...
According to stock analysts, the company's stock valuation today might be as high as $18 billion - instead of the
current $8 billion - were it not for the potential liability shouldered after the Cheney-engineered 1998 merger between
Halliburton and Dresser Industries. The asbestos liability is not the only concern. Last week, the company revealed
that the Securities and Exchange Commission has launched a preliminary investigation into an accounting practice -
adopted when Cheney was CEO - in which unapproved billings were counted as revenue.
While some of Halliburton's problems lie with the cyclical nature of the oil business, the biggest troubles stem from
Cheney's decision to merge Halliburton with Dresser.
The merger ''was probably one of the most foolish decisions Halliburton ever made,'' said lawyer John Wall of Houston,
who represents several dozen laid-off employees. ''Cheney would have had to know'' about the potential asbestos
liability, Wall said. ''That would be part of his due diligence. If he didn't know, that would be total incompetence.''
A Cheney spokeswoman referred calls to Halliburton, where chief financial officer Douglas L. Foshee said the
potential asbestos liabilities were known but were not considered significant enough to deter an otherwise worthwhile
merger.
The drop in the stock price from the potential asbestos liability has been felt deeply in Boston. Fidelity Investments,
the mutual fund giant, last year was the largest shareholder of Halliburton stock, with nearly 10 percent. But Fidelity
had cut its holdings to just 4 percent as of March; the company won't say whether it took a huge loss like many other
investors who sold during the last year.
Another Boston company, the institutional investment firm of Wellington Management LLP, has stepped in to buy
Halliburton shares and in March became Halliburton's top shareholder, with 8.2 percent of the stock. Wellington
declined comment.
It was 1995 when Cheney, who served as the secretary of defense under President George H. W. Bush, parlayed his
government experience into the job as CEO of Halliburton. In 1998, Cheney went on a quail hunt in South Texas with
Dresser chief executive Bill Bradford and the two began talking about a merger.
In merging with Dresser, Cheney picked a firm with long ties to the Bush family. Prescott Bush, the father of the
former President Bush, was the banking representative who helped finance the deal that established Dresser and
served on the company's board. The former president wrote in his autobiography that Neil Mallon, the former president
of Dresser Industries, ''was a mentor second only to my father.''
It was Mallon who helped former President Bush get into the oil business, and Bush worked for Dresser for 21/2
years. The brother of the current President Bush, Neil, is named after Mallon.
Halliburton officials said that they knew nothing about the Bush family's history with Dresser and that they knew of
nothing to indicate that the Bush family gained anything from the merger or held any financial interest in either
company. A spokesman for Cheney and former President Bush did not respond to questions about the matter.
Cheney announced the merger with Dresser with great personal fanfare, calling it ''one of the most exciting things I've
been involved in.''
He said at the time: ''The merger is designed to result in long-term benefits for the company's stakeholders - its
customers, employees, and shareholders.''
As often happens in major mergers, the initial impact was both good and bad - good initially in stock market reaction,
but bad for the 10,000 people who almost immediately lost their jobs. The company said that the synergies between
the two firms enabled the new entity to eliminate many duplicate positions.
...
And how can you criticize anything that had win-win
synergies going for it, especially when we're at war?
