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Iran terminates Halliburton contract over fears of espionage
5 Sept. 2005

WASHINGTON, Sept. 5 (HalliburtonWatch.org) -- The new hardline Iranian government terminated a natural gas subcontract because of concerns that nuclear secrets could be leaked to Halliburton and its former chief executive, Vice President Dick Cheney.

One of Iran's largest private oil companies, Oriental Oil Kish, based in Dubai, awarded the subcontract to Halliburton last January for the purpose of developing natural gas off Iran's coast.

But the new Iranian government became alarmed that a senior member of the country�s nuclear negotiations team, Sirus Nasseri, also serves as the vice chairman of the board of directors of Oriental Oil Kish. Government officials feared Nasseri might compromise the nation's nuclear secrets while working with Halliburton on the natural gas project. So, the contract was terminated in August.

The Financial Times reported that Nasseri is "a senior Iranian diplomat negotiating with Europe over Iran's controversial nuclear programme" and is "at the heart of deals with US energy companies to develop the country's oil industry."

Iran accused Oriental Oil Kish of engaging in corrupt practices, including bribery. In July, top company officials were arrested amid allegations that bribes were paid to win the natural gas contract. Nasseri was interrogated, but not arrested.

Critics say the arrests were nothing more than a witch hunt by Mahmoud Ahmadinejad, Iran's new hardline leader, against his political rival and former president and presidential candidate Hashemi Rafsanjani, whose family owns part of Oriental Oil Kish.

This month, Iran awarded the natural gas contract to the National Iranian Drilling Company.

In January, twenty days after accepting the subcontract from Oriental Oil Kish, Halliburton abruptly announced it would withdraw from Iran after existing contracts are completed. CEO Dave Lesar cited poor business conditions for the decision.

Shareholders and lawmakers have repeatedly asked Halliburton to discontinue business in Iran, but the company resisted such calls.

U.S. companies are forbidden by law from doing business with Iran, but their foreign subsidiaries are exempt. The exemption allows Halliburton's Cayman Islands subsidiary, Halliburton Products and Services, to legally profit in Iran. Nevertheless, Halliburton is under criminal investigation by the U.S. Justice Department over its long-standing ties with the country. Investigators believe the subsidiary is actually controlled by officials at the company's Houston headquarters and is therefore not a true "foreign" subsidiary as required by law.

Vice President Dick Cheney, while CEO of Halliburton, expressed his opposition to laws against doing business in Iran. "I think we'd be better off if we, in fact, backed off those sanctions [on Iran], didn't try to impose secondary boycotts on companies ... trying to do business there," Cheney told an Australian television interviewer in April 1998.

Halliburton did $40 million in business with Iran in 2003 even though President George W. Bush has accused the Iranian government of financing terrorism.