W. Bush is so peeved about corporate America's
"wrongdoers" - not to be confused with "evildoers"
- that last week he spoke out about them four
times in four days. By the time he took a
breather, the markets had hit their worst
half-year finish since 1970, the Nasdaq was
at a five-year low, the dollar was on the
skids and, despite much evidence to the contrary,
a majority of Americans had told CNN/USA Today
pollsters that the country was in a recession.
Tuesday the president returns to the subject
in a full-dress speech on Wall Street. Maybe
it's time to try pinning the whole mess on
Ann Richards again.
Bush keeps saying all the right things. He
is "deeply concerned." He will "hold people
accountable." But words, like stocks, lose
value when nothing backs them up. It is now
more than six months since the president promised
"a lot of government inquiry into Enron."
Since then, Playboy has done a better job
of exposing the women of Enron than the Bush
administration has done at exposing its men.
Just as the Justice Department rounded up
some 1,000 alleged Sept. 11 suspects and failed
to indict a single one of them for terrorist
activity, so it has made a big show of its
shaky Andersen conviction while failing to
indict a single Enron executive or individual
Andersen accountant. (Not that all the law-enforcement
news is downbeat: last month John Ashcroft's
minions held a press conference to boast that
a 13-month investigation had led to the arrest
of 12 prostitutes in New Orleans.)
sight of a corporate crook being led away
in handcuffs, Giuliani-style, would do far
more to restore confidence in Wall Street
than any more presidential blather. Mr. Bush
says that only "a few bad actors" are at fault.
Why is the administration so lax about bringing
them to justice?
may have something to do with who those "few
bad actors" are. Speaking on ABC's "This Week,"
Richard Grasso, chairman of the New York Stock
Exchange, tossed out a range of 1 to 15 as
the rough count of corporate culprits, "in
comparison to more than 10,000 publicly traded
corporations." The fact remains that so far
at least five members of that theoretically
tiny club have direct ties to the Bush administration:
Enron, Halliburton, Andersen, KMPG and Merrill
Lynch - the last three all former clients
of the president's choice as Wall Street's
top cop, the S.E.C. chairman Harvey Pitt.
Five for 15: Mr. Bush could have used a batting
average that high when he ran the Texas Rangers.
this record, there has been only balking,
not housecleaning, at the White House. Thomas
White, who was vice chairman of Enron Energy
Services when it allegedly hid $500 million
in losses and manipulated the California energy
crisis, is still secretary of the Army, despite
having been cited by the Senate Armed Services
Committee for violating his signed ethics
agreement. (Even worse, Mr. White has threatened
to bring to the Army his "understanding of
best business practices.") The record of Enron
contacts by him and countless other administration
officials remains incomplete and in constant
revision. What information does dribble out
often emanates from the White House counsel,
Alberto Gonzales, who himself had an attorney-client
relationship with Enron while a partner at
Vinson & Elkins in Houston.
it's Mr. Gonzales who, as the administration's
chief ethics maven, advised the White House
this week on how to handle the 1991 S.E.C.
report showing that Mr. Bush had filed disclosures
of his stock trades in Harken Energy, where
he was a director, as much as eight months
late. The ethical call? Blame Harken's lawyers.
A presidential spokesman assured us as well
that this infraction amounted to nothing more
than driving 60 in a 55-mile-per-hour zone.
That will surely bring good cheer to those
Harken shareholders who were left holding
the stock that Mr. Bush sold, with no insider's
knowledge, of course, just before it tanked.
is a political boon to the president because
it allows him to moralize about epic-scale
crime without mentioning Enron, Halliburton
or Harken. But the Enron bomb hasn't been
defused. Its next detonation may come the
day someone outside the administration unearths
the as-yet mostly secret names of those buddies
of Enron executives who were let into the
hundreds of side partnerships that overnight
yielded multimillion-dollar plunder on nominal
stakes (with ordinary stockholders left paying
the bill). "Not in memory has a single major
company grown so big in tandem with a presidential
dynasty and a corrupted political system,"
wrote the Republican political analyst Kevin
Phillips in The Los Angeles Times five months
ago, tracing Bush family favor-swapping with
Enron back to 1988 and likening Enron's potential
damage to that of the Harding administration's
Teapot Dome scandals. "The question now is
whether what went up together will come down
a question only Mr. Bush can answer. He can
give the oil cronies within his administration
an ethical pass, much as Harding did. He can
keep trying to finesse the Wall Street crisis
with rhetorical panaceas as empty as his father's
"Message: I care" response to his own economic
storm. Or he can fulfill a campaign promise
and become a reformer with results, a Teddy
Roosevelt who cleans up capitalism to make
flowery speeches are required to describe
the reforms needed now, from fully independent
policing of accounting firms to the complete
prohibition of conflicts of interest that
encourage both accountants and stockbrokers
to cut corners. "No off-balance-sheet or offshore
entities, no shell corporations, no sham transactions,"
adds Robert Morgenthau, the Manhattan district
attorney, who is pursuing Enron more aggressively
than the administration is. Arthur Levitt,
the former S.E.C. chairman, urges legislation
that increases the legal liability for investment
bankers, lawyers and accountants who aid,
abet and also profit from corporate Ponzi
president could get real reform "in a heartbeat,"
says Eliot Spitzer, the New York attorney
general, who went after Merrill Lynch while
the Pitt S.E.C. slept. "All he has to do is
call Oxley" - Michael Oxley, who is steering
a weak Republican "reform" bill through the
House - "and say this is the bill we're passing
instead." But that's about as likely as Martha
Stewart discovering a cure for cancer instead
of trying to cash in on one. Mr. Bush has
already opposed the notion of requiring corporations
to count executive stock options as expenses
- a simple fix endorsed by Alan Greenspan
and Warren Buffett as an antidote to fictional
profits. The Treasury Department, Newsweek
reports, is hard at work stifling a bill that
would end the offshore shenanigans that allowed
Enron (with 800-plus such entities) to evade
taxes in four out of five years.
within existing law, the Bush administration's
notion of enforcement is the antithesis of
T.R.'s: it speaks loudly and carries a small
stick. On Wednesday a judge threw out an S.E.C.
action against the accounting firm Ernst &
Young because the S.E.C. could not muster
the quorum of conflict-free commissioners
required by law to bring its case; both Mr.
Pitt and another Bush S.E.C. appointee had
previously worked for Ernst & Young. Mr. Pitt's
conflicts also include meeting privately with
Xerox and KPMG executives while their companies
are under investigation by his agency. "It's
like the mob's consigliere running the F.B.I,"
in the words of Marshall Wittmann, a T.R.-minded
conservative Republican at the Hudson Institute.
Mr. Bush blames others for his Harken mishaps,
so Mr. Pitt's new shtick is to hide behind
Bill Clinton, telling Matt Lauer, "this is,
unfortunately, a mess that I inherited from
the prior administration." But it was Mr.
Pitt who invited the likes of WorldCom to
play fast and loose by implying last fall
that no one need fear the "kinder and gentler"
S.E.C. he would install in place of Mr. Levitt's,
which initiated the Xerox and Rite Aid cases
that Mr. Pitt would now like to take credit
not that Democrats are clean. When Al Gore
blasted Mr. Pitt last weekend for having led
the accounting industry's drive "to open up
loopholes" in the 1990's, he could have been
describing his own ticket mate, Joe Lieberman,
who was second to none in doing the accounting
industry's bidding. But the Democrats don't
have the power to undo the damage anyway.
It is Mr. Bush who is C.E.O. If he doesn't
bring zero tolerance of corporate cheating
to his own White House, it's hard to imagine
Americans rushing back into the market trusting
that his administration will enforce it anywhere
2002 The New York Times Company
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