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Halliburton

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Halliburton Energy Services (NYSE: [HAL]) is a multinational corporation with operations in over 120 countries. It is based in Houston, Texas. Halliburton operates two major business segments: The Energy Services Group provides technical products and services for oil and gas exploration and production, and the KBR subsidiary is a major construction company of refineries, oil fields, pipelines, and chemical plants. Company 2005 revenues were US$20.99 billion. The company employs more than 106,000 people worldwide.

Contents

Business Overview

Energy Services, the company's historical cornerstone, includes drilling & formation evaluation, digital & consulting solutions, production volume optimization, and fluid systems. This business continues to be profitable, and the company is a world leader in this industry; Schlumberger is the company's closest competitor.

With the acquisition of Dresser Industries in 1998, the Kellogg-Brown & Root division (in 2002 renamed to KBR) was formed by merging Halliburton's Brown & Root (acquired 1962) subsidiary and the M.W. Kellogg division of Dresser (which Dresser had merged with in 1988). KBR is a major international construction company, which is a highly volatile undertaking subject to wild fluctuations in revenue and profit. Asbestos-related litigation from the Kellogg acquisition caused the company to book over $4.0 billion U.S. in losses from 2002 through 2004.

As a result of the asbestos-related costs, Halliburton lost approximately $900 million U.S. a year from 2002 through 2004. A final non-appealable settlement in the asbestos case was reached in January 2005 which allowed Halliburton subsidiary KBR to exit Chapter 11 bankruptcy and returned the company to quarterly profitability.

At a meeting for investors and analysts in August 2004, a plan was outlined to divest the KBR division through a possible sale, spin-off or initial public offering. Analysts at Deutsche Bank value KBR at up to $2.15 billion, while others believe it could be worth closer to $3 billion by 2005.

Corporate Governance

The current members of Halliburton's board of directors are David J. Lesar, C. Christopher Gaut, William P. Utt, Andrew R. Lane, Albert O. Cornelison, Mark A. McCollum, Craig Nunez, Lawrence J. Pope, and David R. Smith.

History

1919 to 1990

Mr. and Mrs. Erle P. Halliburton first tried to find work cementing oil wells in Burkburnett, Texas then moved their business (New Method Oil Well Cementing Company) to the Healdton field near Ardmore, Oklahoma.

1990s

2000s

PDF that use offshore tax havens. It ranks the contractors in terms of the size of the contractors and provides information about how many subsidiaries the companies have offshore. Using data of the end of 2001, Halliburton ranked 30, had 17 offshore companies in tax havens, and 131 foreign subsidiaries.

Today KBR employs over 30,000 men and women in Iraq. Halliburton's work in Iraq is diverse and complicated. In addition to troop support, Halliburton also provides air traffic control support; produces 74 million gallons of water a month for consumption, hygiene and laundry; deploys as many as 700 trucks a day to deliver essentials to American forces; and provides firefighter and crash-rescue services, as well as working to restore Iraqi oil infrastructure.

Iraq controversy

Wikinews has news related to:
Halliburton is the only company mentioned by Osama bin Laden in an April 2004 tape in which he claims that "this is a war [in Iraq] that is benefiting major companies with billions of dollars."[[Citing sources citation needed]]

Revenues

The company's contracts in Iraq are expected to have generated more than $13 billion in sales by the time they start to expire in 2006, but most offer low margins — less than 2% on average in 2003 and just 1.4% this year for the logistics work [[Citing sources citation needed]] making these contracts less profitable than Halliburton's core energy business. The contracts in Iraq will be more profitable after the US Army reimburses them for costs that were originally investigated as potentially inflated. [link]

Despite statements that the company receives low profit margins from their Iraq contracts, their stock value has gone from $9 in mid-2002 all the way up to $69 as of late-2005. Yearly revenues as of December 31st 2002 were $12.5 billion, and as of December 31st 2004 Halliburton revenues have climbed to $20.5 billion. ([Yahoo Finance]) The stock hit a [record high] in January 2006.

KBR has contracts in Iraq worth up to $18 billion, including a single no-bid contract known as "Restore Iraqi Oil" (RIO) which has an estimated worth of $7 billion.

An audit of KBR by The Pentagon’s Defense Contract Audit Agency (DCAA) found $108 million in "questioned costs" and, as of mid-March 2005, said they still had "major" unresolved issues with Halliburton.

Dick Cheney ties

In recent years the company has become the center of several controversies involving the 2003 Iraq War and the company's ties to US Vice President Dick Cheney. Cheney retired from the company during the 2000 U.S. presidential election campaign with a severance package worth $20 million[[Citing sources citation needed]]. As of 2004, he had received $398,548 in deferred compensation from Halliburton while Vice President. Cheney also retains unexercised stock options at Halliburton, which have been valued at nearly $8 million.

Concerns have been raised regarding the possible conflict of interest resulting from Cheney's deferred compensation and stock options from Halliburton. However, before entering office in 2001, Cheney bought an insurance policy that guaranteed a fixed amount of deferred payments from Halliburton each year for five years so that the payments would not depend on the company's fortunes. He is legally bound by an agreement he signed which turns over power of attorney to a trust administrator to sell the options at some future time and to give the after-tax profits to three charities. The agreement specifies that 40% will go to the University of Wyoming (Cheney's home state), 40% will go to George Washington University's medical faculty to be used for tax-exempt charitable purposes, and 20% will go to Capital Partners for Education. The agreement states that it is "irrevocable and may not be terminated, waived or amended," preventing Cheney from taking back the options at a later date.

Allegations of fraud

Allegations of fraud by Halliburton, specifically with regard to its operations in Iraq, have persisted since before the Iraq War. The associations between Cheney and Halliburton had led many to speculate with regard to improprieties and profiteering from the war.

On 27 June, 2005, the Democratic Party held a public committee, aired on C-SPAN 3, at which former civilian employees based in or administering operations in Iraq, testified to specific instances of waste, fraud, and other abuses and irregularities by Halliburton and its subsidiary Kellogg, Brown and Root (KBR).

Among the senators and representatives present at the hearing were Byron Dorgan (presiding), Henry Waxman, Frank Lautenberg, and Mark Dayton.

Among those testifying were Bunny Greenhouse, former Chief Contracting Officer of the U.S. Army Corps of Engineers; Rory Mayberry, former Food Program Manager for a Halliburton subsidiary; and Allan Waller of the Lloyd-Owen International security and operations firm.

Greenhouse, who provided the bulk of testimony, spoke for several minutes about her involvement in the evaluation and crafting of government Army contracts, and explaining how her superiors undermined and dismissed her concerns of illegal business practices. "Ultimately my main concern was the repeated insistence RIO contract be awarded to KBR without competitive bidding," Greenhouse said. She testified to have been given misinformation in answer to her complaints, saying she was "overtly misled."

Mayberry, still in Iraq, testified by video from questions prepared by the committee. He said that KBR routinely sold expired food rations to the Army.

The recorded interviewer asked, "Are you saying that Halliburton deliberately falsified the number of meals they prepared and then submitted false claims for reimbursement and that they did this to make up for past amounts auditors had disallowed?" Mayberry firmly answered "yes." He said that serving expired food rations was "an everyday occurrence, sometimes every meal." He also explained that Halliburton systematically overcharged for the number of meals as well, saying, "they were charging for 20,000 meals and they were only serving 10,000 meals." Dorgan later commented, "obviously there's no honor here, by a company that would serve outdated food to our troops in Iraq."

Halliburton and its subcontractors contend that billing discrepancies for the dining facilities stemmed from interpretive differences in their contracts, which required them to be prepared to serve a minimum number of meals per day. When they billed for these minimum numbers however, the DCAA countered that they should only be required to pay for meals served. Of the more-than-$200 million in question, $51 million was eventually retained by the U.S. Army Field Support Command.

Mayberry also claimed would-be whistleblowers were threatened "to be sent to Fallujah" and other "places under fire" if they talked to media or governmental oversight officials. In 2003 and 2004, Fallujah had been well known as dangerous for foreign troops and civilians. "I personally was sent to Fallujah for three weeks. The manager told me that I was being sent away until the auditors were gone, because I had talked to the auditors," Mayberry said.

"The threat of being sent to a camp under fire was their way of keeping us quiet. The employees who talked to auditors were sent to camps under more fire than other camps, and Anaconda." This report led Dorgan and others to voice considerable outrage.

Allan Waller testified to specific examples of how KBR officials had conspired in blocking of Lloyd-Owen fuel transports, and using other coercive means against its competitor. British based Lloyd-Owen has a direct contract with the Iraqi government to provide fuel to various parts of the country.

In his introductory remarks, Dorgan said that Senate Republicans had blocked any attempts at having a formal bi-partisan hearing, resulting in a separate committee.

See also

Notes

External links

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