SEC is investigating Halliburton

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Top Financial News


05/28 22:43
Halliburton Says SEC Is Investigating Its Accounting (Update3)
By Daniel Taub


Dallas, May 28 (Bloomberg) -- Halliburton Co., the world's
second-largest provider of oilfield services, said the Securities
and Exchange Commission is investigating a change in accounting
practices made while Vice President Dick Cheney ran the company.

The company received a letter from the SEC informing it of the
investigation into how it treated cost overruns on construction
jobs, Chief Financial Officer Doug Foshee said in an interview.
Halliburton said the investigation probably stems from a New York
Times article last week that said the company altered its
accounting practices in 1998 so it could report as revenue more
than $100 million in disputed construction costs, and didn't
disclose the change to investors for more than a year.

A growing list of energy companies, including Dynegy Inc. and
Halliburton rival Baker Hughes Inc., have had their financial
statements probed by regulators since the collapse of Enron Corp.
last year. Halliburton shares have tumbled 59 percent in the past
year, partly on concern about rising asbestos claims.

"There were some business-driven changes that prompted them to
change their accounting," said Fred Mutalibov, an analyst with
SWS Securities who rates Halliburton shares "strong buy" and
doesn't own them. "And the amount affected was immaterial to
their total revenue."

Foshee declined to provide a copy of the one-paragraph letter.
Halliburton said it expects to receive a formal request for
documents or a subpoena in the next few days.

Cheney

Cheney was Halliburton's chief executive officer from 1995 to
August 2000. He also served as the company's chairman from 1996
to October 1998 and again from February to August 2000.

Arthur Andersen LLP was Halliburton's auditor at the time of the
change. The accounting firm today is on trial in Houston for
destroying Enron audit records that government investigators
believe might reveal whether fraud led to the energy trader's
demise. Halliburton fired Andersen on April 17.

Halliburton said the accounting change involved recording revenue
and accounts receivable when it expected such items to be
collectible from its customers.

"The company has continued this accounting treatment of similar
items since 1998 and has never recorded a profit on a job where
an unapproved claim or change order has been recorded in
revenue."

Halliburton said it told the SEC that it will cooperate with the
investigation. A spokeswoman for Cheney couldn't immediately be
reached for comment.

Energy Woes

Dynegy Inc. Chief Executive Officer Charles L. Watson resigned
today after investigations of the company's trading and
accounting contributed to a 62 percent drop in its stock this
year.

Watson departed after the company disclosed bogus electricity
trades with CMS Energy Corp., whose CEO resigned Friday. The top
two traders at Reliant Resources Inc., which did similar "round-
trip" trades with CMS, also have quit.

Halliburton settled 30 asbestos cases in New York for an
undisclosed amount today. It had three asbestos-exposure verdicts
totaling $152 million in 2001.

Shares of Dallas-based Halliburton rose 25 cents to $19.35. The
announcement was made after the close of regular U.S. trading.