Cheney Praises Andersen In Video

A 1996 promotional videotape has surfaced that features Dick Cheney praising now-disgraced Arthur Andersen LLP for going above and beyond routine audits for the company he ran for five years.

The oil services firm the vice president once headed, Halliburton Co., is being investigated by the Securities and Exchange Commission for the way it accounted for cost overruns on construction jobs during Cheney's tenure. Cheney and the company were sued on Wednesday by a watchdog group alleging fraudulent accounting practices, a suit the White House dismissed as lacking merit.

The Wall Street Journal obtained a copy of the video, which can be viewed on the Internet. On the tape, Cheney and six other executives applaud the accounting firm.

"One of the things I like that they do for us is that, in effect, I get good advice, if you will, from their people based upon how we're doing business and how we're operating, over and above the, just sort of the normal by-the-books audit arrangement," said Cheney, who headed Halliburton from 1995 to 2000.

The four-minute video was produced by Andersen in 1996, well before the company was damaged by revelations about its role in such corporate scandals as the collapse of Enron Corp. and WorldCom Inc.

In May, Andersen was convicted of obstruction of justice by shredding documents that had to do with Enron, which admitted it exaggerated profit to appeal to investors.

The video became available as President Bush demanded new penalties for corporate wrongdoing to restore public confidence in the stock market.

A spokeswoman for the vice president said Halliburton had no reason to question Andersen at the time.

"Arthur Andersen was Halliburton's accountant for 50 years," said Jennifer Millerwise. "Obviously, they had never had a problem, so of course under those circumstances the vice president, along with many other CEOs, did a piece."

Millerwise said Cheney was unhappy that Andersen identified him as "vice president" in a recent copy of the video.

"It's inappropriate, and they did not ask our permission," she said.

The video features another executive whose company is now under an SEC investigation: Peregrine Systems' former chief executive, Steve Gardner, who left soon after the company fired Andersen as its auditor. Peregrine Systems said it may have overstated revenue.

David Rubenstein appeared on the video praising Andersen for not collecting its fees right away when he first started his company, The Carlyle Group. "They carried us for quite a while," Rubenstein said.

On Wednesday, Halliburton said claims made in the lawsuit filed by Judicial Watch against the company and Vice President Cheney, its former chief executive, were without merit.

"The claims in this lawsuit are untrue, unsupported and unfounded," Halliburton Chief Financial Officer Doug Foshee said in a statement Wednesday.

Earlier Wednesday, Judicial Watch announced the lawsuit against Cheney and the oil services company he once ran, alleging they defrauded shareholders by overstating the company's revenues. Cheney headed Halliburton from 1995 to 2000.

The accounting fraud lawsuit also names as defendants Halliburton's directors and its accounting firm, Arthur Andersen LLP.

The civil lawsuit was filed in federal court one day after President Bush went to Wall Street to outline proposals aimed at stopping the accounting scandals that have shaken investor faith in the U.S. financial markets.

The suit was filed in Dallas, where Halliburton is based.

In Washington, White House spokesman Ari Fleischer said he had spoken to Cheney's office and "they believe the suit is without merit, and that's where it stands."

Judicial Watch targets government corruption and has sued politicians of every stripe in the past.

Klayman said the inflated revenues resulted from accounting changes that were never made public as required by law, and inflated Halliburton's stock price.

The lawsuit, filed on behalf of two Halliburton shareholders who lost "a lot" of money, did not specify the amount of compensation the plaintiffs are seeking. But Klayman said: "We're seeking millions and millions of dollars ... It's to punish the people involved."

Fleischer said Tuesday the SEC would take its investigation of Halliburton "wherever it leads," dismissing suggestions investigators would come under pressure to back off if Cheney was implicated.

The oil field services company announced on May 28 that it received notice from the Securities and Exchange Commission that the commission was looking into Halliburton's accounting methods - adopted in 1998 - for reporting cost overruns on construction jobs.

The SEC has not filed any charges against the Dallas-based company.

Before 1998, the company had been more conservative, reporting such revenue only after settling with customers.

Judicial Watch alleges those accounting practices resulted in the overvaluation of Halliburton's shares, deceiving investors.

"We're seeking actual and punitive damages for allegations of securities fraud, for changing accounting practices and not advising the public of these changes," said Judicial Watch chairman and general counsel Larry Klayman, who is to hold a news conference Wednesday in Miami to announce further details on the legal action.