Halliburton Corruption

Halliburton Corruption

Basic Information:

Halliburton delivers products and services to the exploration and production sectors of the oil and gas industry (Halliburton, 2012a). This comprises products and services involved with discovering hydrocarbons, drilling and the construction and operation of wells (Halliburton, 2012a). Halliburton was established in the year 1919, in Duncan, Oklahoma by Erle Halliburton (Halliburton, 2012b).

Halliburton is based out of Houston, Texas (Halliburton, 2012c), with a new second headquarters in Dubai, United Arab Emirates (Halliburton, 2012a). The company has employed more than 70,000 people in roughly 80 countries (Halliburton, 2012a). It has procedures in every continent, save Antarctica (Halliburton, 2012c). Kellogg Brown and Root (KBR), stated below, is a former subsidiary of Halliburton (Rudolf, 2012); the companies parted in April of 2007 (McGreal, 2009) and all incidences involving KBR outlined here occurred before the split.

The industries which Halliburton has been and is involved with are in and of themselves controversial; however, it is not necessary to delve into a debate on the ethics of the oil and gas industry or military contracts to find ethical issues with Halliburton. Halliburton has been accused of improper conduct and major infractions within United States law. This ethical case study highlights some main incidents which Halliburton has been involved in and is by no means exhaustive.

Corruption:

The United States Securities and Exchange Commission (SEC) accused KBR with bribing Nigerian government officials with $180,000,000 in order to secure a $6000 million construction contract (SEC, 2009). The SEC claims that bribes began in 1994 and continued for a decade (SEC, 2009). The SEC also charged KBR and Halliburton with book and record violations and internal control violations, all related to the bribery (SEC, 2009). In February, 2009, Halliburton and KBR agreed to pay $177 million in disgorgement and KBR was charged to pay $402 million in criminal fines (SEC, 2009). Albert Stanley, a former CEO of KBR, pleaded guilty to the bribery scheme and was sentenced in February, 2012 to two and a half years in prison (Rudolf, 2012). Two other former executives were also accused (Rudolf, 2012). Nigeria alleged Halliburton of the bribery scheme and charged former American Vice President Dick Cheney and nine other executives of Halliburton and KBR with conspiracy and distribution of gratification to public officials (CNN Wire Staff, 2010). Nigeria dropped the charges, however, when Halliburton agreed to a $35 million settlement (CNN Wire Staff, 2010).

In Indonesia, where Halliburton has many involvements, KBR lost a contract in 1999 while the government was trying to rid of corruptly acquired contracts in the country (EarthRights International, 2000).

Allegations have been made from the Pentagon that Halliburton overcharged for fuel imports to Iraq to the sum of $108 million, or more (Eckholm, 2005). Part of these allegations include a kickback scheme with a company Halliburton hired in 2003, Altanmia, for fuel from Kuwait (Eckholm, 2005). This was done without competitive bidding and Altanmia charged high prices for the services; Halliburton may have charged the Pentagon for more than the services were worth and profited (Eckholm, 2005).

Accoording to Wethe(2012),Halliburton is presentlyhas an internal investigation of operations in Angola and Iraq. This began after an unspecified e-mail in December 2010 warned the company that recent and former employees had violated the company’s Code of Business Conduct and the United States Foreign Corrupt Practices Act (Wethe, 2012).

Dick Cheney:

Despite the fact that Dick Cheney was the Secretary of Defence, KBR was chosen to look at the potential for subcontracting military contracts to private corporations (CBS and Associated Press, 2009). Cheney then became CEO of Halliburton from 1995 to 2000 (CBS and Associated Press, 2009). After that, Cheney became the Vice President of the United States (CBS and Associated Press, 2009). KBR was then granted a large, open-ended military contract without competitive bidding (CBS and Associated Press, 2009). It has been alleged that it was not proven that KBR was justified to receive this contract (O’Harrow, 2004); no other firm was allowed to bid (McGreal, 2009). It has also been alleged that KBR was allowed to participate in meetings with information that it was not supposed to have access to (O’Harrow, 2004).

While of Halliburton, Cheney bought Dresser Industries, which brought Halliburton obligation from individuals who sued for injury or at risk from asbestos manufactured by Dresser Industries (Gerth and Stevenson, 2002). This ended up costing Halliburton $4.17 billion in claims (CBS, 2009).

Sanctions:

According to Luo (2007), Halliburton has been condemned for doing business in Iran, despite United States sanctions. The company is able to do this lawfully through their subsidiary company based out of the Cayman Islands (Luo, 2007). Halliburton Logging Services, a former subsidiary, was accused for on-going trade with Libya despite United States sanctions (EarthRights International, 2000). Halliburton was also accused for breaking sanctions with Iraq (McGreal, 2009). Cheney and other Halliburton executives have been active in differing United States sanctions, which may a conflict of interest.

Unsafe Military Conditions:

Halliburton and KBR have been sued by Joshua Eller, a former United States military employee, for revealing military personnel to unsafe conditions (Kennedy, 2008). This includes unsanitary water in the showers and pools, expired food of up to a year, and fumes from open burn pits (Kennedy, 2008). The open burn pits burned medical waste, human remains, plastic and lithium batteries (Kennedy, 2008) The suit also claims that KBR shipped ice for military forces in mortuary lorries that had not been disinfected and still contained remains and fluids (Kennedy, 2008). Of the 67 water percolation tanks provided to military in Iraq by Halliburton and KBR, 63 were contaminated (Thangham, 2008). Halliburton has said that they no longer have ties with KBR and were inappropriately named in the lawsuit; however, the allegations were filed in 2006 before the companies split (Kennedy, 2008).

According to Risen (2008), At least 5 deaths of military personnel in Iraq occurred due to faulty grounding in military camps and many more have been injured. KBR was answerable for the electrical work at the camps, and had been made aware of faulty grounding by personnel complaining of receiving shocks in the shower (Risen, 2008). KBR was aware of the hitches and even reported a case of hazardous wiring to the Pentagon early on in 2007 (Risen, 2008). However, no action was taken until after the death of Sergeant Ryan Maseth in January, 2008 (Risen, 2008).

Sexual Assault:

Up to forty employees of KBR have contacted Lawyer Todd Kelly about sexual assault or harassment which they saw while working for KBR (Siegel, 2011). Despite this, KBR made it to the top fifty companies to work for in Woman Engineer Magazine in 2011 (Siegel, 2011). Jamie Leigh Jones purported she was intoxicated and gang raped by co-workers in 2005 and that by the time she was seen in court in 2011 evidence went missing (Doyle, 2009; McGreal, 2009). The company denied her allegations and she did not win this case in the United States federal court (Staff, 2011). Jones was first deprived of the right to take the case to court as her contract stated that the matter must be determined by mediation (Doyle, 2009; McGreal, 2009). Due to this case, any companies which prohibit such cases from being taken to court will now be unable to receive military contracts from the United States government. Tracy Barker says she faced harassment and sexual assault while working for KBR in Iraq in 2005 and won $2.93 million in sexual assault accusations, settled through mediation (Sandholm, 2009).

References

CNN Wire Staff. (2010, December 21). Cable News Network (CNN). Retrieved from: www.articles.cnn.com

Doyle, S. (2009, October 15). All Rape Cases Must Go Before the Law. The Guardian.Retrieved from: www.guardian.co.uk

McGreal, C. (2009, October 15). Rape Case to Force US Defence Firms into the Open.The Guardian.Retrieved from: www.guardian.co.uk

Kennedy, K. (2008, December 3). Suit Claims Halliburton, KBR sickened base. Army Times.Retrieved from: www.armytimes.com

Luo, M. (2007, May 1). Senators Question Halliburton Executive About Dealings in Iran. The

Gerth, J. & Stevenson, R. (2002, August 1). Cheney’s Role in Acquisition Under Scrutiny. The New York Times.Retrieved from: www.nytimes.com

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (2011). Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling. Report to the President. Retrieved from: www.oilspillcommission.gov

Risen, J. (2008, May 4). Despite Alert, Flawed Wiring Kills G. I’s.The New York Times. Retrieved from: www.nytimes.com

Thangham, C. (2008, December 5). Halliburton Subsidiary KBR Provided Contaminated Water to US Soldiers. Digital Journal.Retrieved from: www.digitaljournal.com

Sandholm, D. (2009, November 20). Woman Who Claims Sexual Assault Wins $3 Million From Former Halliburton Division. ABCNews.Retrieved from: www.abcnews.go.com

Siegel, H. (2011, April 11). Company Facing Lawsuits for Alleged Sexual Assault Voted Top Employer for Women. ABCNews.Retrieved from: www.abcnews.go.com

Staff. (2011, July 8). Texas Woman Loses Iraq Rape Case against KBR. CNS News. Retrieved from: www.cnsnews.com

The Globe and Mail. (2012, January 3). BP Sues Halliburton Over $42-billion Oil Spill.The Globe and Mail.Retrieved from: www.theglobeandmail.com

Rudolf, J. (2012, February 24). Alex Stanley, Former Halliburton Exec, Sentenced in Bribery Scheme. The Huffington Post.Retrieved from: www.huffingtonpost.com

Wethe, D. (2012, July 27). Halliburton Opens Internal Probe on Iraq, Angola Operations. Bloomberg Businessweek. Retrieved from: http://www.businessweek.com/news