That settles that. Or does it?
The Securities and Exchange Commission has fined Halliburton Inc. $7.5 million for the company's accounting sleight-of-hand that boosted reported business results in 1998 and 1999. The SEC also fingered two financial executives for their alleged culpability but had nothing to say about Halliburton's chief executive at the time, Dick Cheney.
The reaction from Cheney's lawyer: We told you so; the boss and his board weren't responsible for any of that stuff. The buck stopped with Halliburton's chief financial officer and the controller, based on the SEC agreement. Call it the Ken Lay fantasy settlement.
The SEC didn't say much of anything about Cheney, other than that he cooperated fully with its two-year investigation. That leaves at least three scenarios that could explain how he fits into the story, none flattering. First, a little background. The Halliburton case is about how the energy and construction company recognized income that offset cost overruns on big projects. The longstanding Halliburton policy had required the company to eat the expense and then try to recoup some or all of it from its customer. Whatever payment the customer made was recognized as income when it arrived.
In 1998, Halliburton began to record the amount the company thought it would be able to recover, at the time the expense was incurred. The accounting change had a big immediate impact, because the company was struggling with cost overruns. Meanwhile, Halliburton was preparing to merge with Dresser Industries, and falling oil prices were putting pressure on the company's stock.
Halliburton's pretax profits for all of 1998 became 46 percent larger than they would have been under the old accounting policies, improving from $190.9 million to $278.8 million, according to the SEC. Halliburton's pretax income also got a smaller boost in each of the first three quarters of 1999.
There wasn't anything wrong with changing the accounting policy, according to the SEC. But Halliburton violated securities laws by not telling anyone the game had changed until early 2000, according to the regulators.
So how does Cheney, now the vice president, fit into the story? Consider a few possibilities.
First: He didn't know anything about it. Does anyone really believe the chief financial officer and controller change a company's accounting policy and keep their boss in the dark? And what would you say about a chief executive who fails to notice earnings are nearly 50 percent better?
Second: He knew about the accounting change but didn't think the company was required to disclose it. Perhaps Halliburton's financial executives told Cheney they weren't obligated to say anything. Would the chief executive of a big company take advice like that when the change had such a big impact?
Of course, there is a third possibility. But there is no evidence Cheney knew what he was doing all along. The public paper trail ends at the feet of Halliburton's chief financial officer, Robert Muchmore. The SEC complaint notes that one of Muchmore's main jobs was to ensure the accuracy of Halliburton's financial filings. Muchmore and his staff prepared the company's quarterly earnings announcements and the scripts executives followed in analyst conference calls, the SEC notes.
The Halliburton saga doesn't rate much outrage when it's measured against today's sad standards for extreme corporate malfeasance. Companies did not crumble. Waves of people did not lose their jobs or fortunes. But the Halliburton story, spelled out officially this week, is about activity that was deceptive and fundamentally dishonest. Who should be held responsible for that?
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.