million since Iraq invasion
15 Sept. 2005
WASHINGTON, Sept. 15
(HalliburtonWatch.org) -- War and
skyrocketing oil prices have been good to
Halliburton's CEO David Lesar, whose stock in
the company increased by an estimated $78
million since the U.S. invaded Iraq in 2003, a
HalliburtonWatch analysis reveals.
In March 2003, the first month of the Iraq
invasion, corporate disclosure records show
Lesar owned 1.476 million common shares
and share options in Halliburton worth $30
million. At the end of stock trading yesterday,
those shares were worth $93 million, for a
$63 million gain. Subsequent to the Iraq
invasion, Lesar boosted his total holdings in
the company from $93 million to $108 million
by acquiring a net 243,000 additional shares,
thereby increasing his stock holdings by $78
million since March 2003.
Halliburton's stock price tripled since the Iraq
invasion from $20 to $63.
Lesar owns an additional 644,575 shares of
"restricted stock," or stock that may be sold
only if he satisfies certain goals and
requirements of the corporation. If Lesar is
authorized by Halliburton to sell those shares,
they would be worth an additional $40.8
million as of yesterday's closing stock price.
$16.3 million sold this year alone.
On September 1, three days after Hurricane Katrina hit New Orleans, he sold stock
pursuant to his stock option plan, earning a one-day profit of $720,100. One week
later, on September 8, he similarly earned a one-day profit of $782,000 by selling
stock.
$13.6 Billion in Iraq Revenue
Lesar has presided over a period for the company that has corrected the mistakes
created by former CEO and current U.S. Vice President Dick Cheney. After Cheney
left the firm in 2000 to run for vice president, Halliburton was forced to deal with
the legacy of his incompetent decisions made while he was CEO, decisions that
forced parts of the company into bankruptcy. Those problems have mostly been
solved under Lesar's leadership. In the last four reported quarters, Halliburton
received $20 billion in revenue and earned $1.9 billion in operating income.
Iraq-related contracts amounted to $13.6 billion in revenue for the company since
March 2003. Nonetheless, most of Halliburton's profit is earned from its energy
services business, not the war. Higher gasoline prices have required oil companies
to build additional oil rigs, something Halliburton leads the world in doing.
The company's skyrocketing stock price also reflects, in part, a market expectation
that the company might one day benefit from Iraq's large oil reserves.
'Jacking Up the Margins'
Lesar complained last year about the low profit margins earned in Iraq from the
company's troop support contract with the Army, known as "LOGCAP." He even
threatened to charge the Army with higher costs by declaring that he would "jack
the margins up significantly" if companies other than Halliburton are allowed to bid
for new work under LOGCAP. He made his comments in response to a U.S. military
recommendation that called for the immediate termination of the LOGCAP contract
so that other, less scandalous, firms can be hired to assist the soldiers.
"Jacking up the margins" is already standard practice at Halliburton via cost
overcharges. Those overcharges helped boost the company's war profits by 284
percent during the second quarter of this year.
Audits conducted by the Pentagon's Defense Contract Audit Agency determined
that KBR had $1 billion in "questioned" expenses (i.e. expenses which military
auditors consider "unreasonable") and $442 million in "unsupported" expenses (i.e.
expenses which military auditors have determined contain no receipt or any
explanation on how the expenses were disbursed).
Despite the cost overcharges, numerous critical reports from military auditors and
the public outcry against Halliburton, Washington continues to drag its feet in
dealing with the company's continuing rip-off of U.S. taxpayers.
