-Caveat Lector-
10/06 18:37
Cheney Debate Remark Ignores Halliburton's U.S. Tie
(Update2)
By John Rega
Washington, Oct. 6 (Bloomberg) -- 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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