A fresh disclosure that Halliburton is under investigation for suspected dealings with Iran through an offshore subsidiary put another spotlight on the embattled oil services firm once headed by United States Vice President Dick Cheney.
"This is the biggest scandal yet to hit Halliburton," said Senator Frank Lauterberg on a conference call organised by the campaign of Democratic presidential candidate John Kerry.
"This could result in major felony charges, because it is illegal to do business with a terrorist state, particularly Iran."
The company denied any US laws have been broken. But in a filing with the Securities and Exchange Commission yesterday, acknowledged a grand jury is investigating possible dealings with Iran through a Cayman Islands subsidiary.
Deputy Attorney-General James Comey, asked during a Justice Department news conference, declined to comment on the matter.
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advertisement "I can't comment on any pending investigation," Comey said, while refusing to speculate whether an offshore subsidiary of a US firm could be prosecuted for doing business with Iran.
The news came as the Texas-based corporation faces multiple domestic and international probes into its operations extending from Iraq to Nigeria.
"We have a Cayman Islands subsidiary with operations in Iran, and other European subsidiaries that manufacture goods destined for Iran and/or render services in Iran," Halliburton vice president Margaret Carriere acknowledged in the filing.
She said the company received this month a grand jury subpoena requesting documents related to the operations, the nature of which remains undisclosed.
Halliburton has also been notified that the investigation, which was initially launched the Treasury Department in 2001, has now been handed over to the Justice Department.
US law bars US-incorporated entities, citizens and residents from engaging in commercial and financial transactions with Iran.
But Carriere insisted there was no wrongdoing on the part of the firm.
"We completed a study in 2003 of our activities in Iran during 2002 and 2003 and concluded that these activities were in full compliance with applicable sanction regulations," she said.
A loophole in the law apparently allows US firms to circumvent the sanctions through foreign-based subsidiaries, if their dealings are not directly managed by US citizens or from US soil, according to legal experts.
Lautenberg said of the probe, "The question is whether or not this was a subsidiary set up to disguise who they are."
There was no indication whether Halliburton had already complied with the grand jury request, but Carriere said the company intended to fully cooperate with the government's probe.
Cheney was chairman of Halliburton from 1995 until his selection as George Bush's running mate in the 2000 presidential race.
The grand jury probe is added to a multitude of other investigations faced by the politically connected Texas conglomerate over work done by its affiliates in Iraq and Nigeria.
The Pentagon and the Justice Department are looking into allegations that Kellogg Brown and Root, a Halliburton subsidiary that has secured an exclusive oil supply contract in Iraq, may have overcharged the US government by $US61 million ($83.59 million).
Another damaging imbroglio involves allegedly overpriced meals served by Halliburton to US troops in Iraq and Kuwait, which prompted the army to withhold payments on some of the company's invoices.
Meanwhile, US and French authorities are investigating if the company paid bribes to secure a Nigerian natural gas project. Such actions could violate the US Foreign Corrupt Practices Act, which bans bribes to foreign officials
