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Halliburton in Iran

by JASON LEOPOLD

Halliburton Corp., the oil field services company once headed by Vice President Dick Cheney, told the New York City Comptroller’s office Monday that it won’t scale back its business dealings in Iran, despite concerns from the City’s Comptroller William Thompson about “corporate ties to states sponsoring terrorist activity,” which could force the New York City Police and Fire Department pension funds to pull its $23 million investment in the company.

The Comptroller’s office, on behalf of the pension funds, in a resolution last March urged the boards of directors of Halliburton and General Electric and ConocoPhillips to set up committees to review its operations in terror-linked countries, specifically Iran. Halliburton helps build drilling rigs in Iran’s southern oil field.

Thompson accused the firms of setting up offshore and United Kingdom subsidiaries to sidestep U.S. laws against doing business with Iran and Syria, countries that Washington says sponsor “terrorism.” Shareholder value is threatened by possible negative publicity, public protests and a loss of consumer confidence, he said.

Wendy Hall, a spokeswoman for Halliburton, said in an interview Monday that Halliburton set up an in-house committee to study whether the company’s business dealings in Iran has helped fund terrorist activities. Hall said Halliburton finalized a report and sent it to its board of directors and to the Comptroller’s office, which oversees the police and fire departments’ pension funds.

“The report details the company’s limited work in Iran,” Hall said. “We believe that decisions as to the nature of such governments and their actions are better made by governmental authorities and international entities such as the United Nations as opposed to individual persons or companies. Putting politics aside, we and our affiliates operate in countries, to the extent it is legally permissible, where our customers are active as they expect us to provide oilfield services support to their international operations.”

“We do not always agree with policies or actions of governments in every place that we do business and make no excuses for their behaviors. Due to the long-term nature of our business and the inevitability of political and social change, it is neither prudent nor appropriate for our company to establish our own country-by-country foreign policy.”

A spokesman for the Comptroller’s office said Monday that the Halliburton report was received from the company but officials haven’t looked it over yet. It’s unclear whether the pension funds will remove their investments in Halliburton because the company does business in Iran. However, the spokesman said Thompson hasn’t changed his stance on the issue and is unsure whether the pension funds will continue to invest with Halliburton.

Halliburton has been a lightning rod for criticism by Democrats in Congress ever since it won a multibillion no-bid contract to rebuild Iraq’s infrastructure after the war started there in March. Last week, Congressman Henry Waxman, D-California, accused Halliburton of gouging U.S. taxpayers by charging inflated prices to import gasoline into Iraq. Hall vehemently denied the accusation and Halliburton’s Chief Executive, David Lesar, sent an email to the company’s employees urging them to write to their local newspapers to tout Halliburton in a favorable light as a result of the negative publicity.

Shortly after major combat in Iraq ended in April, President Bush accused Iran of giving safe-haven to al Qaeda terrorists linked to Osama Bin Laden, the mastermind behind the 9-11 terrorist attacks, as well as remnants of former Iraqi President Saddam Hussein’s B’aathist regime. Many hardliners in the White House view Iran as the next target on the war on terrorism. The White House has also given financial support to Iranians seeking to overthrow Iran’s government.

If the war in the Middle East were to spread to Iran, Halliburton stands to earn billions of dollars in reconstruction efforts there because it already has a presence in the country and its expertise in rebuilding war-torn countries which dates back more than forty years.

Halliburton first started doing business in Iran as early as 1995, while Vice President Cheney was chief executive of the company and in possible violation of U.S. sanctions.

According to a February 2001 report in the Wall Street Journal, “U.S. laws have banned most American commerce with Iran. Halliburton Products & Services Ltd. works behind an unmarked door on the ninth floor of a new north Tehran tower block. A brochure declares that the company was registered in 1975 in the Cayman Islands, is based in the Persian Gulf sheikdom of Dubai and is “non-American.” But, like the sign over the receptionist’s head, the brochure bears the Dallas company’s name and red emblem, and offers services from Halliburton units around the world.”

An executive order signed by former President Bill Clinton in March 1995 prohibits “new investments (in Iran) by U.S. persons, including commitment of funds or other assets.” It also bars U.S. companies from performing services “that would benefit the Iranian oil industry.” Violation of the order can result in fines of as much as $500,000 for companies and up to 10 years in jail for individuals.”

In the February 2001 report, the Journal quoted an anonymous U.S. official as saying “a Halliburton office in Tehran would violate at least the spirit of American law.” Moreover, a U.S. Treasury Department website detailing U.S. sanctions against bans almost all U.S. trade and investment with Iran, specifically in oil services. The Web site adds: “No U.S. person may approve or facilitate the entry into or performance of transactions or contracts with Iran by a foreign subsidiary of a U.S. firm that the U.S. person is precluded from performing directly. Similarly, no U.S. person may facilitate such transactions by unaffiliated foreign persons.”

When Bush and Cheney came into office in 2001, their administration decided it would not punish foreign oil and gas companies that invest in those countries. Halliburton has continued doing business in Iran by skirting U.S. laws. It’s Tehran office is registered through a Cayman Island subsidiary and does not employ anyone from the U.S.

The sanctions imposed on countries, like Iran and Libya before Bush became president were blasted by Cheney, who gave frequent speeches on the need for U.S. companies to compete with their foreign competitors, despite claims that those countries may have ties to terrorism.

“I think we’d be better off if we, in fact, backed off those sanctions (on Iran), didn’t try to impose secondary boycotts on companies … trying to do business over there … and instead started to rebuild those relationships,” Cheney said during a 1998 business trip to Sydney, Australia, according to Australia’s Illawarra Mercury newspaper.

David Lesar, Halliburton’s current chief executive explained why the company does business with countries that may or may not sponsor terrorism.

“A lot of our competition is non-US companies,” Lesar said in an interview with Knight-Ridder in July 2000. “We do operate in some other sanctions-countries by complying with sanctions rules. You operate in those countries using non-US subsidiaries and non-US employees.” Lesar said at the time he couldn’t specify the amount of business that Halliburton did in Iran and Libya, but he called it “not substantial.”

In 1995, Halliburton paid a $1.2 million fine to the U.S. government and $2.61 million in civil penalties for violating a U.S. trade embargo by shipping oilfield equipment to Libya. Federal officials said some of the well servicing equipment sent to Libya by Halliburton between late 1987 and early 1990 could have been used in the development of nuclear weapons. President Reagan imposed the embargo against Libya in 1986 because of alleged links to international terrorism.

But the fact that Halliburton may have unwillingly helped Libya obtain a crucial component to build an atomic bomb only made Cheney push the Clinton administration harder to support trade with Libya and Iran.

During a trip to the Middle East in March 1996, Cheney told a group of mostly U.S. businessmen that Congress should ease sanctions in Iran and Libya to foster better relationships_a statement that when read today seems hypocritical considering the Bush administration’s foreign policy.

“Let me make a generalized statement about a trend I see in the U.S. Congress that I find disturbing, that applies not only with respect to the Iranian situation but a number of others as well,” Cheney said. “I think we Americans sometimes make mistakes…There seems to be an assumption that somehow we know what’s best for everybody else and that we are going to use our economic clout to get everybody else to live the way we would like.”

JASON LEOPOLD can be reached at: jasonleopold@hotmail.com

 

JASON LEOPOLD is the former Los Angeles bureau chief of Dow Jones Newswires where he spent two years covering the energy crisis and the Enron bankruptcy. He just finished writing a book about the crisis, due out in December through Rowman & Littlefield. He can be reached at: jasonleopold@hotmail.com

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