Hammering on Dick

Tiassa · Jan 12, 2005

Hammering on Dick
Halliburton cleans up Cheney's mess

Last week, Halliburton finalized a $4.17b settlement pertaining to thousands of asbestos claims against the company's subsidiary, Dresser Industries, Inc.

The Houston-based oil services conglomerate's construction and engineering subsidiary, KBR, and other subsidiaries that filed for bankruptcy protection in December 2003 as part of the settlement have emerged from Chapter 11.

The reorganization plan, which included a $2.775 billion cash payment with the rest in stock to settle 400,000 asbestos and 21,000 silica claims, received court approval in July last year and went into effect this past Friday, Dec. 31. Halliburton said the company anticipates funding trusts to pay the claims by the end of this month.

"The asbestos chapter in Halliburton's history is closed," said Dave Lesar, chairman and chief executive of Halliburton.

BuffaloNews.com
Click to expand...

At any rate, we might add to the mix that Halliburton acquired DII in 1998, under the stewardship of Vice President Dick Cheney. And, of course, that's where this story picks up some attention.

Not much. But some.

Instead, let's talk about Halliburton's well-executed $5 billion escape from its asbestos problems, most of which Cheney created when he orchestrated Halliburton's purchase of Dresser Industries in 1998. Few people connect this problem with Cheney, but they should, given that he was in charge at the time and got a raise as a result of buying Dresser.

Dresser's asbestos problem was only a potential one when Halliburton bought it, but rapidly metastasized into a threat to Halliburton's existence. By then, though, Cheney had gone off to Washington.

Had he still been Halliburton's chief executive, Wall Street might have forced him to take responsibility for the asbestos problem he imported to his company. But because he wasn't around -- and because his successor, Dave Lesar, was a stand-up guy -- Cheney has largely escaped scrutiny for this fiasco.

Washington Post
Click to expand...

Filed away in section E (Business) of the Washington Post, Allan Sloan considers the matter in at least two related contexts. First is the discussion of just what the Dresser acquisition cost:

While Halliburton's all-stock takeover of Dresser was valued at $7.7 billion when it was announced in February 1998, it was worth only $5.3 billion when it was completed seven months later. The bankruptcy settlement is costing Halliburton just about that much: around $2.8 billion in cash, Halliburton stock with a market value of $2.3 billion the day before Dresser's bankruptcy was resolved and miscellaneous odds and ends and potential payments.

The bankruptcy resolution, which became final on Jan. 3, covered both the Dresser problems and the smaller asbestos problems that Halliburton already had.

Halliburton hasn't said how much each set of liabilities cost, but Dresser is clearly way more than half. How do I know that? Because a Halliburton bankruptcy filing discloses that "historical Dresser" accounts for about two-thirds of the claims, and the filing also shows that claims from Dresser's business average from 2.5 to five times as much as equivalent claims from Halliburton's businesses.

Do the math, and at least five-sixths -- 83 percent -- of the claims costs are from Dresser. So let's attribute 85 percent of the costs to Dresser. That seems reasonable, if not conservative.

That works out to around $4.3 billion. That doesn't include what Dresser-related claims cost Halliburton between the purchase in 1998 and the Chapter 11 filing in 2002 by Dresser and other Halliburton subsidiaries. It doesn't include offsets for possible insurance payments, either, but I don't know how to value those.

Washington Post
Click to expand...

Secondly, and not particularly subtly, there seems to be some moralizing. "I give Halliburton's current management huge credit for pulling off this tricky maneuver," Sloan wrote. "And I give them big credit for dealing with the problem rather than awaiting a miracle rescue from Congress." The tale would be worth telling, he asserts, even without a celebrity CEO. He even takes a moment to call Dick a chump.

• • •

I understand why conservatives are tired of the Cheney-chump parade. I would hope they could understand why people who aren't Republicans are getting tired of Cheney's chumpiness. Really, I don't see the necessity of the chump charge. Why not just call him the vice-chimp?

That Cheney's a chump is perfectly clear to anyone who looks, and those of us who claim to be interested in progress have to realize that conservatives won't stop defending him until we move on and pretend they won't hold moving on against us, as well. But in the end, Cheney orchestrating a "win-win" deal that nearly wrecked Halliburton is, frankly, chump change.
____________________

Notes:

Associated Press. "Halliburton ends asbestos claims it bought with Dresser Industries". BuffaloNews.com, January 4, 2005. See http://www.buffalonews.com/editorial/20050104/1063014.asp

Sloan, Allan. "Halliburton Pays Dearly but Finally Escapes Cheney's Asbestos Mess". Washington Post, January 11, 2005; page E03. See http://www.washingtonpost.com/wp-dyn/articles/A64535-2005Jan10.html

See Also -

Gerth, Jeff and Richard W. Stevenson. "Questions on Halliburton Deal Under Cheney". TruthOut.org (New York Times), August 1, 2002. See http://www.truthout.org/docs_02/08.02C.cheney.halli.htm

Log in or Sign up

Hammering on Dick

Tiassa Let us not launch the boat ... Valued Senior Member

Share This Page

Log in or Sign up

Hammering on Dick

Tiassa Let us not launch the boat ... Valued Senior Member

Share This Page

Useful Searches