For Cheney, Tarnish From Halliburton

An executive sells shares in his energy company two months before the company announces unexpected bad news, and the stock price eventually tumbles to a quarter of the price at which the insider sold his.

George W. Bush at Harken Energy Corp. in 1990? Yes, but also Richard B. Cheney at Halliburton Co. in 2000.

When Cheney left Halliburton in August 2000 to be Bush's running mate, the oil services firm was swelling with profits and approaching a two-year high in its stock price. Investors and the public (and possibly Cheney himself) did not know how sick the company really was, as became evident in the months after Cheney left.

Whether through serendipity or shrewdness, Cheney made an $18.5 million profit selling his shares for more than $52 each in August 2000; 60 days later, the company surprised investors with a warning that its engineering and construction business was doing much worse than expected, driving shares down 11 percent in a day. About the same time, it announced it was under a grand jury investigation for overbilling the government.

In the months that followed, it became clear that Halliburton's liability for asbestos claims, stemming from a company Cheney acquired in 1998, were far greater than Halliburton realized. Then, in May of this year, the company announced it was under investigation by the Securities and Exchange Commission for controversial accounting under Cheney's leadership that inflated profits. Halliburton shares closed at $13.10 yesterday on the New York Stock Exchange.

There has been no serious allegation of wrongdoing by the vice president himself in all of this. But the highflying company Cheney hailed as a "great success story" during the 2000 campaign is now a troubled behemoth fighting for its life. The humbling of Halliburton raises doubts about Cheney's stewardship there and, by extension, his reputation as a smart executive bringing a businessman's acumen to the White House.

The developments at Halliburton since Cheney's departure leave two possibilities: Either the vice president did not know of the magnitude of problems at the oilfield services company he ran for five years, or he sold his shares in August 2000 knowing the company was likely headed for a fall.