halliburton's relationship with Cheney as "the embodiment of the Iron Triangle, the nexus of the government, military, and big business that President Eisenhower warned America about in his farewell speech."

Halliburton and KBR separated once again in 2006, with Halliburton focusing on oil services and KBR continuing as a separate entity focused on engineering, construction, and military supply contracting. Halliburton moved its operational headquarters to Dubai, while remaining incorporated in Delaware and retaining offices in Houston.

(A number of books provide useful explorations of Halliburton's history, including "The Halliburton Agenda" by Dan Briody, "Cronies" by Robert Bryce, and "How Much Are You Making in the War, Daddy?" by William D. Hartung).

Financial information

Stock ticker symbol: HAL

Specialized Information

Information that is harder to get than the rest.

Links to federal contract rankings in U.S.:

# 4 Federal Prime Contractor in 2006 (Washington Technology 2007)