5.15pm update |
Fraud lawsuit filed against US vice president
Wednesday July 10, 2002
A public interest legal group today filed a shareholder lawsuit accusing US vice president Dick Cheney, the oil services company he once ran, and accounting firm Andersen of accounting fraud.
Filed by Judicial Watch, the lawsuit alleges that when Mr Cheney was chief executive of Halliburton, he and other directors inflated revenue reports, boosting Halliburton's share price.
"They overstated their revenues by tens of millions of dollars and that's an understatement," said Larry Klayman, chairman and general counsel at Judicial Watch as the suit was filed in Dallas federal court.
The lawsuit did not specify the amount of compensation the plaintiff shareholders are seeking. But Mr Klayman said: "We're seeking millions and millions of dollars ... it's to punish the people involved."
Mr Cheney served as chairman and chief executive of Halliburton from 1995 to 2000. The suit names Mr Cheney and 10 company board members. However, a Halliburton official said: "We don't believe that there's any merit to this case."
The legal challenge against Mr Cheney comes just one day after the president, George Bush, tried to clear the air on financial scandals with a speech in New York.
Judicial Watch described Mr Bush's speech, in which he outlined tougher measures against corporate fraud, as an attempt to deflect attention away from his and Mr Cheney's own business practices.
The public interest legal group has previously sued for access to records of Mr Cheney's energy taskforce that drew up the Bush administration's energy policy last year.
Halliburton said on May 28 that it received notice from the securities and exchange commission, America's financial regulator, that its accounting methods were being looked into by the commission.
At issue are accounting practices Halliburton adopted in 1998 which recognised some of its unresolved claims against engineering and construction clients as revenue, even though the amounts of money at stake were still in dispute.
Before 1998, the company was more cautious, reporting such revenue only after settling with customers. The SEC has not filed any charges against Halliburton.
The lawsuit will serve to remind Americans about the financial propriety of top Bush administration officials, including the president himself, at a time when the White House is desperately trying to distance itself from the corporate excesses that have rocked Wall Street. A twitchy White House is doing its best to insulate itself from financial scandal to avoid any political damage in the November mid-term elections.
In further embarrassment for Mr Cheney, a video has surfaced showing the vice president taking part in a promotional video for Andersen, which was found guilty of shredding documents during the collapse of energy giant Enron. Shot in 1996, the video, obtained by the Wall Street Journal, shows Mr Cheney saying: "I get good advice, if you will, from their people based upon how we're doing business and how we're operating over and above the just sort of normal by-the-book auditing arrangement."
Mr Bush's own conduct as a businessman has been questioned since a leaked internal SEC memo detailed his 34-week delay in reporting stock sales worth more than $1m (645,370) while serving as a director of Harken Energy more than a decade ago. Although the SEC found no evidence of insider trading and declared the matter closed, the White House's differing explanations on the delay has embarrassed Mr Bush.
Mr Bush's enemies are making the most of the administration's financial embarrassments. A group that used television advertisements to attack Mr Bush during his presidential campaign has re-emerged to point to links between oil companies with questionable accounting practices and the Bush team.
The group, American Family Voices, paid for a 30-second commercial that will be shown until Thursday on cable news programs. The ad calls Mr Bush "sly like a fox" for talking down his dealings with Harken. American Family Voices and its advertising agency, the Glover Park Group, have significant links to the Clinton administration as Michael Lux, president of the group, was an aide to Bill Clinton.
But Mr Bush is also coming under fire from less partisan quarters. In a hard-hitting editorial, the influential New York Times called upon Mr Bush to be more candid about his financial past.
"The president needs to speak much more frankly about the money he made in selling his faltering oil company to Harken Energy of Texas - and later selling Harken shares shortly before the company's stock price collapsed," the Times said.
"Mr Bush made the disastrous mistake of arguing that in his case, accounting rules were 'not always black and white'.
a president whose foreign policy, and entire political outlook, is
based on the idea that the world can indeed be divided into good and
bad, black and white, nothing could have sounded worse."
Printable version | Send it to a friend | Read it later | See saved stories