WASHINGTON – Hammered with questions about his links to corporate crime, President George W. Bush hastily travelled to Wall Street July 9 and vowed to crack down on CEOs who enrich themselves through fraud while employees lose their jobs, pensions and health benefits.
The overwhelming majority of corporate executives are honest and only a few “bad apples” spoil the lot, Bush intoned to a handpicked audience of stockbrokers and other Republican contributors. He did not mention a single corporate wrongdoer. The word Enron and the name Ken Lay, once a bosom friend, did not cross his lips. “The business pages of American newspapers should not read like a scandal sheet,” Bush said, a faint smirk on his face, “Faith in the fundamental integrity of American business leaders is being undermined. Nearly every week brings better economic news and a discovery of fraud and scandal.”
AFL-CIO President John Sweeney debunked Bush’s claim that most CEOs are honest. “The corporate wrongdoing is not the product of a few bad people,” he said. “It is the result of markets that were once well-regulated but now allow …unchecked greed to destroy companies, industries, and even lives.”
Bush said capitalism rests on investor faith in the system and that is endangered by the torrent of disclosures of corporate double-bookkeeping and insider trading that led to the downfall of Enron, the Arthur Andersen accounting firm, Tyco, WorldCom and other Fortune 500 firms.
Bush called for increased funding for the Securities and Exchange Commission and stiffening criminal penalties for corporate fraud. But he stopped short of calling for the resignation of SEC Chair Harvey Pitt, despite a growing chorus that Pitt, former lobbyist for the accounting industry, should be removed.
Bush also rejected a bill by Sen. Paul Sarbanes (D-Md.) to establish an independent oversight board to police the accounting industry. CEOs, Bush said, should be required to personally vouch for the accuracy of their companies’ reports and should return ill-gotten compensation. But he offered no means to achieve these goals.
Bush also opposes a bill to curb CEO stock options, one of the most corrupt forms of executive compensation. Workers’ 401(k) accounts and executives’ severance pay should be treated the same, he said, echoing a famous dictum that “rich and poor are equally entitled to sleep under bridges.”
Bush delivered his speech the day after a bruising White House news conference in which reporters peppered him with 22 questions about his role as a director of Harken Energy 13 years ago. Bush attempted to brush aside the question of why he failed for 36 weeks to report the sale of 212,000 shares of Harken stock netting him a tidy $850,000 profit just before the company announced $22 million in losses. It was a deal that reeks of the same “insider trading” that enabled Enron executives to sell off their Enron holdings before the company collapsed, leaving thousands of workers holding worthless Enron stocks.
Bush claimed that the SEC gave him a clean bill of health. But the questions have erupted anew as the economy falters and many thousands lose their jobs and benefits in this election year.
Sweeney called for the SEC to vigorously investigate “irregularities at Halliburton when Vice President Cheney was CEO” and demanded that Bush “fully disclose details of his own sale of Harken Energy stock.” New laws are needed to strengthen government regulation of big business and to “move employees from the bottom of the ladder in bankruptcy proceeedings to the top.”
Congress, Sweeney said, must act now to “close the gaping loopholes in our laws that foster the hijacking of American business by insiders bent on self-enrichment.”
When Bush was installed in the White House, Sweeney added, he unleashed a campaign to further deregulate big business. It includes Bush’s veto of the ergonomic standard, ten years in the making, to protect workers from job injuries caused by “corporate negligence.” Bush also repealed a Clinton rule that would have made it harder for chronic corporate lawbreakers to get lucrative federal contracts.
Jeff Faux, president of the labor-backed Economic Policy Institute, spoke on the spreading corporate scandal during a July 9 Capitol Hill news conference convened by Sen. Sarbanes. “This is not just an issue of a few individuals consumed by greed,” he said. “What we are witnessing is lawlessness made possible by inadequate regulation and enforcement. Thousands of workers have lost their jobs and their retirement savings in pensions and 401(k)s.”
Three pension funds, he added, “are now stuck with $1.25 billion in WorldCom bonds now worth about 13 cents on the dollar. The damage so far is huge and this may be the tip of the iceberg.”
Robert Borosage, co-chair of the Campaign for America’s Future, scorned the “conservative bubbleboys” for attempting to shift blame to Clinton for the crisis. “This bubbleology would allow conservatives to shirk responsibility for what they have wrought,” he said. “It is no accident that the current wave of costly corporate scandals follows the rise of modern conservatism to power two decades ago.”
Ronald Reagan’s Commerce Department drew up a “hit list” of regulations that corporate America wanted repealed. Reagan signed the bill that deregulated the savings and loan industry, setting the stage for the crisis that cost taxpayers many billions. The same deregulation frenzy was carried out by the senior Bush during his one term, by House Speaker Newt Gingrich and now by George W. Bush, Borosage charged.
The author can be reached at greenerpastures21212@yahoo.com
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