02-15-2006, 07:17 PM
WASHINGTON, D.C. - Senator Frank R. Lautenberg released a CRS Report today that confirms that receiving deferred salary and holding stock options in a corporation does constitute a "financial interest" under Federal ethics standards. This finding directly conflicts with statements released by the Vice President's office after it was revealed that the Vice President continues to receive deferred salary from Halliburton and holds 433,333 Halliburton stock options. The controversy arose when Vice President Cheney made the following statement on the September 14th edition of Meet the Press:
"And since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven't had, now, for over three years."
After the Vice President was confronted with information to the contrary, his office continued to deny any financial tie, arguing that by taking out an insurance policy on the deferred salary and assigning his after-tax proceeds from the sale of unexercised options to charity, a financial interest no longer existed. The CRS Report explicitly rejects this dubious line of reasoning, finding that financial ties continue despite those steps.
Another important issue explained in the CRS report is that the President and Vice President are both exempt from the enforcement of the ethics laws. The reason they are exempt is because forcing the President or Vice President to disqualify themselves from certain duties or recusing themselves from certain issues could interfere with the President and Vice President's Constitutionally required duties. The Constitution provides its own remedies against the President and Vice President for ethical breaches.
"This report makes clear that Vice President Cheney does indeed have financial interests in Halliburton under Federal ethics standards," said Senator Lautenberg. "I ask the Vice President to stop dodging the issue with legalese, and acknowledge his continued financial ties with Halliburton to the American people." DEFERRED SALARY
* Deferred salary paid by Halliburton to Vice President Cheney in 2001: $205,298 * Deferred salary paid by Halliburton to Vice President Cheney in 2002: $162,392
Halliburton paid "deferred salary" to Vice President Cheney in his first two years in office and is scheduled to make similar payments to him in 2003, 2004 and 2005. Deferred salary is not a retirement benefit or a payment from a third party escrow account, but rather an ongoing corporate obligation paid from company funds. If a company were to go under, the beneficiary could lose the deferred salary. The Vice President's disclosure forms also describe the deferred salary payments as "elective" without defining this term.
In an attempt to mitigate the Vice President's continuing financial interest in Halliburton with respect to the payment of this deferred compensation, the Vice President's financial disclosure form states that that the Vice President "acquired" an insurance policy "to ensure that he will receive the equivalents of his remaining deferred compensation account with Halliburton." The terms of this insurance policy, its cost, and who paid for it are unclear.
STOCK OPTIONS
At the end of 2002, Vice President Cheney's financial disclosure form stated that he continued to hold 433,333 unexercised Halliburton stock options, with exercise prices above the company's current stock market price. The Vice President has signed an agreement to donate any profits from these stock options to charity, and has pledged not to take any tax deduction for the donations. Should Halliburton's stock price increase over the next few years, the Vice President could exercise his stock options for a substantial profit, benefiting not only his designated charities, but also providing Halliburton with a substantial tax deduction.
Halliburton Stock Options Held by Vice President Cheney (current to end of 2002):
* 100,000 shares at $54.5000 (vested), expire 12-03-07 * 33,333 shares at $28.1250 (vested), expire 12-02-08 * 300,000 shares at $39.5000 (vested), expire 12-02-09
The Vice President's deferred compensation and stock option benefits are in addition to a $20 million retirement package paid to him by Halliburton after only five years of employment; a $1.4 million cash bonus paid to him by Halliburton in 2001; and additional millions of dollars in compensation paid to him while he was employed by the company.
HALLIBURTON'S CONTRACTS WITH THE ADMINISTRATION
WHILE OFFICIAL WASHINGTON SHUT DOWN PREPARING TO RIDE OUT HURRICANE ISABEL HALLIBURTON ENLARGED ITS NO-BID CONTRACT WITH THE BUSH-CHENEY ADMINISTRATION BY AN ADDITIONAL $300 MILLION LAST WEEK. THIS SPIKE BRINGS THE TOTAL AMOUNT OF TAXPAYER DOLLARS PAID TO HALLIBURTON TO $2.25 BILLION – OF WHICH $1.25 BILLION IS FROM THE NO-BID, EXCLUSIVE CONTRACT.
Negotiated in secret, this no-bid contract was originally intended for the sole purpose of extinguishing potential oil fires that could result from the war, but Halliburton's sole-source contract extended with the Army last March and April to include the reconstruction and repair of Iraq's oil infrastructure. Lautenberg has called on the Government Affairs Committee to hold hearings on Halliburton's no-bid contract.
"While the lights were out, Halliburton billed the American people $300 million over the hurricane weekend," said Lautenberg. "Congress has the responsibility to look into this immediately before more taxpayer money is placed in Halliburton's bank accounts."
"And since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven't had, now, for over three years."
After the Vice President was confronted with information to the contrary, his office continued to deny any financial tie, arguing that by taking out an insurance policy on the deferred salary and assigning his after-tax proceeds from the sale of unexercised options to charity, a financial interest no longer existed. The CRS Report explicitly rejects this dubious line of reasoning, finding that financial ties continue despite those steps.
Another important issue explained in the CRS report is that the President and Vice President are both exempt from the enforcement of the ethics laws. The reason they are exempt is because forcing the President or Vice President to disqualify themselves from certain duties or recusing themselves from certain issues could interfere with the President and Vice President's Constitutionally required duties. The Constitution provides its own remedies against the President and Vice President for ethical breaches.
"This report makes clear that Vice President Cheney does indeed have financial interests in Halliburton under Federal ethics standards," said Senator Lautenberg. "I ask the Vice President to stop dodging the issue with legalese, and acknowledge his continued financial ties with Halliburton to the American people." DEFERRED SALARY
* Deferred salary paid by Halliburton to Vice President Cheney in 2001: $205,298 * Deferred salary paid by Halliburton to Vice President Cheney in 2002: $162,392
Halliburton paid "deferred salary" to Vice President Cheney in his first two years in office and is scheduled to make similar payments to him in 2003, 2004 and 2005. Deferred salary is not a retirement benefit or a payment from a third party escrow account, but rather an ongoing corporate obligation paid from company funds. If a company were to go under, the beneficiary could lose the deferred salary. The Vice President's disclosure forms also describe the deferred salary payments as "elective" without defining this term.
In an attempt to mitigate the Vice President's continuing financial interest in Halliburton with respect to the payment of this deferred compensation, the Vice President's financial disclosure form states that that the Vice President "acquired" an insurance policy "to ensure that he will receive the equivalents of his remaining deferred compensation account with Halliburton." The terms of this insurance policy, its cost, and who paid for it are unclear.
STOCK OPTIONS
At the end of 2002, Vice President Cheney's financial disclosure form stated that he continued to hold 433,333 unexercised Halliburton stock options, with exercise prices above the company's current stock market price. The Vice President has signed an agreement to donate any profits from these stock options to charity, and has pledged not to take any tax deduction for the donations. Should Halliburton's stock price increase over the next few years, the Vice President could exercise his stock options for a substantial profit, benefiting not only his designated charities, but also providing Halliburton with a substantial tax deduction.
Halliburton Stock Options Held by Vice President Cheney (current to end of 2002):
* 100,000 shares at $54.5000 (vested), expire 12-03-07 * 33,333 shares at $28.1250 (vested), expire 12-02-08 * 300,000 shares at $39.5000 (vested), expire 12-02-09
The Vice President's deferred compensation and stock option benefits are in addition to a $20 million retirement package paid to him by Halliburton after only five years of employment; a $1.4 million cash bonus paid to him by Halliburton in 2001; and additional millions of dollars in compensation paid to him while he was employed by the company.
HALLIBURTON'S CONTRACTS WITH THE ADMINISTRATION
WHILE OFFICIAL WASHINGTON SHUT DOWN PREPARING TO RIDE OUT HURRICANE ISABEL HALLIBURTON ENLARGED ITS NO-BID CONTRACT WITH THE BUSH-CHENEY ADMINISTRATION BY AN ADDITIONAL $300 MILLION LAST WEEK. THIS SPIKE BRINGS THE TOTAL AMOUNT OF TAXPAYER DOLLARS PAID TO HALLIBURTON TO $2.25 BILLION – OF WHICH $1.25 BILLION IS FROM THE NO-BID, EXCLUSIVE CONTRACT.
Negotiated in secret, this no-bid contract was originally intended for the sole purpose of extinguishing potential oil fires that could result from the war, but Halliburton's sole-source contract extended with the Army last March and April to include the reconstruction and repair of Iraq's oil infrastructure. Lautenberg has called on the Government Affairs Committee to hold hearings on Halliburton's no-bid contract.
"While the lights were out, Halliburton billed the American people $300 million over the hurricane weekend," said Lautenberg. "Congress has the responsibility to look into this immediately before more taxpayer money is placed in Halliburton's bank accounts."
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