WASHINGTON, July 20 (AFP) – A disclosure that Halliburton is under investigation for suspected dealings with Iran through an offshore subsidiary put another spotlight on the embattled oil services firm once headed by Vice President Dick Cheney.
This post adds some background and ‘atmosphere’. ed.
“This is the biggest scandal yet to hit Halliburton,” said Senator Frank Lautenberg on a conference call organized by the campaign of Democratic presidential candidate John Kerry.
“This could result in major felony charges, because it is illegal to do business with a terrorist state, particularly Iran.”
The company denied any US laws have been broken, but in a filing with the Securities and Exchange Commission on Monday, acknowledged a grand jury is investigating possible dealings with Iran through a Cayman Islands subsidiary.
Deputy Attorney General James Comey, asked during a Justice Department news conference, declined to comment on the matter.
“I can’t comment on any pending investigation,” Comey said, while refusing to speculate whether an offshore subsidiary of a US firm could be prosecuted for doing business with Iran.
But the development came as a special panel was expected to release evidence Iran may have allowed hijackers in the September 11 attacks to transit through the country.
The news also came as the Houston, Texas-based corporation faces multiple domestic and international probes into its operations extending from Iraq to Nigeria.
“We have a Cayman Islands subsidiary with operations in Iran, and other European subsidiaries that manufacture goods destined for Iran and/or render services in Iran,” Halliburton vice president Margaret Carriere acknowledged in the filing.
She said the company received this month a grand jury subpoena requesting documents related to the operations, the nature of which remains undisclosed.
US law bars US-incorporated entities, citizens and residents from engaging in commercial and financial transactions with Iran.
But Carriere insisted there was no wrongdoing on the part of the firm.
“We completed a study in 2003 of our activities in Iran during 2002 and 2003 and concluded that these activities were in full compliance with applicable sanction regulations,” she said.
A loophole in the law apparently allows US firms to circumvent the sanctions through foreign-based subsidiaries, if their dealings are not directly managed by US citizens or from US soil, according to legal experts.
Lautenberg said of the probe, “The question is whether or not this was a subsidiary set up to disguise who they are.”
Cheney was chairman of Halliburton from 1995 until his selection as George W. Bush’s running mate in the 2000 presidential race.
The grand jury probe added to a multitude of other investigations faced by the politically-connected Texas conglomerate over work done by its affiliates in Iraq and Nigeria.
The Pentagon and the Justice Department are looking into allegations that Kellogg Brown and Root, a Halliburton subsidiary that has secured an exclusive oil supply contract in Iraq, may have overcharged the US government by 61 million dollars.
Another damaging imbroglio involves allegedly overpriced meals served by Halliburton to US troops in Iraq and Kuwait, which prompted the army to withhold payments on some of the company’s invoices.
Meanwhile, US and French authorities are investigating if the company paid bribes to secure a Nigerian natural gas project. Such actions could violate the US Foreign Corrupt Practices Act, which bans bribes to foreign officials.
Standard and Poor’s said the news is likely to be negative for the group, noting, “This is the third significant investigation of various issues confronting the company.”
But Halliburton shares rose 15 cents to 31.43 in closing trade Tuesday.