Cheney Defends Halliburton Leadership
WASHINGTON – Vice President Dick Cheney defended his leadership of Halliburton Co., saying that as chief executive he believed the oil giant's insurance would protect it from asbestos lawsuits that have cost it dearly and helped send its stock price plunging.
Halliburton's $7.7 billion acquisition of rival Dresser Industries Inc. in 1998, when Cheney was chief executive, doubled the Texas company's size overnight and allowed it to claim the title of the world's leading oilfield services provider. Most of its current asbestos claims were inherited from Dresser, and critics have questioned whether Cheney should have insisted on more research into the issue before the transaction.
Cheney's appearance Sunday on NBC's "Meet the Press" was the first time he fielded questions from a journalist on Halliburton since May 28, when the Securities and Exchange Commission told the company it was investigating its accounting practices. Cheney was chairman and chief executive of Halliburton from 1995 to 2000.
He said the asbestos claim issue "afflicts a great many companies," and that "most of the difficulties arose since I left two years ago." Without elaborating, He also blamed plaintiffs' lawyers.
Last year, Halliburton was hit with verdicts in Texas, Mississippi and Maryland totaling $152 million. The last verdict triggered a sell-off that sent Halliburton shares plunging 40 percent in one day because investors feared it was the tip of the liability iceberg.
"Our experience with asbestos at Halliburton was that we were insured, we were indemnified," Cheney said. "We had a track record in terms of what settling asbestos claims cost."
In Cheney's time, Halliburton settled cases for modest sums -- 214,000 claims for $173 million, including $101 million paid by insurance, leaving Halliburton's out-of-pocket cost at $336 per claim.
The vice president declined to answer any questions about the SEC probe, saying he wanted to avoid accusations that he is trying to influence the investigation.
The SEC is looking into how Halliburton assessed cost overruns in 1998 and later. The company counted overruns as revenue, assuming that its customers would pay at least part of the cost. Customers sometimes disputed the costs and didn't pay on time, however.
The SEC also is investigating whether the company adequately disclosed the practice to investors.
Cheney deflected to Halliburton's Web site questions on whether Halliburton should have told the SEC about its accounting changes.
The Web site does not answer that question, but says Halliburton followed established accounting guidelines, and that its clients at the time had signed "cost-plus" contracts because "in multimillion-dollar projects, there are always changes in the costs." Still, it acknowledged that it has changed its policy, and now signs "fixed price" agreements where clients are periodically apprised of cost overruns.
The Web site says "the CEO is made aware" of accounting and reporting procedures changes.
"Political reporters want to see if there are any similarities between the company's accounting practices and those of the corporations under intense scrutiny because of their accounting," the site says. "However, we will work to answer every question honestly, no matter how ridiculous."
Cheney has not been contacted by the SEC in its Halliburton investigation, spokeswoman Jennifer Millerwise said Sunday.
Cheney joined George W. Bush's presidential campaign in August 2000, and quit Halliburton. He sold stock options worth just over $40 million.
The company's stock sold for more than $54 a share at the time. It closed at $13.84 on Friday.