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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Frederick Langford who wrote (92613)	7/8/2002 4:22:45 PM
From: Softechie	Respond to of 99280

Bush Readies Corporate Crackdown By Adam Entous WASHINGTON (Reuters) - President Bush huddled with advisers on Monday to complete plans for a crackdown on corporate misconduct with new criminal penalties, responding to a wave of accounting scandals that threatened to turn Bush's pro-business reputation into a liability. ADVERTISEMENT Bush will present his plan on Tuesday in a Wall Street speech aimed at restoring investor confidence shaken by accounting scandals at telecoms giant WorldCom Inc. (NasdaqNM:WCOME - News). and other once high-flying firms. But the Republican president faced an uphill battle reversing a market selloff that deepened on Monday amid revelations drug company Merck & Co. (NYSE:MRK - News) recorded revenues of $12.4 billion from its pharmacy benefits subsidiary in the past three years that the unit never actually collected. "The president will talk about strict enforcement and tough punishment," White House spokesman Ari Fleischer said. "He thinks it's important for the economy that the American public has confidence in corporations. His speech is going to be aimed at restoring that confidence." Bush is under pressure to act decisively after Republican Sen. John McCain of Arizona joined Democratic lawmakers in calling for the resignation of Securities and Exchange Commission Chairman Harvey Pitt, a former Wall Street lawyer with prominent clients including major accounting firms. McCain said Pitt's response to recent accounting scandals "appeared slow and tepid." With congressional hearings into the WorldCom debacle getting under way, former Chief Executive Bernard Ebbers and former Chief Financial Officer Scott Sullivan refused to testify, exercising their constitutional right against self-incrimination before the U.S. House Financial Services Committee. Ebbers was appointed by Bush in July 2001 to serve on the administration's National Security Telecommunications Advisory Committee. The White House said WorldCom has been represented on the committee since 1997, and that Ebbers, as the company's former CEO, was the automatic designee. Wrapping up a three-day Fourth of July holiday weekend in Kennebunkport, Maine, with an early morning round of golf, Bush told reporters his speech was "in pretty good shape." But he declined to reveal details as he, his father, former President George Bush, brother-in-law Bobby Koch and Cape Arundel golf pro Ken Raynor teed off at the crack of dawn. The president was to meet his advisers at the White House and hold a news conference later on Monday. Republican sources said Bush's proposal would include new criminal penalties for company officers who submit intentionally misleading financial statements. Currently they can face fines and other civil penalties. Democrats have proposed their own plan, which would create a new, general crime of securities fraud that could be punished with a 10-year jail sentence. Democrats would also lengthen -- from three to five years -- the time in which private securities fraud lawsuits can be filed. By taking a harder line in public on corporate crime, the first U.S. president with a master's degree in business hoped to distance himself politically from boardroom bosses whose big donations helped finance his 2000 presidential campaign. Bankrupt energy trader Enron Corp. was one of Bush's biggest contributors. In March, Bush proposed several measures aimed at stopping abuses by corporate executives, but stopped short of backing tougher measures advocated by lawmakers and his own treasury secretary. So far Bush has remained largely unscathed by the business scandals. According to recent polls, most Americans blame greedy executives, not the president. POLITICAL FALLOUT In the run-up to the November congressional elections, Democrats hoped to use the corporate scandals to their political advantage, accusing Bush and his fellow Republicans of spearheading policies that reward corporate greed at the expense of workers and investors. Bush's own conduct as a businessman has been questioned since an internal Securities and Exchange Commission memo detailed his 34-week delay in reporting stock sales worth more than $1 million while serving as a director of Texas-based Harken Energy Corp. more than a decade ago. The White House is also worried about political fallout from a probe of accounting practices at Halliburton Co. (NYSE:HAL - News), the energy company that Vice President Dick Cheney ran from 1995 to 2000. Army Secretary Thomas White is a former senior Enron executive, and other administration officials were Enron consultants. Hoping to improve corporate America's image, the Business Roundtable launched a public relations campaign that included full-page advertisements in major newspapers declaring: "Enough is enough." The group, an association of chief executive officers of leading corporations, said it would support a proposal by Maryland Sen. Paul Sarbanes to create an oversight board for accountants, to become stricter on insider trading and to close regulatory loopholes. The Business Roundtable said it would also support tougher penalties for wrongdoing by CEOs. But the Democrat-leaning American Family Voices said it would counter with a television advertising campaign of its own, saying, "Bush and his economic team promising to crack down on corporate America is like letting the fox guard the henhouse."