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Contact Us Kerry Ad Falsely Accuses Cheney on Halliburton Contrary to this ad's message, Cheney doesn't gain financially from the c ontracts given to the company he once headed.
Printer Friendly Version Summary A Kerry ad implies Cheney has a financial interest in Halliburton and is profiting from the company's contracts in Iraq. The fact is, Cheney doe sn't gain a penny from Halliburton's contracts, and almost certainly won 't lose even if Halliburton goes bankrupt. The ad claims Cheney got $2 million from Halliburton "as vice president," which is false. Actually, nearly $16 million of that was paid before C heney took office. More importantly, all of it was earned before he was a candidate, when he was the company's chief executive. Analysis A Kerry ad released Sept 17 once again attacks Cheney's ties to Halliburt on, implying that Cheney is profiting from the company's contracts in Ir aq. Kerry-Edwards Ad "Cheney Halliburton" Cheney: I have no financial interest in Halliburton of any kind and haven 't had now for over three years. Announcer: The truth: As vice president, Dick Cheney received $2 million from Halliburton. It says, "As vice president, Dick Cheney received $2 million from Halliburton. And it implies th at Cheney lied to the public when he said in a TV interview that "I have no financial interest in Halliburton of any kind." But as we document here, Cheney has insulated himself financially from wh atever might happen to Halliburton. It is true that Cheney has rece ived just under $2 million from Halliburton since his election, but near ly $16 million of that total was paid before Cheney actually took offic e on Jan. Saying Cheney got that much "as vice president" is s imply false.
pay statement dated Jan 2, 2001 shows just under $ 147,579 was paid that day as "elect defrl payou," meaning payout of salary from the company's Elective Deferral Plan. That was salary Cheney had earned in 1999, but which he had chosen previously to receive in five installments spread over five years.
That was Cheney's incentive compensation -- bonus money -- paid on the basis of the company's performance in 2000. Cheney had formally resigned from the company the previous September to campaign full time, but the amount of his bonus couldn't be calculated until the full year's financial results were known. Cheney's personal financial disclosure forms, together with the pay state ments just mentioned, show that Cheney has received $398,548 in deferred salary from Halliburton "as vice president." And of course, all of that is money he earned when he was the company's chief executive officer. C heney was due to receive another payment in 2004, and a final payment in 2005. The Kerry ad isn't the only place the false $2 million figure appears.
The dates of the Halliburton payments don't appear on Cheney's personal financial disclosure form from 2001, and the DNC assumed -- incorrectly as we have shown -- that all the 2001 payment were made after he took o ffice. Deferred Salary The $398,548 Halliburton has paid to Cheney while in office is all deferr ed compensation, a common practice that high-salaried executives use to reduce their tax bills by spreading income over several years. In Cheney 's case, he signed a Halliburton form in December of 1998 choosing to ha ve 50% of his salary for the next year, and 90% of any bonus money for t hat year, spread out over five years.
Legally, Halliburton can't increase or reduce the amount of the deferred compensation no matter what Cheney does as vice president. So Cheney's d eferred payments from Halliburton wouldn't increase no matter how much m oney the company makes, or how many government contracts it receives. On the other hand, there is a possibility that if the company went bankru pt it would be unable to pay. That raises the theoretical possibility of a conflict of interest -- if the public interest somehow demanded that Cheney take action that would hurt Halliburton it could conceivably end up costing him money personally.
policy (which cost him$1 4,903) that promises to pay him all the deferred compensation that Halli burton owes him even if the company goes bust and refuses to pay. The po licy does contain escape clauses allowing the insurance company to refus e payment in the unlikely events that Cheney files a claim resulting "di rectly or indirectly" from a change in law or regulation, or from a "pre packaged" bankruptcy in which creditors agree on terms prior to filing. But otherwise it ensures Cheney will get what Halliburton owes him shoul d it go under. Cheney aides supplied a copy of that policy to us -- blacking out only so me personal information about Cheney -- which we have posted here public ly for the first time. Stock Options That still would leave the possibility that Cheney could profit from his Halliburton stock options if the company's stock rises in value. However , Cheney and his wife Lynne have assigned any future profits from their stock options in Halliburton and several other companies to charity.
The "Gift Trust Agreement" the Cheney's signed two days before he took of fice turns over power of attorney to a trust administrator to sell the o ptions at some future time and to give the after-tax profits to three ch arities.
Capital Partners for Education , a charity that provi des financial aid for low-income students in Washington, DC to attend pr ivate and religious schools. The agreement states that it is "irrevocable and may not be terminated, w aived or amended," so the Cheney's can't take back their options later. The options owned by the Cheney's have been valued at nearly $8 million, his attorney says. Such valuations are rough estimates only -- the actua l value will depend on what happens to stock prices in the future, which of course can't be known beforehand. But it is clear that giving up rig hts to the future profits constitutes a significant financial sacrifice, and a sizeable donation to the chosen charities. "Financial Interest" Democrats have taken issue with Cheney's statement to Tim Russert on NBC' s Meet the Press Sept. I have no financial interest in H alliburton of any kind and haven't had now for over three years. And as vice president, I have absolutely no influence of, involvement of, kno wledge of in any way, shape or form of contracts led by the Corps of En gineers or anybody else in the federal government. Frank Lautenberg released a legal ana lysis he'd requested from the Congressional Research Service. Without na ming Cheney, the memo concluded a federal official in his position -- wi th deferred compensation covered by insurance, and stock options whose a fter-tax profits had been assigned to charity -- would still retain an " interest" that must be reported on an official's annual disclosure forms . And in fact, Cheney does report his options and deferred salary each y ear. But the memo reached no firm conclusion as to whether such options or sal ary constitute an "interest" that would pose a legal conflict. It said " it is not clear" whether assigning option profits to charity would theor etically remove a potential conflict, adding, "no specific published rul ings were found on the subject." And it said that insuring deferred comp ensation "might" remove it as a problem under conflict of interest laws. Actually, the plain language of the Office of Government Ethics regulatio ns on this matter seems clear enough. The regulations state: "The term f inancial interest means the potential for gain or loss to the employee . as a result of governmental action on the particular matter." So by removing the "potential for gain or loss" Cheney has solid grounds to a rgue that he has removed any "financial interest" that would pose a conf lict under federal regulations. Conflict of Interest It is important to note here that Cheney could legally have held onto his Halliburton stock options, and no law required him to buy insurance aga inst the possibility that Halliburton wouldn't pay the deferred compensa tion it owes him. Both the President and Vice President are specifically exempted from federal conflict-of-interest laws, for one thing, as are memb...
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