Bush Pre-Judges SEC on Halliburton
House GOP Born-Again Reformers
7/18/02
dailyenron.com
Even the O.J. Simpson jury waited for the end of the trial to acquit. But, yesterday - in what might be called a case of "SEC-nullification" - President Bush declared Vice President Dick Cheney innocent.
The remarks came as the SEC's investigation into allegations that Halliburton Corp. cooked its books from 1998-2001 was just getting underway. Cheney served as the company's CEO from 1995-2000.
Bush's unscripted remarks defending Cheney came when he was blindsided by a reporter's question at press conference with Polish President Aleksander Kwasniewski.
In a series of stumbling dead-end sentences Bush stated that he was "sure [Cheney] did nothing wrong." Critics quickly blasted the remark as a transparent attempt to influence already embattled SEC Commissioner Harvey Pitt.
"When the president of the United States stands at a podium and says, basically, there is nothing to this investigation, I think that could have a significant impact on the SEC's investigation," said Jennifer Palmieri, spokeswoman for the Democratic National Committee.
Yesterday's presidential absolution may have done Cheney more harm than good. Since the news of Halliburton's troubles first surfaced, Cheney has refused to comment on the case, stating that any comment from the Executive Branch about an ongoing investigation would be inappropriate.
"President Bush has blown Cheney's cover," said Palmieri. "The White House has refused to answer any questions about Cheney's Halliburton past for fear of influencing the SEC investigation. The President has taken that excuse away by saying that he thinks Vice President Cheney did not do anything wrong."
Finally, by excusing Cheney's business practices at Halliburton, Bush has only reinforced a growing public perception that Bush is too wedded to business interests to fully address the issue of corporate ethics.
"When I picked him [Cheney] I knew he was a fine business leader and a fine, experienced man," Bush said yesterday.
Besides the SEC investigation, Halliburton and Cheney were named as defendants last week in a $450 million shareholder lawsuit alleging accounting fraud during Cheney's tenure.
Both the President and Vice President are under a cloud of suspicion and controversy over their behavior as private executives. While the Halliburton matter is currently under scrutiny by the SEC, the agency's investigation of Bush's actions while at Harken Energy in the late 1980s was closed in 1993 without action being taken. But even now, neither the SEC nor the White House will authorize the release of the files on that investigation.
Critics have charged that the investigation of Bush's Harken stock sales took place under the auspices of his father's administration and its outcome is therefore suspect. They have asked that the files be released so independent experts can examine them.
------------------------------------------
House GOP Deserts White House
You don't see the likes of it very often, but we saw it this week: panic among House Republicans. With control of the House in their hands since 1994, House Republicans usually carry themselves with a monarchial air of cocky self-confidence. Not this week though.
This week it was every man and woman for him and herself. After months of sticking by the Bush administration's "go slow, go easy" strategy to corporate governance reforms, House Republicans suddenly found themselves on the wrong side of public opinion.
When Enron failed, the White House and House GOP leaders crafted a plan they hoped would allow Republicans to appear concerned about corporate crime, without actually enacting strong accounting and other reforms.
Consequently the House passed a bill by Financial Services Committee Chairman, Michael Oxley, (R-OH) which has since been criticized as a weak collection of half steps towards reform.
When the Democrat-controlled Senate moved a strong set of measures sponsored by Senate Banking Chairman Paul Sarbanes (D-MD) that garnered bipartisan support and public praise, House Republicans felt they had been hung out to dry by the White House.
"Hey, lots of these folks up here have to face voters back home this fall," a Hill source said. "The White House misjudged this one. They thought they could dampen public backlash with largely symbolic legislation. But the issue had gotten away from them. And, now with both Bush and Cheney being lumped in with Ken Lay (Enron) and Bernie Ebbers (WorldCom), it was time to start looking out for themselves."
A New York Times/CBS poll released today showed that, "by more than two to one, the poll's respondents found that the administration was more interested in protecting the interests of large corporations than those of ordinary Americans." Even Republicans - more than half of those polled - believe their party is too beholden to business.
So, House Republicans broke ranks with their own administration this week and, as the stock market plummeted, called for stiffer penalties for corrupt CEOs than the president has proposed.
And, after years of refusing to adequately fund the SEC, they proposed more money for both the Securities and Exchange Commission and the Treasury Department to be earmarked for policing corporate behavior.
"We will advance further than Bush will at this stage in the game," said Rep. Mark Foley (R-FL), "He can't control everything. . . . Sometimes we have to lead."
For months, the White House strategy was to frame Enron and subsequent corporate meltdowns as business rather than political issues. But, this tactic was overwhelmed by the crush of company failures, investigations, and news reports detailing a virtual crime wave in the suites.
"In the final analysis, we're no good to Bush if we don't keep the majority," a GOP strategist told the Washington Post. "…So we've got to look out for ourselves, first and foremost. We have to go home in a week and say we've done something. People have to wake up and realize the political nature of this fight."
After seven months of foot-dragging and half-measures, House Republicans rushed to announce that they would now push to approve new tough corporate regulations by July 26.
House Minority Leader Richard A. Gephardt (D-MO) described the born-again GOP reformers as "political posers."
--------------------------------------------------------------------------------
More Documents Held Hostage
Not since Richard Nixon was President has a more secretive administration occupied the White House. And never has anyone established a broader or more self-serving view of executive privilege than the current Bush administration. Since taking office, the administration has limited access to enormous swaths of both current and historical Executive Branch documents.
In 2001 the Bush administration refused to release Vice President Dick Cheney's Energy Task Force documents, claiming they were privileged. The General Accounting Office has sued to gain access to those documents, as have several public interest groups that contend citizens have a right to know whom the administration consulted in formulating its national energy policies. Nevertheless, those documents continue to be held under lock and key in a secure, undisclosed location.
A new set of documents have now been added to the list of those the administration refuses to release. When the SEC investigated then-private citizen George W. Bush in 1993 for possible insider trading, his father was President. The SEC Commissioner Richard Breeden was a Bush appointee, and G.W. Bush's former personal attorney, James. A. Doty, was the SEC's General Counsel. The SEC closed the investigation without taking action. The SEC also ruled that the sale of a Harken subsidiary during Bush's tenure on its board was without economic substance - i.e. phony - and ordered the company to reverse the sale.
When asked about these events at recent news conferences, President Bush has claimed he was exonerated by the SEC and, when pressed for details, has referred reporters to SEC documents and Harken's own board minutes.
But, the SEC refuses to release its file on the Harken investigation and the White House refuses to ask Harken Energy to release its board minutes from that period.
The only SEC document to surface so far has been a letter from the SEC to Bush's attorney stating that the SEC had investigated Bush's stock sale and had decided there was not enough proof of wrongdoing to proceed with SEC action. The letter also clearly warned that the decision was not and should not be described as exoneration. And, that if new evidence surfaced later, the SEC retained the option of reopening the probe.
Critics say the only way President Bush can shake the Harken controversy is to order a full release of all files on the case and request that Harken Energy do the same.
"You'd think that the White House would have learned something from the Whitewater affair," a Hill observer said. "The lesson was, release everything. Do it now. Don't dribble the stuff out. Get it over with. Because, sooner or later, it's all going to come out anyway."
--------------------------------------------------------------------------------
Quote of the Day
"Manifestations of lax corporate governance, in my judgement, are largely a symptom of a failed CEO....One thing I have become acutely aware of is how crucial the issue of what the [a company's] CEO believes and does is."
-Alan Greenspan, July 16, 2002 |
