Cheney, Step Down
June 6, 2002
By Richard Prasad
Every action the Vice President takes should be under scrutiny, shouldn't it? We were all told about Vice President Gore's fundraising methods, ad nauseum. Every time Mr. Gore sighed, or told an anecdote, he was called a liar and a phony and worse. Why isn't the same level of scrutiny applied to Vice President Dick Cheney? The Republicans will tell you that this is a different time, that with global terrorism and wars and rumors of wars in the air, this is not the time to engage in the politics of personal destruction. It is ironic that the very same politics of personal destruction brought the Republicans back to the White House.
Vice President Cheney has been very successful at staving off any inquiry about himself or his administration's actions by saying the Democrats are playing politics. Don't ask about Bush's prosecution of the war on terror, or what country we are going to invade next, that is unpatriotic. Don't ask what the Bush administration knew before 9/11 about the World Trade Center Attack, it is all the Clinton Administration's fault. And so goes Cheney's song and dance, and so far it has kept the press at bay.
By now, everyone who hasn't been living in a cave since last December knows the Vice President's role in the Enron scandal, but it bears repeating since there has been almost no reporting on Enron lately. Mr. Cheney set up an Energy Task force, which included major energy producers and large contributors, but no environmental groups. Mr. Cheney met with former Enron CEO Ken Lay, and let Mr. Lay hand pick the new members of FERC, the regulatory commission that's supposed to keep energy prices under control. But of course with Mr. Lay in control of FERC, FERC did nothing while Enron was manipulating energy prices in California. Mr. Cheney meanwhile, has invoked Executive Privilege, to keep these documents from the public eye. And although no Federal judge has agreed with Mr. Cheney's interpretation of executive privilege, the stonewalling has worked, and the public has stopped caring about Enron, and Mr. Cheney's energy commission.
With such misdirection and obfuscation, it is no great surprise that the latest charges against Cheney and his company have gone almost unnoticed, slipped under the radar, as they say. On May 22, 2002, the New York Times reported that Halliburton, the energy company that Cheney was the CEO of before he became Vice President, altered its accounting practices in 1998, when Cheney was CEO, and reported 100 million dollars in profits that it actually had not received yet. Halliburton makes much of their money on construction projects, where the disputed 100 million dollars came from. Under the new accounting rules, Halliburton assumed that their customers would pay the cost for construction cost overruns, even though the question of who would pay those costs was still in dispute. The problem is, Hallibuton did not disclose the change in accounting practice to investors for over a year. And now the Bush administration's own Securities and Exchange Commission is looking into why the accounting rule change wasn't disclosed.
The new accounting practice was approved by Arthur Andersen, Halliburton's accountants at the time. You remember Andersen don't you? They are the accounting company on trial for destroying documents during the Enron investigation. In a May 29th 2002, New York Times article, the relationship between Cheney and Andersen seems quite close. The relationship was so close that Cheney appeared in a promotional video to extol the virtues of Arthur Andersen.
What was the purpose of this accounting change? According to the same May 22nd article from the Times, two former executives at Dresser Industries, which merged with Halliburton in 1998 said the changes in accounting came about to obscure losses that Halliburton suffered. The hundred million dollars in question is not a large amount in terms of corporate budgets, but the shift in accounting policies came at a key time. Halliburton had just suffered large losses, due to a recession in the oil industry, and had just acquired Dresser Industries, any more losses at that time would have sent investor confidence plummeting.
But the excuses for Cheney are already piling up. The first excuse is that these accounting practices are not illegal. Accountants call these practices "aggressive" but not illegal. Of course, one has to wonder, with the corporate behavior at Enron and Andersen, what exactly is illegal in corporate America these days? The corporate ethic is in the toilet, because nothing is viewed as illegal anymore as long as nobody gets caught doing it.
The second excuse is that Cheney was a hands-off CEO, that didn't actually make the decision, but left it up to his subordinate David Lesar. Cheney had not specifically ordered the change because the change in accounting was so mundane that it was done without Cheney's knowledge. That is another problem with corporate America today: there is no accountability. The captain does not go down with the ship, the captain blames those under him and goes on as if nothing is wrong. Somewhere there has to be a memo with Cheney's signature on it that approved this accounting change, it is up to the press to find it, if they even care to look.
If all else fails, they can blame the accountants, as Enron tried to do. In a very funny op-ed piece, on May 31st, 2002, Michael Kinsley wrote for the Washington Post that Cheney could always feign surprise like the Claude Raines character in Casablanca and say that Halliburton was "shocked, shocked, shocked" to find out what Andersen was doing. Of course given the fact that Cheney had already made a promotional video for Andersen, feigning shock would hardly be believable.
Cheney would be much better served by wrapping himself in the flag and calling any charges that he knew about the accounting partisan and outrageous. Hasn't that been the post-9/11 strategy of the Bush Administration all along?
The accounting snafu was hardly the first slip-up for Halliburton during Cheney's tenure at the helm. According to the United Press International and the Washington Post, dated June 25th, 2001, Halliburton's dealings in Iraq, through foreign subsidiaries, were much more extensive than originally believed. Halliburton held stakes in two companies that agreed to sell $73 billion dollars in oil production equipment to Iraq. The refrain from the Cheney camp was a familiar one. It was a joint venture between a foreign subsidiary of Halliburton and Iraq, so Cheney did not review the contracts and had no knowledge of the deal, according to Vice presidential spokesman Mary Matelin. And besides that it was all legal. But just think how much more oil production equipment Hallibuton and it's foreign subsidiaries could sell if Saddam Hussien were removed and UN sanctions were dropped? No wonder Cheney has been one of the most vocal proponents of removing Saddam. But I'm sure the monetary gains for Halliburton by removing Saddam has never entered Cheney's mind has it?
And that is not the only dark cloud hanging over Cheney's tenure at Halliburton. Cheney's acquisition of Dresser Industries was supposed to be Dick Cheney's crowning achievement, but it might be Halliburton's undoing. Along with Dresser Industries, Cheney acquired the many, many asbestos litigation suits that were filed by former Dresser Industries workers who claim to have lung cancer as a result of their long term exposure to asbestos. According to New York Newsday from May 30th 2002, Halliburton faces almost 292,000 asbestos related lawsuits. This has caused many brokers to institute a sell rating on the stock. A sell rating is something that brokers never initiate, but more of them are saying sell about Halliburton, and that means trouble. At it's height in 1998, Halliburton was worth about 60 dollars a share. After the merger with Dresser, it was worth 30. After these latest accounting disclosures, Haliburton is trading at 17 dollars a share. Mr. Cheney's portfolio is taking quite a beating isn't it? Maybe the fact that he laid off 10,000 workers after the merger with Dresser doesn't bother him, but Halliburton's precipitous drop in share price sure does.
Actually, the truth is Halliburton made Cheney richer than his wildest imagination. Even though Halliburton withheld Cheney's bonus in 1999 for missing earnings targets, in the year 2000, Cheney's last at Halliburton, he made over 36 million dollars in salary and stock incentives. Not bad for a guy who ran the company's stock into the ground and laid off 10,000 of the workers he and Bush pretend to care about.
Mr. Cheney, for the stonewalling of your energy commission documents, for your decision not to tell investors about Halliburton's accounting practices for a year, for the double dealings on Iraq through Halliburton's subsidiaries, for firing 10,000 workers after lining your own pockets with ill-gotten gains, for all the asbestos litigation cases that you made Hallibuton a part of, and most of all, for all the times you've falsely invoked patriotism to cover your old, unethical behind, for the good of America Mr. Cheney, please resign immediately.