Cheney AWOL from Corp. Responsibility Signing
Failed Execs Pocketed $3.3 billion in 3 Years
thedailyenron.com
In politics body language often speaks louder than words. I offer President Bush as Exhibit A. Whenever he is forced to sign something into law that may be politically expedient, but which he personally opposes, Bush downgrades the signing.
Just how much he downgrades it indicates the degree of contempt in which he holds the law he is enacting. For example, when forced by public opinion to sign the McCain/Fiengold campaign finance reforms, Bush held the signing in virtual seclusion.
Yesterday was another of those moments. Against all odds a strong corporate responsibility law pushed by Sen. Paul Sarbanes (D-MD) had passed both houses and landed on the President's desk. Just a month ago the measure was given no chance of passage as House and Senate Republicans worked feverishly to bottle the Sarbanes measure in committee. But, with corporate America looking a bit like Pearl Harbor the day after, and public anger at the boiling point, Republicans deserted the White House and rushed to support the Sarbanes bill. Now the President had to sign the thing.
The setting was, by bill-signing standards, low key - just a modest table surrounded with a handful of non-headline-provoking individuals. Missing were the likes of Federal Reserve Chairman, Alan Greenspan and Vice President Dick Cheney. Cheney preferred to attend a fundraiser in Ohio rather than be photographed standing next to a block-letter sign reading "Corporate Responsibility."
The White House usually releases a list of prominent chief executives who attend East Room events, but no list was released yesterday.
Now that the measure is law, critics are already alleging that the administration has begun watering down enforcement of the law. Less than eight hours after the signing, the White House issued its first "interpretation" of the law that Democrats say is the first attempt by Republicans to sabotage the stronger provisions of the law.
The White House statement said the administration would provide federal job protection for employees who are cooperating with an investigation authorized by the law. But, Sen. Patrick J. Leahy (D-VT), who helped draft parts of the measure, said that section was intended to also apply to whistle-blowers who provide evidence of fraud to an individual lawmaker, even before a formal investigation is launched.
President Bush and Republican lawmakers backed a weaker House measure, but shifted in recent weeks to support Democrats in cracking down on accounting firms and corporate boards as polls showed the public favored the stronger reform.
Embattled SEC Chairman Harvey L. Pitt, a Bush nominee and former lawyer for major accounting firms, also sounded a hesitant tone when asked how vigorously the SEC would enforce the new law.
"We've got our hands full, but we're going to do it," Pitt said.
Following the signing, Pitt held a private lunch with Rep. Michael Oxley (R-OH), who had authored the weaker measures passed by the House and backed by the President. Oxley put the best face he could on what can only be considered a defeat for his measure. "Paul's (Sarbanes' bill) was more prescriptive," he said. "We gave greater latitude to the SEC. It was a difference of philosophy."
The new law comes at a particularly inopportune time for the administration. Vice President Cheney faces an SEC inquiry into accounting changes made by Halliburton Co. when he was chief executive. While Cheney was absent from the signing, he was not entirely forgotten. He was spoofed by a protester dressed as Hallibacon, "the corporate crime-fighting pig."
It had to be a personally awkward moment for the President who was sitting before the red, white and blue, "Corporate Responsibility" poster at a time when his own behavior as a corporate executive is under public scrutiny.
Reaction to the signing was as underwhelming as the ceremony. Bush predicted that enacting the bill would boost investor confidence and send the stock market back up. Apparently investors missed the point because the Dow dropped nearly 32 points.
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Failed Executives Earned Over $3.3 Billion
The Financial Times reports this morning that a survey of failed US corporations shows that the men who headed them reaped nearly $3.3 billion in personal wealth in just three years between 1999 and 2001. The companies surveyed went bust, wiping out hundreds of billions of dollars of shareholder value and nearly 100,000 jobs.
Among the biggest winners were former executives of Enron, Global Crossing and WorldCom. In the three years since 1999 alone, Ken Lay of Enron grossed $247m while Gary Winnick of Global Crossing - the survey's top-earning baron of bankruptcy - grossed $512m.
The FT's survey, the first systematic study of executive gain at companies that went bankrupt amid the recent economic downturn, covered the 25 largest US companies to go bust in the past 18 months. It includes salaries and proceeds from share sales between 1999 and 2001. Of the 208 executives and directors included in the survey, 52 individuals grossed more than $10 million, 31 more than $25 million, 16 more than $50 million, and eight more than $100 million.
When Global Crossing executives were asked yesterday during Senate hearings if the company was going to try to retrieve any of the money Winnick took with him when he left, they responded that they believed the company had no legal right to do so.
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What About Bob?
While hardly Teapot Dome, it was not helpful. Yesterday the Senate Ethics Committee slapped both wrists of Sen. Robert Torricelli (D-NJ) for accepting gifts from a donor who was something less than a Boy Scout.
The gifts in question were a TV and an antique clock - chump change by political standards, and that's the point. They were hardly worth threatening the Democrats' one-seat margin in the Senate.
The ruling came after almost two years of Justice Department investigations into Torricelli came up empty-handed. Ruling that there had been no federal law violations, prosecutors referred the matter to the Senate Ethics Committee. After admitting he accepted the gifts in violation of the Senate rules that exclude gifts over $50, the committee voted to "severely admonish" Torricelli.
After the vote, Torricelli went to the Senate floor, apologized and said he deserved the censure. He probably also deserves what the folks back in New Jersey call a good "dope slap" as well.
Torricelli is in a close race for re-election against wealthy GOP businessman
Douglas Forrester who now hopes to leverage the Ethics Committee ruling into victory.
"We're all rooting for that," a top Senate GOP aide told the Washington Post.
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Larry Thompson's Old Company Shrinks
When Deputy Attorney General Larry Thompson was a top executive of Providian Financial, the company experienced explosive growth on the backs of poor borrowers. Providian became the nation's largest provider of what lenders euphemistically refer to as "sub-prime" loans - loans to the poor and those with poor credit ratings.
During Thompson's time as a member of Providian's board, the company became enmeshed in a number of civil and regulatory actions accusing the company of predatory lending policies, hidden fees and other violations. The company paid out over $400 million to settle the charges.
Denied the ability to milk borrowers with excessive fees and hidden charges, the company has shrunk. This week Providian announced it would layoff another 1,300 employees in California and Utah.
It is just the latest in a round of ongoing layoffs that the company says will eventually number 6,000 - cutting the company's size to about half of what it was when Thompson was there.
Thompson's tenure at Providian during the company's troubled years simply adds to the Bush administration's list of officials with tainted corporate pasts.
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Fastow Decides to Live Modestly
Former Enron executive Andy Fastow has decided to put his uncompleted 11,000 square foot Houston mansion up for sale. The house, located in an ultra-exclusive section of Houston, is nearing completion.
Fastow and his family are currently leasing a "modest" $700,000 home.
It is unknown what prompted Fastow to decide to sell the new house. Under Texas (and Florida) law, personal residences are shielded from creditors and court judgments and it is common for those being pursued by creditors to protect part of their ill-gotten gains in large homes. Enron's former CEO Ken Lay continues to live in a $7 million penthouse, for example.
What may have changed Fastow's plans is a new federal bankruptcy law working its way to the President's desk. The law tightens federal bankruptcy rules in regard to personal residences. When the new rules go into affect, a person will have to have lived in their home for at least 40 months prior to filing bankruptcy for the property to be protected. |
