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Monday, Nov 9, 2009
President Bush is talking tough about pinstriped rip-off artists -- ignoring the skeletons in his and Cheney's own corporate closets
Jul 2, 2002 | After the shock of two more multibillion-dollar corporate fraud cases last week, WorldCom and Xerox, President George W. Bush has taken up the mantle of corporate responsibility. "Corporate leaders who violate the public's trust should never be given that trust again," he told listeners to his radio address on Saturday.
But even to the most objective observer, this pitch, from this White House, is one tough sell.
Although Bush evaded most of the political fallout from the Enron debacle despite his adminstration's close ties to that company, the growing scandal of corporate irresponsibility is threatening to engulf the business-friendly White House. And with every move Bush makes to respond, his own corporate past, and that of Vice President Dick Cheney, the former Halliburton CEO, may well come back to haunt him.
Bush is planning a big address on the issue, complete with proposals for reform, for July 9. He already put forward a 10-point proposal for corporate reform back in March. But these very moves could help remind Americans of the corners Bush and Cheney cut during their days in the executive suites of corporate America.
Point No. 6 of the president's plan, for instance, says, "Corporate leaders should be required to tell the public promptly whenever they buy or sell company stock for personal gain."
And yet Bush had his own run-in with the SEC over his failure to report sales of Harken Energy stock in a timely manner when he was a member of Harken's board of directors. Bush dumped thousands of shares of Harken stock and then filed his forms with the SEC 34 weeks late.
Those sales, in June 1990, came just before the company announced big losses, and they netted Bush more than $848,000. Two months after Bush's sale, Harken filed a report with the SEC declaring $23 million in losses. The price of Harken's stock dropped dramatically. On June 22, 1990, when Bush sold more than 200,000 shares of Harken stock, the stock sold for $4.13 per share. By Nov. 23, 1990, the price was down to $2.
The SEC launched an investigation into Bush's late reporting only after a story in the Wall Street Journal pointed it out, on April 4, 1991. The investigation focused on whether Bush could have known the company would post big losses in its August filing. Bush was cleared of any wrongdoing.
Similarly, when Bush calls for accountability from company executives, critics are quick to point out that the Securities and Exchange Commission is investigating charges that the Halliburton Corp. altered its accounting practices to hide more than $100 million in losses while Cheney was the company's CEO.
Bush said this weekend that "corporate officers who personally benefit from false accounting statements should lose all the money gained by their fraud." Shortly before accepting Bush's invitation to be his running mate, Cheney sold 100,000 shares of Halliburton stock for $5.1 million, according to SEC filings.
And the president's call for a tough new SEC comes less than a year after critics charged that the administration hampered the SEC in its ability to prevent fraud cases like the ones involving Enron and WorldCom. In the president's proposed budget for fiscal year 2002, he called for the elimination of 57 staff positions at the SEC, including the elimination of 13 positions in the office of full disclosure, 13 in the office of investment management regulation, and 12 positions in the office of the prevention and suppression of fraud.
Ralph Nader, George W. Bush is not.
Jeff Faux, president of the Economic Policy Institute in Washington, says the crisis of confidence goes to the ideological core of the Republican Party's domestic policies. "The Republican domestic agenda rests on the assumption that less regulation is better," says Faux. "It presumes that government has got to be cut back and the market will deliver whatever you need. Now they've got to plug up this massive leak in their ideological dike."
Democrats are quick to point this out. Democratic National Committee spokesman Bill Buck said the Bush administration has been compromised on the subject of accountability: "It's hard to see how they can credibly talk about corporate responsibility. Bush and Cheney are examples of business leaders whose companies were investigated by the SEC."
