Skip to comments.Bush Readies Crackdown on Corporate Misconduct
Posted on 07/08/2002 3:56:16 PM PDT by Sungirl
Responding to a wave of corporate scandals that have turned his pro-business reputation into a potential liability, President Bush ( news - web sites) put the final touches on Monday on new policies to crack down on boardroom misconduct, with criminal penalties for the worst offenders.
The speech will come amid new revelations that drug company Merck & Co. recorded revenues of $12.4 billion from its pharmacy benefits subsidiary in the past three years that the unit never actually collected.
Bush is under pressure to act decisively after Republican Sen. John McCain joined Democratic lawmakers in calling for the resignation of Securities and Exchange Commission ( news - web sites) 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 set to get under way, former Chief Executive Bernard Ebbers and former Chief Financial Officer Scott Sullivan told lawmakers they will refuse to testify to avoid incriminating themselves. 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.
"I'm focused on 18 holes of golf," Bush said.
The president was to meet his advisers when he returned to the White House later on Monday. Republican sources said the proposal would include new criminal penalties for company officers who submit intentionally misleading financial statements. Currently they can face fines and other civil penalties.
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 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., the energy company that Vice President Dick Cheney ( news - web sites) ran from 1995 to 2000. Army Secretary Thomas White is a former senior Enron executive, and other administration officials, including economic adviser Lawrence Lindsey, 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 said it would support a proposal by Maryland Sen. Paul Sarbanes to create a new oversight board for accountants, crack down on insider trading and take other steps to close regulatory loopholes.
The Business Roundtable said it would also support tougher penalties for CEOs guilty of wrongdoing. "The penalties should be real, they should be severe, they should be prompt," said John Dillon, the chief executive of International Paper Co. and the chairman of the Business Roundtable.
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."
White House officials were tight-lipped about the specifics of Bush's speech, but Bush has vowed that "executives who commit fraud will face financial penalties, and, when they are guilty of criminal wrongdoing, they will face jail time."
In March, Bush proposed several measures aimed at cracking down on abuses by corporate executives. But he stopped short of backing the tougher reforms advocated by lawmakers and his own treasury secretary.
+ Congress and the Accounting Wars During the boom years of the 1990s, the accounting industry flexed its lobbying muscle on Capitol Hill as never before. Here's a look at the three major political battles of the decade's accounting wars: the fight over stock options, the fight over tort reform, and the all-out war over the attempt to separate auditing and consulting. The Accounting Industry and Campaign Money According to the Center for Responsive Politics, the accounting industry gave more than $50 million dollars in federal campaign contributions during the 1990s, with 56 percent going to Republicans and 43 percent going to Democrats. So far in the 2002 election cycle, the industry has made $5,298,849 in contributions, with 72 percent going to Republicans and 28 percent to Democrats. Below is a chart of accounting industry contribution trends from 1990 to today, followed by a breakdown of industry campaign contributions to Congress during the big three accounting battles of the decade, and the 2000 presidential election. [NOTE: All data is from OpenSecrets.org, the Web site of the Center for Responsive Politics, a non-partisan, non-profit research group in Washington, D.C. that tracks money in politics.] 1990-2002: FEDERAL CAMPAIGN CONTRIBUTION TRENDS Election Cycle Total Contributions Amt. to Democrats Amt. to Republicans % to Democrats % to Republicans 1990 $3,098,764 $1,553,042 $1,544,722 50% 50% 1992 $6,338,182 $3,399,397 $2,920,446 54% 46% 1994 $6,922,476 $3,490,177 $3,411,399 50% 49% 1996 $11,169,445 $4,561,535 $6,570,390 41% 59% 1998 $9,341,295 $3,617,141 $5,672,081 39% 61% 2000 $14,705,429 $5,631,400 $8,961,847 38% 61% 2002 $5,298,849 $1,480,893 $3,794,473 28% 72% TOTAL $56,874,440 $23,733,585 $32,875,358 42% 58% 2001-2002: TOP CONTRIBUTORS In the current election cycle, the accounting industry has contributed $5,298,849, with the majority of donations coming from the Big Five accounting firms and the industry trade association, the American Institute of Certified Public Accountants (AICPA). Here is a breakdown of their contributions. Rank Organization Amount % to Democrats % to Republicans 1 Ernst & Young $869,487 32% 68% 2 Deloitte & Touche $750,734 25% 75% 3 KPMGLLP $709,329 19% 81% 4 PricewaterhouseCoopers $624,001 19% 81% 5 Andersen $591,789 30% 70% 6 AICPA $334,332 26% 74% CONGRESSIONAL CONTRIBUTIONS 1993-1994 Election Cycle: Contributions to Members of Congress House # Members Avg. Contribution Total Contributions Democrats 219 $8,215 $1,799,021 Republicans 165 $8,800 $1,452,042 Independents 1 $500 $500 TOTAL 385 $8,446 $3,251,563 [NOTE: The House of Representatives has 435 members] Top Ten Recipients Rick Santorum (R-Pa.) -- $84,324 W.J. "Billy" Tauzin (D-La.) -- $71,200 Jack M. Fields Jr. (R-Texas) -- $52,550 Dave McCurdy (D-Okla.) -- $50,900 Jon Kyl (R-Ariz.) -- $42,800 Jim Cooper (D-Tenn.) -- $41,346 Sherrod Brown (D-Ohio) -- $38,793 E. Clay Shaw, Jr. (R-Fla.) -- $34,652 Collin Peterson (D-Minn.) -- $32,200 Richard Gephardt (D-Mo.) -- $28,250 Senate # Members Avg. Contribution Total Contributions Democrats 44 $17,516 $770,686 Republicans 29 $16,904 $490,215 Independents 0 $0 $0 TOTAL 73 $17,273 $1,260,901 [NOTE: The Senate has 100 members] Top Ten Recipients Kay Bailey Hutchison (R-Texas) -- $109,085 Edward M. Kennedy (D-Mass.) -- $77,600 Jim Sasser (D-Tenn.) -- $64,650 Joseph Lieberman (D-Conn.) -- $62,100 Frank Lautenberg (D-N.J) -- $60,137 Dianne Feinstein (D-Calif.) -- $58,300 Paul Sarbanes (D-Md.) -- $53,350 Slade Gorton (R-Wash.) -- $43,630 Kent Conrad (D-N.D.) -- $41,527 Daniel Patrick Moynihan (D-N.Y.) -- $41,500
You know, from a capitalist's perspective at one time I would have argued the point with you, but in short, you're right.
This has gone beyond capitalism and turned into outright piracy under the Clinton watch. Now we're paying the price of Clinton's legacy of lies.
Capitalism doesn't have anything to do with what these criminals are doing to large corporations. It's opening theft protected by high priced lawyers and loopholes in the bankrupcy laws which allow you to be a billion dollars in debt but keep your mansion in Boca Raton.
When you see how so many people are being laid off while goofy freaks like Michael Eisner are bringing home nearly a billion a year, it's sickening.
Still, I sure as hell don't trust the fate of Capitalism in the hands of the current Senate. Let's be careful for what we wish for...
Well said. Who's at fault for this is something we can talk about when we post mortem this mess. For now, the Bush administration has an opportunity to clean up this mess. They should take it. As someone who voted for Dubya in 2000, I demand he take this challenge head-on and not like Clinton would have. I don't even care if he succeeds, or even if his ratings sink, as long as he gets some good ideas for reform on the table and uses his bully pulpit to further them. Then he will have done his job.
My company pays its President $350,000- $400,000 a year. We just layed off another 70 employees. (a year ago it was about 100)...have about 200 left....and lost 7.5 million dollars in the last year and a half.
WHat is wrong with this picture? I had to work another hour again today for FREE to make up for the loss of employees.....
I just found out Florida is a RIGHT TO WORK state? What I was told was basically no unions allowed and employees have no rights....??
We have a situation where the patriot act limits the rights of ordinary folk, where are rights to privacy, an attorney, or being presented with charges is being denied. But the Worldcom execs show up in DC and and meet our congress and senate and just walk in and out the doors as criminals.
Two things, you can BET that the phones of these two criminals who took the 5th today aren't bugged, and secondly unlike the average schmoe who bounces a check and is charged with uterance they will never see jail.
What the real problem with wall street is that people are sitting in CLINTON (CBS NEWS) still in shock that they have been looted and under some type of learned helplessness that a remedy from their looters will be at hand.
I bought two suits and I have learned two thing! People with expensive suits do not go to jail. People with expensive suits still have civil rights.
This nation was never supposed to be:
" that this nation under God shall have a new birth of freedom, and that government of the corporation, by the corporation, for the corporation, shall ...
The people of Clinton/WORLDCOM interviewed by CBS reminded me of 9-11 survivors.
Do we have enough cruise missiles left in the national arsenal in order for Bush to enforce this crackdown? ;-)
IIRC, right to work means the right to get a job and not be forced to join a union. I've seen the dark side of unions up close and personal- believe me, you WILL want a choice given some of the locals out there. Like every other 'rat bastion except the abortion industry, the labor unions are definitely not pro-choice.
Me neither. If Bush waffles on this issue, however, I think you will see candidates who we haven't even thought of emerge from the political wilderness. Suddenly a lot of the electorate will be looking beyond a candidates support for snowmobiles in national parks or even his/her stance on abortion and looking to a candidate that will preserve this nations trust in capitalism. Without a functioning free market system, everything else matters much less. Atleast to me.
The throw in maxine waters, and, the dems are off and running.
Another thread about elected officials?
If you are a person who votes for the duopoly, perhaps this will serve as a wake-up call. Bought and paid for politicians are not your friend, they serve those who pay for the hay ride.
I would prefer that we begin with those cheats who stole trillions, yes trillions! The ones that rob everyone with the point of a gun through an arguably unconstitutional tax code. But ok. That insane speeder got away. Now lets pick on a more socialist target. Conservatives, naturally, will catch who they can. [Jumping through Dan Rather's hoops.]
The rich and powerful as a whole are now over 2 tillion dollars poorer than they were before Bush came into office. I would imagine that the rich and powerful are ready to take matters into their own hands to punish those responsible. Well they should. If I owned a company and some creep robbed millions from me, there would not need to be a trial. I'd kill him.
Next point. Up until recently, the corporate system appeared to be working very well. During the Clinton administration, there were a few warning signs. Arkansas companies began to expand like yeast rising bread. Tyson Chicken. Walmart. And some bank that later got into legal trouble... NationsBank. [I was one of NationsBank's victims. They used ogre-like graft.] I mentioned this again and again, but few people think anything of it. Arkansas, the unknown state from nowhere, suddenly had three booming businesses that sweep the country.
Then came The Red Sun Rising expose that triggered economic meltdown in China. [Free Congress Foundation] Things were looking pretty sleezy.
The Clintons' symbolism of ethics was also corrosive. Hillary's cattle futures. Hugh Rodham's heading the tobacco lawsuit [later selling a Clinton pardon to a crack dealer.] Hillary's investment into pharmacuticals, just after threatening a major investigation and change.
CONCLUSION: Things were record breaking until recently. We had shocked the world with our success. We must not, MUST NOT, allow too much change to occur, other than simply getting tougher on white collar crime. All we really need is open the windows and allow the foul stench of the 90s blow out of our rooms. And perhaps Florida should quit allowing people to keep multi-billion dollar mansions after filing for bankruptcy.
Sure, why not? That matches up pretty well with your other observations on how government should intrude itself into the marketplace because greedy rich people must be stopped. How about we just tell government that they have no legitimate business looking for misconduct without a complaint from citizens with standing to complain?
This sounds like sour grapes from a socialist, especially with your admission that you loved working for a state government, but hate being in the private sector in a right to work state because your employer can fire you. I'll give you a tip: if you want to belong to a union and work in the private sector, you'd be better off getting a manual labor job in manufacturing. Except for government employees' unions, most unions don't represent anyone in management or other salaried positions.
FR isn't a forum where you should expect much sympathy for socialist positions such as yours. Complaining about an employer while cashing his paychecks is the kind of thing a socialist union slacker does. If you want to run your employer down, quit and then complain about him to your heart's content. If you want to applaud politicians when they attack the producers in our economy for violating socialist laws, don't be surprised when you get some criticism yourself. This is a conservative forum, after all.
No offense intended, of course.
When exactly was the last time that McStain did NOT join the RATS in attacking the GOP?!
Whatever happened to that Recall Vote in Arizona?!
That's the most critical paragraph of this article. The left-wing of the Senate is manufacturing these "scandals" in order to cover for the fact that they have been blocking critical legislation, including military and homeland security funding, that those institutions will run out of funds in the middle of a war, that the Senate is blocking confirmation of judicial nominees and basically sitting on their thumbs while in session. This is like a lesson in "How to Get Elected Without Doing Anything for Your Constituents."
They will block the legislation proposed by the president today. Mark my words.
While they are busy playing politics and blocking the president at every turn, we the people suffer.
Right. For nearly a decade, corperate crooks have been taking advantage of the Clinton/Gore mantra, "No Controlling Legal Authority." The Senate will block President Bush's proposed legislation, because they can get LIGHTYEARS worth of political mileage out of KEEPING it that way. That's all they care about: politics. Not people.
I just found out Florida is a RIGHT TO WORK state? What I was told was basically no unions allowed and employees have no rights....??"
You have the right to leave that job and take another one elsewhere.
You have the right to relocate to another place where jobs are more plentiful.
You have the right to educate yourself for a better job, or one in another field.
If you fail to exercise these rights, how does this become a Federal government issue?
Sounds like the company hubby recently worked for. In addition, workers who've been injured on the job and require surgery are allowed to return to work...then told they are being laid off, and THEN, when they apply for unemployment, are told by the unemployment office that they've been FIRED.
Great way for the company to save on unemployment insurance. Before being laid off/fired, Hubby, who had a supervisory position, took THREE pay cuts. In fact, all of management and all of the foremen took massive paycuts...all except the CEO's, who are living large while their employees suffer and their company loses money.
I'm in PA, which is NOT a right to work state. A union won't help you. The president of Hubby's union chapter embezzeled the union dues paid by the workers....they effectively HAVE no union. Last I knew, union dues are still being taken out of worker's pay and disappearing into an accounting black hole. Effectively, the company has been pretenting to comply with state regulations, while bleeding the workers dry, then dropping them into the trash.
Allegedly, the Department of Labor is investigating, and I'm supposed to be under a gag order, but screw them. We don't work there anymore, and I trust the PA department of labor about as far as I an spit the huge under-the-table payoff the company will bribe them with in order to ensure that no charges are ever filed.
Personally, I'm thinking of moving back down south, because in right to work states, you can at least GET another job.
Where are the jobs plentiful? I thought S Florida had plentiful jobs (yeah at walmart)....and I just came from Buffalo...(hahahha!!!) and the jobs aren't there!
I have over 100 classes under my belt....how many more should I take to qualify for a decent honest stable secure job? Do I have that right?