Halliburton to Move Headquarters to Dubai
MICHELE NORRIS, host:
Halliburton, the big oil services company has announced that its CEO, David Lesar is moving to Dubai, and if the company is opening a corporate headquarters in that oil-boom town. Now note that the company did not say that it's moving its headquarters to Dubai. The company apparently plans to have two headquarters: one in its traditional home of Houston; the other, in Dubai.
NPR's Adam Davidson reports on why Halliburton is moving its CEO.
ADAM DAVIDSON: Roger Reed says the reason Halliburton's CEO is moving to Dubai is pretty simple.
Mr. ROGER REED (Analyst, Natexis Bleichroeder): Why do you rob banks? Because that's where the money is. Well, where do you look for oil? You look for it where the reserves are, and the reserves are in that part of the world.
DAVIDSON: Reed is an analyst with Natexis Bleichroeder. He asked us to disclose that he does own some Halliburton stock. Halliburton doesn't own oil wells, it comes in when a company or a country that does own a field wants to dig for oil.
Mr. REED: You can almost think of it as like if you were, you know, building a house. You could be your own general contractor, and you hire various guys in, like Halliburton, to do work. Or you could say, you know, I just want a house built. You guys say you can do it all. I live you in charge. You get it done.
DAVIDSON: Halliburton does most of its work at new oil fields. Once a field is up and running, Halliburton usually leaves the scene. So the company wants to be where new fields are opening. Decades ago, that was Houston. Today, it's the Middle East, Central Asia, even Vietnam. And, Reed says, it's a very long flight from Houston to those places.
Mr. REED: And then once you're there, you know, it's your nighttime when you're during the day, and it can be a little disorienting, be fairly tough travel.
DAVIDSON: Some press accounts and a few in Congress suggest that Halliburton is leaving the U.S. and will become a Dubai company. Halliburton did not return calls to NPR, but a spokesperson told the New York Times that Halliburton will maintain our company's legal registration in the United States, and we are not leaving Houston. Tax attorney Alan Appel(ph).
Mr. ALAN APPEL (Tax Attorney): Just moving the offices alone won't do it, and it's just - I mean, that just won't do it.
DAVIDSON: Appel, of the law firm Bryan Cave, says it used to easy for companies to switch their legal residence for tax purposes, but Congress tightened the law in 2004.
Mr. APPEL: Basically, in plain English, if a U.S. company moves its corporate headquarters to a foreign country for U.S. tax purposes, nothing has happened. It's still considered to be a U.S. corporation for all purposes of the Internal Revenue Code.
DAVIDSON: Appel says if Halliburton does want to stop being an American company and to legally become foreign, it would have to locate 10 percent of its global staff in Dubai and would have to make 10 percent of its global income there. Neither of those conditions are likely anytime soon, so for now, Halliburton is very much an American company. But Greg Priddy, an analyst with the Eurasia Group, says the CEO's move to Dubai might be targeted at public opinion in oil-rich countries.
Mr. GREG PRIDDY (Analyst, Eurasia Group): The U.S. brand name, so to speak, in the Middle East is very unpopular right now, and for a company that wants to grow their business there, it makes sense to emphasize that they're global rather than, you know, U.S.-based.
DAVIDSON: Some in Congress have expressed concern about the move because Halliburton's subsidiary, KBR, is a major defense contractor, but KBR is on track to become an independent company next month. Vice President Dick Cheney was CEO of Halliburton from 1995 to 2000. His office said that he would not comment on the move. Adam Davidson, NPR News.
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