The Wall Street Journal
By PETER WALDMAN (Staff Reporter)
October 27, 2000
Among the many news releases issued by Halliburton Co. under former Chief Executive Officer Richard Cheney, one stands out for what it didn't say.
The announcement, in December 1996, trumpeted the "success story" of a Halliburton joint venture that builds undersea pipelines, unveiling several large contracts in Asia and Europe for the London-based operation. Missing from the rundown, however, was any mention of one of the venture's biggest contracts that year -- in Burma.
Halliburton's Burma connection is a potentially embarrassing episode for Mr. Cheney, now in the final stretch of his campaign as the Republican vice presidential candidate. Since 1988, when Burmese's army killed thousands of pro-democracy protesters to stay in power, the country's military junta has been widely condemned as one of the world's most brutal violators of human rights. The U.S., which withdrew its ambassador and suspended aid to Burma a decade ago, banned new U.S. investment in the country in 1997 and has led international efforts to isolate the regime.
The sanctions don't cover service contractors such as Dallas-based Halliburton and the energy-services giant's subsidiaries, nor do they affect U.S. investments in Burma prior to 1997. Hence, Halliburton, which today remains one of the last U.S. companies to keep an office in Burma, doesn't appear to have violated any laws by working there. Most U.S. companies, including oil giants Texaco Inc. and Atlantic Richfield Corp., pulled out of Burma years ago. Mr. Cheney, according to his press secretary, was kept "generally aware" of Halliburton's foray into Burma to work on a major pipeline project. He has long opposed unilateral U.S. business sanctions on the grounds that they put American businesses at a disadvantage to foreign rivals and that the U.S. can influence a foreign government best by doing business with the country, rather than placing embargoes on it. Mr. Cheney's position dates back at least to his years in Congress, when he opposed such actions against South Africa's apartheid regime. After taking the helm of Halliburton, he became one of corporate America's most vocal opponents of sanctions. "I personally have spoken many times that unilateral sanctions, I think, are a mistake. They almost never work," he said in March when asked if he supported easing sanctions against Iran. In an antisanctions speech in 1996, he also cited restrictions on business in Libya and Nigeria. "We seem to be sanction-happy as a government," he said in 1997, according to an oil-industry newsletter. "The problem is that the good Lord didn't see fit to always put oil and gas resources where there are democratic governments."
Halliburton itself has been active in opposing attempts to restrict U.S. business dealings in Burma. In 1995, it opposed shareholder votes on doing business there. More recently, the National Foreign Trade Council, a lobbying group backed by Halliburton and other businesses, persuaded the Supreme Court in June to strike down a Massachusetts law that denied state contracts to companies that did business in Burma.
In Burma itself, the Western companies that in partnership with the country's military rulers sponsored the pipeline and hired contractors like the Halliburton venture already knew the project was benefiting from forced Burmese labor and "numerous acts of violence" by Burmese military, according to recent findings by a U.S. federal judge in Los Angeles. In that case, U.S. District Court Judge Ronald S.W. Lew dismissed human-rights charges brought by Burmese plaintiffs against Los Angeles-based Unocal Corp., a principal investor in Burma's Yadana gas field, on the grounds that the company didn't conspire to commit the abuses.
But Judge Lew's 41-page order granting summary judgment in favor of Unocal quoted extensively from depositions, company records, consultants' reports and State Department cables to show that the project's French and U.S. sponsors, as far back as 1993, were well aware of human-rights abuses in connection with the pipeline. "My conclusion is that egregious human-rights violations have occurred, and are occurring, now in southern Burma" along the pipeline route, a Unocal consultant reported to the company in 1995, a year before Halliburton's London joint venture agreed to install the offshore portion of the pipeline.
"The most common" abuses, the consultant reported, as quoted in Judge Lew's order, "are forced relocation without compensation of families from land near/along the pipeline route; forced labor to work on infrastructure projects supporting the pipeline ... and imprisonment and/or execution by the army of those opposing such actions. Unocal, by seeming to have accepted [Burma's] version of events, appears at best naive and at worst a willing partner in the situation." A different consultant's report for Texaco in 1996 noted the "harsh conditions" of unpaid laborers on the Burma pipelines, "including young children."
In addition to Judge Lew's findings, several human-rights groups, the United Nations Special Rapporteur on Burma, the U.S. Department of Labor and the International Labor Organization have all published detailed reports on forced labor and other human-rights violations in Burma, with particular references to the Yadana project. President Clinton, in a speech last year at the ILO annual conference in Geneva, singled out Burma for "flagrant" rights abuses and called on other nations to help the Burmese people. "We must stand by them and keep up the pressure for change," the president said.
Halliburton hasn't been mentioned specifically in any of these instances. In his order, Judge Lew made no mention of Halliburton or other contractors and no finding on whether they were aware of the use of forced labor on the project.
A Unocal spokesman, while praising Judge Lew's legal reasoning for dismissing the case, denied the judge's findings that the project's Western partners knew of and benefited from human-rights violations by Burmese troops. He says the Yadana field is now ramping up, as planned, to produce 525 million cubic feet of gas a day by the end of this year, to be delivered via pipeline to Thailand.
"We acknowledge human-rights abuses have occurred in Burma," the Unocal spokesman says, "but, as the judge rightly pointed out in his order, we have no control over the military forces of Burma. We continue to believe the presence of Unocal and other companies with high standards of business practices can have a positive impact on Burmese political and economic climate." At Halliburton, a spokeswoman says the company used no forced labor on the pipeline. But she refuses to comment on the company's decision to work in Burma or whether Halliburton was aware of human-rights or security concerns in Burma during Mr. Cheney's tenure. "From time to time, several non-U.S. subsidiaries of Halliburton Company have performed services for oil-and-gas companies operating in Burma," she says in a prepared statement. "These business activities have been conducted in compliance with applicable U.S. law."
Halliburton refers questions concerning Mr. Cheney, its CEO from 1995 until he was chosen as Texas Gov. George W. Bush's running mate in July, to Bush campaign headquarters in Austin, Texas.
There, Cheney press secretary Juleanna Glover Weiss says the former Halliburton CEO was kept abreast of the Burma operations, all of which, she says, were "consistent with U.S. policy and U.S. law." She says the decision to work in Burma was made by the Italian management of Halliburton's joint-venture partner, Milan-based Saipem SpA, a unit of Italian energy company ENI SpA. She adds that Mr. Cheney wasn't involved in that decision, but was aware of it. Through Ms. Weiss, Mr. Cheney declined requests for an interview to discuss the level of his involvement in Halliburton's Burma project.
Like South Africa in the 1980s, Burma has been a poster child of the corporate-accountability movement in the past decade. The most powerful calls for an economic embargo of Burma emanate from Aung San Suu Kyi, a winner of the Nobel Peace Prize, whom the junta has held under house arrest since her political party won 1990 elections that were deemed generally fair. She and other democracy campaigners have been particularly critical of the Yadana gas project, arguing that it has fostered military brutality, as well as raised money to bolster the regime. "Our message is clear: This is not the time to do business in Burma," says Bo Hla-Tint, minister for the foreign-affairs committee of Burma's elected government in exile. "The oil companies are propping up the junta by giving them legitimacy and hard currency that it desperately needs to buy arms."
Besides Unocal and Halliburton, other U.S. energy companies recently active in Burma include BJ Services Co., Houston, and J. Ray McDermott SA, a unit of McDermott International Inc., New Orleans. The McDermott subsidiary built much of the offshore infrastructure for the Yadana project, such as various platforms and wellheads in the Andaman Sea. McDermott's Burma projects are described in detail on the company's Web site, including the revenue garnered by the company in Burma: a total of $162 million in 1997 and 1998, making the country J. Ray McDermott's fifth-largest revenue source in the two-year period, according to the Web site. Halliburton's Web site, which archives company news releases and regulatory filings going back many years, makes no mention of Burma, except in a long list of places where prospective job applicants may work. In a long directory of global offices, it has no entry for Rangoon. A Halliburton spokeswoman confirms that the Rangoon office is still operating.
Other corporate Web sites indicate that Halliburton and various joint-venture partners operated in Burma as far back as the early 1990s, helping do precommissioning services on the Yadana project. In March 1996, according to industry reports, Mr. Cheney himself presided over a signing ceremony in India on an agreement for Halliburton's Brown & Root International unit to supply gas produced in Burma to India. Later in 1996, according to Offshore Data Services, a Houston research firm, the Halliburton venture was awarded the big Yadana undersea pipeline contract, a year or so after Mr. Cheney became Halliburton's CEO.
For the project, the London-based joint venture, called European Marine Contractors Ltd., was responsible for laying 365 kilometers (about 226 miles) of 36-inch pipe, connecting the Yadana field with the Burma peninsula near the village of Daminseik. The Halliburton news release of December 1996 that didn't mention the Burma project was datelined at corporate headquarters in Dallas and did recount in great detail European Marine's recent triumphs in France, Holland, Britain, Norway and China. Joint-venture partner Saipem features the Yadana pipeline on its Web site as one of its major achievements.
A Halliburton spokeswoman says she was unable to find out why the company omitted the Yadana contract from its 1996 news release on European Marine's exploits. She says Halliburton has never tried to conceal its work in Burma.
The pipeline's financial value to Halliburton is difficult to ascertain. Halliburton's financial disclosures show that its European Marine joint venture was highly profitable, and that its revenue and net income soared in 1997, the year most of the Yadana work was completed. That year, European Marine earned net income of $48.5 million, up 11% from 1996, on a 77% surge in revenue, to $436.1 million. The Halliburton spokeswoman declines to explain the gains. Though the Halliburton spokeswoman didn't respond to human-rights or security questions, a McDermott spokesman says J. Ray McDermott, like the Halliburton venture, did most of its work offshore. Thus, he says, the McDermott unit didn't encounter any problems between civilians and the military.
Still, according to the 1996 report of the U.N. Special Rapporteur on Burma, Judge Rajsoomer Lallah of Mauritius, Burmese villagers were forced to work on portions of the project offshore, as well as on the mainland. For example, in May 1995, the U.N. Rapporteur wrote, the military ordered about 200 villagers to go to Heinze Island, an uninhabited shoal in the Andaman Sea where Burmese forces set up a base camp to guard construction work on the offshore pipeline. On Heinze Island, Judge Lallah found, the villagers were required to work for two weeks without pay, clearing land, building bamboo barracks and constructing a helicopter pad high atop a steep hill -- probably for later use by the Western companies that built the pipeline, according to Burmese human-rights monitors. The villagers were forced to pay their own transportation costs to the island; those who refused to go were arrested and sent into rebellious areas to serve as porters for the military, Judge Lallah wrote.
Arguments in defense of Burma's human-rights record are hard to come by. But Unocal did offer one in the Los Angeles federal court case. Unocal, noted Judge Lew in his order, took the position that the Burmese military's use of forced labor is akin to public-service requirements that existed in some U.S. states in the early 20th century. Specifically, Unocal compared Burma's actions to those of the state of Florida, which once required residents to pay a tax of $3 or work on roads and bridges for six days a year.
"Unocal's public-service argument is not compelling," Judge Lew concluded, largely because "Unocal knew that forced labor was being utilized and that the Joint Venturers benefited from the practice."
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