David Lesar, head of US-based oil-deposit-developing company Halliburton, announced on Sunday evening that the corporation is to relocate its headquarters from Houston to Dubai. The decision shocked and puzzled the United States. Halliburton had previously been headed by current US Vice President Dick Cheney, so the company is traditionally viewed as the closest business structure to the White House. The U.S. took the radical decision as politically-motivated. Trying to discover the real motives of the move, US analysts suggest two versions: Halliburton is either fleeing from the U.S., afraid of more scandalous probes into its activities, or the company foresees another large repartition of Middle East oil.
Bad Company
Halliburton head made the sensational announcement while speaking at an energy conference in Bahrain. Saying that the main regions where his company works are the Middle East, rich in energy resources, and Asia in general, David Lesar announced that from now on he will spend most of his time in the United Arab Emirates. The corporation's headquarters, as well as all its CEOs, will soon move to Dubai, while the former head office in Houston, Texas, will become just a regular rep office.
However, statistics shows that Lesar is being slighly crafty. Halliburton's activities are not limited to the Middle East. For instance, only 16,000 out of 45,000 employees of the corporation work in the Eastern Hemisphere. Moreover, the region brought only 38 percent of earned income to the company in 2006. Thus, by moving to Dubai, the corporation's CEOs apparently intend to work for perspective, hoping to develop Halliburton's expansion in the Middle East.
Moving the headquarters means that from now on Halliburton will be paying a considerable part of taxes not to the US budget, but to the treasury of Dubai Emirate. Most likely, the corporation will remain registered in the U.S., in the state of Delaware. Anyway, Halliburton has been carrying out most of its transactions not directly, but thru its subsidiaries registered in off-shore zones, most of them in the Cayman Islands.
Halliburton has the reputation of a company which is guided by political motives, making good use of the insider information coming from the White House. Its nearness to US administration is explained by the fact that Vice President Dick Cheney headed Halliburton from 1995 to 2000, right before entering George Bush's team. Later, he was repeatedly accused of providing special privileges for the company. For instance, the corporation's unit Kellog Brown & Root (KBR) construction company became the major contractor to receive orders for reconstruction works in Iraq from the interim government. KBR was also in charge of the logistics and support for US troops, on the Pentagon's order. All those contracts were given to KBR without bidding. They amounted to nearly $10 billion. That is why many US analysts now think that the initiative for moving Halliburton to Dubai might be coming from the White House.
"Why Dubai? It is closer to events," was the title of the article on the headquarters' move in Houston Chronicle, the city's major newspaper. It believes that the events requiring Halliburton's presence will soon begin happening in the Middle East.
Hard Time
Halliburton CEOs decided to move at a rather difficult period for the corporation. Just a few weeks ago, the company admitted it has difficulties. In the last quarter of 2006, its profits fell by 40 percent, while the profits of Halliburton's closest competitor, Schlumberger corporation, grew by 11 percent.
Besides, Halliburton is now finishing the spin-off of its most scandalous subsidiary, Kellog Brown & Root (KBR). By the end of March, Halliburton's shareholders are to receive KBR shares due to them, while other shares are already in free sale.
Finally, the corporation's chief problem is the heightened attention of Congressmen-Democrats to its activities in the recent years. After the Democratic Party's victory, the new chairman of the House Oversight and Government Reform Committee Henry Waxman said he intends to begin the probe into Halliburton's getting no-bid contracts, as well as into other scandals.
What is more, for over two years now, Halliburton is under FBI investigation. Last month, the company's management was charged with the embezzlement of $2.7 billion out of the $10 billion given to the corporation for reconstructing Iraq after the war. The management refutes all charges. Another investigation concerns the story with the many-year bribing of Nigeria's government. According to FBI, the international consortium headed by Halliburton repeatedly gave large bribes (between $20-60 million annually) to the administration of then Nigerian dictator Sani Abachi in the 1990s. In exchange, Nigerian authorities gave contracts for developing oil deposits, amounting to $5.3 billion, to the consortium. Such relations with Nigeria's government existed at the time when Halliburton was headed by current Vice President Dick Cheney. That is, if the investigation goes on this way, the second man in the White House might become one of the suspects.
The news that Halliburton is moving its headquarters caused numerous speculations that the company's CEOs go to Dubai to hide from subpoenas obligating them to testify for various slithery cases related to the corporation's recent past.
Meanwhile, Congressmen-Democrats, already experienced in investigating Halliburton's activities, did not hide their indignation over the company's decision yesterday. Henry Waxman said he will initiate Congress hearings concerning the matter, particularly to find out whether the corporation's move to the Middle East poses any threat to US national security, since the company carried out defense orders. "It is an insult to US soldiers, as well as taxpayers who paid for no-bid contracts, covering all expenditures of that company all those years," said Patrick Leahy, the current chairman of the Senate Judiciary Committee.
Halliburton's move will undoubtedly heighten attention to its activities, and the company's management could not help considering this factor. Apparently, the CEOs of the corporation which is going thru difficult times hope that moving the headquarters to Dubai will enable the company to get new profitable contracts in the region, -- similar to those obtained by Halliburton's subsidiaries during the war in Iraq.
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