Cheney firm won $3.8bnracts from government
The Bush files - Observer special Ed Vulliamy in New York and Nick Paton Walsh in Moscow
Sunday July 21, 2002
The Observer
The oil services company once headed by United States
Vice-President Dick Cheney reaped massive rewards in
government contracts and bank loans after he took its helm,
including one deal with a Russian firm under investigation for
mafia connections.
This was disclosed as President George Bush renewed his
efforts to stabilise stock markets and distance himself from the
wave of accounting scandals afflicting corporate America.
Yesterday, Bush urged Congress to punish corporate abuses.
From 1995 to 2000 Cheney was chief executive and chairman of
Halliburton, the Dallas-based company that provides products
and services to the oil and energy industries, employing 100,000
people worldwide.
Its share value has fallen by two-thirds because of lawsuits over
asbestos poisoning and an investigation of accounting changes
introduced under Cheney.
Most of Halliburton's government contracts were won by its
construction subsidiary, Kellogg, Brown and Root - a company
with British origins that was sold to the US parent in the 1970s.
Documents uncovered by a Washington researcher, Knut Royce
- formerly with the Centre for Public Integrity - and by The
Observer show that government banks loaned or insured loans
worth $1.5 billion during the five years that Cheney was chief
executive, compared with only $100 million during the previous
five years.
The company under Cheney benefited from $3.8bn in
government contracts or insured loans. Although Bill Clinton was
in the White House, Capitol Hill - where the Appropriations
Committee handles government contracts - was controlled by
Cheney's Republican Party, to which Halliburton doubled its
contributions to $1,212,000 after his arrival.
The most eye-catching contract was for the refurbishment of a
Siberian oilfield, Samotlor, for the Tyumen oil company of
Russia. The company was loaned $489m in credits by the US
Export-Import Bank after lobbying by Halliburton; it was in return
to receive $292m for the refurbishments.
The White House and State Department tried to veto the
Russian deal. But after intense lobbying by Halliburton the
objections were overruled on Capitol Hill. One of Halliburton's top
lobbyists was David Gribben, who had been Cheney's chief of
staff at the Pentagon.
The State Department's concerns were based on the fact that
Tyumen was controlled by a holding conglomerate, the Alfa
Group, that had been investigated in Russia for mafia
connections.
Alfa strongly denies that it has ever had any criminal
connection, describing the allegations as 'nonsense'.
Cheney was highly valued by Halliburton because of
connections made in the Arab oil-producing states while
Defence Secretary during the war against Iraq under George
Bush Snr.
Halliburton denies that Cheney used his position or contacts to
win government business. A spokeswoman said: 'Any innuendo
that Halliburton or Dick Cheney has acted improperly is false.'
The company's fortunes have flourished during the 'war on
terrorism'. It has landed contracts to build the cells for al-Qaeda
detainees at Guantanamo Bay.
A Securities and Exchange Commission investigation is under
way into accounting changes introduced by Halliburton in 1998,
when it inflated its revenue figures by including uncollected
debts.
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