THE FRAUDULENT VICE-PRESIDENT....???
Law firm sets sights on Halliburton
By Sheila McNulty
Financial Times
Published: August 7 2003 1:16 | Last Updated: August 7 2003 1:16
Dick Cheney, US vice- president, faces being cited as a defendant in an accounting fraud lawsuit against Halliburton, where he was formerly chief executive, after escaping inclusion in earlier lawsuits allegedly because of political considerations.
On May 30, the energy services contractor announced it had reached a $6m agreement to settle 20 lawsuits arising from allegations that Halliburton used deceptive accounting practices starting when Mr Cheney ran the company. His name, however, was excluded because of political sensitivities with the country at war, a lead plaintiff in the case has said.
Scott + Scott, which represents one of four lead plaintiffs, has not signed the settlement and, if the law firm gets its way, the case against the Houston-based company will face trial. This time, Mr Cheney is likely to be named as a defendant.
It is attempting to have Schiffrin & Barroway removed as lead counsel in the case and Judge David Godbey, US district judge in Dallas, has agreed to permit Scott + Scott to show at a hearing on August 25 why it wants the removal and the class freed from its proposed settlement.
Connecticut-based Scott + Scott is accusing Schiffrin & Barroway of violating court orders by agreeing to a settlement without the participation or consent of its lead partners.
Schiffrin & Barroway claims three of the four lead plaintiffs and their counsel have already approved the settlement, adding there is no evidence that the firm failed in its responsibilities to represent the class. But Scott + Scott say that only one plaintiff has actually signed the settlement.
The firm says Pennsylvania-based Schiffrin & Barroway did not convene a single meeting of the lead plaintiffs, refused to give the other firms evidence it had investigated the charges and then settled the case for $6m, even though some have estimated damages as high as $6.8bn, according to Scott + Scott documents.
Neil Rothstein, counsel for Scott + Scott, said in documents obtained by the Financial Times that Richard Schiffrin of Schiffrin & Barroway "admitted that Cheney may have risk involved in this lawsuit but he was not named as a defendant because it would be inappropriate to do so in a 'time of war'."
In court papers, Mr Schiffrin admits meeting with Mr Cheney's attorneys but said: "Lead counsel acknowledges only that these discussions were conducted at a time when this country was focused on its war efforts against Iraq."
In an interview, Mr Schiffrin said he had sought the meeting to explain, as a courtesy, that the vice-president would not be named in the lawsuit. "My point was that there was no basis to name him as a defendant," he said. "Particularly in a time of war."
Terrence O'Donnell, private counsel to Mr Cheney, said: "We have never requested anyone to forego litigation against the vice-president because the country was at war."
Because the case centres on an accounting issue, and Mr Cheney was chief executive, there was nothing that tied him into the decision-making process on the alleged fraud, Mr Schiffrin said. Nonetheless, his firm named David Lesar, who replaced Mr Cheney as CEO, in the lawsuit. Mr Schiffrin told the Financial Times yesterday that he "honestly can't remember" why Mr Lesar was named.
The class action covers May 1998 to May 2002, a period in which both men led the company.
Mr Rothstein alleges that Schiffrin & Barroway admitted it had reached a verbal agreement with Halliburton lawyers to stall the case until it could be settled. "Lead counsel's conduct has brought a cloud over this matter," Mr Rothstein says.
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