Halliburtonstein, a Corporation and Its Creatures

Polluting, War Profiteering and Politically Corrupting

halliburtonstein.jpgWritten for FedUpNewYorkers.org

This month our corporate spotlight is on Halliburton, portrayed here as a Frankenstein monster, Halliburtonstein. The company’s destructive impact will be felt long after its infamous CEO, Dick Cheney, exhausts the ingenuity of modern medicine. Meanwhile, David Lesar, his successor, is now at the controls — and just barely holding on.

In January 2001, in one of his first actions as president, George W. Bush appointed Vice President Cheney to chair an energy task force charged with developing new energy policies for the country. Cheney had left Halliburton’s chairmanship for government service, but continued to receive deferred compensation during his tenure as vice president.

Though some details were discovered as a result of lawsuits and leaks, the administration succeeded in keeping much of the task force’s deliberations and even its membership hidden from the public and Congress.

A few environmentalists were consulted long after decisions had been made, but it was mere window dressing. Oil and gas interests dominated the process. Cheney’s task force studied maps of Iraqi oilfields, pipelines, refineries, terminals and oil and gas development projects. It was a small pebble in the mountain of evidence that Big Oil had Iraq’s oil resources in its sights long before they came up with the bogus 9/11 connection, dragged the world into a never-ending Middle East war and pulled in an estimated $138 billion in blood-soaked profits. Halliburton profited most handsomely, raking in at least $39.5 billion. Meanwhile, Cheney told NBC's “Meet the Press” in 2003 that he had “absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts” that Halliburton received in Iraq.

As for the energy task force, litigation to open up its deliberations went all the way to the Supreme Court. Before the case was decided, Cheney invited Justice Antonin Scalia and his daughter to attend a duck shooting outing hosted by a prominent Louisiana oil man, transportation courtesy of Air Force Two. Never mind “avoiding the appearance of impropriety,” the commonly accepted ethical standard for judges and other high-ranking public officials, Scalia’s attendance was an ethical scandal that should have triggered calls for his resignation from the court. At the very least, Scalia should have recused himself from the case. Instead, he thumbed his nose at the many legal scholars and editorial writers who called on him to do just that and joined the majority opinion to uphold Cheney’s position.

Polluting the Environment

Halliburton is a major player in the business of drilling for oil and gas using the process of hydraulic fracturing, or “fracking.” The evidence is overwhelming that fracking’s toxic chemicals, some known to be carcinogenic, have caused serious health and environmental damage, including the contamination of drinking water, severe illness, death of livestock and fish, and air and groundwater pollution. But much like the tobacco industry years ago, executives in the oil and gas industries deny the existence of toxic effects or health hazards, especially those that can’t be eliminated with nominal industry safeguards.

In 2005, amid florid declarations of concern for the environment, public health and safety, Cheney pushed through Congress the so-called “Halliburton Loophole,” which prohibited the Environmental Protection Agency from regulating fracking under federal clean water and air protections.

The Marcellus Shale, a geological formation that spans parts of New York, Pennsylvania and other states, has been a major target for frackers. It contains large amounts of natural gas, and Pennsylvania, along with many other states, is a fracking paradise. Regulations are weak and the officials assigned to enforce them, even if they are able to resist political pressures, are underpaid and their agencies understaffed. New York State has similar problems. But in an epic David-Goliath battle, the residents of Dryden, a small town in upstate New York, took things into their own hands and forced the elected town board to ban fracking under its local zoning regulations. The action was upheld in 2014 by the state’s highest court.

The New York Court of Appeals said it would have upheld preemptive state action to override local restrictions had Albany taken such action. That was too great a political hazard for the governor or for upstate Republican legislators. So shortly after the court’s decision, a reluctant Andrew Cuomo imposed a long-delayed statewide ban on fracking, garnering credit for a strong environmental action that he had been forced to take by grassroots pressure. Bottom line: A handful of fed-up Dryden residents who organized themselves were able to leverage their voting power at the local level to stop the monster in its tracks, saving their own community and many others around the state. [For more on this story...]

We Built It And Now We Have To Control It

Dryden demonstrates the potential of a focused, passionate grassroots movement to defeat the most powerful and corrupting force in our society: large financial and industrial corporations.

Years ago, it took an act of a state legislature to create a corporation. Now, we create them by filling out a few forms. We’ve given them perpetual existence and greater legal rights than we enjoy as individuals, and allowed them to accumulate unimaginable wealth and power. We’ve programmed them for a single purpose: to maximize profits for those who own and control them. And now they’re out of control.

Even assuming the narrow mission of maximizing profits for a handful of people can be rationalized, human ownership is transitory and human control is illusory. Owners — namely, stockholders — come and go with the click of a computer mouse. And human control is exercised only within the constraints of the legal and fiduciary obligation to maximize profits. The corporate CEO who doesn’t deliver the profits, or at least the revenues, on which stock prices are based loses personal wealth and eventually his or her job. But the stakes are much higher than that: If the CEOs do their jobs, they will bring us all down. Shareholders or not, we’re all stakeholders.

Low-level employees work long hours, often for subsistence wages and ever-diminishing job security. In a particularly scandalous practice, many corporations collect the proceeds from life insurance policies they’ve taken out on the most insignificant employees. Neither they nor their families are aware that their deaths are a source of multibillion-dollar, tax-free corporate profits.

When these corporate monsters merge or when one acquires another, lifetime employees are cast off without remorse. Again, the better to maximize profits, or in business school lingo, to gain the benefits of “synergies” and “efficiencies of scale.” Corporate offspring, known as subsidiaries, are set up in other countries so that their parent companies can avoid paying U.S. taxes. The Government Accountability Office (GAO) estimates that corporate tax avoidance costs the U.S. Treasury $180 billion per year.

Presidential candidates urge repatriation of corporate profits held offshore at much lower tax rates, always in the interest of “job creation.” To hear them tell it, one would think no one is more concerned for “hard-working taxpayers” (the phrase that emerged from Frank Luntz’s focus groups) than Republican politicians.

When Bush signed the American Jobs Creation Act in 2004 to repatriate offshore monies at a 5.5 percent tax rate (the nominal corporate rate is 39.1 percent), the windfall was used for massive stock buybacks, which increased stock prices and enriched CEOs who hold stock options. Instead of investing the capital in domestic industry, they fired tens of thousands of employees.

In 2004, the GAO identified 17 Halliburton subsidiaries in tax havens, including 13 in the Cayman Islands. Among those in the Caymans was Halliburton Products and Services Ltd., which CEO David Lesar incorporated in 2003. That subsidiary enabled Halliburton not only to avoid U.S. taxes but also to circumvent U.S. sanctions on doing business with Iran.

Avoiding taxes, providing faulty military equipment and bogus services to American troops, wreaking environmental havoc, bribing politicians and regulators — Halliburtonstein is the quintessential corporate monster. It uses our rivers, streams and air as giant toilets for the toxic wastes its processes generate — the point of the Halliburton Loophole — and exploits our country’s military and financial power to advance its financial interests.

More than that, along with Wall Street, industrial corporations such as Halliburton virtually own our political process. Only grassroots political power can hope to constrain them. So hats off to the small group of Dryden voters who demonstrated that while corporations enjoy outsized political influence, the people still have the power — if they use it.

 

Illustration by Keith Seidel. From the cover of the January, 2016 edition of the ‘Fed-Up New Yorkers’ newspaper.
DICK CHENEY, ANTONIN SCALIA AND FRANK LUNTZ — ALL IN THE SERVICE OF THE WAR-PROFITEERING, ENVIRONMENT-DESTROYING, POLITICALLY CORRUPTING HALLIBURTONSTEIN.

 


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