A Treasury Department investigation into the activities of oil giant Halliburton in Iran is looking at potentially suspicious business contacts between Iran’s oil company and Halliburton at the time it was headed by Vice President Richard Cheney.
According to documents dating from 1997 and 1998, a Dubai-based Halliburton subsidiary received at least a dozen tender offers from Kala Ltd, the wholly owned British subsidiary of the National Iranian Oil Company.
Investigators are trying to figure out if those deals were concluded and if they violated U.S. sanctions against Tehran, congressional sources said.
“This would be the first evidence that Halliburton was actively seeking business in Iran under Cheney in possible violation of U.S. laws,” said Dan Katz, the chief counsel for Senator Frank Lautenberg of New Jersey, who obtained the documents as part of an effort to tighten U.S. sanctions against states sponsoring terrorism and then handed them over to the Treasury.
“Although we don’t know if those deals are legal or not, the intensive contacts raise questions and OFAC [the Treasury Department office of foreign assets control] is looking into this closely,” Katz said.
Halliburton acknowledged in a filing to the Securities and Exchange Commission in February that OFAC recently had requested new information about the activities in Iran of one of its unit, Halliburton Services and Products, which is incorporated in the Cayman Islands and based in Dubai.
Molly Millerwise, an OFAC spokeswoman, said the office would not confirm or deny the existence of an investigation. Halliburton did not return calls requesting comment.
The Houston-based oil company has been mired in controversy, mainly because of allegations that it unduly won reconstruction and logistics contracts in Iraq thanks to Cheney’s influence and overcharged the government in executing them. Rep. Henry Waxman, the company’s main congressional critic, wrote this week in a letter to Cheney that a Pentagon political appointee had told a House committee that he was behind the decision to grant Halliburton a $7 billion, no-bid contract to rebuild Iraq’s oil sector and that the decision was then submitted to a group of high-level administration officials — including Cheney’s top aide, Lewis “Scooter” Libby.
The company also announced last week that the Securities and Exchange Commission had opened an investigation into charges that the company had bribed officials in Nigeria in the 1990s.
While Cheney is on record criticizing U.S. sanctions against Iran when he was CEO of Halliburton between October 1995 and August 2000, the company has denied violating U.S. laws, contending that foreign subsidiaries employing no U.S. nationals are allowed to conduct business with states on the State Department’s terrorism-supporting list, such as Iran, Libya, North Korea, Sudan, Cuba, Syria and, until recently, Iraq.
A recent report on CBS News’s “60 Minutes,” however, provided evidence that the Halliburton subsidiary in Dubai was in fact sharing office space, as well as phone and fax lines, with Kellogg, Brown & Root, an American subsidiary of Halliburton, fueling suspicion that Halliburton was violating the law. The Dubai subsidiary opened an office in Tehran in February 2000.
In the CBS report and in a subsequent interview with the Forward, New York City Comptroller William Thompson charged that the company may have been violating U.S. law. Acting on behalf of the New York City Police and Fire Department Pension Funds, he submitted a shareholder proposal at Halliburton’s annual meeting after what he claimed was the company’s “complete failure” to review the “reputational risks” posed by its operations in Iran.
The resolution was defeated.
“Halliburton’s business in Iran is clearly permissible under applicable laws and regulations,” Wendy Hall, Halliburton’s director of public relations, told the Forward by e-mail. She said Thompson should avoid playing politics with the city’s pension funds.
In a briefing about its operations in Iran sent to Thompson last October, Halliburton said its main activity in the country was conducted through Halliburton Products & Services, which made some $40 million in 2003 for work in Iran’s oil sector. Halliburton also said it had three subsidiaries based in the United Kingdom and one in Sweden working in Iran.
It said its revenues in Iran represent only 0.5% of the company’s income, and added that many of its competitors were present in Iran.
Thompson’s aides counter that he also submitted a similar shareholder proposal at an annual meeting of General Electric after the company did not offer satisfactory explanations about its business dealings with the Iranian government through Canadian and Italian units. Gary Sheffer, a GE spokesman, said the company was complying fully with U.S. laws and regulations.
By contrast, ConocoPhillips responded to Thompson’s entreaties last December by announcing that it would phase out the operations of its British subsidiary, Conoco Ltd, in Iran and in Syria.
Katz denied that Cheney’s links to Halliburton were the reason for focusing on Halliburton’s activities in Iran, noting that the Dubai subsidiary was a more ominous case since he claims it is geared toward doing business in Iran.
The documents showing the submission by Kala to Halliburton Services & Products between February 1997 and September 1998 mention that Kala will arrange shipment to Iran. An official at the National Iranian Oil Company said Kala was in the process of shutting down its offices in London and moving them to Switzerland. The company could not be reached.
In order to close the loophole in U.S. sanctions against terrorism-supporting states, Lautenberg is sponsoring an amendment that would redefine corporate entities subject to U.S. sanctions to include not only U.S. companies and their foreign branches, but also foreign subsidiaries owned more than 50% by their parent American company. It would give such subsidiaries 90 days to divest their business with terrorist states.
On May 19, the Senate narrowly defeated 50-49 the amendment when it was introduced as part of the 2005 Defense authorization bill. Lautenberg blasted the Republican leadership for the outcome and vowed to reintroduce the measure.
“If the Republican leadership wants to continue to vote on the side of Iran and North Korea, we’ll be more than happy to let them,” said Alex Formuzis, a Lautenberg spokesman. “But the American people must find it hard to believe that they would continue to support such extreme policies that go so far as to help those countries that provide resources to terrorists make more money that they in turn hand over to groups bent on killing Americans.”