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Bush Seeks 'New Era of Corporate Integrity'
Tue Jul 9, 1:48 PM ET
By Randall Mikkelsen
NEW YORK (Reuters) - President Bush ( news - web sites) on Tuesday called for a "new era of integrity in corporate America," with a crackdown on abuses and a stronger watchdog agency to fight accounting scandals that have shaken investor confidence and threatened to become a political liability.
"My administration will do everything in our power to end the days of cooking the books, shading the truth and breaking our laws," Bush said in a speech outlining his proposals to about 1,000 Wall Street leaders.
The measures, such as longer maximum prison terms and a financial crimes "SWAT team," aim at cracking down on individual abusers rather than overhauling the underlying system of corporate regulation. Democrats said Bush failed to go far enough, and called for additional measures such as protections for corporate whistle-blowers and a strong federal board to oversee the accounting industry.
"So far the administration's approach has been a familiar strategy. Use harsh rhetoric to condemn wrongdoers while delaying and watering down whatever reforms might come out of Congress," said House of Representatives Democratic leader Richard Gephardt of Missouri.
The speech failed to inspire U.S. share markets, where stock indexes have sunk to five-year lows amid the scandals. Prices traded little changed after the speech.
Corporate misdeeds threatened workers and investors, Bush said. "At this moment, America's greatest economic need is higher ethical standards," he said.
"With strict enforcement and higher ethical standards, we must usher in a new era of integrity in corporate America," he said. "The business pages of American newspapers should not read like a scandal sheet."
The president is seeking to double to 10 years maximum prison terms for mail and wire fraud charges frequently used in cases of corporate fraud. White House officials said that although maximum sentence are not often imposed, the result of the change would be to increase terms and deter abuses.
Bush also would strengthen laws against document shredding and other forms of obstruction of justice -- issues that have come up in the collapse of energy trader Enron Corp.
MORE MONEY FOR SEC
Bush proposed a new $100 million increase in the Securities and Exchange Commission ( news - web sites) budget for fiscal 2003 to hire more investigators and buy equipment. This comes on top of $20 million sought earlier this year, but is well below the $338 million SEC funding increase being pushed by some members of both parties in Congress.
The proposals were tougher than steps the president announced in March after the accounting scandal at Enron shook U.S. stock markets, and they appeared to reflect the fear that voters could punish Bush and his Republican party in the Nov. 5 midterm elections.
Bush rejected calls to make companies treat as an expense stock options given to executives. He sought instead to ensure that shareholders vote on all option plans -- and he omitted a call for a federal board to oversee the accounting industry.
Both major parties have proposed versions of an oversight board but differ on details, which a White House official said could be resolved.
"We believe that to truly take on corporate fraud, you need to do two things: a strong independent oversight board to audit the auditors and real restrictions on auditor conflict of interest," Senate Majority Leader Tom Daschle of South Dakota told reporters. "If you don't support those, you don't support real reform," the South Dakota Democrat added.
The White House and the SEC have been criticized by Democrats and some conservatives for moving too slowly to take on the scandals at Enron, telecommunications company WorldCom Inc. and other firms.
While Bush's call for stronger prison terms would require legislative action, many of his proposals on Tuesday relied on self-policing by companies and by the U.S. stock exchanges.
Bush appeared to be seeking a balance between reassuring investors with government action while avoiding a major overhaul of securities laws that companies would resist and, White House officials said, could spook the markets.
Bush said: "The American system of enterprise has not failed. Some dishonest individuals have failed our system."
With public outrage building over multimillion-dollar pay packages for some top executives, Bush called for companies to explain how their executive compensation packages are in the company's interest and by explaining "every detail" of them in plain English in their annual reports.
He urged companies to stop giving loans to executives.
The president also called on stock exchanges to require that a majority of the directors of public companies be "truly independent."
He ordered creation of a Justice Department ( news - web sites) corporate fraud task force, which he described as a "financial crimes SWAT team" to help direct investigations.
Bush's record as a business leader has come under attack from Democrats seeking an advantage going into congressional elections this fall. Democrats have charged Bush and the Republican party with being too heavily influenced by business interests and too slow to react to the scandals.
Bush, who ran for president in 2000 promising to restore integrity to the White House after the presidency of Democrat Bill Clinton, said on Tuesday said that many of the corporate abuses coming to light began in the booming markets of the 1990s -- when Clinton was president. He did not mention his predecessor by name, but the Republican National Committee ( news - web sites) accused Clinton of presiding over an "era of irresponsibility."
-- more deceptive headgames (watch what he does @ not what. he says), July 09, 2002
Dumbya uses this strategy all the time and it usually works because the majority of the sheeple are gullible, they take things at face value without looking deep enough to discover the truth. When a prominent figure has the audacity to stand in the spotlight and say he is going to do something, few people would suspect that the reason he is doing this is because he actually intends to do the opposite. Very sneaky. Unfortunately for Dumbya, this time he had announced his plans to do this speech before someone started digging around in his past and found some dirty laundry. This is one of the few times he was caught looking very transparent and hypocritical, but most of the sheeple still don't even have a clue.
-- (dumbya by far @ biggest hypocrite. in history), July 10, 2002.
July 10, 2002
Bush struggles to avert backlash on business scandals
From Roland Watson and Katty Kay in Washington
PRESIDENT BUSH mixed a populist attack on corporate crooks with a subtle evasion of personal blame yesterday as he tried to prevent a political backlash from the scandals of corporate America.
With Democrats straining to make ground from the wave of accounting frauds, Mr Bush made clear that he was as outraged as the rest of the country. “The business pages of American newspapers should not read like a scandal sheet,” he said.
He said he was prepared to sign into law rules requiring new financial disclosures and curbs on the sale of executives’ stocks. Mr Bush said that executives should lose all compensation “gained by deceit” and be banned for life from serving as directors of public companies if found guilty of fraud. “Resignation is not enough.”
However, in a politically critical speech delivered on Wall Street, he was also careful to make clear that he bore no responsibility for boardroom corruption that he has said is threatening Americans’ very confidence in capitalism.
Twice Mr Bush mentioned the 1990s as the root of the problems “long in the making, now coming to light”. It was the “lure of heady profits in the late 1990s” that had spawned abuses and excesses, he said. He said that it was a time of tremendous growth, adding: “As we’re now learning, it was also a decade when the promise of rapid profits allowed the seeds of scandal to spring up.”
The President has avoided blaming his precedessor, President Clinton, personally. But the White House is anxious to ensure that Mr Bush is not blamed himself.
Yesterday’s lecture to Wall Street that in areas such as pension reform “what’s fair for the workers is fair for the bosses” was a prime example of his determination not to make the mistake that cost his father re-election. The first President Bush saw his high approval ratings after the Gulf War whittled away in little more than a year by what voters saw as his failure to pay enough attention to their woes in an economic downturn.
Mr Bush went out of his way yesterday to sympathise with the employees, investors and pension-holders who had suffered in recent months. “Too many corporations seem disconnected from the values of our country,” he said, rounding on the rogue executives who were “hurting millions of people who depend on the integrity of businesses for their livelihood, their retirement, their peace of mind and their financial well-being”.
Democrats and business analysts called for more detail to the President’s plan, but he was anxious not to get boxed in by specifics while Congress negotiates the fine print of a Bill to send to the White House.
White House officials said yesterday that the President would sign the Bill that emerges from both houses, even though a few weeks ago Mr Bush would have balked at some of the demands likely to emerge from the Senate.
The change in the political climate brought by the corporate scandals has also continued to shine light on Mr Bush’s own business career, especially after he gave a third explanation for his failure to measure up to Securities and Exchange Commission (SEC) rules in 1990.
Asked on Monday about why it had taken him 34 weeks to file the necessary paperwork on his sale of stock in the Harken energy company, of which he was a director, Mr Bush replied: “I still haven’t figured it out completely.”
Last week, White House officials had said that Harken lawyers were to blame. But before that, Mr Bush had said that it was the SEC that had mislaid the paperwork.
Mr Bush has won three elections — two to the Texas Governors’ mansion — since the episode without it appearing to have harmed him, but Democrats believe that in the present climate, they can make capital out of it.
Recent polls suggest that business scandals and the weak stock market have alarmed voters. A Gallup poll last week showed that a majority of Americans believed that the economy was heading back into recession and were more concerned by the economy than by terrorism. That does not bode well for Mr Bush. A Pew research poll showed Mr Bush’s approval rating for his handling of the economy fell from 60 per cent in January to 53 per cent at the end of June.
Political strategists suggested that the health of the stock market would the key issue in the run up to November’s congressional elections. If voters continued to see their own investments and pension funds loosing value, that could hurt the Republicans. The Administration’s vulnerability in pointing the corporate finger was underscored by Mr Bush’s insistence that the ethical buck stops with business chiefs.
-- (email@example.com), July 10, 2002.
I am surprised no noe discussed this. Without getting bogged down in too many details, the facts are that the "president" gave one reason a few years back for being 34 weeks late in filing the sale of his Harken stock, and another reason recently. First it was the government who lost his paperwork (implying that he had filed on time) and second that it was clerks in his lawyers office who screwed up and filed the paperwork late.
When asked about it this week, he replied that he "still has not yet figured out what happened". Honestly, I do not really think he knows what happened, but if he is going to be a good lier he has to keep his stories straight.
THe bottom line is that he probably knew the company was tanking and did an insider trade, but with Daddy as preseident, the SEC was called off.
I think this more egregious than lying about consensual sex.
-- FutureShock (firstname.lastname@example.org), July 12, 2002.
I don't condone illegal insider trading, if that's what it was. But to categorize the Monica event as "consensual sex" is facile at best. It was sexual harassment of a 22 year old female employee with a self-esteem problem by her 52 year old boss who just happened to be the most powerful man in the world.
Not to mention that it happened in the Oval Office while his wife and daughter slept upstairs; not to mention that at times he was conducting the nation's business on the phone with Congresspersons while simultaneously ejaculating in her mouth; not to mention that his behavior was absurdly dangerous---what did Clinton know about Monica? She could have been a spy for the Arabs, the Israelis, the Republicans. She could have been an assassin for chrissake.
Clinton's behavior was wrong, no matter how you cut it.
If Bush's trading was illegal, impeach him on its own merits.
-- (email@example.com), July 12, 2002.
I believe this matter calls for an investigation. From all appearances, it seems Dumbya violated the law, so it is not clear why the SEC just let it slide. We would like to find out if George Bush Sr. had any influence on the SEC at that time to get them to drop the case.
I specialize in cases involving penises, cigars, and perverse sexual antics, but I will be happy to refer you to someone who can handle this type of investigation.
-- Kenneth Starr (Not to be confused @ with. "Kenny Boy" Lay), July 12, 2002.
July 12, 2002
The Insider Game
By PAUL KRUGMAN
he current crisis in American capitalism isn't just about the specific details — about tricky accounting, stock options, loans to executives, and so on. It's about the way the game has been rigged on behalf of insiders.
And the Bush administration is full of such insiders. That's why President Bush cannot get away with merely rhetorical opposition to executive wrongdoers. To give the most extreme example (so far), how can we take his moralizing seriously when Thomas White — whose division of Enron generated $500 million in phony profits, and who sold $12 million in stock just before the company collapsed — is still secretary of the Army?
Yet everything Mr. Bush has said and done lately shows that he doesn't get it. Asked about the Aloha Petroleum deal at his former company Harken Energy — in which big profits were recorded on a sale that was paid for by the company itself, a transaction that obviously had no meaning except as a way to inflate reported earnings — he responded, "There was an honest difference of opinion. . . . sometimes things aren't exactly black-and-white when it comes to accounting procedures."
And he still opposes both reforms that would reduce the incentives for corporate scams, such as requiring companies to count executive stock options against profits, and reforms that would make it harder to carry out such scams, such as not allowing accountants to take consulting fees from the same firms they audit.
The closest thing to a substantive proposal in Mr. Bush's tough-talking, nearly content-free speech on Tuesday was his call for extra punishment for executives convicted of fraud. But that's an empty threat. In reality, top executives rarely get charged with crimes; not a single indictment has yet been brought in the Enron affair, and even "Chainsaw Al" Dunlap, a serial book-cooker, faces only a civil suit. And they almost never get convicted. Accounting issues are technical enough to confuse many juries; expensive lawyers make the most of that confusion; and if all else fails, big-name executives have friends in high places who protect them.
In this as in so much of the corporate governance issue, the current wave of scandal is prefigured by President Bush's own history.
An aside: Some pundits have tried to dismiss questions about Mr. Bush's business career as unfair — it was long ago, and hence irrelevant. Yet many of these same pundits thought it was perfectly appropriate to spend seven years and $70 million investigating a failed land deal that was even further in Bill Clinton's past. And if they want something more recent, how about reporting on the story of Mr. Bush's extraordinarily lucrative investment in the Texas Rangers, which became so profitable because of a highly incestuous web of public policy and private deals? As in the case of Harken, no hard work is necessary; Joe Conason laid it all out in Harper's almost two years ago.
But the Harken story still has more to teach us, because the S.E.C. investigation into Mr. Bush's stock sale is a perfect illustration of why his tough talk won't scare well-connected malefactors.
Mr. Bush claims that he was "vetted" by the S.E.C. In fact, the agency's investigation was peculiarly perfunctory. It somehow decided that Mr. Bush's perfectly timed stock sale did not reflect inside information without interviewing him, or any other members of Harken's board. Maybe top officials at the S.E.C. felt they already knew enough about Mr. Bush: his father, the president, had appointed a good friend as S.E.C. chairman. And the general counsel, who would normally make decisions about legal action, had previously been George W. Bush's personal lawyer — he negotiated the purchase of the Texas Rangers. I am not making this up.
Most corporate wrongdoers won't be quite as well connected as the young Mr. Bush; but like him, they will expect, and probably receive, kid-glove treatment. In an interesting parallel, today's S.E.C., which claims to be investigating the highly questionable accounting at Halliburton that turned a loss into a reported profit, has yet to interview the C.E.O. at the time — Dick Cheney.
The bottom line is that in the last week any hopes you might have had that Mr. Bush would make a break from his past and champion desperately needed corporate reform have been dashed. Mr. Bush is not a real reformer; he just plays one on TV.
-- Cherri (firstname.lastname@example.org), July 12, 2002.
"We would like to find out if George Bush Sr. had any influence on the SEC at that time to get them to drop the case."
Good luck with that Kenneth. One of the first things Dumbya did when he stole the office was to create an executive order which prevents anyone from digging into his Daddy's records.
-- (freedom of information @ thing. of the past), July 12, 2002.
FS, Bush didn't break the law. There were no laws on when he needed to file the actual sale of stock. As a matter of fact when these forms are sent they usually are ignored or even disgarded. He legally filed the proper forms for notification of intent to sell prior to his selling. That was all the law required. The reason this isn't discussed is because there's nothing to discuss except in the eyes of the left-wing conspiracy.
Second, after he sold the stock went up. He could have made even more money had he held on a little longer.
But the fact remains he followed the law.
-- Maria (email@example.com), July 12, 2002.
All these skanky dealings were occurring during the Clinton years. Why didn't his regulators pick-up on Enron, WorldCom, etc? Could it be that he didn't want them to? After all, it was fat-city during the 90s. His team didn't want that to end on their watch.
"It's the economy, stupid".
-- (firstname.lastname@example.org), July 12, 2002.
They might have happened during the Clinton years, but it was Reagan and Poppy who loosened up corporate regulation and encouraged CEO's to rip off the public. Clinton couldn't crack down because the Repug-controlled Congress refused to allow it.
-- (nice try at blaming Clinton again @ but it won't fly. this time), July 12, 2002.
LOL!! Dim buld Maria is still in total denial. Dumbya DID break the law by not reporting his sale immediately, and the stock did NOT go up afterwards, it went way down. It's now down in the 40 cent range.
-- rotflmao! (Maria @ total. moron), July 12, 2002.
Clinton couldn't crack down because the Repug-controlled Congress refused to allow it.
-- (email@example.com), July 12, 2002.
Trying to blame it on Clinton, now THAT'S bullshit! You know damn well that Reagan and Poppy Bush did everything in their power to loosen up regulations for corporations and make it impossible for investors to sue them. That's when this all started.
The blaming everything on Clinton strategy is so fucking pathetic it's gone way beyond laughable.
-- (give it up @ pug. loser), July 12, 2002.
Lars, you are on the wrong side of this argument.
Clinton's head of the SEC, Arthur Levitt (sp?) was a damn good man. And he was stymied by Congress in all sorts of ways, with yes minority participation by Democrats. (I used to like Joe Lieberman, now I think he's a complete fool. His "solution" to the pledge problem, as I understand it, is a Constitutional amendment. Give me strength.)
-- Peter Errington (firstname.lastname@example.org), July 13, 2002.