Democrats: Bush lax on policing businesses
The Philadelphia Inquirer
Posted on Mon, Jul. 08, 2002
Daschle blamed Bush for "cozy" corporate ties. His words set up a political showdown.
By Robert A. Rankin and Seth Borenstein
Inquirer Washington Bureau
WASHINGTON - Senate Majority Leader Tom Daschle
yesterday blamed the Bush administration for fostering a "cozy, permissive relationship"
of lax regulation toward corporate America that he said had led to the recent
wave of financial scandals.
Daschle (D., S.D.) and other Democrats are calling for tougher government action
to tackle corporate misbehavior. Bush and fellow Republicans have been blaming the
problems on a few corporate bad apples, but they appear to be rethinking that position
as public concern mounts and Democrats mobilize for new legislation.
Bush is to deliver a major speech on Wall Street tomorrow
calling for strict punishment of corporate executives who report
false financial statements. Daschle said the Senate
would pass a strong accounting-reform measure this week.
Both events underscore how Republicans and Democrats in the nation's capital
are sprinting to capitalize on the public revulsion at recent disclosures of how executives at
such big corporations as Enron Corp. and WorldCom Inc. worked with accountants
to falsify their finances. House Republicans are planning to take the lead
in grilling current and former WorldCom officials at a hearing today.
Daschle made clear that he believed the chairman of the Securities and
Exchange Commission, Harvey Pitt, an appointee of President Bush, must go.
"I have to say that at this point, we could do a lot better than
Harvey Pitt in that position today," the Senate Democratic leader said
"That cozy, permissive relationship has to end, and he, in large measure,
has orchestrated that over the last 18 months."
Pitt represented Wall Street financial and accounting firms as a Washington
lawyer before Bush put him in charge of regulating them at the SEC.
The financial scandals have depressed stock prices and cost millions of investors dearly.
Daschle's harsh attack signals that corporate financial scandals could become
a pivotal issue in November's congressional elections. Democrats hold a one-seat majority in
the 100-member Senate and need to gain only six seats in the House of Representatives
to take control there. Daschle also is a potential candidate for the Democratic
presidential nomination in 2004.
The Senate Democratic leader slammed Bush for contributing
to the too-cozy relationship between government and
corporate America. He cited Bush's failure in 1990 to
disclose promptly that he had sold almost $850,000 worth
of stock in the Harken Energy Corp., where he served as a board member.
Bush sold 212,140 shares of the stock for $4 each about two months before
Harken disclosed $23 million in losses, which cut the value of its stock in half.
Bush filed notice of his stock sale at the SEC more than eight months late.
An SEC investigation concluded in March 1992 that there was insufficient evidence
to charge Bush with a violation of securities law.
"I think that's illustrative of this permissive environment,"
Daschle said on CBS's Face the Nation. "That's the kind of thing
that got us into trouble in the first place - winking at
regulation."
A White House spokeswoman in Kennebunkport, Maine, where Bush
was spending the weekend, dismissed Daschle's attacks and said the President
retained full confidence in Pitt.
"The President believes the SEC is doing an excellent job cracking down on
corporate wrongdoing and on increasing the amount and timeliness of information that
companies need to release. This SEC is much, much tougher than previous
SECs," spokeswoman Claire Buchan said.
Buchan said Bush's sale of Harken stocks was "a 10-year-old issue"
that had nothing to do with current corporate problems.
The Bush administration is on the defensive, in part because
the SEC is also investigating accounting practices at Halliburton,
a Dallas-based oil-services company. Vice
President CHENEY was the firm's chairman and chief executive from 1995 to 2000.
"Some of these corporate criminals need to go to jail," said
U.S. Rep. W.J. "Billy" Tauzin (R., La.), chairman of the
House Energy and Commerce Committee, which is
investigating the massive bankruptcies of energy trading giant
Enron and the telecommunications company Global Crossing.
"As soon as one of these major corporate leaders is indicted,
confidence will generally come back," Tauzin said on NBC's Meet the Press.
Current and former WorldCom executives were summoned to appear today before
the House Financial Services Committee. The telecommunications giant is battling
to avoid bankruptcy since the recent disclosure that it disguised $3.9 billion in expenses.
The SEC chairman under President Bill Clinton, Arthur Levitt, blamed the
Republican-majority Congress of the 1990s for blocking his agency's efforts
to police corporate America's finances more thoroughly.
On NBC's Meet the Press, Levitt endorsed a bill sponsored by Sen. Paul S. Sarbanes
(D., Md.) that would toughen federal oversight of accounting firms.
Daschle said the Senate would act on the Sarbanes measure this week.
He predicted last week that it would pass easily.
philly.com
Contact Robert A. Rankin at 202-383-6017 or rrankin@krwashington.com. Ron Hutcheson of the Inquirer Washington Bureau contributed to this article, which also includes information from Inquirer wire services.
© 2001 inquirer and wire service sources. All Rights Reserved.
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