The Halliburton Scam: You Can Do Better Than That, BusinessWeek
(Sign and photo courtesy of the Freeway Blogger.)
Hi everybody, I'm here pinch-hitting for Matt O., who's busy trying to help someone win an election or some such silliness.
But that doesn't mean you'll miss your weekly dose of war-profiteer blogging, because I've been following the same beat from time to time since the beginning of our disaster in Iraq. In particular, I remember when BusinessWeek staff editor Brian Hindo wrote this just after the U.S invasion in 2003:
Democrats howled when oil-field services behemoth Halliburton scored a no-bid contract to do work in postwar Iraq. . . . The stock has risen 25% this year, closing on May 20 at $23.09 — near its recent 52-week high. That compares with a 9% gain over the same period for rival Schlumberger (SLB ) and a 4% gain in the S&P 500-stock index.
The stock isn't going gangbusters because of Iraq deals, shady or otherwise. Indeed, the $75 million in revenue that Halliburton has collected so far by putting out oil fires and repairing refineries in Saddam Hussein's former turf will add insignificantly to its profits — perhaps a penny a share this year. Even if the contract eventually reaches $600 million, as projected by the U.S. Army Corps of Engineers, it'll account for less than 4% of Halliburton's annual revenue.
. . . "It's a great news story," adds John Kartsonas, oil-field services analyst at Standard & Poor's, "but right now it has nothing to do with the earning power of the company."
Nope, nothing at all… riiiiiight. Since this unfortunate missive was written, Halliburton (as we know all too well) went on to gorge itself at the Iraqi occupation trough, and its stock hit an all-time high of $81 earlier this year before announcing a stock split.
The closest BusinessWeek has come to acknowledging its blunder was this well-buried blurb a few months ago:
Maybe it was just too good to last. The U.S. Army confirmed on July 12 that it will no longer solely rely on Halliburton subsidiary Kellogg, Brown & Root as the caretaker of troops abroad. Pentagon officials plan to split the logistics contract, under which Halliburton has raked in roughly $15 billion since 2001, among four vendors, with bidding to begin on July 28. Halliburton, Vice-President Dick Cheney's former employer, could still win a chunk of the new deal.
$15 billion seems just a tiny bit larger than $75 million or even $600 million, doesn't it? As far as I can tell, though, neither BW nor Brian Hindo (who seems to have left the magazine) have ever undertaken a reassessment of that original May 2003 article. Perhaps someone should suggest to one or both of them that it's time for an