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If he wins, Cheney to give up options

The Republican says he would forfeit $3.5-million in Halliburton stock options to avoid a conflict of interest.

©New York Times

© St. Petersburg Times, published September 2, 2000

WASHINGTON -- Dick Cheney, the Republican vice presidential candidate, said Friday that if elected, he will forfeit stock options worth about $3.5-million in the energy services company that he left to run for office.

Cheney had been challenged by the Gore campaign for inviting a conflict of interest if he owned the options while in office.

He was precluded from selling the options, which he was awarded for his service as chief executive of the Halliburton Co., until 2001 at the earliest, and their value by then would be affected by the company's profits, which are sensitive to the price of oil.

Cheney on Friday released tax returns and financial disclosure forms showing his income skyrocketing, from $258,394 in 1992, his last year as secretary of defense, to just over $2-million in 1993 and then to $4,423,289 in 1999.

In a brief statement, Cheney said: "In order to avoid even the appearance of a conflict of interest, I am fully prepared to forfeit any options that have not vested by the time I assume office."

The statement said the forfeiture also covered 3,000 previously unreported stock options in Procter and Gamble, a consumer products company, which also cannot be sold until after the next administration takes office.

But Procter and Gamble's price is now below what it would cost him to exercise the options, so it is no loss.

Previously, Cheney had declined to pledge to forfeit his options, saying only that he would do whatever he must to avoid a conflict of interest.

Cheney's financial disclosures, which he was required to file with the Federal Election Commission within 30 days of his nomination, also showed that when he was picked by Gov. George W. Bush of Texas as his running mate, Cheney received hundreds of thousands of dollars from EDS, and that his wife, Lynne, has been paid as a director of the Lockheed Martin Corp., a major defense contractor, since 1995. Cheney was on the board of EDS, which was founded by Ross Perot.

Explaining Cheney's decision to forgo the Halliburton options, his press secretary, Dirk Vande Beek, said Cheney and his advisers had consulted with the Office of Government Ethics, which reviews the finances of federal officials, and with the Internal Revenue Service, and had determined that there was no way to turn the options over to charity.

Therefore, Vande Beek said, Cheney "will forfeit the unvested options."

The value of the options depends upon the price when the options are exercised, but for example, if Halliburton's stock were to rise by $10 a share from about $53 Friday, the options would have been worth $6.1-million when exercised.

Some who look into political finances and ethics said Cheney's vow to give up the options if he is elected is too little, too late because the conflict already exists.

Peter Eisner, managing director of the Center for Public Integrity, a non-partisan, non-profit watchdog group, called Cheney's decision to hold onto the options until the election is decided one of the "most blatant cases" of conflict of interest he has seen.

"The idea of maintaining the options throughout the campaign and only forgoing the options should he win is quite odd," Eisner said. "He's already made tens of millions of dollars from retirement and he's done it because of the revolving door between government and private business, and now he's trying to have it both ways."

Eisner said Halliburton could benefit now from a close relationship with a vice presidential candidate.

However much the decision might cost Cheney if elected, the Gore campaign was not impressed.

Douglas Hattaway, a spokesman for the Gore campaign, said: "Cheney got caught with his hand in the cookie jar, and now he is trying to put the cookie back. It's a last-ditch attempt to separate the Bush-Cheney ticket from big oil."

The Cheneys' tax returns not only showed a very sharp increase in adjusted gross income from 1992 to 1999, but also disclosed total contributions to charities of $209,832, or just over 1 percent of their 10-year income of $20,677,742.

A Bush-Cheney campaign news release said Friday that $442,152 went to charity.

That total was reached by adding $89,500 in honorariums that Cheney had to decline and therefore redirected to charity and $142,820 in grants from corporations on whose boards either Cheney or his wife served that matched the Cheneys' contributions.

The Cheneys were under no legal obligation to release their income tax returns, although many candidates, including Vice President Al Gore, have done so.

In April, Bush released information about his taxes, but not the actual returns, for which an extension to file had been requested.

At that time, a Bush spokesman, Ari Fleischer, said, "Traditionally the governor has made his tax return available in October."

The Cheney financial disclosure forms showed that Cheney remained a director of Procter & Gamble and Union Pacific, and that his wife served as a director of Lockheed Martin, the Union Pacific Resources Corp., the Reader's Digest Association, the Exide Corp. and the AXP Mutual Fund.

But the biggest items on the form were two categories of Halliburton stock options, each valued at between $1-million and $25-million, in the ranges specified by the federal form.

The fact that some of Cheney's stock options could not be exercised until after inauguration was first reported by the New York Times last month.

- Information from the Los Angeles Times was used in this report.

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