AUSTIN, Texas -- Did you hear the Bush administration finally
found a connection between Iraq and Al Qaeda? They both have the letter Q.
The evil, evil Q. (Not original with me, making the rounds.)
Some days, I'd just as soon whack myself in the head with the
newspaper as read it. Remember the time the stock market tanked, lost $6.65
trillion, 38 percent of its total value? That would be the last two years.
Silly us, we thought the Bushies were actually going to do
something -- not much, but something -- about why it happened. Congress
stepped nobly to the plate in the summer of aught-two -- as Enron, WorldCom,
Tyco, etc. came crashing down around us -- and passed a Reform Bill. Yes,
they did. Not a dissenting vote against it, even in the Republican House.
President Bush fought it right up to the final week, then turned
around and not only signed it, but claimed credit for it. So we were all off
on the rosy road to reform, led by none other than Harvey Pitt, Bush's man
at the Securities and Exchange Commission, who spent his entire career as a
lawyer for the major accounting firms. If Harvey Pitt were any closer to the
accounting industry, he'd be in violation of the Texas sodomy statute.
Then, oops, bumps on the rosy road. Pitt appointed Judge William
Webster to head the new oversight board that was supposed to clear up all
the conflicts of interest in the accounting field, but Webster turned out to
have some conflicts of interest himself. So Webster stepped down, and Pitt
himself was canned on election night last year.
You probably thought he was long gone, but, nope, he's still
head of the SEC. Bush hasn't gotten around to nominating anyone else. So
Pitt is still there, working his fingers to the bone for his former clients.
Remember when we thought the minimum reform would be to separate
the auditing and the consulting functions of accounting firms? Can that. The
SEC plans to make it optional, leaving the choice up to a company's audit
committee. Let's see, would Ken Lay and Jeff Skillings have voted to bring
in another auditor to check out the offshore partnerships they set up with
help from Arthur Andersen?
You're going to find this hard to believe, but Pitt is actually
making the rules on the accounting industry (SET ITAL) weaker (END ITAL)
than they were before all the corporate scandals came out. Now it will be
even harder for investors to find out how much a company pays its accounting
firm for auditing work and how much for consulting work.
If you think all this is just some obscure infighting at an
alphabet-soup agency, you haven't looked at your 401K lately. In 2000, the
SEC was not prepared to actually do anything about the glaring conflict of
interest between auditing and consulting by the same accounting firm, but at
least it required that companies disclose the payments. Guess who
represented the accounting firms during that battle? Harvey Pitt, arguing
that it was a terrible idea.
The SEC is also backing down from requiring lawyers to make a
public withdrawal from their clients if they fail to convince said clients
to stop violating securities laws. The lawyers are naturally claiming this
would violate lawyer-client confidentiality. People, the lawyer gets to keep
his clients secrets after the crime is committed, not before.
Here's part of what still needs to be done:
-- One of the major incentives for corporate crooks to cook the
books is the practice of granting stock options that are not counted as a
business expense. You get vast amounts of stock distributed to executives,
who then have enormous incentive to create short-term increases in the stock
price so they can cash out before the price plummets.
-- The Litigation Reform Act of 1995, passed by the Republican
Congress over Clinton's veto, gives protection to accounting firms that
approved false earnings statements and allows immunity from lawsuits for
accountants who fail to spot or disclose fraud. That's ridiculous. Other
laws passed in 1996 and 1998 severely limit the possibility of recovery by
defrauded investors and force class-action suits into federal courts under
weak federal laws.
There are only two ways to control corporate greed: one is by
government regulation, but for 20 years now regulatory oversight has been
systematically shut down, bought off and defunded. The other way is by suing
the bastards, but access to the courts is also being systematically shut
down by round after round of "tort reform."
-- Shut down the off-shore tax shelters and mail-drop
-- Give workers the right to elect the trustees of their
retirement funds. Put independent directors on corporate boards.
-- Regulate derivatives.
-- Do not permit accounting firms to offer both auditing and
consulting services to the same clients.
The only way we are ever going to get this administration to
make matters better rather than worse is through serious pressure from the
public. It's your money.
To find out more about Molly Ivins and read features by other
Creators Syndicate writers and cartoonists, visit the Creators Syndicate web
page at www.creators.com.
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