A rchive Date
[ 09-07-2002 ]
Category
[ International Relations ]
sub-Categoy
[ U.S ]
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[http://www.canoe.ca/TorontoMoney/ts.ts-07-09-0058.html
Talk won't cut it
Bush too cozy with corporate crooks to play tough
By LINDA LEATHERDALE, BUSINESS EDITOR
Tuesday, July 9, 2002
A great cleansing is sweeping our financial markets. And, if George W. Bush has shared in the corruption, he too will be swept away. Mark my words. But for now, U.S. President Bush wants us to believe he's the saviour who will throw the corporate fraudsters in jail and restore investor confidence.
So today, on Wall Street, Bush will play tough guy as he unveils stricter securities rules, tougher fines and longer jail terms for those corporate criminals who lie on financial statements to line their own pockets, leaving behind devastated shareholders and employees who've lost life savings.
But, believe me, Bush's tough talk will do little for our battered stocks, beaten up by a growing list of scandals, including Enron, WorldCom, Tyco, Global Crossing, ImClone and Xerox. The latest shock hit yesterday with news that Merck & Co. - the world's third-largest drug maker - reported $12.4 billion US in revenue from its pharmacy benefits that was never collected. Merck claims no wrongdoing.
So, why won't Bush's tough talk help? For starters, how can investors trust someone who's been cozy with the crooks, and who himself was caught in the centre of controversy over an accounting scandal?
Bush sat on the board of directors and auditor committee of Harken Energy in 1989, which masked $10 million US in losses by reporting a profit on a sale of a subsidiary to a group of Harken insiders borrowing money from the company itself.
The Securities and Exchange Commission (SEC) forced Harken to restate its 1989 earnings, while Bush was investigated in 1991 for being up to 34 weeks late in reporting stock sales worth more than $1 million US. Bush was cleared of illegal insider trading.
Now SEC is investigating Halliburton Co., the company Bush's Vice-President Dick Cheney ran from 1995 to 2000.
Bush is also a close friend of Kenneth Lay, CEO of Enron - which has gone down as the biggest bankruptcy fraud in U.S. history. Enron donated $600,000 US to Bush's campaign, while many former Enron workers are now administration officials for Bush.
Is it any wonder critics accuse Bush's administration of a "cozy, permissive relationship" with corporate America? But, it gets worse.
After Enron rocked our financial world, kicking off a string of scandals, then came WorldCom - now teetering on bankruptcy after admitting it overstated expenses by $4 billion US. Yesterday, the flamboyant former WorldCom CEO Bernard Ebbers - who owes $400 million US in company loans - refused to testify at congressional hearings in Washington.
So did former chief financial officer Scott Sullivan, who also invoked his Fifth Amendment Right. And how cozy is this? In July 2001, Bush appointed Ebbers to serve on his administration's National Security Telecommunications Advisory Committee.
Meanwhile, the anger grows over these revelations of corruption. Yesterday, The Business Roundtable - a group of CEOs of major U.S. corporations - said it was "appalled, angered and alarmed." In a statement, the CEOs went on: "Where there have been violations of law, we believe that the violators should be prosecuted."
Time will tell.
But markets, meanwhile, are continuing to lose confidence. In New York yesterday, the Dow Jones industrial average shed 104.6 points to close at 9,274.9. On Bay Street, the S&P/TSX composite index closed down 20.48 points to 7,091.98. "A lot of these stocks are falling off a cliff, which does suggest a bit that it's getting emotional," commented Brian Acker, president of Acker Finley Inc. "People just want to get their money back - whatever money there is - and just sit on the sidelines for a while."
 World Fact Book (CIA)]
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