ECONOMICS REPORT - Halliburton's Legal Troubles
By Mario Ritter
Broadcast: Friday, August 13, 2004
This is Gwen Outen with the VOA Special English Economics Report.
Investors in a company have some control over how it operates. Shareholders can vote on some issues. They can also go to court if they believe their interests are being harmed.
Last week, investors brought legal action against the energy services company Halliburton. The investors accuse four former or current top officers of misleading them.
The latest legal action says that Halliburton lost a legal case in Texas in September, two thousand one. A court ordered the company to pay one hundred thirty million dollars. The decision was kept secret. At the time, Halliburton told investors that the case had gone well. But three months later, the company's stock price dropped forty-two percent on the day that news of the judgement became public.
Four former Halliburton employees also told legal investigators that the company did not keep honest records of its sales and costs from nineteen ninety eight to two thousand one. They said the company claimed to collect more money than it received. They said workers were expected to change records to make the company appear more profitable. The charges cover two years when Vice President Dick Cheney was its chief executive officer. He was not named in the case.
In a statement, Halliburton said the latest legal action is an attempt to turn public opinion against the company. Halliburton said a federal court in Dallas, Texas, approved a settlement of twenty similar cases on June seventh. The company agreed to pay six million dollars. Halliburton said the court ordered that no more shareholder cases be brought against the company.
On August third, Halliburton reached a settlement with the Securities and Exchange Commission. The S.E.C. said the company had secretly changed its method of financial record-keeping in nineteen ninety-eight and nineteen ninety-nine. The new method made Halliburton's earnings appear almost fifty percent higher. Halliburton paid seven million five hundred thousand dollars without admitting any wrongdoing.
Halliburton faces other problems. The Justice Department is investigating Halliburton's projects in the Balkans and in Nigeria.
Halliburton is based in Houston, Texas. It is the world's second largest oil services company. The largest is Schlumberger Limited.
This VOA Special English Economics Report was written by Mario Ritter. This is Gwen Outen
