Michael Kinsley at Slate nicely outlines the breaking scandal involving Halliburton (when Cheney was CEO) and Arthur Anderson.
The New York Times, which first reported the Halliburton funny business, explained it pretty clearly: The company runs large construction projects, mostly for the government and the oil industry. Apparently, large construction projects work just like small ones, such as remodeling the bathroom. That is, the contractor states a price, runs over budget, then tries to get the customer to fork over the difference. Until 1998 Halliburton had the tact to wait until it got the extra money before putting it on the books. In that year, it began guessing how much of a disputed surcharge would ultimately get paid and crediting itself in advance. Why not? You only live once! This self-administered pick-me-up added $100 million in reported revenues to Halliburton’s books.
And where was Arthur Andersen while its client Halliburton was saute-ing the spreadsheets? Looking the other way, apparently. Later, when the Enron story broke, Halliburton undoubtedly thought, “Goodness. We’d better get rid of Arthur Andersen and find ourselves an accounting firm with integrity. We certainly don’t wish to be associated with an auditor that will allow us to do the kind of thing we’re doing.” So they fired Arthur Andersen. Too late, too late. Due entirely to Andersen’s failure to stop it, Halliburton is now under investigation for doing what it did.
And where was the future vice president while this was going on? The company insists, graciously, that a mere $100 million flyspeck on the company accounts (1999 income: $438 million) was beneath the notice of a busy CEO like Dick Cheney. This is believable. Cheney’s income in 2000, his last year at Halliburton, was $36 million in salary, bonuses, benefits, deferred compensation, restricted stock sales, exercised options, frequent-flier miles, a turkey at Christmas, and other standard elements of the modern CEO compensation package. It is a vital responsibility of anyone who is that valuable to remain completely ignorant of anything improper going on around him. He owes it to the company to be untainted.
As Patrick says in his ‘blog: “Hot times in the undisclosed location”
