- The Washington Times - Saturday, October 26, 2002

From combined dispatches

DALLAS Vice President Richard B. Cheney and Halliburton Co. asked a federal judge yesterday to throw out a lawsuit accusing them of defrauding investors by changing accounting methods at the oil-field-services company.

Halliburton, speaking for Mr. Cheney, who was chief executive of the company from 1995 until August 2000, denied the charges in the class-action lawsuit and contended that the U.S. District Court in Dallas does not have jurisdiction over the matter.

Judicial Watch, a self-styled government watchdog group that filed the lawsuit, charged in its complaint in July that Mr. Cheney and other Halliburton executives issued "materially false" financial statements that inflated its share price from 1998 through 2001.

The U.S. Securities and Exchange Commission is investigating the accusations in the lawsuit. They center on whether Halliburton properly disclosed to investors its decision to accelerate the booking of revenue from construction work under an accounting change initiated when Mr. Cheney was chief executive.

Beginning in 1998, Halliburton counted some of the cost overruns on large projects as revenue, even though customers sometimes disputed those costs and were not required to pay them.

The change was disclosed in a footnote to Halliburton's 1999 annual report, which was filed in March 2000. On its Web site, Halliburton said it followed established accounting guidelines.

Judicial Watch contends that the accounting change resulted in a $445 million overstatement of revenues from 1999 through 2001 and that investors lost millions when the stock dropped as a result of the SEC investigation announced in May of this year.

The Judicial Watch lawsuit was filed on behalf of shareholders Stephen S. Stephens of Indiana and Lyle and Deanna J. Lionbarger of New Mexico. It does not specify the number of shares they hold.

Besides Halliburton and Mr. Cheney, defendants in the lawsuit are accounting firm Andersen Worldwide and Arthur Andersen LLP, current Halliburton Chairman David J. Lesar, 12 other Halliburton board members and Terrence Edward Hatchett, Halliburton's former managing partner for North America.

Mr. Cheney earned more than $11 million in salary during his tenure at Halliburton and gained $22 million from exercising stock options in 2000.

The shares of Dallas-based Halliburton fell 24 cents to $14.88 in New York Stock Exchange trading yesterday.

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