ABOUT HALLIBURTON

Halliburton subsidiaries DII Industries, LLC (formerly known as Dresser Industries) and Kellogg Brown & Root, Inc. filed for bankruptcy protection in December 2003 for the purpose of minimizing asbestos liability. Halliburton purchased DII Industries in 1998 under the direction of former CEO Dick Cheney. The acquisition meant that Halliburton inherited 300,000 asbestos claims filed against DII, who had for years manufactured construction products which contained the harmful substance. Halliburton's Kellogg Brown & Root also had manufactured products containing asbestos and has been fighting asbestos lawsuits since 1976. Asbestos causes scarring of the lung tissue (asbestosis), cancer of the pleural lining (mesothelioma) and lung cancer. Victims allege the companies knew of the health risks of asbestos long before they took it off the market.

The bankruptcy proceedings halted all personal injury lawsuits arising from the asbestos claims. If the bankruptcies are approved in court, Halliburton plans to contribute settlement amounts to a trust fund for the benefit of afflicted plaintiffs. A settlement agreement was reached with plaintiffs in December 2002 and, if approved by a judge in Pittsburgh, PA, will settle all present and future asbestos claims against Halliburton. The settlement, expected in May 2004, would require Halliburton to finance a victims trust fund with up to $2.5 billion in cash, 59.5 million shares of Halliburton common stock, notes worth $52 million (valued on December 31, 2003), and insurance proceeds, if any, between $2.3 billion and $3.0 billion as received by DII Industries and Kellogg Brown & Root.

Recent efforts in Congress to ban lawsuits against asbestos manufacturers and to limit their liability could mean Halliburton will receive a sweeter deal from Congress than from its proposed court settlement. The December 19, 2002 Washington Post reported, "The Republican victory in the November [2002] elections has increased the chances that some sort of national tort reform might be enacted, perhaps limiting damage recoveries [for asbestos claims]." But in April 2004, the Senate blocked proposed legislation that would have banned lawsuits against asbestos companies. The legislation would have established a $124 billion asbestos trust fund to compensate victims nationally while canceling the pending lawsuits. Many victims are vehemently opposed to such legislation, saying the proposed $124 billion trust fund is too small to finance all of the claims currently pending in court. Asbestos victims told the Chicago Tribune that the legislation is a sweet deal for Halliburton and "a bailout for reckless companies who knew of the risks from asbestos."

Halliburton's asbestos-related bankruptcies resulted in a pre-tax charge of $1.016 billion in the fourth quarter of 2003. So, while Halliburton's revenues have skyrocketed because of war in the middle east, its bottom line continues to suffer. It lost $820 million for all of 2003 and $65 million during the first quarter of 2004, all because of bankruptcies related to asbestos lawsuits.

President Bush is keen on settling the asbestos issue. In 2004, he said, "Asbestos reform legislation is stuck in the Senate [and] ought to go forward." But the Senate in April failed to prevent a filibuster of the legislation. The Senate is expected to seek a compromise soon. So Halliburton may yet obtain a sweeter deal from Congress than from the currently-pending court settlement. Stay tuned.

More Information

USAction report on Halliburton's asbestos liability

USAction Cartoon

Tell Congress to oppose the asbestos bailout of Halliburton!