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Thursday, August 8, 2013

Did Halliburton cut a good deal with Justice?

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Is the criminal plea agreement Halliburton struck with the Justice Department on Thursday a good deal for the company?

The terms seemingly marked a setback for the Houston-based oil services giant, which had asserted its innocence in the 2010 Gulf of Mexico oil spill that killed 11 people and poured nearly 5 million barrels of oil offshore. Now Halliburton concedes that employees twice erased computer simulations that undercut the company’s argument about the causes of the disaster.

But investors on Friday shrugged off that admission. After the announcement Friday of a share buyback program of up to $3.3 billion, Halliburton’s stock closed at $45.98, up 3.7 percent.

And the terms of the company’s settlement with Justice also could be viewed less harshly:

Halliburton will pay the maximum fine for a misdemeanor, but the $200,000 is equal to just under four minutes’ revenue for the company.

The company will pay $55 million to the National Fish and Wildlife Foundation, but that payment might be considered tax deductible since the foundation, a conservation grant-making organization created by Congress in 1984, is a nonprofit group.

“One might read this as a deterrent in the reverse sense, in that it strongly encourages future corporate defendants to admit guilt, make separate unconditional payouts and cooperate like crazy, with the ‘carrot’ being a mere misdemeanor conviction,” said Robert Weisberg, law professor...

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