Just one month after DP World sealed the deal that sold the American port operations that came with its P&O purchase, Dubai staged another coup involving the US, and one that is proving as controversial. On March 11, Halliburton, the oil services giant famously headed at one time by US vice president Dick Cheney, announced in Bahrain the opening of its corporate headquarters office in Dubai. It means Halliburton chairman, president and chief executive officer Dave Lesar will now move to Dubai, ostensibly to lead the company’s efforts in expanding its business in the Middle East, Africa and elsewhere. In the US, the decision by the Houston based firm, which is embroiled in a scandal over its so-called “no-bid” contracts in Iraq, was met with outrage, with US senators promising an inquiry. Democratic Senator Patrick Leahy called the decision to move “an example of corporate greed at its worst.” “This is an insult to the US soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years,” he said. “At the same time they’ll be avoiding US taxes I’m sure they won’t stop insisting on taking their profits in cold, hard US cash.” Halliburton denies the move is a tax dodge, or an attempt to shield itself from investigations into the Iraq contracts. Instead, it claims the move is driven by a business strategy that seeks to take advantage of opportunities in the East. Hemisphere divide. In 2006, more than 38 percent of Halliburton’s $13 billion oil field services revenue was generated from the part of the world the company calls the Eastern Hemisphere, which is everything outside the Americas. The area encompasses four regions, where the company has more than 16,000 employees. Halliburton has been active in the Eastern Hemisphere energy services market since 1926, offering a range of technologies and services across the company’s petroleum production and consulting divisions. But at the same time, North America provided 55 percent of Halliburton’s profit for the last quarter. Halliburton has to choose between that and the other half of the globe “where the company estimates it will see 68 percent of its opportunities for new contracts in the next several years,” a Bloomberg report said. “Profit from international operations, which provide services to Saudi Aramco, the world’s biggest oil producer, among others, rose 49 percent in the fourth quarter from a year earlier to $434 million. Europe, Africa and the former Soviet Union accounted for the bulk of Halliburton’s earnings outside North America,” it said. In the days following the announcement, the company said it will add more than 13,000 new employees in 2007. Earlier, the company had clarified that it would remain legally incorporated in the US and would not lay off any of its 45,000 employees, nearly half of whom work in the US. For years, Halliburton has been under scrutiny from auditors, congressional Democrats and the Justice Department for the quality and pricing of its KBR Inc. unit’s work for the US army in Iraq. When the announcement came, Senator Hillary Clinton was the first to attack it, calling it “disgraceful.” “American companies are more than happy to try to get no-bid contracts like Halliburton has, and then turn around and say, ‘You know, we’re not going to stay,”‘ she said. Senator Byron Dorgan said he will call for a Senate investigation of Halliburton’s move to Dubai. Angry rhetoric aside, senators have taken practical steps to find out the real reason behind the surprise move. On March 14, Senator Robert C. Byrd wrote to US President George W. Bush asking why Halliburton, one of the federal government’s largest private contractors, wants to relocate. During the last fiscal year, Halliburton received $6.1 billion in federal contracts, making it the government’s sixth largest contractor. War chest. It is no secret that the war in Iraq has benefited Halliburton immensely. It received numerous contracts on a no-bid basis when the first provisional government was set up following the exit of Saddam Hussein. Ever since, Halliburton has been viewed with mistrust, particularly after its KBR subsidiary won a lucrative contract in 2003 to supply the US military in Iraq and over-billed the US government by millions of dollars. Halliburton has reported being paid $10.7 billion for its work in Iraq in 2003 and 2004. Halliburton now plans to spin off KBR’s engineering and government contracting unit. KBR has also been at the center of scrutiny for receiving a five-year, no-bid contract to restore Iraqi oil fields shortly before the war began in 2003. The company reported its pre-tax profits from that work as $163 million. According to a report published by The Financial Times in 2004, Pentagon auditors asked the department’s inspector general to investigate whether Halliburton overcharged the US government for fuel supply contracts in Iraq. In an audit of the company, the Defense Contract Audit Agency found evidence of “suspected irregularities.” Halliburton has repeatedly denied any wrongdoing, maintaining that KBR delivered fuel to Iraq “at the best value, the best price and the best terms.” However, several of its contracting irregularities in Iraq have gone unexamined by the Republican-led Congress. With Democrats now in charge, committee chairmen are looking to make up for lost time. Cynics might call it capitalizing on human tragedy but for Halliburton natural calamities mean income of millions of dollars. This was the case after hurricane Katrina hit the Mexican Gulf coast in 2005, when KBR bagged a $500 million contract to do emergency repairs at naval and marine facilities that had been battered by the hurricane. Later in the year it emerged that the company and its subcontractors had hired hundreds of undocumented Latino workers to do the cleanup work, only to mistreat them and throw them out without pay. Halliburton’s notoriety extends beyond the Middle East. At least one of its forays into Africa has raised dust. In September 2004, Nigeria’s house of representatives barred Halliburton and the TSKJ consortium from being awarded new Nigerian oil contracts, pending the conclusion of investigations into the Nigerian liquefied natural gas bribery scandal. TSKJ allegedly paid $180 million to Tristar, a Gibraltar based company, that effectively formed a slush fund for Nigerian officials. Halliburton later announced that it had severed ties with A. Jack Stanley, a former KBR chairman who was working as a consultant for the company. The company cited violation of its code of business conduct that included allegedly receiving “improper personal benefits” linked to KBR’s Bonny Island natural gas liquefaction plant project. Halliburton conceded that an internal investigation had uncovered documents indicating that TSKJ officials discussed bribing public officials in the African country to secure a multibillion-dollar contract there. However, the company maintained that it was unclear whether payment was actually done and handed over the evidence to authorities in the US, France and Nigeria, which were already investigating the consortium. The company declined, however, to reveal the names and positions of the people allegedly involved in the bribery scheme. Wrongful payments. It was only in February this year that more details emerged, through Halliburton’s regulatory filing, in which it said “the documents found last summer indicated payments may have been planned for government officials outside of Nigeria.” The report said that the company is reviewing a number of recently discovered documents related to KBR activities in countries outside of Nigeria with respect to agents for projects after 1998, adding that it had stopped using the services of two unnamed agents who may have made “wrongful payments” to help win projects in Nigeria and other countries. The stand-off with the Bush administration over the nuclear issue notwithstanding, Halliburton continued to fiddle with Iran until the issue became too hot to handle. The company’s principal activity in Iran went on through the operations of Halliburton Products & Services Limited, a Cayman Islands company headquartered in Dubai. This was despite a law introduced in 1996 in the US that threatens sanctions on American and foreign companies investing more than $40 million in Iran’s petroleum industry. In January 2005, Halliburton won a contract to drill at a huge Iranian gas field called Pars despite US sanctions tightly restricting the ability of US companies to do business there. Even though the company called the operation entirely legal, it still came under a federal criminal investigation. The focus of the probe was to ascertain whether the company set out to illegally evade the sanctions. The company’s plea was that its foreign subsidiary, operating in Iran, was independent of the company’s main operation in Texas. It wasn’t long before Lesar announced an end to its activities in Iran. “The business environment currently in Iran is not conducive to our overall strategies and objectives. As a result we have decided to exit Iran and wind down our operations there,” Lesar said. Nevertheless, he denied any wrongdoing. “We believe that the services we provided in Iran were perfectly legal under US law and minuscule in comparison to the scope of our worldwide activity,” Lesar said, adding: “However, they attracted a disproportionate share of attention.” While the news of having a high-profile operator like Halliburton in their midst has pleased the Dubai corporate world, the same cannot be said on Wall Street, which has begun to fret about its declining share in the world’s capital markets and the growth of rival financial centers. Halliburton’s move confirms Dubai’s growing clout as an international business and financial center, where a number of Fortune 500 global firms already operate.

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