Dick Cheney, the United States Vice-President, was on Wednesday sued for alleged accounting fraud while he was a director of the oil firm Halliburton, further undermining the Bush administration’s attempt to take a firm grip on the scandals shaking corporate America.
The lawsuit was filed by Judicial Watch, a self-appointed public interest law firm that monitors corruption in government and often challenged former president Bill Clinton.
Halliburton said in May that the US financial watchdog, the Securities and Exchange Commission (SEC), had opened an investigation into the firm’s accounting. The civil suit claims Halliburton overstated earnings by $445-million over a period of three years.
It names Cheney, Halliburton, the auditor Arthur Andersen and a number of the company’s board members, but has not specified damages.
President George W Bush has also faced a barrage of questions about his own business dealings while a director of the Houston-based company Harken Energy a decade ago.
Judicial Watch said Bush’s promise in a rhetoric-laden speech to Wall Street on Tuesday to crack down on corporate malfeasance was an attempt to distract attention from his and Cheney’s own business dealings.
Larry Klayman, chairperson and general counsel of Judicial Watch, said: ”The American people cannot look the other way just because the president and the vice-president are allegedly involved.” To do so, he added, ”would set a precedent that the Washington elite are above the law”.
Political rivals to Bush have seized on the crisis of confidence in Wall Street as the first ammunition to attack the administration since September 11. Mid-term elections are in November.
The accounting policies under investigation at Halliburton were adopted by the oilfield services and construction company in 1998. Under the change in policy, the company booked as revenue disputed claims when construction projects ran over budget. The effect was to increase revenues at a time when the company was actually suffering big losses on a number of long-term contracts.
Halliburton maintains that it conformed with generally accepted accounting rules.
Judicial Watch is suing on behalf of two shareholders in Halliburton who, it said, were deceived by fraudulent accounting that caused the shares to be overvalued. Cheney was chairperson and CEO of the company from 1995 to 2000.
The SEC has not yet filed any charges against Halliburton, but last month said the investigation would continue regardless of where it leads.
Ari Fleischer, the White House spokesperson, said he had spoken to the vice-president’s office and ”they believe the suit is without merit and that’s where it stands”.
Bush, who had promised to scale back Washington’s interference in big business before his election, has been forced to take an aggressive stance on the wave of corporate scandals.
A series of cases of accounting fraud, insider dealing and episodes of astonishing greed among top executives has shaken faith in US markets. Companies hit have included Enron, Xerox and WorldCom, some of the biggest names in US business.
Bush has been criticised for the sale of $849 000 worth of shares in Harken in 1991 shortly before the company reported heavy losses, causing the share price to lose almost half its value. The SEC investigated possible insider dealing but dropped the case without taking any action.
Judicial Watch noted on Wednesday that the chairperson of the SEC at the time was an appointee of the president’s father, George Bush Sr. It remains unclear why the president failed to disclose the share sale for eight months. But Harken was forced by the SEC to restate its earnings for 1989 after disputing the accounting for the sale of a subsidiary.
Bush shrugged off comparisons with Enron earlier this week. ”This was an honest disagreement about accounting procedures. And the SEC took a good look at it and decided that the procedure used by the auditors was not the right procedure in this particular case.”