Halliburton Ethical Case Review
By: Brittany Maguire, Dalhousie University
November 25th, 2012
Prepared for:
Basic Information:
Halliburton provides products and services to the exploration and production sectors of the oil and gas
industry (Halliburton, 2012a). This includes products and services involved with locating hydrocarbons,
drilling and the construction and operation of wells (Halliburton, 2012a). Halliburton was established in
1919, in Duncan, Oklahoma by Erle Halliburton (Halliburton, 2012b).
Halliburton is based out of Houston, Texas (Halliburton, 2012c), with a new second headquarters in
Dubai, United Arab Emirates (Halliburton, 2012a). The company has more than 70,000 employees in
approximately 80 countries (Halliburton, 2012a). It has operations in every continent, save Antarctica
(Halliburton, 2012c). Kellogg Brown and Root (KBR), mentioned below, is a former subsidiary of
Halliburton (Rudolf, 2012); the companies separated in April of 2007 (McGreal, 2009) and all incidences
involving KBR outlined here occurred before the split.
The industries which Halliburton has been and is involved with are in and of themselves controversial;
however, it is not necessary to delve into a debate on the ethics of the oil and gas industry or military
contracts to find ethical issues with Halliburton. Halliburton has been accused of improper conduct and
major infractions within United States law. This ethical case study highlights some major incidents
which Halliburton has been involved in and is by no means exhaustive.
Corruption:
The United States Securities and Exchange Commission (SEC) charged KBR with bribing Nigerian
government officials with $180 million in order to secure a $6 billion construction contract (SEC, 2009).
The SEC alleges that bribes began in 1994 and continued for a decade (SEC, 2009). The SEC also charged
KBR and Halliburton with book and record violations and internal control violations, all related to the
bribery (SEC, 2009). In February, 2009, Halliburton and KBR agreed to pay $177 million in disgorgement
and KBR was charged to pay $402 million in criminal fines (SEC, 2009). Albert Stanley, a former CEO of
KBR, pleaded guilty to the bribery scheme and was sentenced in February, 2012 to two and a half years
in prison (Rudolf, 2012). Two other former executives were also accused (Rudolf, 2012). Nigeria alleged
Halliburton of the bribery scheme and charged former American Vice President Dick Cheney and nine
other executives of Halliburton and KBR with conspiracy and distribution of gratification to public
officials (CNN Wire Staff, 2010). Nigeria dropped the charges, however, when Halliburton agreed to a
$35 million settlement (CNN Wire Staff, 2010).
In Indonesia, where Halliburton has many involvements, KBR lost a contract in 1999 while the
government was trying to rid of corruptly acquired contracts in the country (EarthRights International,
2000).
Allegations have been made from the Pentagon that Halliburton overcharged for fuel imports to Iraq to
the sum of $108 million, or more (Eckholm, 2005). Part of these allegations include a kickback scheme
with a company Halliburton hired in 2003, Altanmia, for fuel from Kuwait (Eckholm, 2005). This was
Halliburton Ethical Case Review
done without competitive bidding and Altanmia charged high prices for the services; Halliburton may
have charged the Pentagon for more than the services were worth and profited (Eckholm, 2005).
Halliburton is currently undertaking an internal investigation of operations in Angola and Iraq (Wethe,
2012). This began after an anonymous e-mail in December 2010 alerted the company that current and
former employees had violated the company’s Code of Business Conduct and the United States Foreign
Corrupt Practices Act (Wethe, 2012).
Dick Cheney:
While Dick Cheney was the Secretary of Defense, KBR was chosen to look at the potential for
outsourcing military contracts to private corporations (CBS and Associated Press, 2009). Cheney then
became CEO of Halliburton from 1995 to 2000 (CBS and Associated Press, 2009). After that, Cheney
became the Vice President of the United States (CBS and Associated Press, 2009). KBR was then
awarded a large, open-ended military contract without competitive bidding (CBS and Associated Press,
2009). It has been alleged that it was not proven that KBR was justified to receive this contract
(O’Harrow, 2004); no other firm was allowed to bid (McGreal, 2009). It has also been alleged that KBR
was allowed to participate in meetings with information that it was not supposed to have access to
(O’Harrow, 2004). Since leaving Halliburton during the 2000 presidential election campaign, Cheney has
received substantial benefits including shares, a retirement fund and compensation, which have been
viewed as controversial (CBS and Associated Press, 2009; McGreal, 2009).
While CEO of Halliburton, Cheney bought Dresser Industries, which brought Halliburton liability from
individuals who claimed to be injured or at risk from asbestos produced by Dresser Industries (Gerth and
Stevenson, 2002). This ended up costing Halliburton $4.17 billion in claims (CBS, 2009).
Sanctions:
Halliburton has been criticized for doing business in Iran, despite United States sanctions (Luo, 2007).
The company is able to do this legally through their subsidiary company based out of the Cayman Islands
(Luo, 2007). Halliburton Logging Services, a former subsidiary, was charged for continuing trade with
Libya despite United States sanctions (EarthRights International, 2000). Halliburton was also charged for
breaking sanctions with Iraq (McGreal, 2009). Cheney and other Halliburton executives have been active
in opposing United States sanctions, which may a conflict of interest (EarthRights International, 2000).
The Gulf of Mexico Oil Spill:
In April, 2010 the Deepwater Horizon rig exploded, killing 11 workers and releasing over four million
barrels of oil into the Gulf of Mexico (The Globe and Mail, 2012). Halliburton was responsible for the
cementing of the well, which failed (The Globe and Mail, 2012). A report to the president on the oil spill
stated that the causes of the spill can be traced to mistakes made by BP, Halliburton and Transocean
and that better management and communication between the companies could have prevented the
explosion (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 2011). The
report suggests that Halliburton did not undertake proper tests and communication to demonstrate
Halliburton Ethical Case Review
stability problems of the cementing design to BP, even when their own laboratory tests failed (National
Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 2011). BP is currently suing
Halliburton to recover costs of cleaning up the spill, lost profits and all other costs and damages to BP as
a result of the spill; this was previously estimated at $42 billion (The Globe and Mail, 2012). Halliburton
was also the cementer on a well that exploded in Australia in 2009 due to a cement leak, however, the
company was not found liable (National Commission on the BP Deepwater Horizon Oil Spill and Offshore
Drilling, 2011).
Unsafe Military Conditions:
Halliburton and KBR have been sued by Joshua Eller, a former United States military employee, for
exposing military personnel to unsafe conditions (Kennedy, 2008). This includes unsanitary water in the
showers and pools, expired food of up to a year, and fumes from open burn pits (Kennedy, 2008). The
open burn pits burned medical waste, human remains, plastic and lithium batteries (Kennedy, 2008)
The suit also alleges that KBR shipped ice for military forces in mortuary trucks that had not been
sanitized and still contained remains and fluids (Kennedy, 2008). Of the 67 water filtration tanks
provided to military in Iraq by Halliburton and KBR, 63 were contaminated (Thangham, 2008).
Halliburton has said that they no longer have ties with KBR and were improperly named in the lawsuit;
however, the claims were filed in 2006 before the companies split (Kennedy, 2008).
At least five deaths of military personnel in Iraq occurred due to faulty grounding in military camps and
many more have been injured (Risen, 2008). KBR was responsible for the electrical work at the camps,
and had been made aware of faulty grounding by personnel complaining of receiving shocks in the
shower (Risen, 2008). KBR was aware of the problems and even reported a case of unsafe wiring to the
Pentagon early on in 2007 (Risen, 2008). However, no action was taken until after the death of Sergeant
Ryan Maseth in January, 2008 (Risen, 2008).
Sexual Assault:
Up to 40 employees of KBR have contacted Lawyer Todd Kelly about sexual assault or harassment which
they experienced while working for KBR (Siegel, 2011). Despite this, KBR made it to the top 50
companies to work for in Woman Engineer Magazine in 2011 (Siegel, 2011). Jamie Leigh Jones alleged
she was drugged and gang raped by coworkers in 2005 and that by the time she was seen in court in
2011 evidence went missing (Doyle, 2009; McGreal, 2009). The company denied her allegations and she
lost this case in the United States federal court (Staff, 2011). Jones was first denied the right to take the
case to court as her contract stated that the matter must be resolved by arbitration (Doyle, 2009;
McGreal, 2009). Due to this case, any companies which prohibit such cases from being taken to court
will now be unable to receive military contracts from the United States government (Doyle, 2009;
McGreal, 2009). Tracy Barker says she faced harassment and sexual assault while working for KBR in Iraq
in 2005 and won $2.93 million in sexual assault claims, settled through arbitration (Sandholm, 2009).
Halliburton Ethical Case Review
References
CBS & Associated Press. (2009, February 11). Cheney’s Halliburton Ties Remain. CBSNews. Retrieved
from: www.cbsnews.com
CNN Wire Staff. (2010, December 21). Cable News Network (CNN). Retrieved from:
www.articles.cnn.com
Doyle, S. (2009, October 15). All Rape Cases Must Go Before the Law. The Guardian. Retrieved from:
www.guardian.co.uk
EarthRights International. (2000). Halliburton’s Destructive Engagement. Earth Rights International.
Retrieved from: www.earthrights.org
Eckholm, E. (2005, March 15). Halliburton Overcharged $108 Million, Report Says. The New York Times.
Retrieved from: www.nytimes.com
Gerth, J. & Stevenson, R. (2002, August 1). Cheney’s Role in Acquisition Under Scrutiny. The New York
Times. Retrieved from: www.nytimes.com
Halliburton. (2012a). Corporate Profile. Retrieved from: www.halliburton.com
Halliburton. (2012b). History of Halliburton. Retrieved from: www.halliburton.com
Halliburton. (2012c). Locations. Retrieved from: www.halliburton.com
Kennedy, K. (2008, December 3). Suit Claims Halliburton, KBR sickened base. Army Times. Retrieved
from: www.armytimes.com
Luo, M. (2007, May 1). Senators Question Halliburton Executive About Dealings in Iran. The New York
Times. Retrieved from: www.nytimes.com
McGreal, C. (2009, October 15). Rape Case to Force US Defence Firms into the Open. The Guardian.
Retrieved from: www.guardian.co.uk
National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (2011). Deep Water:
The Gulf Oil Disaster and the Future of Offshore Drilling. Report to the President. Retrieved
from: www.oilspillcommission.gov
O’Harrow, R. (2004, October 29). FBI Widens Probe of Halliburton. The Washington Post. Retrieved
from: www.washingtonpost.com
Risen, J. (2008, May 4). Despite Alert, Flawed Wiring Kills G. I’s. The New York Times. Retrieved from:
www.nytimes.com
Rudolf, J. (2012, February 24). Alex Stanley, Former Halliburton Exec, Sentenced in Bribery Scheme. The
Huffington Post. Retrieved from: www.huffingtonpost.com
Halliburton Ethical Case Review
Sandholm, D. (2009, November 20). Woman Who Claims Sexual Assault Wins $3 Million From Former
Halliburton Division. ABCNews. Retrieved from: www.abcnews.go.com
Siegel, H. (2011, April 11). Company Facing Lawsuits for Alleged Sexual Assault Voted Top Employer for
Women. ABCNews. Retrieved from: www.abcnews.go.com
Staff. (2011, July 8). Texas Woman Loses Iraq Rape Case against KBR. CNS News. Retrieved from:
www.cnsnews.com
Thangham, C. (2008, December 5). Halliburton Subsidiary KBR Provided Contaminated Water to US
Soldiers. Digital Journal. Retrieved from: www.digitaljournal.com
The Globe and Mail. (2012, January 3). BP Sues Halliburton Over $42-billion Oil Spill. The Globe and Mail.
Retrieved from: www.theglobeandmail.com
United States Security and Exchange Commission (SEC). (2009). SEC Charges KBR and Halliburton for
FCPA Violations. Retrieved from: www.sec.gov/news
Wethe, D. (2012, July 27). Halliburton Opens Internal Probe on Iraq, Angola Operations. Bloomberg
Businessweek. Retrieved from: http://www.businessweek.com/news