Bush and Cheney-change the rules and then play by them

Some tidbits about the dynamic duo that I found while perusing the net...



Charge: "In 1989 Mr. Bush was on the board of directors and audit committee of Harken [Energy]. He acquired that position, along with a lot of company stock, when Harken paid $2 million for Spectrum 7, a tiny, money-losing energy company with large debts of which Mr. Bush was C.E.O. Explaining what it was buying, Harken's founder said, 'His name was George Bush.' Unfortunately, Harken was also losing money hand over fist. But in 1989 the company managed to hide most of those losses with the profits it reported from selling a subsidiary, Aloha Petroleum, at a high price. Who bought Aloha? A group of Harken insiders, who got most of the money for the purchase by borrowing from Harken itself. Eventually the Securities and Exchange Commission ruled that this was a phony transaction, and forced the company to restate its 1989 earnings. But long before that ruling—though only a few weeks before bad news that could not be concealed caused Harken's shares to tumble—Mr. Bush sold off two-thirds of his stake, for $848,000. … Oddly, though the law requires prompt disclosure of insider sales, he neglected to inform the S.E.C. about this transaction until 34 weeks had passed. An internal S.E.C. memorandum concluded that he had broken the law, but no charges were filed. This, everyone insists, had nothing to do with the fact that his father was president" (Paul Krugman, New York Times, July 2, 2002).
Bush did not make his fortune in the oil fields. He made it at a major-league ball park heavily subsidized by taxpayers.
Bush takes credit for conceiving The Ballpark at Arlington, home of the Texas Rangers baseball team, which he bought in 1989 with a wealthy group of investors. Among them: billionaire Richard Rainwater of Fort Worth.
Bush invested just over $600,000, but Arlington taxpayers invested a lot more.
"It was $135 million worth of sales tax money," said attorney Glenn Sodd. "The city donated a good bit of land to the project. They got a sales tax exemption on all the items that were purchased for the stadium. We have a property tax in Texas and they were given as part of the deal a property tax exemption." A total of at least $200 million, according to Sodd.
And there's more: Sodd sued the Rangers on behalf of two families whose property was seized for stadium parking. A jury found they were paid about one-seventh of what the land was worth.
But the Rangers defend the deal.
"Basically, what we think we did was to create a model public-private partnership in which both sides came out ahead," said Bush partner and Rangers President Tom Schieffer.
Bush declined to be interviewed, but Schieffer says taxpayers got their money's worth.
"That's what we have always said in this process: 'If this wasn't good for Arlington, don't do it.' And that's the way we took it to the voters," Schieffer said. "We said, 'This is going to be good for the Rangers, no question about it. This is going to be good for us. But if it's not going to be good for you, don't do it.'"
The team threatened to move, and Arlington taxpayers voted in a half-cent increase in the sales tax. The vote was 2-to-1.
The new, subsidized stadium turned out to be a great deal for Bush. He was the most visible partner, and the publicity helped launch him into the governorship in 1994. And when the team was sold last year Bush's share came to at least $14.9 million with perhaps another $1 million or $2 million still to come.
Jim Runzheimer is one Arlington resident who opposed the deal.
"He put $600,000 into this project and he did a little bit better than Hillary Clinton," Runzheimer said. "She only made ... $100,000 or $200,000, from her dealing in commodities. Gov. Bush has made $15 million."
Fans love the stadium. And the team has flourished financially.
"Looking at it from the perspective of a businessman, this was an awfully sweet deal for the business," said Sodd. "Looking at it as a public official, we think it's lousy policy to use government money to subsidize billionaires in the pursuit of their business interests."
So Bush the businessman did prosper. But not by his bootstraps -- with help from wealthy friends and taxpayer subsidies.

Published on Thursday, April 3, 2003 by CommonDreams.org
Halliburton, Dick Cheney, and Wartime Spoils
by Lee Drutman and Charlie Cray
Access to Evil -- business dealings in Iraq, Iran, and Libya: News reports suggest that Pentagon is currently using the Iran-Libya Sanctions Act (ILSA) to draw up a blacklist of non-US companies that have done business in Iran. Yet, Halliburton has conducted Business in Iran through subsidiaries. When Cheney was CEO of Halliburton, he inquired about an ILSA waiver to pursue oil field developments in Iran. In 1997, Halliburton subsidiary Halliburton Energy Services paid $15,000 to settle Department of Commerce allegations that the company had broken anti-boycott provisions of the U.S. Export Administration Act for an Iran-related transaction. Halliburton recently agreed to evaluate its operations in Iran, after the Securities and Exchange Commission rebuffed the company's request to dismiss a New York City police and fire pension funds shareholder proposal for the company to examine its role in Iran.
Also forgotten is that story about how Cheney's Halliburton did business with Saddam. According to the Washington Post, "Halliburton held stakes in two firms that signed contracts to sell more than $73 million in oil production equipment and spare parts to Iraq while Cheney was chairman and chief executive officer."
Halliburton has also done business in Azerbaijan, Burma, Indonesia, Libya and Nigeria. As Dick Cheney once said, "The good Lord didn't see fit to put oil and gas only where there are democratic regimes friendly to the United States."
Tax Havens: Under Cheney's tenure, the number of Halliburton subsidiaries in offshore tax havens increased from 9 to 44. Meanwhile, Halliburton went from paying $302 million in company taxes in 1998 to getting an $85 million tax refund in 1999.
All told, the IRS loses about $70 billion a year in offshore tax sheltering by corporations and wealthy individuals - almost enough to cover the $75 billion Bush has asked for to cover the first six months of war.
***
The Halliburton story is part of a larger dynamic that should not be forgotten in a debate over contractor responsibility. While the Halliburton contracts reek of blatant cronyism, almost all the major firms that provide this kind of work are tied to the administration.
Somebody has to do the job. However, the level of secrecy surrounding the contracts that have been given out so far is troubling, and symptomatic of a bigger problem - the very legitimacy of a reconstruction process controlled by the U.S. military and their corporate contractors. Although the United States has the obligation to pay for the costs of reconstructing Iraq, only the United Nations is the proper body to provide governance and help rebuild a new government, civil society and physical infrastructure if the current regime is overthrown, not the White House, the Pentagon and their corporate cronies.
Note: In honor of Big Business Day 2003, Citizen Works will present Dick Cheney the "Daddy Warbucks" Award for eminence in corporate war profiteering on Friday, April 4

July 17, 2002 | Vice President Dick Cheney has spent most of the past year in hiding, ostensibly from terrorists, but increasingly it seems obvious that it is Congress, the Securities and Exchange Commission, the media and the public he fears. And for good reason: Cheney's business behavior could serve as a textbook case of much of what's wrong with the way corporate CEOs have come to play the game of business.
The game involves more than playing loose with accounting rules, as Halliburton Co. is accused of doing while Cheney was the Texas-based energy company's chief executive.
On Sunday, SEC chairman Harvey Pitt, whom Cheney pushed for the job, reluctantly turned on his sponsor and announced a vigorous investigation of Halliburton's accounting violations. Recent business scandals, however, are also the product of legal loopholes that allow firms to scoop up billions in unregulated profits.
It was just such loopholes that allowed the rise and subsequent fall of Enron and telecom heavyweights like WorldCom -- in the process making CEOs like Dick Cheney very, very rich.
Recall that Cheney was a political hack for most of his professional life, first as a staffer in the Ford White House, then as a congressman for a decade and after that as secretary of defense under the current president's father.
During the Clinton years, however, Cheney took an extremely lucrative five-year cruise into the private sector as chief executive of Halliburton. After deciding, following an extensive search, that he would be George W. Bush's best candidate for vice president, Cheney resigned from the energy services company with a $36 million payoff for his final year of corporate service. This journey from the public payroll to the corporate towers and back left a slimy trail of conflict-of-interest questions. For example, Secretary of Defense Cheney conveniently changed the rules restricting private contractors doing work on U.S. military bases, allowing the Kellogg Brown & Root subsidiary of his future employer Halliburton to receive the first of $2.5 billion in contracts over the next decade. When Cheney left to become CEO of the entire company, he recruited his Pentagon military aide, Joe Lopez, to become senior vice president in charge of Pentagon dealings, which ultimately formed the most lucrative part of the otherwise ailing company's business. Since returning to public office, these disturbing patterns have continued. In a scathing exposé of Halliburton's military contracts, for example, the New York Times revealed that the vice president's old company had been the main beneficiary of the Pentagon's rush to build anti-terrorism military bases around the world. This new work will cost taxpayers many billions, and, according to Pentagon investigators' estimates, without any cost controls the final bill will be considerably higher than if the military's own construction units do the work. Cheney denies having a role in securing those recent contracts, as he denies any knowledge of Halliburton's alleged accounting improprieties. Unfortunately for Halliburton's stockholders and employees, parlaying his Pentagon contacts into profit has proved to be Cheney's only major business success. In fact, CEO Cheney put Halliburton's future in doubt by engineering the acquisition of rival Dresser Industries, a move ballyhooed at the time as justification of his $2.2 million annual salary and massive stock options.But the acquisition has proved to be a disaster because Halliburton assumed Dresser's long-term liability under asbestos lawsuits. Even without the Dresser acquisition, Cheney was running a failing operation at Halliburton. The company, despite the government gravy garnered, had earnings well below Wall Street's expectations --until it suddenly changed its accounting rules. By assuming it would be able to collect on cost overruns on myriad construction projects, Cheney's Halliburton was able to inflate profits by $234 million over a four-year period. Halliburton failed to disclose its accounting shenanigans to the SEC or the company's investors for more than a year afterward, leading to more than a dozen lawsuits alleging fraud, including one by Judicial Watch. And why are we not surprised that Halliburton's accounting firm was Arthur Andersen, earlier this year convicted of obstruction of justice for shredding documents in connection with Enron? Andersen's dubious methods have become the disgrace of American accounting. Cheney, however, was sufficiently enamored with it that in 1996 he glowingly endorsed the accounting firm in a video, thanking it for going "over and above the just-sort-of-normal, by-the-books audit arrangement." Of course, ordinary investors did not know they were getting less than "by-the-books" auditing. It is especially ugly that the president and vice president -- men in a position to know just how sketchy the accounting practices of public companies are -- were so eager to make our Social Security system a vehicle for pouring individuals' retirement money into a stock market they knew to be a house of cards.
cost overruns before it was certain of getting paid.

Halliburton has contracts worth more than $1.7 billion for its work in Iraq, and it could make hundreds of millions more from a no-bid contract it was awarded by the Army Corps of Engineers, The Washington Post has reported.

According to The Post, while Cheney was defense secretary the Pentagon chose Halliburton subsidiary Brown & Root to study the cost effectiveness of outsourcing some military operations to private contractors. Based on the results of the study, the Pentagon hired Brown & Root to implement an outsourcing plan. Cheney became Halliburton CEO in 1995.

CBS/AP) A report by the Congressional Research Service undermines Vice President Dick Cheney's denial of a continuing relationship with Halliburton Co., the energy company he once led, Sen. Frank Lautenberg said Thursday.

The report says a public official's unexercised stock options and deferred salary fall within the definition of "retained ties" to his former company.

Cheney said Sunday on NBC that since becoming vice president, "I've severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven't had, now, for over three years."

Democrats pointed out that Cheney receives deferred compensation from Halliburton under an arrangement he made in 1998, and also retains stock options. He has pledged to give after-tax proceeds of the stock options to charity.

Cheney's aides defended the assertion on NBC, saying the financial arrangements do not constitute a tie to the company's business performance. They pointed out that Cheney took out a $15,000 insurance policy so he would collect the deferred payments over five years whether or not Halliburton remains in business.

Lautenberg, D-N.J., asked the Congressional Research Service to weigh in.
Without naming Cheney or Halliburton, the service reported that unexercised stock options and deferred salary "are among those benefits described by the Office of Government Ethics as 'retained ties' or 'linkages' to one's former employer."

Lautenberg said the report makes clear that Cheney does still have financial ties to Halliburton. "I ask the vice president to stop dodging the issue with legalese," Lautenberg said.

Cathie Martin, Cheney's spokeswoman, said the question is whether Cheney has any possible conflict of interest with Halliburton, "and the answer to that is, no."

Cheney was chief executive officer of Halliburton from 1995 through August 2000. The company's KBR subsidiary is the main government contractor working to restore Iraq's oil industry in an open-ended contract that was awarded without competitive bidding.

According to Cheney's 2001 financial disclosure report, the vice president's Halliburton benefits include three batches of stock options comprising 433,333 shares. He also has a 401(k) retirement account valued at between $1,001 and $15,000 dollars.

His deferred compensation account was valued at between $500,000 and $1 million, and generated income of $50,000 to $100,000.

In 2002, Cheney's total assets were valued at between $19.1 million and $86.4 million.

Earlier this month, a federal judge dismissed a lawsuit that accused Halliburton and Cheney of misleading investors by changing the way the company counted revenue from construction projects.

The lawsuit was filed last year by Judicial Watch, a conservative public interest group, on behalf of three small investors, who said the company tried to polish financial results by booking revenue on
cost overruns before it was certain of getting paid.

Halliburton has contracts worth more than $1.7 billion for its work in Iraq, and it could make hundreds of millions more from a no-bid contract it was awarded by the Army Corps of Engineers, The Washington Post has reported.

According to The Post, while Cheney was defense secretary the Pentagon chose Halliburton subsidiary Brown & Root to study the cost effectiveness of outsourcing some military operations to private contractors. Based on the results of the study, the Pentagon hired Brown & Root to implement an outsourcing plan. Cheney became Halliburton CEO in 1995.