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Iraq: U.S. Company Halliburton Fights To Restore Its Image

As the U.S. government began rebuilding Iraq, it came as no surprise that the American corporation Halliburton was chosen as a chief contractor for oil and natural gas functions. It is one of the largest energy-services companies in the world, and U.S. Vice President Dick Cheney served as its chairman and chief executive from 1995-2000. Now the corporation is under scrutiny for possibly overcharging for its Iraq services, and for suspected bribery in Nigeria. But Halliburton is fighting back -- with lawyers and with television ads.

Washington, 9 February 2004 (RFE/RL) -- One Halliburton ad begins with music meant to evoke a sense of national pride. Then the company's current chief executive, David Lesar, assures his audience that Halliburton won its contract for Iraq reconstruction "because of what we know, not who we know."

Lesar acknowledges the criticism facing Halliburton, and adds, "Criticism is not failure. Our employees are doing a great job."

Halliburton faces more than the idle criticism of those who suspect that it won more than $2 billion in contracts in Iraq because the vice president once served as its chief executive -- and continues to receive so-called "deferred compensation" payments from the company.

Those who are for the most part unaware of Halliburton will not be affected by the ads -- unless, of course, Halliburton becomes a significant issue in the presidential campaign.
The U.S. Defense Department is investigating Halliburton's contract to supply gasoline to Iraqi civilians. A Halliburton subsidiary is paying more than $33 million to the department to reimburse it for kickbacks involving a Kuwaiti subcontractor and overcharging for meals to coalition military personnel.

And the U.S. Justice Department is conducting a preliminary investigation of suspected bribery involving a Halliburton subsidiary doing business in Nigeria at the time Cheney was its chief executive. A French prosecutor also is investigating the case, which is reported to involve $180 million in suspected bribes.

Halliburton says all this scrutiny is politically motivated. A press release on the company's website says the ads are meant to clarify Halliburton's role in Iraq, which it says was misrepresented by Democrats running to be their party's nominee to oppose President George W. Bush in the November election.

Stephen Moore is the president of the Club for Growth, a private, nonprofit organization that advocates limited government regulation of business and low tax rates. He argues that the ad campaign is necessary because Democrats and other Bush opponents have savaged Halliburton's reputation simply because Cheney was once its chief executive: "[Advertisements] do help because Halliburton's been dragged through the mud for the last three years, demonized by the left as a symbol of what's wrong with the political system and what's wrong with corruption in corporate America itself. This [the ad campaign] helps create a good-will image with investors and consumers, and so it makes very much sense for Halliburton to defend its image."

There is no indication how much the ads cost to make or to broadcast, but television ads aired during evening viewing time in the United States are very expensive. But can such an outlay help Halliburton?

Absolutely, Moore says. He argues that advertising campaigns promoting a company rather than its products have a record of success, as long as their messages are compelling and the ads are well crafted. He cited a similar campaign mounted a few years ago by the American Plastics Council, a trade association for the U.S. plastics industry.

According to Moore, the council wanted to respond to the widely held notion that plastics are not only synthetic and therefore not natural, but are also a threat to the natural ecological order. He said that campaign stressed responsible use and recycling as well as the benefits of plastic goods.

"For example, the Plastics Council did a series of really great ads on how actually plastics are good for the environment -- not bad for the environment -- a few years ago, that did a world of good. So this public-image building is important to corporations, and depending on if the ad is cleverly put together, it can really make a difference," he said.

Lawrence Mitchell is a professor of law at George Washington University in Washington who specializes in corporate governance and is the author of the book "Corporate Irresponsibility, America's Newest Export."

In an interview with RFE/RL, Mitchell acknowledges the Halliburton controversy may be politically motivated. But he attributes this to Halliburton, not its critics.

"It seems to me obvious that Halliburton is [broadcasting the advertisements] purely for political reasons. Halliburton is and has been the subject of a justifiably great deal of public inquiry, given the fact that the vice president is closely associated with the company that is now essentially being paid American taxpayer dollars to rebuild Iraq -- which rebuilding was necessitated by the vice president's aggressive pushing for war against Iraq," he said.

Mitchell also questions the effectiveness of such an ad campaign, especially given the reason it is being used. He says those Americans who are familiar with Halliburton already have made up their minds about whether they feel the company is doing business honestly or being financially predatory. Those who do not take notice of Halliburton will not be affected by the ads.

"The vast majority of Americans have never even heard of Halliburton, don't pay attention and don't care. To those who have [paid attention] and do [care], my guess is that people who already suspect Halliburton [of wrongdoing] are not going to have their minds changed, and people who don't [suspect Halliburton] are not going to have their minds changed either."

Mitchell says those who are for the most part unaware of Halliburton will not be affected by the ads -- unless, of course, Halliburton becomes a significant issue in the presidential campaign. In that case, he says, the ads would be a wise investment.