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Suit accuses Cheney, firm of fraudulent accounting

Suit accuses Cheney, firm of fraudulent accounting


WASHINGTON (CNN) -- A watchdog group filed suit Wednesday against Vice President Dick Cheney and the oil industry company he once headed, accusing them of fraudulent accounting.

Judicial Watch, a group that investigates alleged corruption by government officials, filed the suit in federal court in Dallas against Cheney and Halliburton, a company that supplies products and services to the petroleum and energy industries.

Judicial Watch filed the suit on behalf of shareholders Stephen S. Stephens, Lyle Lionbarger and Deanna Lionbarger, who are seeking about $475,000 in damages. Cheney and several members of Halliburton's board of directors and executive management are named as defendants.

The suit claims accounting practices resulted in the overvaluation of the company's shares, which resulted in investors being deceived.

Judicial Watch is also suing troubled accounting firm Arthur Andersen LLP, which was Halliburton's auditing firm at the time. Andersen was found guilty of obstruction of justice for its role in shredding documents related to Enron.

SEC investigation under way

The Securities & Exchange Commission is already investigating accounting practices at Halliburton. The company has said it is cooperating with the probe but believes it did nothing wrong.

Cheney was chairman and chief executive of Halliburton from 1995 to 2000.

Jennifer Millerwise, a Cheney spokeswoman, said: "This is a case without merit" -- a line echoed by White House spokesman Ari Fleischer.

Halliburton's chief financial officer, Doug Foshee, said, "The claims in this lawsuit are untrue, unsupported and unfounded." He said the company has always followed proper accounting guidelines and is working with the SEC to resolve questions about its practices.

But Judicial Watch Chairman Larry Klayman said the group is confident it can show "Vice President Cheney broke the law."

"Whether it is the Enron, Arthur Andersen, Global Crossing, or now the Halliburton and Harken scandals, there is a dangerous intersection between politicians of all stripes, Democrat and Republican, attempting to feed at the trough of business greed," said Klayman.

Sources familiar with the SEC investigation said there has been no effort to question or contact Cheney directly and that Halliburton has been cooperating with investigators.

The White House position is that Cheney cannot be sued "as an individual" and, because of that, Halliburton is handling all legal aspects of the case.

The company wants the SEC probe handled first, one official said, since its findings could go a long way in determining whether there is any merit to any suit by shareholders.

Judicial Watch characterizes itself as a non-partisan "judicial watchdog group," though Klayman is viewed as a conservative activist.

The organization received considerable attention during the Clinton administration for filing repeated lawsuits against the White House. It has sued GOP fund-raising committees and sued for access to the records of the Cheney energy task force.

A day after Bush calls for higher standards

The suit was filed a day after President Bush called for higher ethical standards for corporations, stricter laws against abuses and more responsible business leaders Tuesday in the shadow of corporate misdeeds by Enron, WorldCom and other major companies.

"We must usher in a new era of integrity in corporate America," Bush told the Association for a Better New York. He called for an end to "cooking the books."

The latest major improper financial disclosure was made last month by the telecommunications giant, WorldCom, which said it had improperly accounted for $3.8 billion in expenses, inflating its earnings.

The report sent its stock plummeting, prompted the SEC to file fraud charges, and triggered widespread criticism from politicians, investors and employees, thousands of whom were laid off.

Arthur Andersen was found to be shredding financial documents of Houston-based energy company Enron as late as January 14 despite having been notified that an investigation was under way. In December, Enron filed for Chapter 11 bankruptcy protection, the largest corporate filing in U.S. history, costing thousands of investors and employees their life savings.

And some lawmakers have raised questions about President Bush's 1990 sale of Harken Energy Corp. stock, which took place when he was a businessman and a member of the company's board of directors.

The sale came two months before the company disclosed a major loss. Bush has said the matter was cleared years ago, and accuses political opponents of trying to use it against him.

In another notable case, Judicial Watch has filed a lawsuit on behalf of Oklahoma City bombing victims that alleges Terry Nichols and Timothy McVeigh received training and money from Iraq.

McVeigh, the Oklahoma City bombing mastermind, was executed last year, and Nichols has been convicted on federal charges for his role in the 1995 bombing, which killed 168 people.



 
 
 
 



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