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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (7847)	10/6/2002 1:16:35 PM
From: stockman_scott	Read Replies (1) \| Respond to of 89467

Chairmen Take to Pleading Ignorance By Mark Sherman Associated Press Saturday, 5 October, 2002 WASHINGTON -- Two of the largest corporate collapses have at least one thing in common: company chairmen who took their creations to great heights, reaped millions from stock sales - and said they knew nothing of problems until it was too late. Kenneth Lay's defense after Enron Corp.'s spectacular downfall was that he was largely uninformed of how the energy-trading company's finances worked. In congressional testimony this week, Global Crossing Ltd. Chairman Gary Winnick could not remember receiving a single warning about potential problems at his fiber-optic company, although senior executives were sounding alarms with increasing frequency in the spring of 2001. Enron filed for bankruptcy protection in December. Global Crossing followed suit a month later. Critics have challenged the veracity of the claims of ignorance, which also have raised questions about how involved chairmen should be - especially when they are so closely tied to their companies' rise. Winnick founded Global Crossing, while Lay transformed Enron from a small natural gas company into an energy giant. "Regardless of size, you should expect chairmen to be aware of major factors affecting the business," said Robert Webb, professor of finance at the University of Virginia's McIntire School of Business. There are, however, no well-established rules about what chairmen are supposed to know, said Lawrence Mitchell, a George Washington University law professor. Chairmen who are not also chief executive are not necessarily kept abreast of day-to-day business, but instead focus on the big picture. At many corporations, the positions are combined. Some chairmen are so closely linked to their companies that pleading ignorance would not be credible. The government's antitrust case against Microsoft, for example, revealed that Chairman Bill Gates was intimately involved in the company's affairs, Webb said. David Skeel Jr., a University of Pennsylvania law professor and expert in corporate bankruptcy, said executives who have asserted they did not know what was happening in the recent round of corporate failures were employing a potentially effective legal strategy. "Strategic ignorance, you might call it," Skeel said. "If you can argue you didn't know what was going on, it's hard to mount a securities fraud case against you." Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee, which is investigating Global Crossing, called Winnick's testimony something else - hard to believe. "Impending corporate doom. Billion-dollar shortfalls. As many times as he said he didn't know that, I can't believe he didn't know that," Tauzin said. Lay served as both chairman and CEO, then promoted Jeffrey Skilling to chief executive last year. It was in that period that many of Enron's off-the-books partnerships were formed and used to hide some $1 billion in debt. Skilling also has testified he could not recall being involved in approving transactions related to the partnerships. Lay resumed running Enron when Skilling abruptly quit in August. He stepped down as chairman and CEO in January. Lay, who asserted his constitutional protection against self-incrimination when he was summoned to testify before Congress, told an internal investigation he knew little about how Enron's finances worked and the forces behind its downfall. But William C. Powers, dean of the University of Texas Law School, told lawmakers in February that his investigation found "virtually everyone from the board of directors down" understood Enron used its partnerships to "offset its investment losses with its own stock." In the Global Crossing case, documents and the testimony of other former and current Global Crossing employees contradict Winnick's assertion that he had no hint of trouble despite daily conversations with CEO Thomas Casey, said Rep. James Greenwood, R-Pa., chairman of the House panel at the forefront of Congress' probe of corporate failures. "There was a lot of dog-ate-my-homework sort of stuff," Greenwood said. Before the bankruptcy filing, Winnick had sold $734 million in Global Crossing stock, including 10 million shares worth $123 million that he sold less than two weeks before he said he first heard the company could be in financial trouble. Tauzin pointed to the May stock sale as the principal reason Winnick repeatedly said he didn't recall earlier warnings. If he acknowledged having been told of problems before selling his stock, he would have opened himself to allegations of insider trading, Tauzin said. truthout.org

To: T L Comiskey who wrote (7847)	10/7/2002 8:12:29 AM
From: stockman_scott	Respond to of 89467

Economy tops Iraq in poll Approval slips in New York Times/CBS News survey By ADAM NAGOURNEY and JANET ELDER New York Times Oct. 7, 2002, 12:19AM A majority of Americans say that the nation's economy is in its worst shape in nearly a decade and that President Bush and congressional leaders are spending too much time talking about Iraq, while neglecting problems at home, according to the latest New York Times/CBS News poll. The poll found signs of economic distress that cut across party and geographic lines. Nearly half of all Americans are worried that they or someone in their household will be out of a job within a year. The number of Americans who said they believe the economy is worse than it was just two years ago has increased markedly since the summer. The number of Americans who approve of the way Bush has handled the economy -- 41 percent -- is at the lowest level of his presidency. And many people said they worry that a war in Iraq -- which most Americans view as inevitable -- would disrupt an already unsettled economy. The poll found that despite the emphasis by Bush since Labor Day on the need to move against Saddam Hussein, support for such a policy has not changed appreciably since the summer. While most Americans said they backed Bush's campaign against Iraq, the sentiment was expressed with reservations and signs of apprehension about its potential repercussions. Americans said they feared a long and costly war that could spread across the Middle East and encourage more terrorist attacks in the United States. They said they do not want the United States to act without support from allies and do not want the United States to act before U.N. weapons inspectors have had an opportunity to enter Iraq. And as Congress prepares to resume debate on a resolution authorizing force against Iraq, Americans said they thought members of both parties were trying to manipulate the issue for their political advantage. "Bush is spending way too much time focusing on Iraq instead of the economy, and he's doing it as a political move," said Gladys Steele, a 42-year-old housewife from Seattle, who is a political independent, speaking in an interview Sunday that was following up the poll. "He thinks keeping us fearful about going to war will distract us from how bad the economy is." The Times/CBS News poll was conducted a month before what Democrats and Republicans view as an extraordinarily competitive round of midterm congressional elections. The Times/CBS News poll suggests that no matter what is happening in Washington, voters are more concerned with the economy and domestic issues. The Times/CBS News poll, conducted by telephone from Thursday through Saturday, was taken of 668 adults nationwide. It has a margin of sampling error of plus or minus 4 percentage points. The subject of Iraq seems likely to dominate the news out of Washington for at least the next week. Besides Bush's speech tonight, the debate in Congress is expected to last at least through Friday. Two-thirds of Americans said they approve of the United States using military power to oust Saddam. A majority of Americans say that Bush has a clear plan to deal with Iraq; by contrast, a majority say the White House does not have a clear plan to deal with terrorism at home. Nearly two-thirds of respondents said they wanted to give the United Nations more time to try to send weapon inspectors into Iraq. Similarly, most Americans said Bush should not act until he wins approval from Congress, and that they applauded Congress for pushing the administration for details on its Iraqi plans. On a number of measures, the poll suggested that politicians in Washington were out of step with the concerns of Americans. Repeatedly, in questions and in follow-up interviews, respondents talked more about the economy than Baghdad, and expressed concern that leaders in Washington were not paying enough attention to the issues that mattered to them. But the popular concern about the economy would seem to be an issue for Bush, who is two years away from his own re-election campaign. More than two-thirds said the president should be paying more attention to the economy than he is today. "I hate to say this because I'm a Republican, but the economy was better when Clinton was in office," said Donna Doolittle, 42, a benefits coordinator who works at a hospital in Holiday, Fla. "Maybe interest rates are low now, but health insurance is going up; there are layoffs." Doolittle said she thought that Bush was trying to make the country "feel safe after what happened," but added: "We need to feel safe about the economy, too." The Times/CBS News poll found that nearly half the respondents thought that Bush was more interested in protecting corporations than in protecting ordinary Americans. chron.com