Marcus Cake

Halliburton: From Bush’s favourite to a national disgrace, Indepdent Online Edition, 14 March 2007 By Andrew Buncombe

Extract:

• It is a symbol of American cronyism, the beneficiary of lucrative Iraq contracts thanks to its relationship with Dick Cheney. Now Halliburton is relocating to Dubai - and US politicians are outraged.
• [Halliburton] is now a vast multinational with operations in more than 120 countries. It enjoys a remarkably close relationship with the Bush administration whose Vice-President, Dick Cheney, was its CEO between 1995 and 2000, and holds no-bid contracts worth billions of dollars. Last year it made $2.6bn (£1.3bn) in profits from revenues of $22.6bn.
• But news of the proposed move, announced at the weekend, has brought an immediate and bitter backlash. A number of senior Democrats have accused the company of nothing less than a blatant attempt to avoid both paying US taxes and the heat of the ongoing federal investigations into its business operations. How could a company that had benefited from so many government contracts, they asked, simply up and leave? There were vows that Congress would launch new investigations.
• Democratic Senator Patrick Leahy of Vermont said the move was “an example of corporate greed at its worst”. He added: “This is an insult to the US soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges all these years. At the same time that they’re avoiding US taxes, I’m sure they won’t stop insisting on taking their profits in cold, hard US cash.”
• Halliburton dismisses the criticisms. Announcing the company’s decision at a regional energy conference in Bahrain, the company’s president, chairman and CEO, Dave Lesar, said the move reflected the growing importance of the Middle East and the Asian energy markets. Last year more than 38 per cent of Halliburton’s $13bn oil field services revenue came from the eastern hemisphere.
• “As we invest more heavily in our eastern hemisphere presence, we will continue to build upon our leading position in the North American gas-focused market through our excellent mix of technology, reservoir knowledge and an experienced workforce,” he said. “The eastern hemisphere is a market that is more heavily weighted toward oil exploration and production opportunities and growing our business here will bring more balance to Halliburton’s overall portfolio.” The company also insists that it will gain no tax advantage from the move, as it will remain legally incorporated in the US.

Halliburton is restructuring its business to reflect new realities. The suppliers of oil are in the middle east. The largest customer for oil will soon be Asia. Capital is moving to non-US markets. An increasing proportion of revenue and capital will come from outside the US.
What makes a company a US company? Is it where its customers are? Is it where they have most of their employees are? Is it where future growth will come from? Is it where shareholders reside? Is it where it is incorporated? Subtle changes occured in Halliburton and the world which have all accumulated over time. A change in incorporation may simply reflect new realities. The Halliburton is a very public statement of global shifts. I do not know what conclusion can be drawn from the strong political reaction.To ensure their survival, all organisations must serve the interests of their stakeholders. In the case of corporations, that is the shareholders. Corporations do not have the luxury of serving the wrong constituency. Quarterly reviews of performance and the possibility of takeovers serve as important tools to keep corporations focused on their constituency.