Politically charged atmosphere over Halliburton's announcement
Since 1919, when Mr.Erle P. Halliburton established the New Method Oil Well Cementing Co. in Oklahoma, the name Halliburton has been associated with American corporate know-how in the oilfield services business.
Last Sunday, the company announced that its chief executive, Dave Lesar, would move to a new corporate headquarters in Dubai to focus on business in the Middle East, Africa, Europe and Asia.
The announcement sparked huge negative response and warnings from members of Congress, who suspected that the company once run by Vice President Cheney was trying to trim its tax bill and remove itself from the limelight in U.S. Immediately the company's policies and tactics come under fire about the way it obtained and executed government contracts, especially those connected to troubled reconstruction projects in Iraq.
The CEO announcement on the offices relocation was qualified as a bizarre by a member of the Senate Commerce Committee in U.S.
Last Sunday, the company announced that its chief executive, Dave Lesar, would move to a new corporate headquarters in Dubai to focus on business in the Middle East, Africa, Europe and Asia.
The announcement sparked huge negative response and warnings from members of Congress, who suspected that the company once run by Vice President Cheney was trying to trim its tax bill and remove itself from the limelight in U.S. Immediately the company's policies and tactics come under fire about the way it obtained and executed government contracts, especially those connected to troubled reconstruction projects in Iraq.
The CEO announcement on the offices relocation was qualified as a bizarre by a member of the Senate Commerce Committee in U.S.
People familiar with investigations carried out by the Pentagon and special Iraq inspectors general said there were many aspects of Halliburton's contracts in Iraq that have not yet come under full scrutiny. In 2006 Halliburton received $6.1 billion of Defense Department contracts, the sixth-largest total of any company. In 2005, it received $5.8 billion.
Halliburton announced last month that it would spin off its 81 percent stake in KBR, its subsidiary that received more than 90 percent of its Pentagon contracts in 2006. Securities analysts said the move would aid Halliburton's stock price, which has languished at lower price-to-earnings ratios than other oilfield services companies.
The chief executive's move will mean little change for the thousands of Halliburton employees, who work in 70 countries, including the United States. The company said it would maintain its U.S. registration and its substantial presence in Houston.
Lawyers who specialize in corporate litigation said that Halliburton, as a company run by U.S. citizens and traded on U.S. stock exchanges, would still be subject to such laws as the Foreign Corrupt Practices Act and Sarbanes-Oxley.
The only change in status is in respect to tax consequences. Income earned abroad and paid to a company based abroad would not be subject to U.S. taxes.
Halliburton announced last month that it would spin off its 81 percent stake in KBR, its subsidiary that received more than 90 percent of its Pentagon contracts in 2006. Securities analysts said the move would aid Halliburton's stock price, which has languished at lower price-to-earnings ratios than other oilfield services companies.
The chief executive's move will mean little change for the thousands of Halliburton employees, who work in 70 countries, including the United States. The company said it would maintain its U.S. registration and its substantial presence in Houston.
Lawyers who specialize in corporate litigation said that Halliburton, as a company run by U.S. citizens and traded on U.S. stock exchanges, would still be subject to such laws as the Foreign Corrupt Practices Act and Sarbanes-Oxley.
The only change in status is in respect to tax consequences. Income earned abroad and paid to a company based abroad would not be subject to U.S. taxes.
Some oil analysts and consultants said the company's explanation for the move was genuine. Halliburton stated that in 2006 38 percent of its $13 billion oilfield services revenue came from the Eastern Hemisphere and that is where the growing of the market is heavily weighted toward oil exploration and production opportunities. Growing the business in the Middle East will bring more balance to Halliburton's overall portfolio.
Another aspect is the change of the company's status - Halliburton, an American company doing international business will become a truly international company.
Suspicions were widespread given the politically charged atmosphere over the war and the troubled occupation and reconstruction efforts in Iraq.
How Halliburton's announcement will affect the trade talks between UAE and the U.S. as negotiations were already damaged by a political furor over state-owned Dubai Ports World's purchase of US port operations last year?
1 comment:
Strictly from a business stand point it is a sound decision. They are a company that does oil field work, they vast majority of the worlds oil comes from the Middle East. Dubai is a good place to base themselves right now.
I admit I find the timing to be a bit odd but I don't think it is going to affect their U.S operations.
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