There’s a whiff of scandal in the air over Washington D.C., and it isn’t just a leak in Strom Thurmond’s colostomy bag (at least not this time). No, this month the unmistakable scent of inpropriety is blowing in from Wall Street. Another charge of corporate greed, another huge company accused of accounting improprieties. Who’s our contestant this week? Let me give you a hint: they provide a variety of services, products, maintenance, engineering and construction to energy, industrial and governmental customers. They’re based in Dallas. And their former chairman and CEO left the company a couple of years ago for a job in the public sector. Give up? The company is Halliburton Co., and the former CEO is your Vice President and mine, Dick Cheney. The charges? That the company overstated revenues by $445 million from 1999 thru 2001. The big question: is this a charge that’s going to stick?
Corporate financial scandals have been all the rage of late, and so far three corporations have borne the brunt of bad press: Enron, Arthur Andersen, and WorldCom. In the flood of stories being written about these three card monte dealers, there’s a real danger that the actvities of Halliburton will be overlooked. And that would be a real shame, because none of the other scandals have such a direct tie to September 11th. In the wake of the terrorist attacks, the American Military-Industrial complex has gone into high gear. Somebody has to support military operations in places like Afghanistan, and at least one of those somebodies is KBR, a unit of Halliburton Corp. The Army and Navy have awarded KBR a ten year contract as their exclusive logistics supplier, and have given KBR a blank check to do the job. KBR’s contract with the US Army is the Army’s only logistical contract without an estimated cost. Its anyone’s guess how much this agreement will funnel into Halliburton’s coffers, but last year the company attributed $13 billion in revenue to government contracts. Now that America has “lost it’s innocence” and the Pentagon is contemplating action against Iraq, that figure could easily double or triple in 2002. Compare the dollar amounts with those in the Enron or WorldCom cases, and you’ll find that Halliburton is easily in the same league. Add the White House connection and you’ve got a scandal far more compelling than any of the questionable deals the Clintons made in Arkansas.
So why isn’t the Cheney/Halliburton connection making bigger headlines? There are a number of factors at play:
So will this turn into a major league scandal? I think it depends on all the other scandals. Cheney’s Halliburton dealings can be managed for the time being. An Arthur Andersen promotional video from 1996 featuring Dick Cheney surfaced last week. Cheney’s comments from the video are pretty embarassing for him:
“One of the things I like that they do for us is that, in effect, I get good advice, if you will, from their people based upon how we’re doing business and how we’re operating, over and above the, just sort of the normal by-the-books audit arrangement.”
However, the spectacle of WorldCom CEO Bernie Ebbers taking the fifth in front of Congress took most of the attention away from the Andersen video. There were also rumblings about some loans Dubya received from Harken Energy Corp. when he served on their board of directors in the 1980′s. The more play people like Bernie Ebbers get in the press, the less Cheney has to worry about. But if the press uncovers more dirt on our President’s past business dealings, Cheney may be in trouble. Managing the Cheney scandal is a priority for the administration, but managing Dubya’s scandals will trump all other concerns. Cutting Cheney loose on the pretense of his heart troubles would be a quick and easy way to distance the President from the scandal, and the code of the Beltway would require Cheney to “take one for the team”. But if that ever comes to pass, one has to wonder if Dick Cheney will take any comfort in what happened to Spiro Agnew’s boss?