Halliburton, Cheney, Corruption
After Cheney’s tenure at the Pentagon ended, in 1993, with the arrival of the Clinton Administration, he spent much of the next two years deciding whether to run for President. He formed a political-action committee, and crossed the country making speeches and raising money. He also became affiliated with the American Enterprise Institute, the conservative think tank. Records from the Federal Election Commission show that Cheney’s pac contributors included executives at several of the companies that have since won the largest government contracts in Iraq. Among them were Thomas Cruikshank, Halliburton’s C.E.O. at the time; Stephen Bechtel, whose family’s construction-and-engineering firm now has a contract in Iraq worth as much as $2.8 billion; and Duane Andrews, then senior vice-president of Science Applications International Corporation, which has won seven contracts in Iraq.
When Newt Gingrich helped bring the House of Representatives into Republican hands, in 1994, Cheney felt reassured that the country was back on the right track, alleviating his need to run. His pac hadn’t raised enough money, in any case. Equally important, colleagues said, Cheney had found that he didn’t enjoy being the center of attention. He preferred to work behind the scenes.
Cheney was hired by Halliburton in 1995, not long after he went on a fly-fishing trip in New Brunswick, Canada, with several corporate moguls. After Cheney had said good night, the others began talking about Halliburton’s need for a new C.E.O. Why not Dick? He had virtually no business experience, but he had valuable relationships with very powerful people. Lawrence Eagleburger, the Secretary of State in the first Bush Administration, became a Halliburton board member after Cheney joined the company. He told me that Cheney was the firm’s “outside man,” the person who could best help the company expand its business around the globe. Cheney was close to many world leaders, particularly in the Persian Gulf, a region central to Halliburton’s oil-services business. Cheney and his wife, Lynne, were so friendly with Prince Bandar, the Saudi Ambassador to the U.S., that the Prince had invited the Cheney family to his daughter’s wedding. (Cheney did not attend.) “Dick was good at opening doors,” Eagleburger said. “I don’t mean that pejoratively. He had contacts from his former life, and he used them effectively.”
Under Cheney’s direction, Halliburton thrived. In 1998, the company acquired its main rival, Dresser Industries. Cheney negotiated the $7.7-billion deal, reportedly during a weekend of quail-hunting. The combined conglomerate, which retained the Halliburton name, instantly became the largest company of its kind in the world. But, in its eagerness to merge, Halliburton had failed to detect the size of the legal liability that Dresser faced from long-dormant lawsuits dealing with asbestos poisoning. The claims proved so ruinous that several Halliburton divisions later filed for bankruptcy protection. The asbestos settlements devastated the company’s stock price, which fell by eighty per cent in just over a year.
Cheney’s defenders have argued that no one could have anticipated the extent of the asbestos problem. Yet the incident presaged a current criticism of Cheney: that he can be blindsided by insular decision-making. Eagleburger, who was on Dresser’s board of directors before it merged with Halliburton, told me, “I can’t fault Cheney as such on asbestos, but somebody slipped up somewhere in the due diligence. Somebody should have caught it.”
The Dresser merger also raised ethical questions. The United States had concluded that Iraq, Libya, and Iran supported terrorism and had imposed strict sanctions on them. Yet during Cheney’s tenure at Halliburton the company did business in all three countries. In the case of Iraq, Halliburton legally evaded U.S. sanctions by conducting its oil-service business through foreign subsidiaries that had once been owned by Dresser. With Iran and Libya, Halliburton used its own subsidiaries. The use of foreign subsidiaries may have helped the company to avoid paying U.S. taxes.
In some ways, the Libya and Iran transactions were consistent with Cheney’s views. He had long opposed economic sanctions as a political tool, even against South Africa’s apartheid regime. During the 2000 campaign, however, Cheney said he viewed Iraq differently. “I had a firm policy that we wouldn’t do anything in Iraq, even arrangements that were supposedly legal,” he told ABC News. But, under Cheney’s watch, two foreign subsidiaries of Dresser sold millions of dollars’ worth of oil services and parts to Saddam’s regime. The transactions were not illegal, but they were politically suspect. The deals occurred under the United Nations Oil-for-Food program, at a time when Saddam Hussein chose which companies his government would work with. Corruption was rampant. It may be that it was simply Halliburton’s expertise that attracted Saddam’s regime, but a United Nations diplomat with the Oil-for-Food program has doubts. “Most American companies were blacklisted,” he said. “It’s rather surprising to find Halliburton doing business with Saddam. It would have been very much a senior-level decision, made by the regime at the top.” Cheney has said that he personally directed the company to stop doing business with Saddam. Halliburton’s presence in Iraq ended in February, 2000.
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