by David Williams
WASHINGTON, Aug 3 (AFP) - US oil services group Halliburton agreed Tuesday to pay 7.5 million dollars to settle charges of misleading accounting when Vice President Dick Cheney was in charge.
Cheney gave sworn testimony to the Securities and Exchange Commission (SEC) and "cooperated willingly and fully" in the investigation, the SEC said in a statement.
Former Halliburton financial controller Robert Muchmore also agreed to pay 50,000 dollars, it said.
Halliburton and Muchmore neither admitted nor denied the SEC findings that they issued "materially misleading" public statements about the company's income in 1998 and 1999.
They each consented to an SEC order to cease and desist from committing or causing future securities law violations, in addition to the financial penalties.
Cheney was Halliburton chief executive from 1995 to 2000.
"The company's former chief executive officer, Vice President Richard B. Cheney, provided sworn testimony and cooperated willingly and fully in the investigation conducted by the commission's career staff," the SEC said.
The SEC said the settlement followed Halliburton's failure to disclose a 1998 change to its accounting practices.
As a result of the undisclosed change, Halliburton's public statements regarding its income in 1998 and 1999 were "materially misleading," the regulator said.
"The SEC's action today emphasizes the importance of complete transparency in a company's financial disclosures," said SEC Fort Worth administrator Harold Degenhardt.
The accounting switch inflated Halliburton's quarterly reports of pre-tax profit between the second quarter of 1998 and the third quarter of 1999, it said.
In the most glaring example, profits were inflated by 46.1 percent in the 1998 annual report, it said.
After the accounting switch, Halliburton began to recognize income that it expected to receive from customers after cost overruns. Previously, it only recognized claims once customers had agreed to pay.
The new accounting method still conformed with generally accepted accounting practices, however.
Halliburton's penalty was imposed not for the accounting change but for "lapses" in conduct during the SEC investigation, which began in 2002 long after Cheney's departure, the SEC said.
"The penalty against Halliburton serves as yet another reminder that the commission will not tolerate lapses by companies that serve to delay or hinder the commission's investigative processes," said SEC Fort Worth enforcement chief Spencer Barasch.
The SEC said it reached no settlement with former chief financial officer Gary Morris and the case against him was moving to the US District Court in Houston, Texas.
"We are pleased to bring closure to this matter," said Halliburton president and chief executive David Lesar.
Halliburton said it adjusted the second quarter 2004 results to show an extra 7.5 million dollars in general corporate expense because of the settlement costs.
Net loss for the second quarter of 2004 was 667 million dollars, up from the previously announced 663 million dollars, it said.