Vice (16 page)

The
Gulf War
began with thirty-eight days of intense bombing of Iraqi positions in
Kuwait
—and strategic sites in
Baghdad
and across Iraq. In the first forty-eight hours of the war, 2,107 combat missions dropped more than five thousand tons of bombs on Baghdad, nearly twice the amount Allied forces dropped on Dresden in 1945. The bombing plan was similar to what was laid out for reporters four months earlier, by an Air Force chief of staff Cheney fired for his loose talk. "The cutting edge would be downtown Baghdad," Air Force general
Michael Dugan
said. Dugan also told a
Washington Post
reporter that he had been informed by Israeli intelligence that Hussein would be devastated by an attack on his family and his mistress. The September 16
Post
story ran under the headline "U.S. to Rely on Air Power if War Erupts." The follow-up story on September 18 required a headline and a subhead. "Candor Cost Top Airman His Job; Dugan Discussed 'Things We Never Talk About,' Cheney Says." Cheney's firing of Dugan, who coincidentally had replaced General Larry Welch, was another demonstration of what Wilkerson described as Cheney's "real ability to administrate, to make a decision, to be an executive." No member of the Joint Chiefs had been fired since 1948. But Dugan had talked to the press, described a plan of attack, and revealed that Israeli intelligence was involved in a war his boss had just sold to King Fahd bin Abdul Aziz, Custodian of the Two Holy Mosques.

Cheney's firing of Dugan was bloodless and fast. He didn't even bother to interrupt President Bush's tennis game at Camp David to tell him the Air Force chief of staff was going to be canned.

News stories and various sources describe Secretary of Defense Dick
Cheney and
Joint Chiefs of Staff Chairman Colin Powell as a near-perfect tandem at the Pentagon. The SecDef who had avoided the draft and the general whose life had been defined by the Army set aside their differences over Iran-Contra and conducted the most successful U.S. military operation since World War II. After thirty-eight days of bombing, the ground campaign lasted four days and resulted in only 137 American fatalities.

The war that brought the two men together would also divide them. Cheney was already thinking about a run for the presidency in 1996. And while he was averse to the press, working to limit media coverage of the war and firing a four-star general for talking to reporters, he was not averse to hagiography when he could find it. The details he revealed to a
Time
magazine
team read like a storyboard for a campaign video: never losing a night's sleep over a difficult decision; packing his own bag to fly to Saudi Arabia; bringing along his cowboy boots and lucky beige zippered jacket; and connecting with the troops once he was on the ground.
David Hume Kennedy's
campaign boudoir photography complemented what was probably the most glowing portrait of a cabinet minister done since newsweeklies went from black-and-white to color. Cheney was taking full advantage of the Gulf War success to write his campaign biography. But then, as now, he lacked Powell's charisma and
telegenic qualities
.

A general who worked at the Pentagon says he witnessed the public moment he believes caused the Cheney-Powell divorce: the "Salute to the Men and Women of the Desert Storm Campaign" at the Washington Hilton in April two months after hostilities in Iraq ended. Congressman Jack Murtha insisted on bringing in a large number of enlisted men. "There were E-ls to E-4s with their girlfriends dressed to the nines running all over the hotel. Everyone made speeches. The event broke up and those kids mobbed Powell. They couldn't get enough of him. Cheney was definitely not mobbed. The TV moved to Powell and left Cheney with a few people talking to him. Cheney looked over there and saw a rival he could not match."

There had been talk of a Cheney-Powell ticket in 1992. But as the pundits and the public sized up the two men, talk began to shift to a Powell-Cheney ticket. On the day Dick Cheney left the Pentagon to return to private life, he didn't even bother to stop by Powell's office to say goodbye, says Wilkerson. "There was no farewell. Powell never knew he departed and all of a sudden he's still the chairman and Cheney's gone."

In the first and only vice presidential debate of the
2000 campaign
, newly retired captain of industry Dick Cheney faced off against Connecticut Democratic senator
Joe Lieberman
. Astoundingly, there was not one mention of Halliburton in their debate. The closest they got to discussing the company Cheney had run from 1995 to just days before joining the Bush campaign in the summer
of 2000
involved a question about partisanship. Cheney used his answer to burnish a myth that largely exists to this day. In it, he stars as the triumphant CEO, a self-reliant insider-turned-outsider who competently and ethically grew his company while increasing shareholder value.

While politically useful, it happens to be a lie.

"I've been out of Washington for the last eight years and spent the last five years running a company
[sic]
global concern. And I've been out in the private sector building a business, hiring people, creating jobs," said Cheney. "I've got a different perspective on Washington than I had when I was there in the past."

If the former executive had chosen Lieberman himself, he couldn't have picked a more clueless opponent to debate than the senator from Connecticut, who has proven himself an enemy of corporate reform and an ally of Lynne Cheney in the culture war. Lieberman not only failed to challenge the business bona fides of his rival for the vice presidency, he helped expand the myth. Attempting to make the case that America was better off after eight years of Clinton-Gore, Lieberman dryly noted that
Cheney
was certainly better off. In other words, he was the very picture of the successful CEO.

Cheney retorted: "I can tell you, Joe, the government had absolutely nothing to do with it."

It was a whopper of a falsehood—and one more that Lieberman failed to dispute.

The Gore-Lieberman campaign had tried to make an issue of Cheney's compensation from Halliburton. Despite retiring early, Cheney was reported by
The New York Times
to have received a severance package worth more than $20 million, and during his time at the company, total compensation of well over $10 million. In reality, he had received a total of $45 million. Not bad for a guy who was earning about $144,000 a year when he left the Defense Department in 1993. Before that, he had served in Congress making even less, calling his government service "a pauper's oath."

In 2006, Vice President Dick Cheney declared his net worth for the previous year could be as high as $94.6 million. Not all, but most, of that income came from Halliburton. Even deep into his second term in the Bush White House, as Halliburton raked in billion-dollar federal contracts, Cheney received compensation and held stock in the company. In his first five years in office, the vice president earned almost a million dollars in
deferred salary from Halliburton. He promised to donate millions more in stock options
to charity, but as late as the spring of 2006, Cheney had still not exercised fifty thousand Halliburton stock options worth almost $4 million at the time. His staggering executive compensation cannot be fully appreciated without a full examination of his tenure at Halliburton, a company that has spent the years after his departure extricating itself from its former CEO's mismanagement and potentially actionable decisions. Even the pro-business
Fortune
magazine
concluded in 2005 that Halliburton had suffered under Cheney's "poor leadership."

The true achievement of Dick
Cheney, CEO
—other than his personal enrichment—is that he somehow managed to keep a lid on an exceedingly messy Halliburton legacy long enough to get elected and reelected to the White House. Some of it was just dumb luck. Some of it was his former company covering for him. Tellingly, a full six years after he left the company, at least one grand jury is still looking into Halliburton activities from that period.

Exactly how a man with no experience in running a multinational energy services company won the job leading Halliburton is itself shrouded in myth. The oft-told story involves a five-day fishing trip on the Miramichi River in New Brunswick in 1995. By then Cheney knew that his dreams of running for president were not to be. In 1994, he had gone so far as to set up an exploratory committee headed by his former Pentagon aide David Addington, but a nationwide speaking tour that year had failed to generate much interest. By year's end Cheney had more than likely seen the polling by his old Ford administration friend Bob Teeter showing that among Republican primary voters, Cheney trailed Bob Dole, Jack Kemp, Colin Powell, and, in all but one poll, Dan Quayle.

According to the New Brunswick fish tale, one night as Cheney slumbered back at the lodge, the corporate executives on the trip started to talk about the ongoing search for a
Halliburton CEO
. Among the executives was Halliburton chairman
Tom Cruikshank
, who had been leading the search. Cheney had wowed the chairman with stories of managing the Pentagon, and in July 1994, Cruikshank had donated a thousand dollars to the former defense secretary's presidential exploratory campaign. Out of the blue, someone suggested that Dick might make a good Halliburton CEO. And once again, with no discernible effort, Cheney, in the right place at the right time, had landed himself a new position of power.

Why a former secretary of defense would be attractive to the Halliburton board is fairly easy to see. Since the 1960s,
Halliburton and
its affiliate, now known as
Kellogg Brown & Root, or KBR
, have been a cornerstone of the
military
-industrial complex. Not only would a Cheney-led Halliburton benefit from government money, the company would depend on it. In just one example of many, in the five years prior to Cheney's arrival at Halliburton, the company received $100 million in government-backed loans from the
Export-Import Bank of the United States
, a federal credit agency that lends money to promote American exports. During Cheney's five-year tenure at the company, it would receive $1.5 billion.

Halliburton didn't begin life suckling at the public teat.
Erle Halliburton
had founded his company among the roughnecks in the Oklahoma oilfields back in 1919. He perfected a way to use concrete to secure wells and helped revolutionize oil production. By dint of hard work, self-sacrifice, and relentless promotion, the Tennessee native transformed his Halliburton Oil Well Cementing Company into a multi-million-dollar success story. While early financing from oil companies helped him grow, Erle avoided government money, after failure to win a public service contract soured him on Washington politicians and their pay-to-play lobbyists. The company branched into other oilpatch services and went public in 1948. In 1957 Erle died. Shortly thereafter, the company rechristened itself Halliburton. Faced with the imperative of constant growth in a cyclical industry of booms and busts, Halliburton found what looked like a solution in 1963. It proposed a merger with a Texas construction company then called
Brown & Root
.

Brothers Herman and
George Brown
had used seed money from brother-in-law
Dan Root
to found their company the same year Erle Halliburton founded his. But unlike Halliburton, Brown & Root thrived on federal contracts. After years of early struggles, the Brown brothers had lucked into a big public works project to build a dam on Texas's Colorado River near Austin. But they needed political muscle in order to see it to completion. The brothers turned to a young, ambitious Texas Hill Country congressman named Lyndon Baines Johnson. After LBJ proved himself able to deliver, the Browns paid to help the Texas pol steal a U.S. Senate race against Coke Stevenson in 1948. (After a campaign fueled by illegal contributions, Johnson won the primary election by eighty-seven votes when an extra ballot box in anything-goes South Texas mysteriously appeared several days later. LBJ's primary victory assured his election in then-solidly Democratic Texas.) For the next thirty years, LBJ and George and Herman Root would work so closely together that Johnson would become known as the senator from Brown & Root. The relationship floated along on a river of campaign cash—sometimes delivered in suitcases—and in exchange, the politician ensured an endless supply of big public works projects.

As LBJ's fortunes grew, so did those of his patron. In 1947, Brown & Root had barely made a list of the top fifty construction companies in the country. By 1965 it was number two, and by 1969 number one, with sales of $1.6 billion. As noted in
Dan Briody's book,
The Halliburton Agenda,
most of the momentum took place while Johnson was president. The escalation of the Vietnam War proved a boon to the company. In wartime, when quick results are demanded, few quibbled over massive cost overruns. So ubiquitous were the company's government projects in Vietnam that war protesters dubbed it "Burn and Loot."

The two firms, which merged in 1963, had much in common. Both were based in Texas. Both were vehemently antiunion and anticommunist. And both of their strong-minded founders, Erle Halliburton and
Herman Brown
, each of whom would likely have objected to the merger, had died in the previous decade.

The period that followed the Brown & Root / Halliburton merger has been called Halliburton's Golden Age. By 1981, revenues had shot up to $8.5 billion, profits were $674 million, and Halliburton employed more than 110,000 workers. But the company had lost its political rainmakers. The oil bust of the 1980s hit Halliburton hard, and profits sank. More than half the employees were laid off. Painful downsizing and consolidation continued into the early 1990s. By 1992 the financial chemotherapy had started to work. It also didn't hurt Halliburton's prospects when government contracts started to flow again, including a very important Army logistics plan commissioned by Secretary of Defense Dick Cheney, which promised a revenue stream that could save the company from the economic roller coaster of oil and gas. Over the three and a half years before Cheney took the reins of Halliburton on October 1, 1995, the company's stock rose 82 percent.

Cheney had lucked into an ideal situation. He was inheriting a company on the upswing, recruited by a board with relatively low expectations of his management prowess. "When we brought Cheney in, it really wasn't to run operations, it was to make the proper strategic decisions, and to establish relationships," Chairman Tom Cruikshank subsequently told
The New York Times.
Halliburton wanted Cheney's Rolodex, and in particular, his contacts in the Middle East.

Unfortunately for the company, Cheney was not content to be a door opener or a celebrity CEO.

By now the world is aware of the dangers of collateral damage when Dick Cheney goes hunting. Certainly, Austin lawyer
Harry Whittington
, whom the vice president inadvertently shot in the face, knows. In 2004, the
Sierra Club
also got a taste. It petitioned U.S. Supreme Court justice Antonin Scalia—to no avail—to recuse himself after he and his pal the vice president went duck hunting just before the court ruled on whether Cheney's
energy
task force logs could remain secret. The environmental group lost that one, as did the interest of open government.

Halliburton stockholders and employees can also count themselves among those who have suffered when Cheney shouldered his shotgun. In January 1998, Dick Cheney, Halliburton CEO, went quail hunting in South Texas with
Bill Bradford
, the chairman of
Dresser Industries
. In a glimpse of how small Cheney's circle of loyalty can be, the two men had three ranches in the area from which to choose: his old friend James Baker's ancestral spread, the hunting camp of George Brown's daughter Nancy Negley, and the almost fifty-thousand-acre ranch of Halliburton board member and former Ford administration ambassador Anne Armstrong. (Years later
Negley
would be present when Cheney peppered Whittington nearly to death with buckshot on
Armstrong's
ranch.) Neither Cheney nor Bradford have said where their hunt took place.

Prior to Cheney's joining Halliburton, the two rival Dallas-based oil service companies had discussed merging, but not much had come of the talks. When Cheney arrived at Halliburton,
merger
mania gripped corporate America. The 1990s would see massive consolidations in the oilpatch, including the pairing of
Exxon
and
Mobil
, BP and
Amoco
, and
Chevron
and
Texaco
. By 1998, Cheney had already successfully absorbed several smaller companies. In particular, analysts cheered his acquisition of
Landmark Graphics
, a software company that produces computer models of hydrocarbon reserves. After joining Halliburton, Landmark posted its highest quarterly revenues since it was founded in 1982.

Dresser was a company of another magnitude altogether. A merger with Dresser would create the largest oil services and construction firm in the world. Cheney believed that Halliburton needed to become the Wal-Mart of oil service companies in order to survive. He envisioned a corporation that would do everything from locate the oil reserves to build the offshore platforms to extract the crude from the ground. As part of his vision, he centralized control within Halliburton, leading one former executive quoted in
Fortune
magazine to compare the company's bureaucracy to "the Soviet navy."

During the quail hunt, Cheney suggested to Bradford that Dresser and Halliburton renew their merger talks. Over the next two months, the men met secretly at the Crescent Court, a Dallas hotel, to work out the details. In February 1998, the two sides agreed that Halliburton would purchase Dresser for $7.7 billion. On paper it made sense. Other than oilfield and engineering departments, most of their divisions did not overlap. Cheney said that he and Bradford did not expect the kinds of devastating layoffs then employed by merger kings like
Al "Chainsaw" Dunlap
of Sunbeam Corp. But his timing proved disastrous. By the time the two companies finished the last of the paperwork in September 1998, the price of oil had plummeted. Halliburton purchased Dresser at the top of the market at a 16 percent premium. To help compensate, Cheney immediately slashed ten thousand jobs.