Thursday, August 05, 2004

Well, now we have a bit of an idea what Ken Lay and Dick Cheney might have been talking about at those meetings of Dubya's Energy Commission whose minutes they're desperate to keep under wraps: their mutual problem defining the responsibilities of a corporate chief executive.

You know what kind of trouble accounting caused at Enron under Lay. And it seems that accounting was also a bit of a problem at Halliburton under Cheney -- they just got fined $7.5 million for booking, in effect, "you owe me" notes that they were sending their customers as revenue before the customers had actually agreed that they owed the money. This, in turn, greatly improved Halliburton's reported earnings performance at a time when that sort of shift was desperately needed to improve the publicity for a merger that was supposed to be Cheney's big project.

And yet Cheney now claims total ignorance of what was going on on his watch -- in which he is backed by the SEC, which, quoth Billmon, names him in neither their complaint against Halliburton, nor their Cease and Desist letter:

Apparently, we're expected to believe that Halliburton's CEO was completely ignorant of an accounting change so significant it turned a quarterly loss in one of the company's two main operating division into a gain - even though, as we shall see, the switch also may have played a crucial role in Cheney's most important business achievement (if that's the right word), the merger with Dresser.

This variation on the Ken Lay defense is pretty far-fetched to begin with, but it becomes even more laughable when you read the complaint, which tries to pin the guilt on the gray flannel shoulders of Halliburton's former CFO by noting that his signature was on a variety of misleading documents, such as the firm's annual report, that were filed with the SEC.

Which is true enough. There is, however, one signature above the CFO's on the company's 1998 report...

The signature to which he refers is, of course, Cheney's own.

Which brings us back to the time, oh so few short years ago, when the accounting scandals were big news, and the cureall advanced by Dubya's crew was making the CEOs sign the reports. As Cheney himself already had. And you can be assured that Dubya's enforcement arms will hold all the other CEOs to the same high standard for accountability which they've shown for Dubya's own veep...


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