Bush, Cheney & SEC scrutiny - Oh how our fearless leaders fill us with patriotic fervor on this 4th of July weekend! Looks like they tried "The dog ate my homework" defense first and now it's just deny, deny, deny. People, especially Dems, won't forget Bush hung out with the likes of "Kenny Boy" Lay, so the spin machine will have to be in full gear for a while -
Wednesday July 3, 3:53 pm Eastern Time
Reuters Company News
Bush seeks to deflect blame for tardy SEC filings
(Updates with White House comments)
By Adam Entous
WASHINGTON, July 3 (Reuters) - The White House on Wednesday blamed a "mix-up" by company lawyers for President George W. Bush's failure to comply with stock sale disclosure rules more than a decade ago, brushing aside criticism that Bush has not lived up to the standards he set for corporate executives in response to recent accounting scandals.
White House spokesman Ari Fleischer said the president personally did nothing wrong while serving as a director of Texas-based Harken Energy Corp. (AMEX:HEC - News) in the late 1980s and early 1990s, when Bush was up to 34 weeks late in reporting stock sales worth more than $1 million.
Fleischer said the Securities and Exchange Commission looked into the matter and concluded "this is not anything that's actionable." Bush's father was president of the United States at the time.
A spokeswoman for Harken Energy refused to comment. "I have zero to say about it," she said.
Fleischer played down any conflict between Bush's belated disclosure of the transactions at Harken and the rules he recently proposed as president requiring top executives to promptly disclose when they buy or sell company stock.
Eager to distance himself and his administration from a series of accounting scandals at Enron Corp. (Other OTC:ENRNQ.PK - News), WorldCom Inc. (NasdaqNM:WCOME - News) and other U.S. firms, Bush will issue a fresh call for corporate responsibility and a crackdown on misconduct in an address on Wall Street on Tuesday.
"If there are any bad players in our free enterprise system, they will be held accountable by this administration and by the government," said Fleischer, offering a preview of Bush's address to business leaders.
Bush's political fortunes could depend on his stewardship of the U.S. economy and his response to the recent flood of corporate accounting scandals.
New York Times columnist Paul Krugman on Tuesday suggested Bush's dealings may bear similarities to the accounting scandals at Enron and other companies that have undermined faith in corporate America and dragged the stock market down.
INTERNAL SEC MEMO
An internal Securities and Exchange Commission memorandum in 1991 accused Bush of being late on at least four occasions in filing reports about transactions involving Harken stock.
One report -- filed 34 weeks late -- disclosed that Bush had sold $848,560 of Harken stock on June 22, 1990, just weeks before the company filed a quarterly report revealing that it had hemorrhaged $23 million during that period.
Bush sold his stock for $4 a share. By the end of the year it was trading not much above $1, according to the Center for Public Integrity, which provided Reuters with a copy of the April 9, 1991, SEC memo.
Fleischer dismissed suggestions of wrongdoing by Bush, saying certain SEC filings were late due to "a mix-up, a clerical mistake involving the lawyers at Harken."
During his 1994 campaign for governor of Texas, Bush suggested that the paperwork was misplaced by the SEC.
Bush was mistaken, Fleischer said on Wednesday. "I think that the best explanation is that the attorneys thought the form had been filed, which is what led then George W. Bush to say that he thought it had been filed and that SEC must have lost it. That was not the case," Fleischer said.
Fleischer said Bush properly disclosed the stock sales in a separate June 1990 filing. "The president, in his own personal action, disclosed promptly the intent to sell," Fleischer said.
The SEC did not take action against Bush. Fleischer said the SEC reviewed the matter and "concluded there's nothing there."
POLITICAL ISSUE
In the run-up to November congressional elections, Democrats would like to blame Bush and Republicans for creating a lax regulatory atmosphere conducive to corporate greed.
In addition to Bush, Vice President Dick Cheney's conduct while at the helm of Halliburton Co. (NYSE:HAL - News) is under scrutiny. The company said in May that the SEC had begun a preliminary investigation of its accounting treatment of cost overruns on construction jobs. Cheney served as chief executive of Halliburton from 1995 to 2000, but a spokeswoman for the vice president said he has not been contacted by SEC investigators.
In March, Bush called for a crackdown on corporate and accounting misconduct. But he stopped short of tougher reforms advocated by lawmakers and his own treasury secretary after the collapse of Enron, one of the president's biggest financial backers in the 2000 campaign.
In the wake of the scandal at WorldCom and renewed attacks by Democrats, officials say Bush is considering new measures to crack down on corporate abuse.
Treasury Secretary Paul O'Neill wants to give the Securities and Exchange Commission the right to freeze the assets of officials implicated in scandals like that at WorldCom.
O'Neill had also proposed changing legal standards -- from recklessness to negligence -- to make it easier to punish executives accused of misleading shareholders. Other Bush advisers want to provide additional resources to the SEC to police the industry and punish executives for misconduct. |
