Ex-Employees Sue Halliburton For Fraud
By Associated Press - August 10, 2004The fraud allegedly occurred from 1998, when Vice President Dick Cheney ran Halliburton, to 2001. Cheney, who left Halliburton in August 2000, was not named as a defendant in the filing.
The former finance employees say that Halliburton divisions routinely inflated their results by overstating amounts due from customers and understating money owed to vendors.
They say the company's top executives also hid Halliburton's vulnerability to asbestos claims. The former employees were not named.
Lawyers attached the proposed lawsuit to a motion they filed Tuesday in U.S. district court in Dallas as part of a class-action case against Halliburton. The lawyers asked a federal judge for permission to file the lawsuit despite a June 7 order that apparently settled the larger case.
The complaint named Halliburton and four executives as defendants, including chairman and chief executive David J. Lesar, former chief financial officer and now El Paso Corp. CEO Douglas L. Foshee, retired CFO Gary V. Morris and former controller Robert Charles Muchmore Jr.
The charges in the filing go far beyond those outlined [last] week in a settlement of a civil lawsuit by the Securities and Exchange Commission, which called for Halliburton to pay $7.5 million and muchmore to pay $50,000 for failing to disclose a change in accounting procedures in 1998. The SEC said the change caused the company to mislead investors in 1998-1999.
In a statement, Houston-based Halliburton blasted one of the law firms filing the complaint, Scott & Scott of Colchester, Conn., which had filed two previous asbestos-related lawsuits against the company. Halliburton said a federal judge in Dallas in June gave preliminary approval to a settlement of about 20 such class-action cases and ordered that no further complaints be filed.
"This is just the latest chapter in Scott & Scott's publicity driven efforts to extort money from Halliburton's current shareholders," Halliburton said.
Halliburton said Scott & Scott attached the new complaint to a motion in an old case to get publicity for its charges "while violating the spirit but not the letter" of the judge's ruling in June.
A call to Scott & Scott was not immediately returned.
The four employees charged that Halliburton and its top executives "intentionally engaged in serial accounting fraud."
The filing claims that in late 2001 Halliburton executives misled investors about the company's liability to pay asbestos-related claims. The executives did not disclose for 10 weeks that the company had been ordered to pay a $130 million verdict in Texas - when the case did become public knowledge, Halliburton shares fell 42 percent in one day.
Houston-based Halliburton inherited many of the asbestos claims through a 1998 acquisition of rival Dresser Industries, one of Cheney's main accomplishments as chairman and CEO.
Wendy Hall, a spokeswoman for Halliburton, said the verdict wasn't disclosed sooner because the company thought it would be reversed on appeal and that insurance would cover the claims anyway.
Hall also rejected the allegations that Halliburton systematically overstated billings and understated costs. She said the company had a toll-free hotline for employees to report concerns about business practices, but that there were no records of any complaints matching those in the court filing.
"Quite apart of doubting the reliability of any anonymous witness, we question why these employees did not previously raise these allegations or concerns," Hall said.
Shares of Halliburton fell 44 cents or 1.5 percent, to $29.67, in trading on the New York Stock Exchange. | 
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