Wednesday, July 12, 2006

Dick Won't Like This

Halliburton did such a great job, it's getting the boot. Oh well. At least it still has its Iranian operations to fall back on. AP (07.12.06):
"The Army is discontinuing a controversial multibillion-dollar deal with oil services giant Halliburton Co. to provide logistical support to U.S. troops worldwide, a decision that could cut deeply into the firm's dominance of government contracting in Iraq. The choice comes after several years of attacks from critics who saw the contract as a symbol of politically connected corporations profiteering on the war." Halliburton losing contract to aid U.S. troops worldwide
"'Halliburton has done an outstanding job, under the circumstances,'" according to King. Were there problems? Ha!! Yeah, a few. "Government audits turned up more than $1 billion in questionable costs. Whistle-blowers told how the company charged $45 per case of soda, double-billed on meals and allowed troops to bathe in contaminated water." The Pentagon's new and improved plan "will split the work among three companies". A fourth company will be "hired to help monitor the performance of the other three. Halliburton will be eligible to bid on the work." Don't feel too sorry for Halliburton. They made out pretty damned well. "Last year, the Army paid the company more than $7 billion under the contract, according to a search of government contracting data by Eagle Eye Inc., a private consulting firm. The number this year is expected to be between $4 billion and $5 billion, according to Randy King, a program manager with the Army. Which pretty much ought to cover the costs of the Dresser Industries debacle. You remember that one? The fantastic acquisition engineered by business genius Dick Cheney? Washington Post (01.11.05):
"It's time for yet another Halliburton story -- but not the one you may be expecting. This isn't about the endlessly scrutinized Iraq contracting business of the big energy services company that Dick Cheney ran before he became vice president. And it's not about Halliburton's profit-boosting accounting change during Cheney's regime, or the scandals and problems currently affecting some of the firm's far-flung projects. Instead, let's talk about Halliburton's well-executed $5 billion escape from its asbestos problems, most of which Cheney created when he orchestrated Halliburton's purchase of Dresser Industries in 1998." Halliburton Pays Dearly but Finally Escapes Cheney's Asbestos Mess
"Few people connect this problem with Cheney, but they should, given that he was in charge at the time and got a raise as a result of buying Dresser." In February, 1998, Cheney and Halliburton agreed to acquire Dresser for $7.7 billion in Halliburton stock. By the time they closed the deal seven months later, Dresser's value had declined to $5.3 billion. So not only did Dick grossly overestimate Dresser's value, he also overlooked a small problem with potential liabilities. BusinessWeek explains (10.26.04):
"And then there's his asbestos blunder. Cheney acquired tens of thousands of claims from Dresser along with the merger. This liability monster has depressed Halliburton's stock price for more than three years, driven several subsidiaries into bankruptcy, and could wind up costing more than $4 billion to resolve. Halliburton is now trying to set up a trust fund to cover future claims." What Cheney Did at Halliburton
In other words, in settling all the asbestos claims, Halliburton had to pay damned near as much as it did to buy Dresser in the first place. Some might fine executive decision-making there, Dick. And you were wondering why this Administration has been agitating for so long to limit liability stemming from asbestos exposure!!


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