US Treasury Dept reopens inquiry into Halliburton's Cayman subsidiary

Thursday, February 12, 2004

HOUSTON, USA: Halliburton, the company formerly run by Dick Cheney, the US vice-president, is facing another investigation, this time over possible business dealings between its Cayman Islands subsidiary and Iran. The oil services company said it had received a letter from the US treasury department, informing it that an inquiry into allegations that Halliburton might have broken trade embargoes had been reopened. 

The investigation relates to when Mr Cheney was running the company. He was chief executive between 1995 and 2000 before quitting to run for office with George Bush, taking with him a $36m severance package. 

Halliburton said the investigation, originally begun in 2001, had been reopened but gave no other detail. Reuters quoted treasury sources saying that new information had come to light which prompted a fresh investigation. 

The news agency claimed to have seen documents that detailed business dealings between a Halliburton subsidiary registered in the Cayman Islands and an Iranian oil company called Kala. 

In the past, Halliburton has maintained that its subsidiaries which had dealings with Iran were staffed and managed by non-US personnel and that the company had complied with US law. A loophole allows US companies to conduct business in Iran as long as the subsidiaries are not run by Americans. 

The decision by the Treasury Department to reopen its investigation follows a '60 Minutes' documentary that aired recently on CBS televison, entitled Doing Business with the Enemy, which criticised Cayman Islands financial practices that led Americans to unwittingly invest in countries at odds with the United States, like Iran. 

The CBS documentary claimed some US companies with subsidiaries in the Cayman Islands were helping to drive the economies of countries like Iran, Syria and Libya that have sponsored terrorists. 

Specifically, it argued, "Just about everyone with a 401(k) pension plan or mutual fund has money invested in companies that are doing business in so-called rogue states." 

William Thompson, the New York City comptroller who oversees the $80 billion in pension funds for all city workers was quoted as saying, "The revenue that is generated from the work that these companies are doing, we believe, helps to underwrite and support terrorism." 

While US law does ban virtually all commerce with the rogue nations, Mr Thompson also claimed General Electric, Conoco-Phillips and Halliburton appeared to have violated "the spirit of the law."

According to Mr Thompson, Halliburton Products and Services, Ltd., which is wholly owned by the US-based Halliburton and registered out of Caledonian Bank in George Town, is doing business with Iran. He reports that the company sells about US$40 million a year worth of oil field services to the Iranian Government. 

"The Iranian Government is receiving dollars from it," Mr Thompson said during an interview with CBS correspondent Lesley Stahl. "And then turning around and exporting terrorism around the world. It benefits terrorism."

To verify Mr Thompson's claims, 60 Minutes went undercover to visit the manager of Caledonian Bank, David Walker. 

Walker told producers that, while Halliburton Products and Services was registered at the address, it was in name only. There was no actual office at the building or anywhere else in the Cayman Islands. And there were no employees on site. 

"They're not doing any business in Cayman per se," he was quoted as having said, "They're doing business, international business. Would it make sense to have somebody in Cayman pushing paper around? I don't know. And some people do it. And some people don't. And it's mostly driven by whatever the issues are with the head office in Houston." 

According to '60 Minutes' producers, if that meant the head office was calling the shots, then that would be against the law because the subsidiary must be completely independent of the US company. Halliburton's head office refused to comment on the matter.

In a letter to New York City Comptroller Thompson, Halliburton said its Cayman Island subsidiary is actually run out of Dubai. '60 Minutes' went there and learned that it shared office space, phone and fax lines with a division of its US-based parent company. Any inquiries to the head office regarding this issue also went unanswered. 

In a letter to Thompson, Halliburton insisted it was complying with all US laws.

  Back...

  Most popular articles: viewed, printed and e-mailed

  Printable version