MarketWatch is reporting Halliburton to move headquarters to Dubai.
Halliburton Co. will move its corporate headquarters from Houston to Dubai, the company announced Sunday. The Associated Press quoted Lesar as saying, “as the CEO, I’m responsible for the global business of Halliburton in both hemispheres and I will continue to spend quite a bit of time in an airplane as I remain attentive to our customers, shareholders and employees around the world. … Yes, I will spend the majority of my time in Dubai.”
Last year, 38% of Halliburton’s $13 billion in oil field services revenue was generated in the eastern hemisphere. The company, which was founded in 1919, operates in almost 70 countries and has more than 45,000 employees. In 2006, it earned a profit of $2.3 billion on revenue of $22.6 billion.
Halliburton is spinning off its KBR division, which provides construction and management for government and infrastructure projects, as well as energy and chemical engineering services. The company’s energy group provides oil field services.
KBR Lingering Issues
Back on March 29th 2006 the Washington Post reported Documents Trace KBR Billing Problems.
Halliburton Co. repeatedly overcharged the government and exhibited “profound systemic problems” under a $1.2 billion contract to restore oil services in Iraq, according to internal government documents released yesterday by one of the company’s fiercest critics.
The documents, cited in a report by the staff of Rep. Henry A. Waxman (D-Calif.), depict government officials’ increasing irritation with Halliburton subsidiary Kellogg Brown and Root Inc. as schedules slid, costs multiplied and the company balked at meeting demands for accurate cost estimates. Ultimately, contract overseers threatened to terminate the company’s contract if it did not improve.
Pentagon auditors have challenged $45 million worth of company costs, out of $365 million in charges that were reviewed. Under the terms of its deal with the government, KBR earns its profit as a percentage of its costs.
In one case, the government’s contracting officials reported that KBR attempted to inflate its cost estimates by paying a supplier more than it was due. In another, KBR cut its cost estimates in half after it was pressed on its true expenses. In a third, KBR billed for work performed by the Iraqi oil ministry.
KBR, the Pentagon’s largest contractor in Iraq, has often been criticized for its work, including one deal for supporting U.S. troops with food, laundry and mail services. Yesterday’s report was the first to look at the competitively awarded contract from 2004 under which KBR worked to restore oil services in the southern part of Iraq.
That contract was a follow-up to a no-bid 2003 deal that gave KBR that responsibility nationwide. The Pentagon’s internal audit division — the Defense Contract Audit Agency — had warned the Army Corps of Engineers to contact auditors before negotiating with the company on the new contract because of “significant deficiencies” in KBR’s ability to estimate its costs. The DCAA later said the Corps never did so.
“Halliburton has pulled off the impossible: it has actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract,” Waxman said in a statement. “This new round of overcharges and dismal performance would have been avoided if the Bush Administration had listened to its own auditors.”
Time to leave Dodge
KBR and Halliburton have both milked the government for every penny possible (and then some). But the sweetheart deals seem to be running dry and Republicans are no longer in control of Congress. This makes KBR a questionable asset if not an out and out liability. All in all now seems to be a great time to pack the bags, kiss the sweetheart goodbye, and Get the hell out of Dodge. Meanwhile Halliburton is poised to
spinoff dump KBR on an unsuspecting public whose appetite for IPOs and leverage buyouts is still relatively strong. Once this is done, the only thing left for Halliburton to say is “Mission Accomplished“.
Mike Shedlock / Mish/