Skip to comments.Judge considers dismissing Cheney/Halliburton lawsuit [And gets tough with Klayman]
Posted on 07/30/2003 2:03:34 PM PDT by Arthur Wildfire! March
Judge considers motion to dismiss lawsuit against Cheney, Halliburton [actual headline]
DALLAS - Halliburton Co. asked a federal judge Tuesday to throw out a lawsuit charging that the company and Vice President Dick Cheney, its former chief executive, misled investors by changing the way it counted revenue from construction projects.
A lawyer for Judicial Watch, a public interest group that filed the lawsuit on behalf of three small investors, said the company tried to polish its financial reports beginning in 1998 by booking revenue on cost overruns before it was certain of getting paid. Halliburton shares dropped sharply when the oilfield-services company's performance sagged in 2001. The Securities and Exchange Commission is investigating the accounting change and the way Halliburton disclosed it. Houston-based Halliburton recently agreed to pay $6 million to settle about 20 potential class-action lawsuits that raised the same charges but didn't name Cheney as a defendant.
A Halliburton lawyer, Ronald W. Stevens, said the accounting change was disclosed in SEC filings beginning in 1999 and that Judicial Watch had failed to produce evidence of fraud.
Stevens said Judicial Watch was pushing its lawsuit "to make political hay with respect to Vice President Cheney ... The federal courts shouldn't be used for these kinds of unsavory political purposes."
Larry Klayman, Judicial Watch's chairman and general counsel, denied any political motivation, saying he is a Republican who voted for Cheney and President Bush in 2000.
Klayman said top Halliburton officials and their auditors made the accounting change to prop up sagging financial results. "Why not just be honest with the public? They weren't," he said.
After a 90-minute hearing, U.S. District Judge Sam A. Lindsay began considering the Halliburton motion to dismiss the case.
The judge expressed skepticism about some of Judicial Watch's claims, saying that the group was just assuming that Cheney knew details about the accounting change. But he left open the possibility that the group could revise its lawsuit after gathering more evidence of fraud.
"Are you going to come back with specifics, or is it going to be an exercise in futility?" Lindsay asked. Klayman said he could produce evidence that has surfaced since he filed the lawsuit, such as Halliburton CEO David Lesar's comment that Cheney knew about the accounting change. He said the SEC investigation of Halliburton could also yield new evidence.
A lawyer for Cheney, Steven M. Farina from the Washington office of Williams & Connolly, attended the hearing but did not speak. He declined comment after the session.
In trading Tuesday on the New York Stock Exchange, Halliburton shares fell 26 cents to $20.94.
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