The fall of Halliburton?

Houston-based Halliburton, which to many had become synonymous with "contract abuse" after high-profile scandals in Iraq, may finally be taking a financial hit for its controversial dealings.

For years, the energy and military contracting company had seemed impervious as charges of cost-overruns, fraud, cronyism, and other misdeeds exploded with stunning regularity. But that may be changing.

First came the news that the Army is re-bidding the no-bid, no-cap contract (first exposed by the Institute in 2001) Halliburton had been given for "logistical support" in the war on terror.

Next, Halliburton's widely-anticipated move to sell off its KBR subsidiary, responsible for most of the Iraq deals, fizzled, in part because of a project gone sour in Nigeria, the Wall Street Journal reports:

Halliburton Co., facing unexpected problems with the initial public offering of its Kellogg Brown & Root unit, says it will take steps to separate the unit in a tax-free spinoff to shareholders within nine months.

The Houston-based company filed in April to sell 20% of its energy-construction and government-contracting unit through an IPO, hoping to capitalize on strong market interest for KBR, which dominates the fast-growing market to build liquefied-natural-gas plants.

But since then, the company says the IPO market has weakened and the unit faces a newly surfaced problem with cost overruns in a giant construction project on the Nigeria coast.

The troubled news continued last week, when Halliburton announced Friday that it was carrying a 6-month operating loss of $41 million, causing Merril Lynch analysis to downgrade the company's stock from "buy" to "neutral."