Cheney keeps low profile as dealings scrutinized

July 29, 2002, 10:00AM
By BENNETT ROTH
Copyright 2002 Houston Chronicle Washington Bureau

Cheney, once highly visible, has maintained a noticeably lower profile in recent weeks, plagued by scrutiny into his business dealings when he ran Texas-based Halliburton Corp.

WASHINGTON — One day last week, as White House officials worked to contain fallout from the spate of corporate scandal, Vice President Dick Cheney was far away — in a submarine off the Florida coast.

Now that the company’s accounting practices are the subject of several lawsuits and a Securities and Exchange Commission investigation, the vice president has avoided making appearances where he might face questions.

Administration officials insist Cheney has done nothing wrong, but experts say the scrutiny is hampering his ability to help Bush steer an economy threatened by a volatile stock market and executive malfeasance.

Cheney was once the administration’s choice mouthpiece on the influential Sunday television talk shows. But he has not appeared to advance the administration’s agenda since the middle of May, before Halliburton announced that the SEC was looking into accounting changes approved under Cheney’s watch.

White House officials say the vice president has been counseled not to talk about the SEC probe, but they bristle at the suggestion that he is trying to dodge the issue of corporate abuse.

“To suggest that Cheney is hiding something is crap,” said Adam Levine, the White House press officer responsible for placing administration officials on talk shows.

Levine said the administration always used Cheney more sparingly than other White House officials on television and only when it had an important message to get out. He said that Cheney had appeared on talk shows six times this year and that he probably will appear again around the anniversary of the Sept. 11 terrorist attacks.

The vice president regularly travels around the country speaking to the Republican faithful, helping the party’s candidates raise money, but those appearances have been tightly controlled to ensure he faces no media inquiries.

When he went to Florida last Tuesday to watch the submarine USS Wyoming test its ballistic missile system, the trip was announced at the last minute and he made no public appearances.

Cheney also is not expected to participate in an economic forum that Bush will host Aug. 13 in Waco — an event that will include Cabinet members, corporate executives, ethics experts and economists from all over the country.

Even in Washington, Cheney has left it up to others, including President Bush, to defend him against Democratic charges that he has not been forthcoming about what went on at Halliburton.

“He is not in a position to help the president a whole lot right now,” said Charles Cook, a political analyst.

Cheney’s spokeswoman, Jennifer Millerwise, said the vice president’s fund-raising speeches regularly include calls to crack down on corporate abuse.

But she added, “It would be inappropriate to comment on specifics of the SEC inquiry. Our office cannot and is not working on Halliburton issues.”

She said that Cheney, who is expected to attend about 60 GOP fund-raisers by November, has had a policy since February of not taking media questions at such events.

At a recent fund-raising luncheon the vice president attended in Houston for U.S. Senate candidate John Cornyn, the media were kept at the back of the room, too far away to shout questions.

A Cornyn official said the campaign did not want a news conference because it would detract from the focus on the candidate. When Cheney’s office was advised that there would be no media availability, the official said the response was, “Good, we don’t have to worry about that.”

White House officials also say that Cheney, despite his extensive business experience, has focused largely on military and foreign policy issues, not the economic agenda.

They point out that the vice president was not the lead spokesman when the president was trying to sell his tax cut last year and that he is more regularly involved in meetings of the National Security Council than in those of the president’s economic team.

Formerly the secretary of defense under Bush’s father, Cheney has been intimately involved in the anti-terrorism effort. And he flew to the Middle East to try to smooth the tension in that troubled region.

The vice president was last dispatched to the talk shows May 19 to respond to the Democratic uproar over media accounts that the president had received advanced warnings about the Sept. 11 attacks.

Right after those attacks, the vice president was often dispatched to secret locations for security reasons, so that one top official would be protected in case of further terrorism.

But after several months, Cheney re-emerged and made a rare appearance with Bush at the president’s State of the Union speech in January.

In recent months, however, Cheney has not been at Bush’s side, as Democrats and reporters have pressed the vice president to disclose what he knew about the accounting changes at Halliburton.

A spokeswoman for Sen. Joseph Lieberman, D-Conn., who heads the Government Affairs Committee, said the lawmaker would not consider launching an official probe into the vice president’s business dealings until the SEC finishes its investigation.

The SEC is looking into the appropriateness of the changes Halliburton made in the late 1990s that resulted in the company reporting as revenue disputed payments it had not received on construction projects.

Halliburton officials contend the accounting changes were legal and that Cheney, who was chief executive officer of the company from 1995-2000, had signed off on them.

Critics claimed that the accounting changes allowed the company to hide financial problems, some of them stemming from a slowdown in business as well as asbestos-related lawsuits inherited when Halliburton merged with Dresser Industries in 1998.

Last week, Halliburton reported a second-quarter loss of $498 million — its first loss in four years — that it attributed largely to asbestos lawsuits and problems with an offshore construction project in Brazil.

Halliburton, one of the world’s largest oil-fields service companies, is planning to move its headquarters from Dallas to Houston, where it has 15,000 employees.

John Wall, an attorney who represents a number of laid-off workers at a Halliburton oil-field products plant in suburban Dallas, questioned why Cheney would approve a merger that brought such financial liabilities with it.

“Why buy something that has so many obvious problems?” Wall asked. “Mr. Cheney is by all accounts a smart man. How could such a smart man make such a foolish mistake?”

Wall noted that Cheney chose to merge Halliburton with a company that had ties to the Bush family. The president’s grandfather, Prescott Bush, was the banker who was instrumental in getting Dresser started. He also served on the company’s board.

Bush’s father, the former president, also worked for Dresser for a short period and got his start in the Texas oil business with the help of former Dresser President Neil Mallon.

Millerwise, Cheney’s spokeswoman, would not comment on the Dresser merger and the asbestos lawsuits.

 

Cheney made bundle off Halliburton stock

July 15, 2002, 9:58PM
$18.5 million profit raises more questions
By DANA MILBANK
Washington Post

WASHINGTON — An executive sells shares in his energy company two months before the company announces unexpected bad news, and the stock price eventually tumbles to a quarter of the price at which the insider sold his.

George W. Bush at Harken Energy Corp. in 1990? Yes, but also Richard B. Cheney at Halliburton Co. in 2000.

When Cheney left Halliburton in August 2000 to be Bush’s running mate, the oil services firm was swelling with profits and approaching a two-year high in its stock price. Investors and the public (and possibly Cheney himself) did not know how sick the company really was, as became evident in the months after Cheney left.

Whether through serendipity or shrewdness, Cheney made an $18.5 million profit selling his shares for more than $52 each in August 2000; 60 days later, the company surprised investors with a warning that its engineering and construction business was doing much worse than expected, driving shares down 11 percent in a day. About the same time, it announced it was under a grand jury investigation for overbilling the government.

In the months that followed, it became clear that Halliburton’s liability for asbestos claims, stemming from a company Cheney acquired in 1998, were far greater than Halliburton realized. Then, in May of this year, the company announced it was under investigation by the Securities and Exchange Commission for controversial accounting under Cheney’s leadership that inflated profits.

There has been no serious allegation of wrongdoing by the vice president himself in all of this. But the high-flying company Cheney hailed as a “great success story” during the 2000 campaign is now a troubled behemoth fighting for its life. The humbling of Halliburton raises doubts about Cheney’s stewardship there and, by extension, his reputation as a smart executive bringing a businessman’s acumen to the White House.

The developments at Halliburton since Cheney’s departure leave two possibilities: Either the vice president did not know of the magnitude of problems at the oil-services company he ran for five years, or he sold his shares in August 2000 knowing the company was likely headed for a fall.

Amid a wave of corporate accounting scandals, Democrats are eager to raise the issue of Cheney’s leadership. The vice president’s office declined to comment for this story.

After Aug. 16, 2000, his last day at Halliburton, Cheney exercised stock options and sold 660,000 shares between Aug. 21 and 28; Halliburton shares were soaring because of high oil prices.

Though Cheney was under pressure to sever his future financial interest in Halliburton, conflict-of-interest laws did not require the sale. “There’s no conflict until I’m sworn in on January 20th,” Cheney said Aug. 27. Four other Halliburton insiders also sold shares in August, including the vice chairman and the chief financial officer.