Posted on 09/04/2002 4:25:36 AM PDT by Libloather
Dems Try to Capitalize on Scandals
Wed Sep 4, 2:07 AM ET
By DAVID B. CARUSO, Associated Press Writer
PHILADELPHIA (AP) - It doesn't take long for Rep. Joseph Hoeffel to drop the "E" word when talking about his Republican challenger.
In campaign speeches and debates, the two-term Democrat from suburban Philadelphia takes aim at Melissa Brown's connections to a failed health-care company being sued by the state insurance commission and draws comparisons between the company and Enron, the collapsed energy trader.
The company, Pennsylvania Physician Health Care Plan, is accused of improperly transferring $614,000 from one subsidiary to another shortly before it became insolvent in 1999 — a move that allowed executives to receive severance pay.
Brown, an eye doctor who helped found the company with her husband, hasn't been accused of wrongdoing, wasn't an officer at the time of the collapse and isn't named in the lawsuit.
But Hoeffel says, "As a co-founder and a consultant, she can't just walk away and say she knows nothing. That's an Enron defense."
He and a number of other Democrats in other states are seeking to capitalize on frustration with corporate fraud and exploit a perception that Republicans are more closely connected to big business.
The effort exasperates Brown, who has centered her campaign on health care reform and expanding prescription drug coverage for senior citizens.
"This shouldn't be an issue," Brown said. "This is the craziest thing in the world. It's just a smoke bomb. It's not Enron."
In previous years, Brown's past business dealings might have been a footnote in the race, but allegations of corporate malfeasance have proven to be an irresistible target for political campaigns this summer.
A few other examples:
_ During his primary campaign, Tennessee state Sen. Lincoln Davis aired a TV ad that featured the Enron and WorldCom logos and claimed that opponent Fran Marcum's former company was caught "red-handed wrongly billing taxpayers $7 million."
Marcum, who later lost the primary, said the ad was misleading. His firm, Micro Craft, agreed to pay $151,000 in interest on past bills but wasn't fined or barred from bidding on government contracts.
_ In Arkansas, Democrats ran ads claiming that Republican Sen. Tim Hutchinson "supported rules that allow corporate executives to overstate their earnings ... and even voted to let wealthy corporations like Enron avoid paying any taxes at all."
Hutchinson's campaign said the ads distorted his position and failed to note his support of a bill protecting employee retirement funds from executive misconduct.
_ In Oklahoma, Democratic Senate candidate David Walters claimed that a 1995 bill sponsored by Republican Sen. Jim Inhofe weakened the accountability of auditors and "led to the accounting scandals blamed for bringing down corporate giants WorldCom and Enron."
Inhofe's campaign spokesmen called the accusations "campaign rhetoric."
"The Democrats are looking for issues that have traction, and this is one of the few they have found," said Democratic strategist Hank Sheinkopf.
"They can't attack the president. He is protected because we are at war," Sheinkopf. "But going after individual Republicans can work, as long as the charge is done in such a way that it is specific, and that it sticks. You can't make a charge that is frivolous, because people will see through it."
GOP consultant Dan Schnur said Democrats with corporate backgrounds have also been criticized.
"I don't see this as a one-party issue," he said. "Candidates are seeing the opportunity to make an attack that they know will resonate with voters, and they are taking it."
In California, Democratic Gov. Gray Davis has run ads attacking the corporate conduct of GOP opponent Bill Simon.
Jurors in late July awarded $65 million in punitive damages and $13.3 million in compensatory damages to a businessman whose company they said had been damaged by Simon's investment banking firm.
Simon called the award "a bad verdict" and predicted it would be overturned on appeal, but some political strategists say the verdict has been damaging.
Political analyst Norm Ornstein of the American Enterprise Institute said attempts by candidates to link their opponents to corporate wrongdoing elsewhere may be less successful.
"It reinforces the stereotype of the Republican Party as the party of big business and of the wealthy ... but how much of an advantage it gives Democrats is unclear," he said. "Most people still see these corporate scandals as being the responsibility of a fairly well-defined group of miscreants."
Citigroup shares routed on risk fears
Wednesday September 4, 4:45 am ET
By Gary Silverman and Joshua Chaffin in New York
FT.com
Citigroup shares fell 10 per cent yesterday as investors worried about the biggest US bank's susceptibility to legal, regulatory and credit risks. Citigroup's rout came on a bad day for financial stocks overall, with Merrill Lynch, Morgan Stanley, Lehman Brothers, JP Morgan Chase and Bear Stearns all falling more than 5 per cent.
However, Citigroup's fall was the steepest. The company lost about $17bn in market value and is now down more than 37 per cent for the year.
Citigroup was hit by growing worries about the US economy and world markets; a "sell" recommendation from Michael Mayo, the Prudential Financial analyst; and a story in the Wall Street Journal about the New York state attorney-general's investigation into its Salomon Smith Barney unit.
The office of Eliot Spitzer has gathered Salomon e-mails, internal memos and other materials as it explores possible conflicts of interest on the part of the investment bank and its former telecommunications analyst Jack Grubman.
Prudential's Mr Mayo said he was downgrading Citigroup because it faced problems on so many fronts - investigations into its role in the Enron and WorldCom collapses, $11bn in exposure to Brazil and sluggish capital markets.
* Investigators at the US Attorney's office in New York have been given an extra 30 days to negotiate a plea bargain deal with David Myers, the former WorldCom finance executive, Peter Thal Larsen reports from New York.
Assistant US Attorney David Anders admitted in papers filed in a New York court that he had been negotiating about a plea bargain with Mr Myers' lawyer.
Mr Myers and his former boss, WorldCom chief financial officer Scott Sullivan, were both arrested in August in connection with the accounting fraud that drove the telecoms group into bankruptcy. However, while Mr Sullivan and another WorldCom executive, Buford Yates, were indicted last week, Mr Myers was not, prompting speculation he was co-operating with the government.
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