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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.
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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.
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., 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.
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