Congress questions Halliburton's move

As expected, Halliburton's announcement Sunday that it'll establish a corporate headquarters in Dubai and move its CEO there sparked some criticism in Congress yesterday from legislators who claim the company is making the change so it can increase business with Iran and take tax benefits in the U.S. "I think Congress ought to hold hearings to try to determine why one of this country's major defense contractors has decided to move its principal offices offshore," Sen. Byron Dorgan (D-N.D.) said. "What's behind it?"

Sen. Frank Lautenberg (D-N.J.), a longtime Halliburton critic, implied that the move to Dubai — which Halliburton said was being made to put CEO Dave Lesar closer to oil production in the Mideast and Asia — is a way for the company to sidestep American rules against doing business with terrorist governments. "Halliburton has gone to extraordinary lengths in the past to do business with the terrorist government in Iran," he said. "Given Halliburton's past dealings with Iran, the company's odd announcement this week certainly sets off alarm bells about its intention to do business with state sponsors of terrorism." Halliburton has been doing business with Iran through a subsidiary called Halliburton Products & Services Ltd., which is registered in the Cayman Islands and based in Dubai, but it has reportedly been winding up its Iran business for the last two years. As a U.S.-based company, Halliburton still falls under rules that prevent American companies from dealing directly with Iran. Lautenberg noted that, "if Halliburton were to move the corporate headquarters, incorporate in Dubai, and cease to be a U.S. company, it would no longer be covered under the relevant U.S. terror sanctions laws" — but the company will continue to be incorporated in Delaware, spokeswoman Melissa Norcross said.

As far as taxes, some members of Congress seem to believe that Halliburton will pay less U.S. taxes by moving Lesar to Dubai: "At the same time they'll be avoiding U.S. taxes, I'm sure they won't stop insisting on taking their profits in cold hard U.S. cash," Sen. Patrick Leahy (D-Vt.) said. But according to Houston tax attorney Chris Kolenda, Halliburton will still have to pay taxes on all its earnings even with the dual headquarters in Houston and Dubai; even Lesar will still have to pay U.S. income tax unless he moves his citizenship to the United Arab Emirates.

All this suspicion — you'd almost think people don't trust Halliburton, wouldn't you?