Piercing The Corporate Veil

Piercing The Corporate Veil
David J. Lesar, Chairman and CEO of Halliburton, one of the country’s largest
frackers, is our Corporate Bad Boy of the Month—And He May Be Coming to
Your Town.
(Lesar’s photo to be superimposed on the face of the man in the stocks—along
with the Halliburton logo?)
Halliburton, Wall-Mart, Boeing, Pfizer, Citicorp, Monsanto, etc. are household names. The
people who run them are largely invisible and rarely held accountable for the actions they take in
the names of the corporations they head.
Long ago, it took an act of a state legislature to establish a corporation. It was understood that if
they were allowed perpetual existence with the sole mission to maximize profits----and whatever
those oil company environmental ads on public television would have us believe--maximizing
profits or at least pretending to do so through accounting gimmicks and thus maximizing
compensation for the top executives is the paramount objective----corporations would grow so
rich and powerful that the men who controlled them would take control of the government and
our lives.
And now they have. We’ve created a true Frankenstein monster: the corporation that lives
forever, carries out anti-social, criminal acts of every imaginable description, is in fact a
sociopath by definition and by law, and reproduces itself. So, for example, if politicians are
bribed, legally of course, to enable corporations to evade taxes by creating subsidiaries in Dubai
or the Cayman Islands, they will be created. Similarly, if by creating subsidiaries around the
world and in other states, the corporation is able to rid itself of union labor, pensions, health,
safety, and environmental regulations, or other constraints on its profit maximizing objective,
little Frankenstein monsters will be created. Not to create them is an almost certain path to losing
one’s CEO position to someone who will.

So, now these creatures roam the earth, transcending national borders, controlling our food
supply, poisoning our water, corrupting our politics, selling trillions of dollars of bogus securities
as triple-A investments, fomenting wars and selling weapons to the combatants on all sides, and
more. They retain the best propagandists who portray them as “job creators” and who portray
government as the enemy, which, so long as officeholders and regulators remain in thrall to big
money, increasingly it is. (Continued below)
Trust the “job creators.” Remember the tobacco company CEOs who swore under penalty of perjury
that tobacco was neither addictive nor a health problem?
David J. Lesar, the powerful Chairman and CEO of Halliburton, war profiteer, tax avoider,
supplier of substandard equipment and contaminated drinking water to American troops in Iraq,
has been immersed in scandal and corruption from the earliest stages of a corporate career that
includes a 16-year partnership at Arthur Andersen, the accounting firm that helped Enron steal
billions of dollars from its customers, shareholders, and employees, thousands of whom lost their
life savings.
Lesar has never been convicted or even formally charged with a crime, but as an Arthur
Andersen senior partner, he presided over a culture of criminality and corruption that included
corporations such as WorldCom, Sunbeam, Waste Management, and many other notorious
corporate clients. Lesar’s corporate biography omits his Arthur Andersen partnership.

Who me, Senator? Joseph Berardino, Arthur Andersen CEO
The Enron scandal resulted in a rare felony conviction for the firm (later overturned on appeal on
technical grounds), and rarer still, the death of what was then one of the “Big Five” accounting
firms; Arthur Andersen was forced to surrender its CPA licenses.
Lesar was Arthur Andersen’s supervising partner on the Halliburton account. In 1995, he left the
accounting firm to join Halliburton as a Vice President. A few months later, Dick Cheney,
Halliburton CEO, named him CEO of Kellog, Brown and Root (KBR), a Halliburton subsidiary.
He continued as Halliburton’s chief financial officer. In 1997, Cheney moved him up to
President and chief operating officer. During that period Halliburton secretly changed its
accounting practices, which enabled it to report annual earnings in 1998 that were 46 percent
higher than they would have been had the change not been made. Cooking the corporate books
led to an SEC corporate fine of $7.5 million. Lesar said, "We are pleased to bring closure to this
matter." 1
Case closed on another accounting scam.
When in 2000, Cheney left Halliburton for the vice presidency, he chose Lesar to succeed him.
Shortly thereafter, Halliburton became the largest financial beneficiary of the Iraq invasion
and occupation. It received some $18 billion in “no-bid” “cost-plus” contracts to service
1 http://articles.baltimoresun.com/2004-08-04/business/0408040306_1_halliburton-accounting-change-cheney

U.S. troops with food, water, laundry, housing, security, intelligence gathering and
interrogation--everything except the actual killing. Halliburton also received major contracts to
rebuild the country’s oil industry.
Lesar authorized millions of dollars of payments to Cheney during his Vice Presidency. The
payments were said to have been obligated by contract before Cheney left the company. Cheney
swore he had nothing to do with the phenomenal growth of Halliburton’s government
contracting or energy business.
Distributing kickbacks, overcharging for fuel and meals that were never served,
substituting contaminated drinking water for purified water, selling defective equipment
that cost the lives of American soldiers (At least 18 soldiers were electrocuted in their showers
due to improper grounding of electrical devices for which Halliburton subsidiary KBR was
responsible), Iraqi civilians, and their own employees---under Lesar’s leadership, Halliburton
engaged in war profiteering that dwarfed anything the country has ever known. And yet
David Lesar remains a respected business leader among his peers and virtually unknown to the
public.
In a parody of corporate public relations, Lesar reminds those who question Halliburton’s
corporate culture that “we are providing coveralls and two-piece work clothing that are sized for
women. These better-fitting garments will improve the comfort and safety of our employees."

In 2005, he told Fortune Magazine writer Peter Elkind, “What we've done in Iraq is good --to the
third power!" 2 And for all we know, he believes it. Nobody wants to think of himself as living
an ignoble life.
Sidebar?
Pentagon auditors, the General Accounting Office, the Inspector General of the Coalition
Provisional Authority, and the Justice Department investigators disagreed.
“…[T]he $2.5 billion Restore Iraqi Oil (RIO) agreement, that has generated the most suspicion about
Cheney's hidden hand, because it was awarded secretly, on a no-bid basis, in March 2003, on the eve of
war. Under this cost-plus contract, Halliburton was hired to put out oilfield fires and rebuild Iraq's oil
infrastructure. It is under this contract that KBR charged infamously high prices to ship gasoline into
Iraq.”….
Several problems that have surfaced are of the jaw-dropping variety--subs charging $100 to wash a 15-
pound bag of laundry, and so forth. Especially telling was an October 2004 Pentagon audit of the RIO
contract. Out of $875 million in charges it examined, $108 million was deemed "questionable" or
"unreasonable." This included Halliburton's claim to have spent $27.5 million to ship to Iraq liquefied gas
it had purchased in Kuwait for just $82,100--a fee the audit calls "illogical." (A Halliburton spokeswoman
responded that the company delivered "vital services for the Iraqi people at a fair and reasonable cost,
given the circumstances.")…
In 2004, the Government Accounting Office identified 17 Halliburton subsidiaries in tax haven
countries, including 13 in the Cayman Islands. In 2003, Lesar had incorporated Halliburton
Products and Services Ltd. in the Cayman Islands, enabling him to circumvent U.S. sanctions on
doing business with Iran.
With retired generals swinging through the Pentagon’s revolving doors and onto Halliburton’s
payroll to lobby their Pentagon colleagues, the military-industrial complex that President
Eisenhower had warned the country about—unfortunately, not until his farewell address—was in
full blown mania at Halliburton.
Following Hurricane Katrina, Lesar dispatched former Bush the Second FEMA head Joe
Albaugh, a Halliburton lobbyist, to Baton Rouge, Louisiana, where in Albaugh’s words; he
"helped his clients get business from perhaps the worst natural disaster in the nation's history."
Recently, Halliburton agreed to pay $1.1 billion to settle lawsuits brought over its role in the
largest offshore oil spill in U.S. history. The explosion aboard the Deepwater Horizon drilling rig
killed 11 workers and caused millions of barrels of oil to spill into the Gulf. Spill victims accused
it of defective cementing work on the Macondo well. Halliburton blamed British Petroleum,
which owned the well.
2 http://archive.fortune.com/magazines/fortune/fortune_archive/2005/04/18/8257012/index.htm

And Now David Lesar and his oil and gas colleagues are going after our drinking water.
[See Fracking Story]