Petroleum

Halliburton: A Problematic History in the Oil Industry

A Global Leader in the Oil Industry

Since it was founded in 1919, Halliburton has become a global leader in providing products and services to the fossil fuel industry. Halliburton currently employs over 60,000 people in more than 80 countries and has a stated vision to help its customers maximize the value of energy production by locating hydrocarbons, managing geological data, developing drilling assessments, and optimizing the construction of oil and gas wells (Halliburton, 2019). Halliburton has been dedicated to a mission that stresses the importance of achieving continuous growth and returns for shareholders by supplying technology and services to improve efficiency and maximize the production of oil and gas fields. While having a profit-driven mission may be beneficial for shareholders, Halliburton’s push to propel profits has resulted in numerous scandals and allegations of fraud throughout the company’s history in the oil field service industry.

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Scandals and Troubling Allegations

For years, Halliburton gained notoriety for troubling allegations related to no-bid contracts, profiteering, and industry cronyism. Halliburton was accused of crafting false statements about its business to artificially inflate its stock price, settled a $44.1 million lawsuit related to a Nigerian bribery probe, was ordered to pay $4.17 billion in damages for thousands of asbestos claims, and was found by federal investigators to have violated U.S. Labor Department pensions laws.

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Source: Wikipedia

Halliburton and U.S. Vice-President Dick Cheney

While Halliburton’s scandals have plagued the company over the years, it is most recognized for its relationship with former U.S. Vice-President Dick Cheney, who took over the company in 1995 after leaving his previous job as secretary of defense. Following Cheney’s time as CEO of Halliburton, he became the nation’s vice president. Halliburton was then awarded nearly $11 billion in government contracts for work in Iraq as part of the Restore Iraqi Oil (RIO) agreement and the Logistics Civil Augmentation Program (Elkind, 2005). These government agreements received intense scrutiny because they comprised one of the largest military logistics contracts in history, and they were awarded without a competitive bid (Burnett, 2003).

Critics have claimed that Halliburton’s government contracts may have been awarded as a result of Vice-President Cheney’s influence. Moreover, when Cheney became Halliburton’s CEO after serving his entire career in the government, Halliburton nearly doubled its federal contracts (Burnett, 2003). However, Halliburton has vehemently denied that Cheney has had any influence in its oil field service contracts with the U.S. government.

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Source: Wikipedia

Falling Financial Stability

As Halliburton’s scandals have mounted, the company’s financial stability has started to falter. After Pentagon auditors within the Government Accountability Office found nearly $1.8 billion in unjustified or undocumented charges related the Iraq contracts, Halliburton’s problems only began to intensify (Elkind, 2005). In 2017, Halliburton was ordered by the U.S. Securities and Exchange Commission to pay $29.2 million to settle Foreign Corrupt Practices Act (FCPA) violations (SEC, 2017). This signaled that Halliburton’s golden age was coming to an end.

In 1981, the company employed over 110,000 workers and boasted revenues of $8.5 billion with profits of over $674 million (Elkind, 2005). Today, the company has seen its oil business slow dramatically and has consequently cut its workforce in half since the 1980s. Moreover, Halliburton’s stock has collapsed by over 29% since the beginning of the year (Hampton, 2019). It’s unclear whether the company will be able to recover from its long and tenuous history filled with lawsuits and corruption investigations.

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Source: Pixabay, Mediamodifier

Sources:

Burnett, J. (2003). “Cheney’s Role in Halliburton Contracts Debated.” NPR: https://www.npr.org/templates/story/story.php?storyId=1567430

Chatterjee, P. (2011). “Dick Cheney’s Halliburton: a corporate case study.” The Guardian: https://www.theguardian.com/commentisfree/cifamerica/2011/jun/08/dick-cheney-halliburton-supreme-court

Driver, A. (2009). “Halliburton to pay $559 million to settle bribery probe.” Reuters: https://www.reuters.com/article/us-halliburton-bribery-idUSTRE50P5ZE20090126

Elkind, P. (2005). “The Truth about Halliburton.” Fortune: https://archive.fortune.com/magazines/fortune/fortune_archive/2005/04/18/8257012/index.htm

Halliburton. (2019) “About Us.” https://www.halliburton.com/en-US/about-us/default.html?node-id=hgbr8q6o

Hampton, L. (2019). “Halliburton cutting 650 jobs in U.S. as oilfield business slows.” Reuters: https://www.reuters.com/article/us-halliburton-layoffs/halliburton-cutting-650-jobs-in-us-as-oilfield-business-slows-idUSKBN1WO23P

SEC. (2017). “Halliburton Paying $29.2 Million to Settle FCPA Violations.” Securities and Exchange Commission: https://www.sec.gov/news/press-release/2017-133

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