www.chron.com Feb. 20, 2003, 11:19PM

By NELSON ANTOSH Copyright 2003 Houston Chronicle

Halliburton on Thursday reported a fourth-quarter loss of $602 million, equal to $1.39 a share, the result of charges for asbestos and discontinued operations.

The losses offset revenue gains in both its oil-field services and engineering and construction businesses.

The Houston-based company thus joins the other big oil-field service companies, Schlumberger and Baker Hughes, which reported losses for the fourth quarter.

Halliburton's quarter included a loss from discontinued operations of $473 million, or $1.09 per share. Of that amount, $452 million represents a change in its estimate of asbestos liability, minus estimated insurance recoveries, with the rest for legal expenses covering the proposed global settlement.

The energy industry was at a low point in its business cycle, with drilling activity down, particularly in the United States and Canada.

Given the market situation, "we really had a great quarter," said Chairman, President and Chief Executive Dave Lesar.

For the year, Halliburton posted a loss of $984 million, or $2.27 per diluted share, against a 2001 profit of $809 million, or $1.88 a share.

Revenues for the fourth quarter at $3.3 billion were up 6 percent from a year ago and up 12 percent from the third quarter, while 2002 revenues at $12.57 billion were down from 2001 revenues of $13.05 billion.

Its Landmark Graphics business had a record quarter and a record year, mostly from sales of software for interpreting seismic data.

Also, there were improvements in the engineering and construction business, with fourth-quarter revenues for the group up 25 percent from the third quarter and up 30 percent year over year, although Lesar said margins still aren't large enough.

Lesar said he expects drilling in North America to pick back up during the second half, but noted that the oil workers' strike in Venezuela will have a greater effect on the company's earnings during the first quarter than during the fourth.

Halliburton's stock gained 2 cents to close Thursday at $19.42, which is up 3.79 percent for the year to date.

reuters.com Fri February 21, 2003 12:09 AM ET By Missy Ryan

LIMA, Peru (Reuters) - The erstwhile lover of Peru's former spy chief, Vladimiro Montesinos, said on Thursday she admired and respected the man alleged to have shelled out bribes, made drugs and arms deals and even ordered murder, seeing him as "honorable" during their six-year affair.

"I never suspected anything bad about Montesinos. When I met him, he was an honorable person ... For me, he was a decent man and went to work and came home ... It was a quiet life," Jacqueline Beltran, her blonde hair draping a zebra-print top, told the court. "I admired him and respected him a lot."

"He never talked about his work ... When I asked him why he was tense ... he would say, 'No Mamita, I can't explain; you wouldn't understand,"' she added.

According to prosecutors, the work Beltran referred to included shelling out state funds for bribes, fixing court decisions and other back-room deals that led up to Peru's worst corruption scandal in history and sparked the downfall of Montesinos' boss, ex-President Alberto Fujimori.

Behind Beltran, Montesinos sat impassively with a tight frown on his face, barely looking at the woman he once took to Europe on holiday, bought a car for and set up in a luxurious beach house, and who wanted to have his children.

Beltran's testimony marked the second day of the Montesinos' first public trial, on charges of "influence peddling," which began this week, 29 months after the former head of Peru's intelligence agency was jailed on charges ranging from drug trafficking to money laundering to murder.

Prosecutors want five years for Montesinos and four years for Beltran for allegedly rigging a pardon for her brother, jailed on drug charges, and illegally helping her uncle in a business dispute.

She said Montesinos offered to help her brother, hotly denying that she pressured him for a favor.

Montesinos remained silent despite a battery of questions fired at him on Thursday. His lawyer, Estela Valdivia, said he would not testify because he was not guaranteed a fair trial.

MONTESINOS STAR OF SCANDAL

All of Peru was stunned in September 2000 when political opponents of Fujimori, who ruled this poor country for a decade, aired a video taped secretly by Montesinos in his office showing him paying a $15,000 bribe to a lawmaker.

Just weeks after the "Vladivideo" scandal erupted, Fujimori fled to Japan. A score of like videos followed.

Despite the government's efforts to get him back to Peru on corruption and human rights crime charges, Fujimori says he is innocent and is planning on running for president again.

Montesinos' trial -- under heavy security with snipers and armed guards -- had created expectations that Montesinos could offer explosive testimony. He admits to some crimes but denies the most serious and says he acted on Fujimori's orders.

While Beltran was Montesinos' lover since she had met him in 1994 and shared an apartment with him in Lima, she furiously accused him in the first day of the trial of trying to incriminate her in order to save himself from jail.

Montesinos -- flown by helicopter to the trial -- has been locked up in a six-person jail on a Lima naval base since he was captured in June 2001 in Venezuela.

A separate trial, on charges he bribed a former mayor, starts on Friday. According to Proetica, a private anti-corruption group, some 1,247 people have been investigated for links to corruption under Fujimori.

By GENE ZALESKI, T&D Staff Writer

All time record level gasoline prices averaging roughly $1.52 a gallon in Orangeburg and throughout The Times and Democrat Region have arrived. And the general consensus among the experts is they are here to stay, at least through the immediate future. "The threat (of war) is causing an artificial increase up the ladder," said Brad McCully, Bamberg's Brabham Oil Co. spokesman. "The futures traders have driven up the cost in anticipation of future things that no one knows will happen." The uncertainty of the situation, McCully said, has been the primary factor in the high prices. Gasoline supply has actually improved as less and less people are traveling due to a combination of both high prices and heavy snowfall in the Northeast.

McCully said the only expectations on seeing any greater increase is if the United States goes to war, and then the Orangeburg area may see prices in the $1.70 range. "This would be extremely short term," McCully said. How about prices for the summer driving season? "It depends where the war falls in," McCully said. "It is hard to put a finger on ... how the disruption will be in the supply line during the war. Some stuff we just don't know. We just have to wait and see." While prices have shot up an average of 8 cents a gallon over the past two weeks, the week of Feb. 12-19, actually saw prices level out. In Wednesday's survey of selected stations throughout The T&D Region, the least-expensive gasoline found sold for $1.479 at the Shell E-Z Shop at U.S. 21 and Highway 22, near Interstate 26 exit 139. At Santee, gasoline sold for $1.489 a gallon for regular unleaded at the Horizon E-Z Shop on Highway 6. In Orangeburg, the least-expensive sold at the Hot Spot on John C. Calhoun Drive for $1.499. Fogle's Piggly Wiggly in Neeses, Holly Hill's Amoco Food Mart on Old State Road also sold for $1.499. The most expensive gasoline of stations surveyed sold in Bamberg and Branchville for $1.579. AAA Carolinas, an affiliate of the American Automobile Association, reported the gasoline price average of $1.591 is the highest recorded by the organization over the past 20 years. The previous record was set in May 2001 when the average price in the state was $1.535 primarily due to reformulated gasoline. And David Parsons, AAA Carolinas president, does not see this changing any time in the near future. "We expect prices to continue to increase and set new records," Parsons said. "We urge everyone to search your area for the lowest pump price, look for ways to cut down on fuel consumption and keep your vehicle properly maintained to increase its fuel economy." As prices continue to spike -- since the middle of January the national average has increased 14.7 cents to $1.618 per gallon -- AAA officials continue to urge gasoline wholesalers and retailers to show restraint in the pricing of their products, and AAA has already cautioned the industry not to take advantage of the nation's heightened terrorist alert status. The organization has stood by the claim that while the nation continues to experience the loss of oil and gasoline imports from Venezuela and recovers from the recent cold snap, nothing justifies the dramatic increase in gasoline prices experienced across the states. Tom Crosby, AAA Carolinas vice president of communications, said while prices here appear to be rising quickly, it is a case of many "taking profits early" before things get much worse. Evidence of price-gouging has not been seen. "They (prices) are awfully high," Crosby said, citing that they could continue to inch upward as long as the Venezuelan situation remains chaotic, the Organization of Petroleum Exporting Countries continues with current production output and war jitters remain. Assessing how high they will in fact reach, Crosby said it is too premature to speculate on a peak. "Once we engage in war ... it will shoot up and then take some time to go back to normal," Crosby said. Traders are feeling the jitters as well. Crude oil futures settled Tuesday at a fresh 29-month high, up 16 cents to $36.96 a barrel on the New York Mercantile Exchange, marking the fifth increase in as many days. "I don't believe crude's move to the upside is over yet," said Peter Beutel, an analyst for Cameron Hanover Inc. in Connecticut. "Where the price goes is less a matter of any absolute number than a matter of time. The longer we wait, the longer we may keep seeing prices going up. It's a bubble that keeps on expanding until we see something that's going to pop it." As crude reacts to ongoing concerns about tight oil supplies in the event of a war with Iraq, the bearish effects of a Northeast snowstorm drove gasoline lower. Since many people won't be driving in the poor weather, gasoline use is expected to be weak, one analyst said. The March gasoline contract fell 2.78 cents to settle at 99.45 cents a gallon, while March heating oil rose 0.47 cent to settle at $1.0654 cents a gallon. As The T&D continues its weekly gas survey, we encourage readers to get involved. If you know of a gasoline price consistently lower than those in our survey, let us know by e-mail at news@timesanddemocrat.com, by fax at 803-533-5595 or by phone at 803-534-1060. The prices must be consistently low for inclusion in the survey. Here are some of the prices found in the survey conducted Wednesday, Feb. 19: Orangeburg -- Hot Spot on Calhoun Drive: regular unleaded, $1.499. -- Horizon E-Z Shop, Old St. Matthews Road: regular unleaded, $1.519. -- Li'l Cricket at U.S. 301 and Highway 70: regular unleaded, $1.519. -- Henry's on U.S. 301: regular unleaded, $1.519. -- Dodges Store at U.S. 301 and Cannon Bridge Road: regular unleaded, $1.519. -- Horizon E-Z Shop, Shillings Bridge Road: regular unleaded, $1.519. -- Gazbah Exxon, Chestnut and Ellis: regular unleaded, $1.539. -- Short Stop, Magnolia and U.S. 178: regular unleaded, $1.539. -- Big D's Shell, Magnolia Street and U.S. 178: regular unleaded, $1.539. -- Citgo, Charleston Highway: regular unleaded, $1.549. -- Speedway, at U.S. 21 and the U.S. 21 Bypass: regular unleaded, $1.549. Neeses -- Fogle's Piggly Wiggly, Highway 4 and U.S. 321: regular unleaded, $1.499. Bamberg -- 3-Way Food Mart, Main Highway: regular unleaded, $1.579. -- Horizon E-Z Shop West, U.S. 78 West: regular unleaded, $1.579. -- Horizon E-Z Shop on U.S. 301 South: regular unleaded, $1.579. Branchville -- Horizon E-Z Shop, Freedom Road: regular unleaded, $1.579. Holly Hill -- Amoco Food Mart, Old State Road: regular unleaded, $1.499. Santee -- Horizon E-Z Shop, Highway 6: regular unleaded, $1.489. St. George -- Fast Point Food Store, on Highway 78 and Sears Street: regular unleaded, $1.529. St. Matthews -- Amoco, Highway 6: regular unleaded, $1.529. T&D Staff Writer Gene Zaleski can be reached by e-mail at gzaleski@timesanddemocrat.com or by phone at 803-533-5551.

world.scmp.com Friday, February 21, 2003 REUTERS in Caracas VENEZUELA

Updated at 11.06am:

Venezuelan police overnight (HK time) arrested a top industrialist for civil rebellion after he led a strike against President Hugo Chavez, in a move opponents feared was the start of a political witch-hunt.

Shots rang out as protesters and private bodyguards faced off with the state security officers who grabbed Carlos Fernandez outside a Caracas steakhouse at around midnight on Wednesday and bundled the white-haired executive into a waiting car, officials and witnesses said.

A judge ordered Fernandez and union boss Carlos Ortega, who led a crippling two-month shutdown to oust Mr Chavez, detained for rebellion against the state, sabotage and other charges. Ortega told reporters by telephone that he had gone into hiding.

Opposition leaders, who accuse Mr Chavez of wielding power like a dictator, said they would step up their demonstrations to protest an arrest they condemned as illegal. Their complaints were dismissed by the attorney general.

''This is not just aggression against these two people. It's aggression against Venezuela's freedoms,'' union leader Manual Cova said at a press conference.

Mr Chavez hailed the arrest of Fernandez, a prominent private sector leader, as belated justice for ''terrorists'' in what his opponents feared was just the beginning of a crackdown.

The president, who was briefly ousted in a coup in April, has taken a tough stance against opponents since strike leaders called off their nationwide shutdown in early February. He has declared 2003 as the ''year of the offensive.''

''These people should have been jailed a long time ago,'' Chavez said grinning widely as he recounted hearing about the arrest. ''At one in the morning I sent for the sweet cooked papaya from my mother, to savor it, because it's not about hate, but justice.''

www.chron.com Feb. 21, 2003, 2:40PM Associated Press

WHY IRAQ MATTERS IN LATIN AMERICA · Exporters fear that consumers, particularly those in the United States, will buy less if there is a war. · High oil prices have pushed up inflation. · War worries have driven down stocks and slowed foreign investment. · It could slow the growth of economies worldwide.

How they are doing:

CHILE: The economy grew 1.9 percent last year, with a 3 percent spurt in the last three months, according to the country's central bank.

Its inflation rate of 2.8 percent was less than a quarter of the region's average of 12 percent, according to United Nations estimates.

BRAZIL: The central bank this week raised interest rates for the fifth time since October as it tries to slow inflation at a five-year high.

Seeking to rein in inflation, which hit 14.5 percent in January, the central bank raised its overnight lending rate Wednesday by 1 percentage point to 26.5 percent.

The prospect of war in Iraq has caused the currency to weaken further this year.

VENEZUELA: The country's economy is slowly coming back from a paralyzing strike. While most sectors are back to work, oil exports, the government's main source of income, are still about half what they were.

Interest rates have risen sharply because of fears of a default, which would reduce investment in an economy that contracted 17 percent in the fourth quarter.

ARGENTINA: The Argentine peso dropped further Thursday while central bank authorities pondered whether to continue trying to prop it up. The currency has slumped 70 percent against the dollar since devaluation in January 2002, leading to fears its lost buying power will lead to hyperinflation.

MEXICO: Stocks and currency have been off because of fears its export-oriented economy will sink with that of its biggest customer, the United States.

-- Bloomberg News

SÃO PAULO, Brazil -- In a small factory in a blue-collar neighborhood of this vast industrial city, dozens of workers churn out parts for pressure cookers, essential items in most Latin American kitchens.

But the management of Acessorios para Panela de Pressao is worried about an economic threat half a world away that could lead to reduced sales and layoffs: a U.S.-led war against Iraq.

Higher oil prices linked to fear of war have already boosted inflation from Brazil to Chile. And a much-anticipated regional economic recovery is on hold, with concerns that the situation could get worse before it gets better.

Brazilian sales of Acessorios' parts for pressure cookers -- widely used to make feijoada, Brazil's national dish of black beans, rice and pork -- are down 50 percent since January because of double-digit inflation and consumer uncertainty over the economy's direction.

The firm has maintained production and its 85-employee work force only because of a spurt in exports to countries such as Colombia and Ecuador.

But demand could plummet beyond Brazil's borders if war breaks out and consumers across the region limit spending and decide to use their old pressure cookers longer, company manager Luciana Pereira Lopes said.

"Usually, sales pick up after carnival," which takes place in early March this year, she said. "But the uncertain thing is how the war could affect the Brazilian economy and the external market."

The war fears have already hurt Latin American stock markets, curtailed foreign investment and prompted investors to push down the value of currencies in Mexico, Chile and Brazil.

While their devalued currencies have helped Latin America boost exports to the United States and Europe, experts warn that a war could reduce global demand for goods ranging from Brazil's manufactured and agricultural products to Chilean wine.

"Right now, talk of war has stalled everything," said Ricardo Amorim, head of Latin American research at the New York-based IDEAGlobal. "If war breaks out and the world economy performs worse, the impact on the Latin American economy will be deeper."

A short war with Iraq could cost the world 1 percent of its economic output over the next few years and more than $1 trillion by 2010, researchers said in a report Thursday. A long war could more than triple the costs, they said.

The compounding effects of rising oil prices, extra budget spending and economic uncertainty could cut $173 billion from the world economy in 2003 alone, said the researchers, Reserve Bank of Australia board member Warwick McKibbin and Centre for International Economics executive director Andrew Stoeckel.

The economies of Brazil and Argentina were hit particularly hard last year. Mexico suffered because its economy is so tightly linked to the United States, and the country could face tough times in war if the U.S. economy stumbles more.

Experts say Argentina wouldn't suffer as much as Mexico or Brazil if war breaks out because the country has already virtually struck rock economic bottom, pummeled by a 5-year-old recession that has put one in two Argentines in poverty and left 18 percent unemployed.

Brazil's economy, South America's largest, turned sour last year amid investor concerns that its new leftist president might implement policies that could lead to a default on the country's massive foreign debt.

Since taking office Jan. 1, President Luiz Inacio Lula da Silva has pleased markets by filling key economic posts with moderates who say Brazil won't adopt unorthodox fiscal changes.

Silva's aides have pledged to fight inflation, and Brazil's central bank continued that course Wednesday by raising the benchmark interest rate to 26.5 percent from 25.5 percent.

But the Brazilian economy still struggles because of the war fears, with experts warning its condition will deteriorate if fighting begins.

The war talk is already hurting some Brazilian companies. Shares of Embraer, the world's fourth-largest commercial aircraft maker, slumped last week after Houston-based Continental Airlines' ExpressJet regional carrier delayed deliveries of new planes.

And Brazilian moving company Granero Transportes was forced to cut costs because Brazilian businesses and families are nervous about moving, marketing director Julio Pires said.

Besides higher gas costs for its fleet of 1,000 trucks, the price of cardboard boxes Granero uses rose about 45 percent in recent months. The company cut 30 jobs from its 1,000-employee work force, parked some trucks, and reduced spending on advertising and maintenance.

"We're in the cascade effect right now," Pires said. "When gas goes up, everything goes up. If it wasn't for the threat of war, the economy would be improving, not getting worse."