- The Washington Times - Monday, September 9, 2002

ASSOCIATED PRESS
Vice President Richard B. Cheney yesterday defended his management of Halliburton Co., saying he had assumed the oil giant's insurance would shield it against asbestos lawsuits that have cost it hundreds of millions of dollars and helped devalue its stock.
The $7.7 billion acquisition of rival Dresser Industries Inc. in 1998 when Mr. 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 company. Most of Halliburton's current asbestos claims were inherited from Dresser.
His appearance on NBC's "Meet the Press" yesterday was the first time Mr. Cheney fielded Halliburton questions since May 28, when the Securities and Exchange Commission informed the company of an investigation of its accounting practices. Mr. Cheney was chairman and chief executive of the company from 1995 to 2000.
Mr. Cheney said asbestos "afflicts a great many companies" and said "most of the difficulties arose since I left two years ago."
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," Mr. Cheney said. "We had a track record, in terms of what settling asbestos claims cost."
In Mr. 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 investigating how the company assessed cost overruns in 1998 and later. Halliburton counted overruns as revenue on the assumption that its customers would pay at least part of the cost, although customers sometimes disputed the costs and didn't pay on time.
The SEC is also investigating whether the company adequately disclosed the practice to investors.
Mr. Cheney deflected questions on whether Halliburton acted properly to Halliburton's Web site.
The Web site 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 describes Mr. Cheney as an "outstanding" leader and says he was aware of accounting and reporting procedures.
Cheney spokeswoman Jennifer Millerwise said the vice president has not been contacted by the SEC in its Halliburton investigation.
Mr. 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 over $54 a share that August. Halliburton closed Friday at $13.84.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide