Two Men Defiant, Angry and in Denial
Where's Waldo? VP Avoids Halliburton Questions
The Daily Enron / 7-19-02
thedailyenron.com
BREAKING NEWS: The Boston Globe reports one of the largest buyers of Harken stock was Harvard Management, and those purchases were made by hen-Harvard Management official Micheal Eisenson, who was also invited to join Bush on Harken's board of directors.
Harvard Management is the investment arm of Harvard University, where Bush received his post-graduate degree in business.
At the height of its investment, Harvard owned roughly a third of the troubled oil company. It began shedding its shares in the early 1990s. As of last May, Harvard still owned 254,251 shares in Harken, according to federal filings. When Bush sold his stock on June 22, 1989, he got $4 a share. After a brief up-tick, Harken's share price has steadily slid, closing yesterday at around 36 cents.
The full story can be read at:
boston.com
Market Dives Below 9/11 Levels
What is worse for the American economy - massive terrorist attacks or rampant corporate crime? Investors voted today and decided that, at least as far as their pocketbooks are concerned, they are more afraid of crooked executives than crazed terrorists.
On the last day of trading this week the Dow dropped 390 points to finish just above 8000. The Dow is now well below its lowest point following the 9/11 terrorist attacks.
With most economic indicators pointing to continued recovery, analysts say the only explanation for crashing stock prices is a lack of investor confidence in corporate management.
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IN OTHER NEWS
Defiance, Arrogance Mark Testimony
Two angry and defiant men faced down congressional committees yesterday, both fighting for their political lives.
Appearing before the House Ethics Committee Rep. James Traficant, (D-OH) faced expulsion after being convicted in his home state of bribery. At the same moment on the Senate side, Army Secretary Thomas White was defending his actions while head of Enron Energy Services, and stock sales he made after joining the administration.
Supporters of the two men described their often-angry testimony as displays of righteous indignation. Their critics say their arrogance as well as a clear emotional and intellectual disconnect only reinforced the view that neither belonged in public office.
The Army Secretary was the first Bush administration official to come under fire after the collapse of Enron in December of last year. White came to the administration straight from Enron where he was one of the company's top officials and oversaw wholesale power operations during the period when investigators say the company illegally manipulated energy prices and hid losses and revenues offshore.
White opened his testimony with a prepared statement in which he defended his years at Enron and his subsequent stock sales. According to Senate testimony
At the completion of his prepared remarks, White was asked by Sen. John McCain (R-AZ) why in his statement White failed to indicate any concern for Enron workers and pensioners who lost their life, jobs and savings when the company collapsed. White responded that, of course, he felt bad for them but quickly added that he too had lost money, explaining that he left about $10 million on the table in the form of Enron stock options that he did not exercise.
Records show that White took with him about $50 million in salary and stock options when he left the company.
During a particularly contentious exchange, White defended his sale of blocks of Enron stock after joining the administration and just before the company filed bankruptcy. Sen. Barbara Boxer had prepared a chart showing some 77 phone calls White made to former colleagues at Enron and sales of blocks of Enron stock shortly after the calls. The timing of the calls and stock sales, Boxer inferred, indicated that White was selling on insider information.
White responded that the calls were entirely personal in nature. "These were friends I had worked with at Enron for years," White said, stating he was just calling to check on their well-being and not to garner inside information.
Boxer was not buying any of it. "It just doesn't look right, just like it doesn't look right for Martha Stewart to call her best friends," Boxer said, referring to the issue of whether Stewart benefited from insider information before selling large amounts of ImClone stock one day before it collapsed.
Boxer said she had asked SEC Commissioner Harvey Pitt to investigate White's phone calls earlier and will repeat that request.
At no point during his testimony did White acknowledge any role in or knowledge of the multiple frauds being perpetrated by Enron while he headed Enron Energy Services. Instead, he blamed all the wrongdoing on other divisions and other executives within the company.
Senator Byron Dorgan (D-ND) shot back, "Well, you were all kissing cousins, weren't you?" White did not respond.
Later in the day the House Ethics Committee voted that the full House should expel Traficant from the House.
President Bush has repeatedly defended White and refused numerous calls for his resignation.
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Hey, Where's Waldo?
While other administration officials take the heat for their earlier corporate behavior, Vice President Dick Cheney has all but vanished from sight. Since his stewardship as CEO of Halliburton Corp (1995-2000) has come under fire in recent weeks, the already elusive and secretive vice president has become even harder to find.
President Bush has faced reporter's questions about his days at Harken Energy, Thomas White on his Enron days and SEC Commissioner Harvey Pitt on his cozy relations with former accounting firm law clients. But Cheney has been silent on what many feel may be a "Spiro Agnew-like" problem brewing around the vice presidency.
Cheney and Halliburton have been accused in a shareholder lawsuit of fraudulent accounting practices that resulted in the company reporting as much as $460 million in dubious revenue over a three year period. The accounting changes were ordered by Cheney and sanctified by Halliburton's auditors, Arthur Andersen. Before leaving Halliburton Cheney appeared in a promotional video lauding Andersen's services.
The SEC has confirmed it is investigating Halliburton, but has not questioned Cheney himself and will not confirm whether it plans to do so. It is not unusual for the SEC to spare high-profile political figures the embarrassment of a grilling. In 1993 the SEC closed its investigation into George W. Bush's Harken stock trades without interviewing Bush, whose father was President at the time.
The allegations surrounding Halliburton and Cheney may prove far more difficult for the administration to finesse than Bush's history behavior while at Harken. Unlike Harken, Halliburton Corp. is a major US company holding billions in federal and state contracts. The allegations of accounting fraud facing Halliburton are the stuff of current front page news. And, Cheney was at Halliburton's controls when the alleged frauds occurred.
Unlike Presidents, sitting Vice Presidents have been historically expendable. In 1972 Vice President Spiro Agnew came under investigation by the U.S. attorney in Baltimore for receiving payoffs from engineers seeking contracts when Agnew was Baltimore county executive and governor of Maryland. Agnew asserted his innocence, but was forced to resign on Oct. 10, 1973. He later pleaded no contest to a single charge that he had failed to report $29,500 of income .
But, if the SEC decides to interview Cheney, they are going to have to find him first.
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Suite Crimes
Citing what she called a "crime wave in corporate boardrooms," the head of Public Citizen, Joan Claybook, called yesterday for action from the Bush administration. Claybrook said that so far the administration had been all talk and no action.
"The Bush administration and Congress are talking tough about cleaning up corporate crime, but unless the deregulatory drive is stopped, meaningful reforms are made and members of the administration - most notably Army Secretary Thomas White - are held accountable for their actions in the corporate world, those words will ring hollow," Claybrook said.
To put an end to the crime wave, Claybrook joined Democrats and other public watchdog groups in calling on the administration to balance its concern for corporate well-being with that of the public good.
"Congress and the White House must stand up to the corporate lobbyists and start legislating and governing on behalf of the American people," Claybrook said. "We need strong regulation of corporations - standards that will prevent wrongdoing and punish executives who violate the public trust."
Claybrook said the administration could begin by adopting its own stated standard of "corporate accountability," by firing Army Secretary White, whom Claybrook described as a "poster boy for corporate abuse.".
She also reiterated earlier criticism of years of industry-inspired deregulation. She said that many of the scandals only now becoming known could not have occurred without the poor enforcement of some existing regulations. Nevertheless, Claybrook complained "not nearly enough is being done to slow the deregulatory drive." |
