The exports � estimated to be worth more than �30m a year � have continued despite sanctions introduced by the US government nine years ago barring Americans from trading or �facilitating� business with the Islamic state.

The subsidiary�s trade with Iran soared after Cheney took over as chief executive of Halliburton in 1995. Last year it shipped more than $6m in drilling equipment and goods to Iran, but trade has grown substantially this year. The Sunday Times has learnt that the company has orders worth $2.6m for October alone.

Although he resigned as Halliburton�s chief executive four years ago, Cheney has retained a substantial interest, owning an estimated $18m (�10m) in share options… He earned $44m during his tenure at Halliburton and continues to collect deferred compensation worth approximately $150,000 a year as well as the options he retains.

Halliburton’s trade with Iran was acknowledged in a confidential letter from Halliburton to one of its shareholders in October last year. It listed five subsidiaries involved: three in Britain, one in the Cayman Islands and another in Sweden.

The company said the contracts were not a breach because the subsidiaries were operating independently and no US citizens had carried out or �facilitated� the work.

However, inquiries by The Sunday Times have revealed that the company does appear to be flouting sanctions because some goods and equipment supplied to Iran were manufactured and designed in America.

The exports range from high specification oil drilling equipment, such as pumps, castings and �hole completion screens�, to domestic toiletries. They are imported into Britain from the United States by Halliburton Manufacturing and Services Limited (HMSL) in Arbroath. According to company insiders, the goods are then shipped on to Iran.

The company believes this is not a breach of the sanctions because it is supplying Britain with what it calls �stock items�, rather than equipment that was deliberately earmarked for Iran.

The Arbroath subsidiary is one of the area�s biggest employers, and Iran is a growing market for its engineering and manufacturing services.

The unit makes high-grade drilling, boring and well completion tools and equipment. But according to company insiders, they are made to Halliburton�s US designs with cosmetic modifications to make them appear British.

A former director of HMSL said the Arbroath subsidiary in fact reported directly to senior Halliburton staff at its US manufacturing base in Duncan, Oklahoma. �Our firm in Arbroath is a manufacturing base, so it reported to our main manufacturing base in the US,� he said.

Another senior figure at Arbroath said: �There is a dotted line from Arbroath to the US because it is a wholly-owned subsidiary of an American company. We are a part of the Halliburton organisation and at some point everybody reports back to the US.�

These latest disclosures come as the company faces fraud, corruption and overcharging inquiries in the US, France and Nigeria. President Bush has ordered an investigation into the firm following allegations that it overcharged the American government by $90m to supply equipment for troops in Iraq and to revive the country�s war-damaged oil industry.

The company�s trade with Iran is already being investigated by the FBI for a federal grand jury inquiry ordered by the US Justice Department.

The company has already been fined $7.5m by the US Securities and Exchange Commission for secretly changing its accounting practices, which resulted in exaggerated earnings. The charges amounted to misleading shareholders about the value of the company and related to accounting practices in 1998 when Cheney was chief executive.