Reply #2: 1. Overstatement of Revenues [View All]

[skip fox]

1. HALLIBURTON OVERSTATED REVENUES BY HUNDREDS OF MILLIONS
OF DOLLARS PARTIALLY DURING CHENEY=S STEWARDSHIP.
(I.e., accounting fraud.)

The contemporary SEC probe is investigating Halliburton=s listing of cost overruns as income (creative bookkeeping in some ways similar to Enron=s), accounting for potential over reporting of $100 million in 1998 when Cheney was CEO). Arthur Andersen was auditor.

The House Democrats on the Judiciary Committee list who claim Cheney knew of the new (fraudulent) accounting procedures:

http://www.house.gov/judiciary_democrats/bushcorpltrattach72402.pdf

<snip

The current CEO of Halliburton, David Lesae, has indicated that the Vice-President was well aware of those accounting practices. In addition, a 2000 memo from Terry Hatchett, the Arthur Anderson partner who managed the Halliburton account, indicates that he worked closely with the Vice-President.

<snip>


The New York Times story summarizes the story well (beyond the Asnipped@ section, the story quotes Halliburton=s financial officer claiming that Cheney was probably not aware of the Anew@Bi.e.,cookedBaccounting procedures):

http://www.nytimes.com/2002/05/22/business/22HALL.html

reprinted here for those not registered:

http://www.iht.com/articles/58654.htm


<snip>

During Vice President Dick Cheney's term as Halliburton Corp.'s chief executive, the company altered its accounting policies so it could report as revenue more than $100 million in disputed costs on big construction projects, public filings by the company show. Halliburton, an energy industry services company, did not disclose the change to investors for more than a year.

At the time of the change approved by Arthur Andersen LLP, the company's auditor at the time Halliburton was incurring big losses on some of its long term contracts, according to the filings. Its stock had slumped because of a slump in the oil industry. Two executives of Dresser Industries Inc., which merged with Halliburton in 1998, said they concluded after the merger that Halliburton had instituted aggressive accounting practices to obscure its losses. Much of Halliburton's business comes from big construction projects, such as natural gas processing plants, that sometimes run over budget. With the accounting change, Halliburton began to book revenue on the assumption that its customers would pay at least part of the cost overruns, although they remained in dispute.

<snip>


But _did_ Cheney know of the accounting practices during his watch? Newsweek reports that he did:

http://www.msnbc.com/news/780130.asp?cp1=1#BODY

(Warning: this address keeps crashing my Netscape.)

<snip>

But in his first extensive interview on Cheney=s tenure, Halliburton CEO David Lesar defended the firm=s bookkeeping and said Cheney was aware that the firm was counting projected cost overrun payments as revenue. AThevice president was aware of who owed us money, and he helped us collect it,@ Lesar told NEWSWEEK.

<snip>

As does MSNBC, which also places the figure of over-reported income to be over $500 million dollars for four years:

http://www.msnbc.com/news/783040.asp?0si#BODY

<snip>


Halliburton said the debts, caused by cost overruns on. construction projects, were counted as revenue when Acollection is. deemed to be probable.@ A company spokeswoman said Cheney. was aware Halliburton was using the new method, which was not disclosed to regulators and investors for more than a year after it was first used.

Lawsuits by investors say the accounting method improperly boosted revenue by $534 million over the past four years C which the company said is only a small part of its revenue.

<snip>

And even the Washington Times is reporting the matter as Aserious@:

http://www.washingtontimes.com/business/20020716 92569704.htm

<snip>

"This is a serious" legal matter hanging over the White House, the former SEC prosecutor said. If the charges are borne out by the SEC's investigation, they could result in civil fines and penalties for the oil company and the vice president or even an indictment on fraud charges by the Justice Department.

<snip>

DU=s Oaf Of Office provided this snippet from and AP story (does someone have the link?):

<snip>

"Accountants we interviewed told us that the Times' accounting which said CPAs said that the accounting change was "stretching accounting rules" was an enormous understatement. In fact, two of three told us that reporting disputed revenues as profits is "a felony" plain and simple. Otherwise, corporations could simply bill customers millions, even billions of dollars and simply report them as revenue even tough knowing these funds would never be collected.

<snip>


The Judicial Watch suit covered by AP, claims a total of $445 million as over reported due to accounting fraud from 1999-2001, a portion of which time Cheney was Chairman and CEO..

http://www.washingtonpost.com/wp dyn/articles/A48950 2002Jul10.html




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