Halliburton Settles SEC Accusations

NEW YORK -- The Halliburton Company secretly changed its accounting practices when Vice President Dick Cheney was its chief executive, the Securities and Exchange Commission said Tuesday as it fined the company $7.5 million and brought actions against two former financial officials, The New York Times reported.

The commission said the accounting change enabled Halliburton, one of the nation's largest energy services companies, to report annual earnings in 1998 that were 46 percent higher than they would have been had the change not been made. It also allowed the company to report a substantially higher profit in 1999, the commission said.

The commission did not say that Cheney acted improperly, and the papers released by the commission did not detail the extent to which he was aware of the change or of the requirement to disclose it to investors. The SEC said that Cheney had testified under oath and had "cooperated willingly and fully in the investigation conducted by the commission's career staff."

The accounting change dealt with the way Halliburton booked cost overruns on projects. At the time, it was having large cost overruns on projects in the Middle East operated by its Brown & Root Energy Services business, which under its old accounting policy would have reduced its reported profit.

The actual change in accounting, the commission said, was permissible under generally accepted accounting principles, but the failure to inform investors that the change had been made -- and of its effect on the company's reported profit - violated securities laws.

-- NYSSCPA.org News Staff

Posted on 8/4/04