Tuesday, March 13, 2007

Congressional & media mis-hype on Halliburton/UAE

Comes as no surprise that anything to do with Dubai tends to get skewed by media and Congressional utterings...

Take the
latest Clinton foot-in-mouth comment

"I think it's disgraceful that American companies are more than happy to try to get no-bid contracts like Halliburton has, and then turn around and say, 'You know, we're not going to stay.'"

There is no "not going to stay" involved here. Halliburton is not closing it's Houston hdquarters in favor of a UAE location. They are merely opening another corporate headquarters. Per the Halliburton website press release

Halliburton Company (NYSE: HAL) announced today at a regional energy conference in the Kingdom of Bahrain the opening of a corporate headquarters office in the United Arab Emirates.

Compare this to the third paragraph in the article linked above...

On Saturday, Halliburton CEO Dave Lesar announced that the conglomerate's headquarters would move from Houston to Dubai, a booming city in the United Arab Emirates known for its liberal tax and residency laws.

Remember this 3rd position paragraph. I'm coming back to it. Fact is, no where in the press release is there a "moving headquarters", implying closure of their Houston facilities. What *is* moving is Chairman, President and Chief Executive Officer Dave Lesar ... to Dubai. But as we all know, truth in the media is an oxymoron.

Fact is, this is a smart business move to benefit Halliburton shareholders. The US is one of the few (if not only) countries that taxes int'l corporations on not only what they earn from US resources, but on revenue earned exclusively thru foreign sources. i.e. A transaction between Pakistan and the UAE is tax revenue for the US Congress, even tho there is no US business involved.

Yes, there are tax revenue dollars to be saved for these foreign contracts. The foreign contracts will now be conducted under the UAE hdqrters umbrella. The sidebar is this move should enrich the shareholders, many of whom reside in the US. And that will mean additional US income tax revenue.

But make no mistake. Halliburton is not escaping US taxes with the move. Their US defense contracts and other US dealings still remain taxable income in the US.

So what's the Congressional beef? They do so hate to give up any of their spending allowance. When gas pump prices are high, does Congress suggest lowering their stringent gas taxes, bringing fuel into a more affordable level? Of course not. They suggest taking the oil company and service station profits instead.

Clinton, however, implants the suggestion of scandal surrounding the misreported "move" instead.

"We have a lot of evidence about their misuse of government contracts and how they have cheated the American soldier, cheated the American taxpayer, they have taken money and not provided the services," said Clinton, a member of the Senate Armed Services Committee. "So, does moving overseas mean that we won't be able to pursue these investigations?"

Really? "A lot of evidence"? Why then is Halliburton not hauled into a court of law for charges instead of facing a finger shaking group of hysterical Congress members at some futile, time wasting hearing?

Okay... remember that third paragraph outright lie I mentioned above? Read carefully the Halliburton response to Hillary's suggestion of nefarious intent. And make note that these are the *very last two paragraphs* in the article. Paragraphs a headline educated public rarely gets to...

Halliburton spokeswoman Melissa Norcross said the company did not expect to receive any tax benefits from the Dubai move and that it would comply with U.S. government oversight.

"With the addition of a corporate headquarters office in Dubai, we join the ranks of many major corporations with multiple centers of senior management," Norcross said.

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