Halliburton Co., the energy services giant and controversial defense contractor, said Sunday that it was moving its corporate headquarters from Houston to United Arab Emirates in the Middle East.
The move to Dubai by the world’s second-largest oil-field services provider was announced by Chief Executive Dave Lesar at an energy conference in the neighboring Bahrain.
“The Eastern Hemisphere is a market that is more heavily weighted toward oil exploration and production opportunities, and growing our business here will bring more balance to Halliburton’s overall portfolio,” Lesar said in a statement.
The plan comes amid a major overhaul at Halliburton, which is spinning off its defense-contracting subsidiary, KBR Inc., into a separate company.
Halliburton has been dogged by criticism that it overbilled taxpayers in a multibillion contract to feed and house U.S. soldiers in Iraq. Last month, federal investigators alleged Halliburton was responsible for $2.7 billion of the $10 billion in contractor waste and overcharging in Iraq. The company has strenuously defended its practices and accused some of its critics of being politically motivated.
The company’s business dealings in Iraq and Nigeria also are being investigated by the Justice Department and the Securities and Exchange Commission. The company has said it is cooperating in the investigations.
The plan for the move surprised longtime critic Rep. Henry A. Waxman (D-Los Angeles), chairman of the House Committee on Oversight and Government Reform. He called for hearings on the move, saying, “I want to understand the ramifications for U.S. taxpayers and national security.”
Democrats have been fiercely critical of the company, which was formerly headed by Vice President Dick Cheney, but who has not been accused by investigators of any wrongdoing.
Halliburton provided few details on its pending move but said it was part of plan to expand the company’s business in the Middle East and other fast-growing markets outside of North America.
The company said it would keep a corporate office in Houston and would remain legally registered in the U.S. Nonetheless, Lesar and other executives will be based out of Dubai, the company said.
“As companies usually refer to the CEO’s office as the corporate headquarters, that’s what we are doing,” Halliburton spokeswoman Melissa Norcross said in a statement.
A Halliburton spokeswoman declined repeated requests to respond to questions about the move, including how many of its nearly 12,000 employees in Houston would be affected, or when the shift would occur.
Halliburton would be one of the best known U.S. corporations to move to Dubai, the Western-friendly boomtown that is rapidly emerging as a corporate headquarters of the Middle East.
The announcement comes as the company prepares this month to spin off its KBR military contracting unit, which has been the focus of heavy criticism from lawmakers for what they have described as lucrative no-bid contracts in Iraq.
One Washington corporate lobbyist said: “I think it ensures that there will be some interesting oversight hearings,” since Democrats have already been unhappy with Halliburton’s no-bid contracts and what they believe is its poor performance.
The lobbyist, who requested anonymity so he would not jeopardize relationships with his clients, said the move raises several questions, among them how much did Halliburton receive in incentives to move to Dubai and what does it do to the company’s tax structure.
“If there’s a huge tax shift, then it’s taking money from U.S. taxpayers while they’re taking no-bid contracts,” the lobbyist said.
He said that he doubted such a move would reduce Halliburton’s legal liability in the U.S., which he said would continue as long as the company has properties in the nation.
Analysts, however, said business considerations rather than politics probably drove the decision to move.
As higher retail gasoline prices show, the energy sector has struggled to keep pace with soaring demand for oil, especially in India and China. And many of the new projects to increase production are in the oil-producing Middle East.
More than 38% of Halliburton’s oil-field services revenue in 2006 came from sources in the Eastern Hemisphere, where the firm has more than 16,000 of its 45,000 employees.
Dubai could also be especially attractive to Halliburton because of its favorable tax and business climate, analysts said.
Even so, the move could be politically risky for Halliburton, said Anthony Sabino, a law professor at St. John’s University in New York who specializes in oil and natural gas issues.
He cited the fallout last year after the Bush administration decided to allow Dubai Ports World, a company from United Arab Emirates to take over operations at several U.S. ports.
Critics, mainly Democrats, said the deal raised serious security issues. Dubai Ports subsequently dropped the proposal.
“While one can see the cogent business reasons for this, it has all the makings of a public relations nightmare,” Sabino said. “This is going to be seized on by Halliburton’s political enemies.”
Times staff writer Paul Richter in Washington contributed to this report.