DIAMONDS | money bags

HALLIBURTON : king of diamonds
($) (what do these signs mean?)

As one of the oil industry's largest providers of equipment and supplies worldwide, Halliburton needed someone at its helm who was capable of winning it major contracts through political connections. That person was Dick Cheney, who took over as Halliburton's CEO in 1995. Cheney saw that the company had the complete support of the government. In the Vice Presidential debate in the run-up to the 2000 election, Senator Joe Lieberman (D-CT) remarked that Cheney had done well for himself as CEO of Halliburton. Cheney responded quickly, "I can tell you, Joe, the government had absolutely nothing to do with it." However, the record points to the contrary.


Under Cheney's watch, the company became one of the largest welfare "queens," benefiting from at least $3.8 billion in federal contracts and taxpayer-insured loans. According to a report by the non-partisan Center for Public Integrity, one of these loans from the U.S. Export-Import Bank paid $292 million to Halliburton for refurbishing a massive Siberian oil field owned by a Russian firm with alleged ties to the mob. The alleged mob connections are impossible to prove, but what is troubling is the fact that the Ex-Im taxpayer-insured loan reduces the borrower's interest rate while simultaneously extending the life of the loan's repayment term. No one can say for sure whether Cheney's career in the highest offices of government secured such a lucrative deal with low interest requirement, but the deal does seem somewhat suspicious given the fact that the company was near bankruptcy just before Cheney took over as Chairman and CEO of the company.

The U.S. Ex-Im bank and its sister U.S. bank, the Overseas Private Investment Corporation, guaranteed loans over $1.5 billion in loans since Cheney took over the company. Compare this with the $100 million in loans during the five years before Cheney became CEO. Their contracts also have totaled more than $2.3 billion, double the $1.2 billion in the five years before 1995 (Center for Public Integrity,

Dealing with terrorists
In 2000, Cheney acknowledged that under his watch, Halliburton had entered into business contracts with Iran and Syria, both listed on the State Department's list of nations supporting terrorism. However, Cheney denied Halliburton or one of its subsidiaries had engaged in business dealings with Iraq, claiming he enforced a "firm policy" against doing business with Iraq. But according to the Washington Post, this was not entirely accurate.

See:, "Firm's Iraq Deals Greater than Cheney Has Said," Cloum Lynch, 06/23/01, A1.

The Post quotes two former executives at subsidiaries of Halliburton who claim they had no knowledge of such a "firm policy." Along with confidential UN records, they showed that Halliburton held stakes in two Iraqi firms which signed contracts worth some $73 million in production equipment and parts while Cheney was head of the company. The deal was done under the "oil-for-food" program administered by the UN, and was apparently completely legal, even if not in keeping with the values of American policy. But documents released since then have shown that these dealings were much more extensive than either Cheney or the company acknowledged.

Cheney, who oversaw the first Persian Gulf war in 1991 as Secretary of Defense promised to take a consistently hard line against Baghdad. He must have forgotten this when in 1998 he engineered the takeover of Dresser Industries, Inc, which exported equipment to Saddam Hussein in a joint venture with US equipment maker Ingersoll Rand Co. Again, the sales were completely legal because they were under the auspices of the oil-for-food program. Even so, the Post story (above) demonstrates that when big businesses like Halliburton are forced to reconcile an ethical obligation against dealing with "rogue states" and profits, the latter always wins out. For Cheney and Halliburton, profit trumps patriotism.

The War on Terror
Is it simply coincidental that Halliburton's profits are rising rapidly as the United States plunges ever more deeply into occupying Iraq? Since the end of the Iraqi invasion, Halliburton has become the recipient of enormous contracts worth billions of dollars.

According to Agence France Presse, Halliburton subsidiary Kellogg, Brown and Root (KBR) inked a no-bid contract with the Army Corps of Engineers in March 2003 to extinguish oil well fires in Iraq, presuming the work would be necessary. According to Henry Waxman, a senior House Democrat who investigated the matter, "the contract - to extinguish oil well fires in Iraq - has no set time limit and no dollar limit and is apparently structured in such a way as to encourage the contractor to increase its costs and, consequently, the costs to the taxpayer." Waxman wrote further, "This type of contract is generally discouraged in the executive branch because it provides the contractor with an incentive to increase its profits by increasing the costs to the taxpayer." In other words, KBR could basically charge whatever they wanted, and be completely subsidized by Mr. And Mrs. John Q. Taxpayer. It was not until five weeks after the deal was disclosed that the American people actually found out about the contract, according to an article from the BBC. As of the 8th of September, Halliburton had earned $948 million for this particular contract.


In each of the previous articles, they quote spokespeople from KBR and the Army Corps of Engineers who said that the deal to cap oil wells and extinguish fires was only temporary, or as one described it a "bridge" to future contracts which would be open to more than one bidder. The article says the Corps "expects a replacement contract to be signed by the end of August."

There has not been a replacement contract and now Halliburton stands to make even more money since George W. Bush requested from Congress an additional $87 billion, which Dick Cheney has said would cover the costs in Iraq for 2003. In an interview quoted in The Boston Globe, Cheney noted, "I don't think anybody can say with absolute certainty at this point" in response to a question about whether the administration would need more money in the future. In this same article, Cheney again disavowed any connection he continues to have with the company: ''Since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company,'' he said. ''And as vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape, or form of contracts let by the US Corps of Engineers or anybody else in the federal government.''

The Boston Globe

But some of the sharpest critics of Halliburton's deals have come from the competitors of the company who would otherwise stand to gain from lucrative contracts in the rebuilding of Iraq. They especially criticize the bidding process which is used to select the winning bidder for certain contracts. When Halliburton was originally awarded the no-bid $7 billion contract earlier in 2003, Congress made the Army Corps of Engineers dismantle certain parts of that contract because it overtly demonstrated signs of favoritism. But Halliburton was still contracted to do some oil repair work. In the bidding process back in August, many of the critics of the contract thought that this work gave the company a leg-up on its fellow bidders. As a result, Halliburton could come off as seeming like the company most able to perform the necessary tasks. For instance, the two contracts up for bid, formerly part of the now-rescinded $7 billion contract awarded to Halliburton, cannot specify the type of work needed in Iraq because the needs of the Iraqi oil industry had not completely been laid out. But because Halliburton has been doing the sort of work required, they have access to information and data not available to other potential bidders.


Even if we were to accept this at face value, there is no question Cheney has a vested interest in seeing the company succeed. As part of his severence package from leaving the firm in 2000 to be Bush's running mate, Cheney agreed to be paid by the company over a period of time extending into his current term of office. The payments show up on Cheney's tax returns as "deferred payments." An Cheney aide, quoted in the British daily The Guardian, said "'This is money that Mr Cheney was owed by the corporation as part of his salary for the time he was employed by Halliburton and which was a fixed amount paid to him over time.' The aide said the payment was even insured so that it would not be affected even if Halliburton went bankrupt, to ensure there was no conflict of interest" (, 03/12/03). Nevertheless, we find it striking that the former CEO makes up to $1 million from a company in which he claims to have no interest whatsoever, yet whose own administration has given gifts worth nearly $2 billion.


American shadow

the web

copyright © 2003, inc | legal disclaimer | privacy policy