The United States of Enron
"Harvey Pitt, the Bush administration's chief at the S.E.C., was actually an 
Arthur Andersen lawyer. After this week's revelation that top Andersen executives knew of funny business at Enron as early as February 2001, you have to wonder whether Mr. Pitt should be a witness in an S.E.C. investigation rather than its overlord. Was he representing Andersen at the time it first detected Enron's misbehavior? Was he in the loop? The stonewalling may have already begun, since neither the S.E.C. nor Andersen, when queried late this week, could say just when Mr. Pitt was in the accounting firm's employ.
Whom can the country turn to for an honest investigation? Democrats and Republicans alike are so beholden to accounting-industry money that they scuttled an attempt by Arthur Levitt, the former S.E.C. head, to regulate conflicts of interest in companies like Andersen two years ago."
Hi, I'm Harvey L. Pitt, George Bush's S.E.C. chairman, and I'm a recovering Andersen lawyer.
Calling Off The Dogs
Recent signals from the SEC raise the question: is "Harvey Pitt" taking a softer line on financial fraud?
By Alix Nyberg
December 01, 2001
As accounting frauds go, the problems at Seaboard Corp.'s Chestnut Hill Farms division amounted to garden-variety book-cooking.
Division controller Gisela de Leon- Meredith had been caught overstating deferred-farming-cost assets and understating farming expenses, inflating revenues by a total of $7 million between 1995 and the first quarter of 2000. When confronted by the internal audit staff, Meredith fessed up, and parent Seaboard, a Shawnee Mission, Kansas-based agribusiness, announced that it would restate its earnings last August. Even investors, who held Seaboard's stock price steady, were apparently nonchalant about the fraud.
The case became extraordinary, however, when the Securities and Exchange Commission thrust it into the spotlight this past October--not as a warning to other companies, but as an example of good behavior on the part of Seaboard, which willingly handed over all of the evidence it had gathered from its internal investigation.
"When businesses seek out, self-report, and rectify illegal conduct, and otherwise cooperate with commission staff, large expenditures of government and shareholder resources can be avoided," read the SEC's official statement, or so-called 21(a) report, signed by recently installed chairman Harvey Pitt and commissioners Laura Unger and Isaac Hunt. In Seaboard's case, that meant a cease-and-desist order for its Chestnut Hill Farms division was the end of the matter. No charges or penalties were levied against the company or its senior management; Meredith walked away without even a fine. Extrapolating from the case, the report set forth "some of the criteria [the SEC] will consider in determining whether, and how much, to credit self-policing, self- reporting, remediation and cooperation" in reducing the severity of enforcement actions.
Meredith walked away without even a fine. Extrapolating from the case, the report set forth "some of the criteria [the SEC] will consider in determining whether, and how much, to credit self-policing, self- reporting, remediation, and cooperation" in reducing the severity of enforcement actions.
What's this? Is Harvey Pitt calling off the guard dogs that his predecessor, Arthur Levitt, so carefully bred? Just last December, the associate director of the SEC's enforcement division, Paul Berger, was warning financial executives to "fasten their seat belts" as the agency ramped up its new Financial Fraud Task Force, a 14-member team charged with special accounting investigations. And while Berger outlined the very same tenets for cooperation that appear in the 21(a) report on Seaboard, the tone was more threatening than promising. Subpoenas for documents and testimony would be sent out faster than ever, with response dates that "are reasonable but less generous than you would like," he noted.
By contrast, the October report signals a friendlier direction for the agency. Moreover, it was issued one day after Pitt's genial speech to the American Institute of Certified Public Accountants, in which he invited companies to help "raise and resolve difficult issues with us, without fear that we will play 'gotcha' with you when you do." You can't blame financial executives for breathing a sigh of relief.
"We're encouraged by this," says CFO Rick Dutkiewicz, who took the reins at wireless-equipment maker Vari-L Co. after the SEC levied accounting fraud charges against the company's former CFO and controller. "I'm delighted," says one securities attorney who requested anonymity. "Before, it was tempting to adopt the bunker mentality when the SEC started investigating, because everyone was coming after you with the suspicion that you were a wrongdoer, and they were damn well going to prove it. Now they're saying, if you cooperate, you're going to be served in the process."
The factors of cooperation listed in the Seaboard case are hardly new, say attorneys, but gain new power in being cataloged and blessed by Pitt. "This statement gives companies substantially more ammunition in dealing with the division of enforcement than they may have otherwise had," says Jerry Isenberg, an SEC enforcement division official until November 2000 and now a partner at law firm LeClair Ryan, in Washington, D.C. He and others read it to mean that cooperation will more likely stem SEC action up front, rather than simply help mitigate charges.
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After Stephens' news conference, all about golf, he openly expressed relief at surviving his minutes in front of the media. At the time, his uneasiness seemed unwarranted. But now it's clear that he had reason to be wary of questioning. |
And the Wall Street Journal has reported that Stephens' Arkansas-based investment bank played a critical role in fund raising for Harken Energy, a small Texas company whose board of directors includes George W. Bush, the president's son, and which won a potential billion-dollar contract to drill for oil in Bahrain.... |
It's Ok To Lie Like Crazy - Just Ask The Judge
"Washington scandal buffs will recall that former Deputy Secretary of Defense W. Paul Thayer was sentenced to four years in prison for obstruction of justice committed by lying to investigators for the Securities and Exchange Commission during an insider-trading probe."
WHITE HOUSE E-MAIL
"November 22-25, 1986 - John Poindexter and Oliver North electronically shred more than 5000 e-mail notes in the memory banks of their computer systems, as the Iran-contra scandal breaks.
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Remarks on Signing the Executive Order Establishing the President's Commission on Federal Ethics Law Reform Well, I want to -- especially at the opening of these brief remarks -- thank Judge Wilkey and Judge Bell, former Attorney General, for joining me today and for agreeing to take on this critical task. Our National Government depends for its success on the excellence and the integrity of those who serve the public. And in choosing officials from my administration, I have sought out individuals of unquestioned competence and the highest integrity. But along with these high standards of selection, we need an unambiguous code -- a code of conduct -- to ensure that those who serve the public trust avoid any actual or apparent conflict between their personal and public interests. As we've seen in the recent debates about ethics legislation, current Federal ethics rules do not adequately serve to eliminate abuse of public office for private gain. And the current framework is fragmented; it's confusing; and most important, does not incorporate sufficient safeguards to protect the public interest in honest and fair government. It's the difficulty of these issues that leads me to create the President's Commission on Federal Ethics Law Reform. Judge Wilkey, thank you, sir, for taking on the arduous responsibilities of Chairman. And Judge Bell, thank you for agreeing to be the Vice Chairman. You both come to this task with extensive experience in public service and a deep interest and understanding of these interests in, and understanding of, ethics matters. And I'm asking you and other members of the Commission to take a fresh look at the ethical standards that apply to all three branches of the Federal Government and to give me your recommendations by March 9th, if you can. I know this does not give you a lot of time, but I'm eager to move forward with reform, and I'm confident that you can get this job done. Before I issue this Executive order, let me leave you with four key principles to guide you as you take up your efforts. One, ethical standards for public servants must be exacting enough to ensure that the officials act with the utmost integrity and live up to the public's confidence in them. Two, standards must be fair. They must be objective and consistent with common sense. Three, the standards must be equitable all across the three branches of the Federal Government. And the fourth one -- we cannot afford to have unreasonably restrictive requirements that discourage able citizens from entering public service. The task of reforming and revitalizing Federal ethical standards is really of the highest importance to me and to the American people. And I'll await your recommendations with great interest. And now I'll sign this Executive order. President George H.W. Bush Note: The President spoke at 2:36 p.m. in the Roosevelt Room at the White House. The Executive order is listed in Appendix E at the end of this volume. |
Bush Pardons 6 In Iran-Contra Affair, Averting A Weinberger Trial; Prosecutor Assails 'Cover-Up
February 3, 1989
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Remarks on the Savings and Loan Crisis The President. While we have the quick exposure here, let me just thank you all, Mr. Speaker, Leader Mitchell, Dole, Bob Michel, for coming down here. This is a listening session. We've got a big problem in this savings and loan. There are no easy answers and no worrying about the blame -- plenty to go around. I want to see the problem solved. We've had a lot of consultation up on the Hill, and good consultation. And Treasury will come, I think, to meet me tomorrow to present their views, but they're not being presented here with this stacked deck. We need ideas, and if we're overlooking something, we want to know what it is. But I think we all agree that it's time to get on with the problem. And so, what I wanted to do this morning is simply ask your advice and listen. And whatever we come up with will not be popular. And I expect then whatever you come up with will not be popular, but we've got to get on and get the problem solved. And I appreciate your coming down here early to discuss this today, and then I'll be meeting, as I say, some more today. And then tomorrow I think we have more final recommendations. I'll go out with it publicly probably early next week -- I think that's the plan -- and see where we go from there. But, Speaker, if you can talk, you're entitled a rebuttal. [Laughter] Speaker Wright. I'm not sure, Mr. President, that any rebuttal is necessary. We're here to listen, and we're here to join with you in trying to find some creative solution to a very serious problem. Majority Leader Mitchell. I think the Speaker has expressed it for all of us, Mr. President. We want to work with you. This is a serious problem for the country; it's not just for us. We've got to do the best we can to come up with the fairest, most efficient way to solve it. The President. Before we break up here to start on our consultations, let me say -- and I think I speak for everybody here -- that the safety of those deposits is guaranteed, will continue to be guaranteed, and that there should be no feeling around the country that some solution will do anything to diminish the credit of the United States being behind the deposits in the FSLIC [Federal Savings and Loan Insurance Corporation], FDIC [Federal Deposit Insurance Corporation], whatever it is. And I thought I'd just take this occasion to make that statement. Thank you all very much, and now let's all go to work. Note: The President spoke at 8:04 a.m. in the Cabinet Room at the White House, prior to a meeting with congressional leaders. In his opening remarks, the President referred to Jim Wright, Speaker of the House of Representatives; George J. Mitchell and Robert Dole, majority and minority leaders of the Senate, respectively; and Robert H. Michel, ranking minority member of the House of Representatives. President George H.W. Bush
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