Old ghosts continue to haunt well-connected

Halliburton

(HAL) - Get Report

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The company -- best known for its political ties to former chief Dick Cheney and its controversial contracts in Iraq -- has issued new information indicating that it may have paid bribes in an effort to secure a multibillion-dollar project in Nigeria. In a regulatory filing on Friday, Halliburton said that the company understands "from the ongoing governmental and other investigations that payments may have been made to Nigerian officials."

Since then, however, Halliburton has downplayed the significance of the disclosure and stopped well short of saying that any bribes took place.

"This is not new information, and our updated disclosure only reflects media reports since our last filing about the non-U.S. investigations," Halliburton spokeswoman Wendy Hall told

TheStreet.com

on Monday. "Halliburton's ongoing investigation has still not found any evidence that supports there were any bribes paid."

Halliburton is one of four companies involved with a big liquefied natural gas plant in Nigeria that's at the center of the probe. It carried out work on the project when Cheney, now the vice president, led the company.

The U.K.'s

Independent

newspaper on Sunday said that two things make the Nigerian probe "particularly uncomfortable" for Cheney, whose relationship to Halliburton has proven to be a mixed bag for the company.

"One is that fraud investigators in four different countries -- Nigeria, France, the U.S. and the U.K. -- are now poring all over this arrangement," the

Independent

wrote. And "the other is that it all took place on Mr. Cheney's watch, while he was chief executive of Halliburton."

By now, Halliburton has already fired two employees -- including a former division chairman -- for allegedly pocketing improper payments related to the Nigerian work. The company terminated former KBR Chairman Jack Stanley and another consultant five months ago. But the government's interest in Halliburton's past employees remains.

In its quarterly filing on Friday, Halliburton said that it understands that the

Securities and Exchange Commission

has issued subpoenas to Stanley and other former -- as well as current -- KBR employees. In addition, the company said the Justice Department has exercised its grand jury powers to seek further information about the Nigerian deal. Moreover, it said the DOJ has already broadened its investigation "to include whether Mr. Stanley may have received payments in connection with bidding practices on certain foreign projects" and goes on to mention a Nigerian fertilizer plant deal in particular.

Hall said on Monday that Halliburton believes it "took the right action" by terminating Stanley back in June. She said that Halliburton requires employees to abide by its code of ethics in every country in which it operates. Nigeria is known as a particularly corrupt place.

"We believe that ethics policies should have no borders," Hall stated. "There's no such thing as: 'When in Rome, do as the Romans do.'"

But investors seemed to fret over Halliburton's lingering problems. They pushed the company's stock down 1.2% to $36.48 halfway through Monday's session.

Still, some clearly dismiss any Cheney-related baggage. Halliburton's stock has risen more than 50% over the past year alone. And it set a 52-week high just a day after President Bush and Cheney won a second term in office.

Most analysts recommend buying Halliburton despite the headline risk. Late last month, A.G. Edwards became the latest in a series of firms to upgrade the company. Analyst Poe Fratt pointed to Halliburton's declining asbestos-related exposure as a reason for optimism.

"Given the significant progress to date, we believe that Halliburton will be able to finally resolve the asbestos issue over the next six months, if not sooner," wrote Fratt, who now has a $43 price target on the company's stock. "We applaud Halliburton's management team for successfully negotiating a settlement that does not have the potential to bankrupt the entire company."

Halliburton was left saddled with major asbestos liabilities following a big merger carried out when Cheney served as CEO. Fratt mentioned nothing about Cheney when recommending the stock ahead of last week's elections. He did, however, single out "political/economic risk in domestic and international markets" as a threat to Halliburton's shares.