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Wednesday, 10 July, 2002, 22:22 GMT 23:22 UK
Cheney accused of corporate fraud
US Vice President Dick Cheney
Cheney ran Halliburton oil company for five years
A US pressure group has filed a lawsuit against Vice-President Dick Cheney, accusing him of defrauding shareholders in a company he used to run.

Judicial Watch, based in Washington DC, says Mr Cheney artificially boosted the share price of the Halliburton energy company during the time he was chief executive in the 1990s.


The claims in this lawsuit are untrue, unsupported and unfounded

Doug Foshee
Halliburton
The White House has dismissed the lawsuit as "without merit".

In another development, it has emerged that Mr Cheney took part in a promotional video for the disgraced accounting firm Andersen.

The lawsuit was filed at a court in Dallas, Texas, where Halliburton is based.

It came a day after President George W Bush called for tougher penalties to fight the type of corporate corruption that has engulfed several high-profile companies in recent months.

Investors 'misled'

Judicial Watch alleges that Halliburton overstated profits to the tune of $445m during the period 1999 to 2001, resulting in some investors "suffering huge losses".

Larry Klayman, chairman and general counsel of Judicial Watch, said the case should demonstrate that even the richest and most powerful could not flout the law.

"It is very important to hold high public officials accountable under the rule of law, and Vice-President Cheney obviously is the second-most powerful man in the world.

"As we allege in the complaint, he participated in a securities fraud, a stock fraud, and we can hold him accountable.

"We are going to set an example for others that they are held accountable as well."

Mr Cheney was the company's chief executive from 1995 until 2000, when he left to become US vice-president.

Larry Klayman, chairman and general counsel of Judicial Watch
Larry Klayman, of Judicial Watch, says profits were overstated
Halliburton announced in May that the Securities and Exchange Commission (SEC) - a government watchdog - was investigating its accounting practices over how it reported cost overruns on construction jobs.

The SEC has not filed any charges against the company.

Judicial Watch claims that those accounting methods led to the overvaluation of shares.

Doug Foshee, Halliburton's chief financial officer, said in a statement issued by the company: "The claims in this lawsuit are untrue, unsupported and unfounded.

"We are working diligently with the SEC to resolve its questions regarding the company's accounting procedures."

White House spokesman Ari Fleischer said that he had talked to the vice-president's staff and "they believe the suit is without merit and that is where it stands".

The BBC's Justin Webb, in Washington, says that for Mr Cheney, the case probably amounts to nothing more than an embarrassing irritation.

But the legal challenge highlights a change in the political atmosphere surrounding corporate fraud.

Andersen video

Our correspondent says that, almost as embarrassing for Mr Cheney is a promotional videotape he made praising the now disgraced accounting firm Andersen.

The video, which fell into the hands of the Wall Street Journal, was made in 1996 when Mr Cheney was at Halliburton and showed his personal relationship with Andersen.

In it, he describes how Andersen gave advice "over and above" what would normally be expected from auditors.

In a short section of the video, Mr Cheney says: "I get good advice, if you will, from their people, based upon how we are doing business and how we are operating, over and above the normal, by-the-books auditing arrangement."

Last month, Andersen was convicted of obstructing justice by shredding documents relating to the failed US energy giant Enron.

President Bush
Bush has faced questions over his business past
Enron has admitted to grossly exaggerating its profits to attract investors.

Mr Bush made a speech in New York's financial district on Tuesday, in which he said he wanted to tighten measures against corporate fraud.

He announced a doubling - to 10 years - of the maximum prison sentence, and the formation of a special investigative task force.

But Judicial Watch said that Mr Bush's rush to crack down on corporate fraud seemed intended to deflect attention away from his and Mr Cheney's own business practices.

Mr Bush has already faced questions about his work as a director of Texas-based Harken Energy Corp a decade ago, when the firm faced an inquiry for masking huge losses.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Nick Bryant
"The timing of this lawsuit could hardly have been worse"
The BBC's Justin Webb
"These accusations are precisely the kind of things that President Bush was targeting in his speech"
Dick Cheney in the Andersen video
"I get good advice, if you will, from their people"
See also:

10 Jul 02 | Americas
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