Halliburton's woes

This has not been a good week for Halliburton.

First, the company revealed yesterday that is lost money in the second quarter, supposedly more than $660 million. Most of my readers probably find that amazing since so much of their revenue comes directly from the US government, with almost no competition and very little oversight:

One-third of Halliburton's revenue came from Iraq in the second quarter.

Their quarterly revenues were $6 billion. Unfortunately for them, their even bigger losses come from places like Brazil or from asbestos litigation.

Halliburton's presence in Iraq exceeds that even of the United Kingdom, as I noted the other day. Sadly, Halliburton has lost 42 employees or contractors in Iraq, while the UK has lost 61 troops.

Anyway, back to the bad news from this week. It was disclosed a few days ago that Halliburton is being investigated by a federal grand jury for possible violation of US trade sanctions against Iran. It is beyond dispute that a subsidiary of Halliburton, registered in the Caymen Islands and headquartered in Dubai, does business with Iran (of "axis of evil" fame). The question is whether the Caymen Islands firm is genuinely non-American, since US trade sanctions forbid US firms from having the kind of economic ties that the company clearly has in Iran.

To comply with US law, companies must not only have a foreign registry, they must also employ no Americans and act independently of the parent company. The investigation covers time when Vice President Dick Cheney was President of Halliburton, 1995-2000.

And it is serious:

Halliburton disclosed in public financial filings this week that the Treasury Department, which had been investigating the matter since 2001, had forwarded the case to the U.S. attorney in Houston for further investigation. The company said a federal grand jury had subpoenaed documents on its Iranian operations.

The Treasury Department refers such complaints only after finding evidence of ``serious and willful violations'' of the sanctions law, a government official said.

Sen. Frank Lautenberg, D-N.J., whose office has provided information on the case to the Treasury Department, said Tuesday that Halliburton Products and Services was a ``sham'' that existed only to circumvent the sanctions.

Though some Republicans are trying to make this seem like a politically-inspired witch hunt, the investigation was obviously started by federal investigators in Texas working during the Bush administration over a period of years.

Incidentally, while this was an especially bad week, Halliburton has long been under investigation for possible over-charging in Iraq ($186 million for meals), and for alleged bribery in Nigeria. Some executives are also being investigated for taking kickbacks in Kuwait.