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Halliburton CEO's stock rises by $78 million since Iraq invasion
15 Sept. 2005

WASHINGTON, Sept. 15 (HalliburtonWatch.org) -- War and skyrocketing oil prices have been good to Halliburton's CEO David Lesar, whose stock in the company increased by an estimated $78 million since the U.S. invaded Iraq in 2003, a HalliburtonWatch analysis reveals.

In March 2003, the first month of the Iraq invasion, corporate disclosure records show Lesar owned 1.476 million common shares and share options in Halliburton worth $30 million. At the end of stock trading yesterday, those shares were worth $93 million, for a $63 million gain. Subsequent to the Iraq invasion, Lesar boosted his total holdings in the company from $93 million to $108 million by acquiring a net 243,000 additional shares, thereby increasing his stock holdings by $78 million since March 2003.

Halliburton's stock price tripled since the Iraq invasion from $20 to $63.

Lesar owns an additional 644,575 shares of "restricted stock," or stock that may be sold only if he satisfies certain goals and requirements of the corporation. If Lesar is authorized by Halliburton to sell those shares, they would be worth an additional $40.8 million as of yesterday's closing stock price.

In the last 24 months, Lesar sold $18.8 million worth of Halliburton stock, with $16.3 million sold this year alone.

On September 1, three days after Hurricane Katrina hit New Orleans, he sold stock pursuant to his stock option plan, earning a one-day profit of $720,100. One week later, on September 8, he similarly earned a one-day profit of $782,000 by selling stock.

$13.6 Billion in Iraq Revenue

Lesar has presided over a period for the company that has corrected the mistakes created by former CEO and current U.S. Vice President Dick Cheney. After Cheney left the firm in 2000 to run for vice president, Halliburton was forced to deal with the legacy of his incompetent decisions made while he was CEO, decisions that forced parts of the company into bankruptcy. Those problems have mostly been solved under Lesar's leadership. In the last four reported quarters, Halliburton received $20 billion in revenue and earned $1.9 billion in operating income.

Iraq-related contracts amounted to $13.6 billion in revenue for the company since March 2003. Nonetheless, most of Halliburton's profit is earned from its energy services business, not the war. Higher gasoline prices have required oil companies to build additional oil rigs, something Halliburton leads the world in doing.

The company's skyrocketing stock price also reflects, in part, a market expectation that the company might one day benefit from Iraq's large oil reserves.

'Jacking Up the Margins'

Lesar complained last year about the low profit margins earned in Iraq from the company's troop support contract with the Army, known as "LOGCAP." He even threatened to charge the Army with higher costs by declaring that he would "jack the margins up significantly" if companies other than Halliburton are allowed to bid for new work under LOGCAP. He made his comments in response to a U.S. military recommendation that called for the immediate termination of the LOGCAP contract so that other, less scandalous, firms can be hired to assist the soldiers.

"Jacking up the margins" is already standard practice at Halliburton via cost overcharges. Those overcharges helped boost the company's war profits by 284 percent during the second quarter of this year.

Audits conducted by the Pentagon's Defense Contract Audit Agency determined that KBR had $1 billion in "questioned" expenses (i.e. expenses which military auditors consider "unreasonable") and $442 million in "unsupported" expenses (i.e. expenses which military auditors have determined contain no receipt or any explanation on how the expenses were disbursed).

Despite the cost overcharges, numerous critical reports from military auditors and the public outcry against Halliburton, Washington continues to drag its feet in dealing with the company's continuing rip-off of U.S. taxpayers.

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