Halliburton Loopholes: Solving Challenges with Crony Capitalism

Halliburton Loopholes: Solving Challenges with Crony Capitalism

“Halliburton Company is an oilfield services company. The Company’s two business segments are the Completion and Production segment and the Drilling and Evaluation segment. The Company provides a range of services and products for the exploration, development, and production of oil and natural gas around the world. It conducts business in approximately 80 countries. The business operations of its divisions are around four primary geographic regions: North America, Latin America, Europe/Africa/CIS, and Middle East/Asia. During the year ended December 31, 2010, based on the location of services provided and products sold, 46% of the revenue was from the United States. It has 170 international and 109 United States field camps, from which it delivers its services and products. In October 2011, the Company acquired Multi-Chem Group LLC.”


“Halliburton has become the object of several controversies involving the 2003 Iraq War and the company’s ties to former U.S. Vice President Dick Cheney.  Cheney retired from the company during the 2000 U.S. presidential election campaign with a severance package worth $36 million.  As of 2004, he had received $398,548 in deferred compensation from Halliburton while Vice President.  Cheney was chairman and CEO of Halliburton Company from 1995 to 2000 and has received stock options from Halliburton…  In the run-up to the Iraq war, Halliburton was awarded a $7 billion contract for which ‘unusually’ only Halliburton was allowed to bid.  Bunnatine Greenhouse, a civil servant with 20 years of contracting experience, had complained to Army officials on numerous occasions that Halliburton had been unlawfully receiving special treatment for work in Iraq, Kuwait and the Balkans.  Criminal investigations were opened by the U.S. Justice Department, the Federal Bureau of Investigation (FBI) and the Pentagon’s inspector general.  In one of Greenhouse’s claims, she said that military auditors caught Halliburton overcharging the Pentagon for fuel deliveries into Iraq.  She also complained that Defense Secretary Donald Rumsfeld’s office took control of every aspect of Halliburton’s $7 billion Iraqi oil/infrastructure contract.  After her testimony, Greenhouse was demoted for poor performance.  Greenhouse’s attorney, Michael Kohn, stated in The New York Times that “she is being demoted because of her strict adherence to procurement requirements and the Army’s preference to sidestep them when it suits their needs.”


When Halliburton came under investigation by the Justice Department Securities and Exchange Commission over allegations of improper dealings in Iraq, Kuwait and Nigeria in 2007, it opened a second corporate headquarters in the United Arab Emirates city of Dubai and moved its chairman and chief executive, David J. Lesar, there…  Halliburton remains a US company subject to US laws, but Dubai has no extradition agreement with the United States, meaning that Mr. Lesar could not be compelled to return to the US to testify, stand trial or serve any sentence related to any Halliburton activities under investigation…  According to a 2004 GAO report, the company is incorporated in Delaware, but had 17 subsidiaries in tax-haven countries…  In February 2007 Whitley Strieber wrote “Congress was told that $2.7 billion paid to Halliburton and its subsidiaries and subcontractors for work done in Iraq was either excessive or unsupported.  Another upcoming investigation that affects Halliburton is the [then] current scandal at Walter Reed Army Medical Center.  The Washington Post reported that the Army agreed to privatize the operation of Walter Reed by awarding a $120 million contract to IAP Worldwide Services, a contractor with connections to KBR, [at that time] a Halliburton subsidiary.”


In February 2011, Desmogblog.com outed Halliburton and other oil and gas companies who together set up “Energy in Depth”, an industry front group that claims to represent “small and independent” operators.  EID’s website was registered by a PR firm experienced in working for companies engaged in scientific deception (e.g. Big Tobacco).  EID was set up to fight back after investigative journalists began to expose problems with hydraulic fracturing (“fracking”) – notably ProPublica.org and the producers of the Oscar-nominated documentary “Gasland”.


‘It was reported that Nigeria’s Economic and Financial Crimes Commission (EFCC) filed charges against former U.S. Vice-President and Halliburton CEO Dick Cheney and officials from five companies, including Halliburton and KBR, over a bribery scheme involving the construction of a liquefied natural gas (LNG) facility in Nigeria (see pending KBR and Halliburton instances, “Nigeria LNG Contracts Bribery (UK Prosecution)”).  In December 2010, EFCC agreed to drop the charges against Cheney. News accounts reported Halliburton agreed to pay $250 million in fines; however, Halliburton stated in a press release that the amount was $35 million (“$32.5 million to the FGN [Federal Government of Nigeria] and an additional $2.5 million for FGN’s attorneys’ fees and other expenses.”)’


On 12 October 2011 the U.S. Interior Department formally cited BP and its two chief contractors – Halliburton and Transocean – for numerous safety and environmental violations in the operation of the doomed Deepwater Horizon well.  The citations, which could lead to millions of dollars in fines, arose from an investigation of the April 2010 explosion that killed 11 workers and led to the worst offshore oil spill in American history. The department and the Coast Guard found in a report issued last month that BP, Transocean and Halliburton had failed to operate the Gulf of Mexico drilling rig in a safe and responsible manner, had heedlessly endangered their workers, had not followed proper well control procedures and had not properly maintained safety equipment, including the blowout preventer.  The actions against Transocean, which operated the drilling rig, and Halliburton, which performed the well cementing job, are the first time that the government has cited contractors rather than just a well’s principal owner, in this case BP, for safety violations.


“Corporate insiders peddling the claim that drilling for methane gas will solve America’s energy needs just scored big in Washington – and for these insiders fracking for gas is very lucrative business.  House Resolution 1380, given the feel-good moniker of the ‘New Alternative Transportation to Give Americans Solutions Act’ or ‘NAT GAS Act’, was announced on Wednesday, April 6 [2011], in the U. S. House of Representatives.  The bill is 24-pages long and rewards the fracking industry with tax credits and products to help “drive” consumption. The bigger the vehicle, the more tax credits given.  This initiative to expand the controversial fracking process – which has already resulted in contaminated wells and rivers and even ignitable tap water for some – is being spearheaded in Congress by Reps. John Sullivan (R-Oklahoma), Dan Boren (D-Oklahoma), John Larson (D-Connecticut), and Kevin Brady (R-Texas). The bill has 77 co-sponsors, with 40 Democrats in support and 37 Republicans, from 33 different states.  But, perhaps its most powerful supporter or potential supporter is President Barack Obama…  Though hailed by [T. Boone Pickens] and other uncritical observers as an “energy efficient solution” and a “clean” energy resource, this PR spin ignores the true dangers and consequences of fracking and of the methane distribution and consumption process. Fracking – using a drilling technique pioneered by Halliburton that forces a concoction of hazardous chemicals and drinkable water into shale – has been well-documented in movies like Gasland, as well as by the Center for Media and Democracy’s Water Portal, as a dangerous and destructive process that shortchanges land owners, enriches drillers, and spoils land and water.”


“Public fears are growing about contamination of drinking-water supplies from the chemicals used in fracking and from the methane gas itself.  Field tests show that those worries are not unfounded.  A Duke University study published in May found that methane levels in dozens of drinking-water wells within a kilometer (3,280 feet) of new fracking sites were 17 times higher than in wells farther away.  Yet states have let companies proceed without adequate regulations.  They must begin to provide more effective oversight, and the federal government should step in, too…  In 2005 Congress – at the behest of then Vice President Dick Cheney, a former CEO of gas driller Halliburton – exempted fracking from regulation under the Safe Drinking Water Act.  Congress needs to close this so-called ‘Halliburton loophole’, as a bill co-sponsored by New York State Representative Maurice Hinchey would do.  The FRAC Act would also mandate public disclosure of all chemicals used in fracking across the nation.”


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