Stock Options
That still would leave the possibility that Cheney could profit from his Halliburton stock options if the company's stock rises in value. However, Cheney and his wife Lynne have assigned any future profits from their stock options in Halliburton and several other companies to charity. And we're not just taking the Cheney's word for this -- we asked for a copy of the legal agreement they signed, which we post here publicly for the first time.
The "Gift Trust Agreement" the Cheney's signed two days before he took office turns over power of attorney to a trust administrator to sell the options at some future time and to give the after-tax profits to three charities. The agreement specifies that 40% will go to the University of Wyoming (Cheney's home state), 40% will go to George Washington University's medical faculty to be used for tax-exempt charitable purposes, and 20% will go to Capital Partners for Education , a charity that provides financial aid for low-income students in Washington, DC to attend private and religious schools.
The agreement states that it is "irrevocable and may not be terminated, waived or amended," so the Cheney's can't take back their options later.
The options owned by the Cheney's have been valued at nearly $8 million, his attorney says. Such valuations are rough estimates only -- the actual value will depend on what happens to stock prices in the future, which of course can't be known beforehand. But it is clear that giving up rights to the future profits constitutes a significant financial sacrifice, and a sizeable donation to the chosen charities.
"Financial Interest"
Democrats have taken issue with Cheney's statement to Tim Russert on NBC's Meet the Press Sept. 14, 2003, when he said he had no "financial interest" in Halliburton:
Cheney (Sept. 14, 2003): I've severed all my ties with the company, gotten rid of all my financial interests. I have no financial interest in Halliburton of any kind and haven't had now for over three years. And as vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts led by the Corps of Engineers or anybody else in the federal government.
Shortly after that, Democratic Sen. Frank Lautenberg released a legal analysis he'd requested from the Congressional Research Service. Without naming Cheney, the memo concluded a federal official in his position -- with deferred compensation covered by insurance, and stock options whose after-tax profits had been assigned to charity -- would still retain an "interest" that must be reported on an official's annual disclosure forms. And in fact, Cheney does report his options and deferred salary each year.
But the memo reached no firm conclusion as to whether such options or salary constitute an "interest" that would pose a legal conflict. It said "it is not clear" whether assigning option profits to charity would theoretically remove a potential conflict, adding, "no specific published rulings were found on the subject." And it said that insuring deferred compensation "might" remove it as a problem under conflict of interest laws.
Actually, the plain language of the Office of Government Ethics regulations on this matter seems clear enough. The regulations state: "The term financial interest means the potential for gain or loss to the employee . . . as a result of governmental action on the particular matter." So by removing the "potential for gain or loss" Cheney has solid grounds to argue that he has removed any "financial interest" that would pose a conflict under federal regulations.
Conflict of Interest
It is important to note here that Cheney could legally have held onto his Halliburton stock options, and no law required him to buy insurance against the possibility that Halliburton wouldn't pay the deferred compensation it owes him. Both the President and Vice President are specifically exempted from federal conflict-of-interest laws, for one thing, as are members of Congress and federal judges.
And even federal officials who are covered by the law may legally own a financial interest in a company, provided they formally recuse themselves -- stand aside -- from making decisions that would have a "direct and predictable effect on that interest." And Cheney says he's done just that.
Cheney says he takes no part in matters relating to Halliburton, and so far we've seen no credible allegation to the contrary. Time magazine reported in its June 7 edition that an e-mail from an unnamed Army Corps of Engineers official stated that a contract to be given to Halliburton in March 2003 "has been coordinated w VP's [Vice President's] office." But it wasn't clear who wrote that e-mail, whether the author had direct knowledge or was just repeating hearsay, or even what was meant by the word "coordinated," which could mean no more than that somebody in Cheney's office was being kept informed of contract talks.
Indeed, a few days later it was revealed that Cheney's chief of staff Lewis "Scooter" Libby was informed in advance that Halliburton was going to receive an earlier contract in the fall of 2002 -- to secretly plan post-war repair of Iraq's oil facilities. But being informed of a decision after it is made is a far cry from taking part in making it. And according to the White House, Libby didn't even pass on the information to Cheney anyway.
So to sum up, this Kerry ad's implication that Cheney has a financial interest in Halliburton is unfounded and the $2 million figure is flat wrong.
