In our capitalist system, Halliburton ostensibly does what’s best for Halliburton. No doubt… Halliburton (aka HAL on Wall Street) has announced it’s moving its corporate headquarters from Houston to Dubai, part of the United Arab Emirates.
This is “richly” ironic on several levels. Halliburton’s current CEO, Dave Lessar, announced in Bahrain that the company wished to be closer to its growing business interests in Asia:
“The eastern hemisphere is a market that is more heavily weighted toward oil exploration and production opportunities and growing our business here will bring more balance to Halliburton’s overall portfolio.”
Balance? As the CNBC talking heads might speculate (for other companies), the statement deserves heavy “discounting.” Halliburton has other reasons for getting out of Dodge.
Remember Halliburton? This is the same oil services giant, ostensibly once run (poorly) by Vice President Dick Cheney. This same Halliburton is widely suspected of underhanded abuse of its connection to Cheney to obtain over $25 billion in lucrative, often no-bid contracts in Iraq.
Ok, sure, 38% of Halliburton’s business now comes from “the eastern hemisphere” – including Iraq… Is this new? Or is something wrong with the airport in Houston?
Just last month, Halliburton was cited by US investigators as responsible for as much as $2.7 billion of an estimated $10 billion in contractor fraud and abuse in Iraq. And last year, Halliburton made $2.3 billion in profits, though profits were down 40% last quarter.
I venture a guess that Halliburton’s reputation with the American people is right down there with Enron.
HAL’s share price is down about 25% off of its highs from last year. To be fair, the Wall Street oil services index is also off about 18% from its high.
Yet shareholder and political heat has been building at HAL. So why not get the exit underway before the party is…voted fully out of office?
On the other side of this intriguing move, remember Dubai? Dubai is the remarkable Arab trading hub that has mushroomed dramatically as a trading portal in all directions, especially to the north with Iran and to the Caspian region beyond.
Dubai is also very tax friendly to foreign corporations. It’s the Delaware of the Arab world.
And remember Dubai Ports World, the international conglomerate that, with Bush family backing, wished to invest heavily in six major American ports? “The Lobby” helped force DPW to agree to sell off those investments last year, on the rather specious argument that DPW, an Arab based company, might not be trustworthy in defending against terrorism. DPW recently threatened to reverse its decision, claiming that the New York Port Authority was trying to blackmail it.
Anybody want to put two and two together here?
I’m also remembering that when Cheney was Halliburton’s CEO, he was among the most high profile critics of the Clinton Administration’s decision to block Conoco’s multi-billion dollar deal with Iran to develop its offshore oil and gas fields. Cheney argued for “engagement” with the Iranians; it made good business sense, back then.
Dubai is about as close as you can get to a front-door for negotiating business deals with Iran. And if Halliburton moves its headquarters “offshore” (meaning, away from American taxing and political control), then the US can only tax and control Halliburton’s remaining operations inside the USA.
Neocon hawsk like Bibi Netanyahu and Frank Gaffney are trying to orchestrate disinvestment campaigns of international energy companies doing business with Iran. I can imagine this move will feed that fire, beginning with old claims that Halliburton subsidiaries still do business with Iran.
Yet I suspect that this move will earn the loudest immediate Amerian resentment over the simple “nerve” of the company. Senator Patrick Leahy, D-N.H. already has condemned the company’s move as
“corporate greed at its worst…. This is an insult to the U.S. soldiers and taxpayers who paid the tab for their no-bid contracts and endured their overcharges for all these years. At the same time they’ll be avoiding U.S. taxes, I’m sure they won’t stop insisting on taking their profits in cold hard U.S. cash.”
No doubt. But what are we going to do about it?
Halliburton isn’t the first energy service player to leave, technically, or otherwise, for more tax and politically friendly shores. Transocean (RIG), the world’s leading deep water driller, moved to the Cayman Islands. (though they hide that on their web site) Others followed over the past decade.
Hey, I have an idea. Let’s make a deal: Why not say that as a condition for the US not contesting Halliburton’s departure, Halliburton agrees to take Cheney with them. (Maybe “Hoagie” knew of the pending Halliburton “move” when speculating about Cheney’s pending resignation.)
If my deal goes through, then we can watch Cheney be born yet again — as an advocate for reducing tensions with the Iranians.
What was it they used to say about “what was good for General Motors, is….”?
I wonder whether there could not be a more mundane explanation. Big bases were to be built in the Gulf. Maybe these bases have seen some building done, though they will not be used, at least not for eternity. Who then would buy any Halliburton-built office space in Dubai ? at what price ? By moving to Dubai, not only does the firm escape US regulations, find a safe harbour to its archives, makes some tax profit, but it frees some nice office space in Houston that can be sold at a premium.
I am not an expert, it’s only guess, but it might ring a bell to some readers.
Ok, sure, 38% of Halliburton’s business now comes from “the eastern hemisphere” – including Iraq… Is this new?
Well, the Dubai mercantile Exchange is about to launch the first Mideast futures contract. Most new oil demand is coming from China and India; this isn’t news. & Halliburton is heavily involved in the growing LNG trade, building terminals and ships for main exporters Qatar, Indonesia, & Australia, and its main importers: Japan & S. Korea. LNG’s price (just so you know) is indexed to the OPEC basket not West Texas crude oil.
FYI Scott, Halliburton announced on Feb 26 that it’s spinning off KBR altogether. It’s also keeping its own legal registration in the US, and much of its office space in Houston.
I venture a guess that Halliburton’s reputation with the American people is right down there with Enron.
I’d venture a guess that if you have a 401(k) account, you probably own some HAL yourself along with half the US population. Largest shareholers are AXA, Capital Group, State Street, etc, in other words every major pension fund and life insurance company.
though they hide that on their web site
It’s actually in a rather obvious place on their web site:c
http://www.deepwater.com/CompanyOverview.cfm
“The Lobby” helped force DPW to agree to sell off those investments last year
I thought “the lobby” was in league with Team Bush? No, left-wing Arabophobes and opportunists like Chuck Schumer killed the DPW deal. Lobby apparatchik Thomas Friedman supported it, as did arch-Zionist cabal leader William Kristol, who correctly termed its opponents “idiots.”
Ok, sure, 38% of Halliburton’s business now comes from “the eastern hemisphere” – including Iraq… Is this new?
Well, the Dubai mercantile Exchange is about to launch the first Mideast futures contract. Most new oil demand is coming from China and India; this isn’t news. & Halliburton is heavily involved in the growing LNG trade, building terminals and ships for main exporters Qatar, Indonesia, & Australia, and its main importers: Japan & S. Korea. LNG’s price (just so you know) is indexed to the OPEC basket not West Texas crude oil.
FYI Scott, Halliburton announced on Feb 26 that it’s spinning off KBR altogether. It’s also keeping its own legal registration in the US, and much of its office space in Houston.
I venture a guess that Halliburton’s reputation with the American people is right down there with Enron.
I’d venture a guess that if you have a 401(k) account, you probably own some HAL yourself along with half the US population. Largest shareholers are AXA, Capital Group, State Street, etc, in other words every major pension fund and life insurance company.
though they hide that on their web site
It’s actually in a rather obvious place on their web site, under ‘Company Overview.’
“The Lobby” helped force DPW to agree to sell off those investments last year
I thought “the lobby” was in league with Team Bush? No, left-wing Arabophobes and opportunists like Chuck Schumer killed the DPW deal. Lobby apparatchik Thomas Friedman supported it, as did arch-Zionist cabal leader William Kristol, who correctly termed its opponents “idiots.”
I caught that recently announced spin-off of KBR too — reminded me of how HAL got that “minefield” in the first place — when then CEO Cheney “brilliantly” bought out Dresser (on the then stated assumption that Dresser’s asbestos liabilities wouldn’t be significant… hah!)
So what were the stated reasons for unloading KBR? That it also made “financial sense”? To concentrate on its “core” oil & gas business – rather than defense and construction contracting? (No doubt Wall Street bought that one too — even as everyone also knows of the political heat building over KBR.)
Oh, and we could have “fun” with what exactly “killed” the DPW deal now, couldn’t we? No doubt DPW thought they had circumvented potential “national security” concerns given the backing of Bush Sr. and friends. But then again, which of the Senators did the “lobby” go to for help in orchestrating support against the deal? Sure, Schummer and the democrats who joined the good fun were indeed “opportunists” — but Schummer and “the lobby” go way back…. no?
As for RIG, the Cayman Islands registry is barely mentioned in RIG materials. The yahoo finance company profile doesn’t mention it, and the “deepwater.com” RIG web site hardly makes its registry obvious:
http://www.deepwater.com/CompanyOffices.cfm
But yes, it is burried at the bottom of the following overview:
http://www.deepwater.com/CompanyOverview.cfm
Surely you don’t want to contest the point that when RIG left the nest, that the move indeed was very politically “sensitive” at the time. (even as it was apparently quite shrewd for tax reasons….)
Curiously today, the Wall Street 20-something financial anal-ysts are out praising the HAL move – to get closer to emerging business prospects (without naming what they might be). No doubt on that too. And not a “discouraging word” is heard on Wall Street about the political angles afoot….
Issue starting to get some “traction” – as Democratic Presidential contenders repeat the suspicions and now Halliburton rebuts:
http://www.nytimes.com/2007/03/13/business/13halliburton.html?_r=1&oref=slogin
So if unlike RIG (and others) who went “offshore” primarily to reduce taxes, if HAL really is staying “registered” as a US corporation (and I’m not clear on that), then just why would HAL be moving its HQ and CEO to Dubai?
Don’t get me wrong, I too have long been fascinated by Dubai’s unusual “independence,” its economic dynamism, and its relatively laid back, free-wheeling atmosphere.
(To whit, I see Shakira and Aerosmith will be holding concerts there soon… sic Hips don’t lie…)
And not a “discouraging word” is heard on Wall Street about the political angles afoot….
Scott, this is ridiculous. Every article I’ve read on the topic touches on the “political angles afoot:”
Reuters: KBR has faced several investigations into alleged overbilling in Iraq
Motley Fool: These issues leave with KBR, along with the costs of the ongoing legal expense, and perhaps some of the negative press that has dogged the company in recent years.
FT: Last week’s elections and the prospect of congressional oversight into KBR’s role as the Pentagon’s largest contractor in Iraq have made an exit all the more urgent.
Moreover, there’s no reason shareholders should be discouraged. Political heat is bad for business anyway, but KBR detracted from HAL’s profit margins in the bargain. & ideological critics like yourself should applaud its departure from military contracting. Perhaps you’re afraid of losing a favorite corporate scapegoat?
As for RIG, the Cayman Islands registry is barely mentioned in RIG materials.
Transocean’s Cayman registration isn’t just advertised prominently on its website, it’s on every last SEC filing. I see no reason why RIG or any other offshore entity would bother to hide this fact from investors, since they’re the ones footing the tax bill and because it’s so utterly commonplace. Schlumberger for example has headquarters in both Paris and Houston but for tax reasons is registered in Curaçao.
Public companies founded in the United States have no patriotic duty to remain there. Transocean and Halliburton owe loyalty only to their shareholders -mainly pension funds- not to the US government. If any of these criticisms were sincere, they’d verge on jingoism. But Hillary Clinton is no dummy. As with the DPW “scandal” its pure politics and completely superficial.
Speaking of unwholesome alliances between states and oil companies, check out what’s happened to Venezuela:
http://www.latincounsel.com/eng/noticiaampliada.php?nid=5835
The banking syndicate also includes Sumitomo Mitsui Banking Corporation, the Tokyo branch of ABN AMRO Bank, N.V., ING Bank N.V., Citibank, N.A., Deutsche Bank AG, Societe Generale, BNP Paribas and Calyon.
Seriously, how much do you think Bush’s oil cronies are paying Chavez to destroy Venezuela’s reserves (enriching Exxon and Iran) while mortgaging his country to international banking conglomerates?
Viva Citibank, NA! Viva Milbank Tweed! Who knew the revolution would involve offshore special purpose vehicles and “a syndicate of international banks?”
but Schummer and “the lobby” go way back…. no?
Schumer is definitely a “lobby” sounding surname. But if the Kabbalistoes of “the Lobby” killed the DPW deal, how do you explain the endorsements of Bill Kristol, Jonah Goldberg, David Brooks, the WSJ editorial page, Fred Barnes, Mort Kondrake etc? So no, I don’t get how “the Lobby” was involved here at all. Michael Moore and other Ayrab hating lefties drove that bus.Your remark confirms that “Lobby”-oriented analysis inevitably introduces a fallacy of composition.
What’s Good for Halliburton (and Cheney) is Good for…Dubai
http://www.opednews.com/articles/opedne_dave_lin_070313_what_s_good_for_hall.htm
“Viva Citibank, NA! Viva Milbank Tweed! Who knew the revolution would involve offshore special purpose vehicles and ‘a syndicate of international banks?'”
That’s funny. Please post more capitalist humor.
Seeing all this is much easier with Halliburton based in Dubai, rather than Houston. Especially when you also consider the new oil law written by America and passed by the Iraqi parliament, which opens Iraq’s oil reserves to American oil companies.
How completely detached from reality is this? The idea that the USA is cultivating havoc in Iraq while simultaneously trying to exploit its oil reserves is deeply confused. No US business will spend fifty cents developing any Iraqi oil field while there’s a civil war going on. Certainly not Halliburton! You must think their shareholders very stupid, Salah. There’s money to be made in Central Asia, the Pacific Rim, and supplying LNG to the far east, not in war torn Iraq.
with its tax obligations now owed to the Dubai Revenue Department instead of the IRS
bzzt! wrong.
So how do we feel knowing that virtually the entire supply line for our over-extended troops in Iraq and Afghanistan is now in the hands of a Dubai corporation
it isn’t. KBR is being spun off, remember?
they are really fighting and dying for Halliburton, Exxon/Mobil and Chevron…and Dubai
ExxonMobil hasn’t a single Iraqi oil project in the works. Neither has Chevron. Conoco is a more interesting case, but then you’d have to go “off topic” since that story’s mainly about Russia.
Funny, Dave Lindorff hasn’t written once about current Russian oil claims in Iraq totaling in the tens of billions. I wonder why? Maybe he simply hates the United States. It certainly detracts from his credibility.
http://www.kommersant.com/p-10251/Field_Iraq_LUKOIL/
Seriously John, take a look at the cast of characters attending that PDVSA closing.
Maples & Calder (Cayman counsel to JBIC)
Walkers (Cayman Islands Counsel to Marubeni and Mitsui)
I wonder if we’ll be treated to a lecture on the ethical lapses of Mitsui, since Chavez is clearly beyond reproach. How about Milbank Tweed? They’re American, if it sweetens the deal.
Is it worth mentioning that PDVSA- and by extension the people of Venezuela- are almost certainly getting raped in this gigantic trade?? And what the hell is Chavez doing scrounging for cash with at 60 bucks?
Still I’m betting it won’t invite a breathless editorial by John Lindorff in CounterPunch.
Wow, Vadim, you’re obsessed with this one. Of course the DPW died a “bipartisan” death. Even Kerry couldn’t resist piling on in the end, especially after it was the Jerusalem Post that “revealed” the allegation DPW going along with the Arab League’s boycott of Israel…..
(I never dug into that hot issue, but I’m curious, did Perle, Wolfowitz, and the WSJ confirm or deny that allegation?)
We can well guess how DPW and Bush Sr. thought they had greased the rails to get the DPW deal past normal sensitivities…. and who knows, perhaps that included generous “consideration” given to lead neocon players…. (esp. the “prince of darkness.”)
But to deny AIPAC was opposed to the deal – and energetically so – would be roughly akin to saying it wasn’t cold last month in Buffalo.
http://www.jpost.com/servlet/Satellite?apage=2&cid=1139395516290&pagename=JPost%2FJPArticle%2FShowFull
All this talk about “the lobby”, and you think vadim is obsessed. Thanks for the chuckle.
But to deny AIPAC was opposed to the deal
oh, you meant AIPAC! I thought we were referring to the loose coalition of individuals and organisations who actively work to steer US foreign policy in a pro-Israel direction, ie “THE LOBBY” (cue hitchcock music) Quite loose indeed! Sometimes it takes in half of Washington; today we’re in a literal mode.
So if you only meant AIPAC, then why bring up Wolfowitz (who isn’t in AIPAC) or Perle (ditto) – neither one weighed in on DPW. And neither serves in the US government, in case you’ve just emerged from a coma. Which I’m not discounting, since you also seem to think Perle is a “lead neocon player.”
All this talk about “the lobby”, and you think vadim is obsessed. Thanks for the chuckle.
“Don’t look at me, doc, you’re the one with the dirty pictures!” 🙂
“Is it worth mentioning that PDVSA- and by extension the people of Venezuela- are almost certainly getting raped in this gigantic trade??”
Vadim, on the one hand I agree with you that this deal has all the trappings of an Enron-era swindle. On the other hand, it is not so clear who is actually being screwed by whom and whether anyone, other than the lawyers and investment bankers, will benefit in the end. Is Chavez mortgaging his people’s future to the international banking conglomerates just to further his own despotic ambitions, or is this in effect an involuntary leveraged buy-back of the last of the country’s oil assets held by international energy conglomerates? I suppose from your point of view it is a question of economic efficiency, and I have no doubt that Exxon, Chevron, BP, CP and all are capable of converting oil reserves into executive bonuses and stock appreciation quicker and cheaper than PDVSA with its presumably high-interest structured financing. But how do your economic models value the “noncommercial objectives” of the NOC’s, or even measure their achievement? Arguably, layering in all of this financing could lead to better financial controls and increased “transparency,” although I frankly have my doubts. My bottom line is that we have to resist the urge to immediately react to what might well be bad economic policies on the part of emerging “leftist” governments by trying to undermine and destabilize them. That’s not particularly efficient either, from the standpoint of us taxpayers.
Well my post seems not to have made it through the filter. I’ll try once more with no URLs.
is this in effect an involuntary leveraged buy-back of the last of the country’s oil assets held by international energy conglomerates?
Leaving aside that Mitsui and Mitsubishi are also enormous energy conglomerates, Chavez is likely to compensate the Orinoco partners not with cash but with vouchers, as it paid Total and BP last April for the Jusepin field. That’s assuming he compensates them at all. Clearly he needs the cash for other purposes, among them propping up the sovereign debt of his neighbors at substantial risk to the already vulnerable Venezuelan economy.
(see “Fonden seen funding debt deals”, (Caracas) Daily Journal, 3/15/07)
PDVSA couldn’t possibly exclude international conglomerates from developing Orinoco, any more than they could send a man to Mars. Even Chavez -with his GWB-esque brain (tiny) and ego (enormous)- knows the chemical engineering is simply too sophisticated … & forget about the economics!! To make matters worse, Chavez fired all PDVSA’s best engineers after their strike in 2003, many of whom then emigrated to Canada to work on Alberta’s oil sands projects.
Regarding transparency: the Venezuela brief you cited (Mares/Altamirano) makes the following observation:
Any economic and financial evaluation of PDVSA’s performance is extremely difficult to accomplish after 2003. …after leaving the SEC regime in early 2006, the firm has only released a single page document entitled “PDVSA Gestión y Resultados 2005” in October 2006. This document is not directly comparable to the financial statements presented to SEC, and although it is of questionable validity, it is the best current financial data available for the firm
From “The Devil’s Excrement” on Salon:
Of course, going forward things will only get worse. PDVSA will no longer be required to file its financials with the SEC. The shareholders, read all the Venezuelans, will no longer have access to the financials. There will not even be shareholders meeting even to comply with the formalities of the law.
PS: evil oil traders love Chavez. He’s great for price volatility, he’s obviously not scared to give money away to the markets, and he’s entertaining in the bargain.
Ok, I think I’ve solved the mystery of the $3 billion borrowing spree.
http://www.mercopress.com/vernoticia.do?id=9939&formato=HTML
Venezuela is currently negotiating with European and Russian companies the purchase of nine submarines valued in three billion US dollars for the event of “an attack from United States”, report several South American newspapers.
Here I was worried he was going to waste all that cash on social programs.
Submarines? Maybe he’s planning a sub-sea escape route for when the house of cards finally collapses.
“Submarines?”
Imagine that. What kind of reckless, irresponsible leader would borrow billions of dollars to buy fancy weapon systems that will never be of any practical use? It’s a good thing we don’t live in a corrupt and mismanaged country like that, eh?