Cheney's Halliburton Role Under Scrutiny
July 19, 2002 — -- From the start, Dick Cheney has been one of George Bush's biggest assets: A man who has run big things inside the government and out. Cheney was once a CEO, head of the multibillion-dollar energy exploration company, Halliburton.
But almost two years later, with financial markets reeling from the wave of corporate scandals, the vice president's past as a corporate chieftain has become a liability.
The president has been forced to go out and defend him, recently telling the press, "I've got great confidence in the vice president. He's doing a heck of a good job. When I picked him, I knew he was a fine business leader and a fine, experienced man, and he's doing a great job."
It is the vice president's old job that is the problem. The Securities and Exchange Commission is investigating Halliburton to see if the company used misleading accounting tricks to inflate its profits.
A watchdog group representing shareholders is one of five groups suing Halliburton and Cheney for fraud. "Dick Cheney was CEO of Halliburton. The buck stops on his desk, in the words of Harry Truman," says Larry Klayman, chairman and general counsel of of Washington, D.C.-based Judicial Watch.
When Cheney was at the helm of the oil exploration giant, the company changed the way it calculated its profits. Starting in 1998, Halliburton began counting as revenue money it had not yet collected from clients, because the charges were still in dispute. The company's current chief says Cheney, as CEO, knew about the change.
Adds Klayman: "Rather than booking actual profit, they started to book speculative profit on contracts that were in dispute, that really hadn't come to fruition yet."
The move was approved by the scandal-plagued accounting firm, Arthur Andersen. The change allowed Halliburton to add $89 million in revenues to its books. The added revenue was important: Analysts say it helped Halliburton beat its earnings target by 2 cents a share for the year. Without that accounting change, those same analysts say, the company would have missed that target by 11 cents a share.
