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February 01, 2004

A Pox on Your House

As the nation is diverging into two distinct political camps with less room for a moderate middle, the Pox on Your House - Take No Prisoners style of politics is increasing in vigor.

Preceding this schism has been the Washington revolving door, where our politicians take a lucrative hiatus in the private sector. Of course the benefits of the revolving door would have to flow in both directions for a beneficial arrangement to take place. The companies usually sought preferred access to lucrative government contracts.

Of course the revolving door has been cited by critics as a threat to the integrity of government.

Perhaps the Pox On Your House tactics will actually serve to restore integrity back to government service by disincentivizing the revolving door through the intense scrutiny directed at companies that hire former politicians and bureaucrats.

Consider the case of Halliburton, the firm Vice-President Cheney used to head during his hiatus from government. They now list their association with the Vice-President as a Risk Factor in their S.E.C. 8-K Filing of January 23, 2004.

Since his nomination as Vice President, Halliburton has been and continues to be the focus of allegations, some of which appear to be made for political reasons by political adversaries of the Vice President and the current Bush administration. We expect that this focus and these allegations will continue and possibly intensify as the 2004 elections draw nearer. These allegations have recently centered on our government contracts work, especially in Iraq and the Middle East. In part because of the heightened level of scrutiny under which we operate, audit issues between us and government auditors like the DCAA or the inspector general of the Department of Defense are more likely to arise, are more likely to become public and may be more difficult to resolve. As a result, we could lose future government contracts business or renewals of current government contracts business in the Middle East or elsewhere. We could also be asked to reimburse material payments made to or through us or be asked to accept lesser compensation than provided in our contracts. In certain circumstances, we could be subject to fines and penalties under the U.S. False Claims Act, under which treble damages could be sought. In addition, we may be required to expend a significant amount of resources explaining and/or defending actions we have taken under our government contracts. There can be no assurance that these and any additional allegations made under our government contracts would not have a material adverse effect on our business and results of operations.
Posted by TangoMan at 07:49 AM