Bush Seeks to Deflect Blame for Tardy SEC Filings
Reuters
Staff
July 03, 2002 12:37 PM ET
Source
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WASHINGTON (Reuters) - The White House said on Wednesday that a "mix-up" by lawyers at a Texas-based oil and gas exploration firm was to blame for President Bush's delay in filing reports on stock transactions worth more than $1 million before his election as the governor of Texas.
White House spokesman Ari Fleischer said Bush personally did nothing wrong while serving as a director of Harken Energy Corp. in the late 1980s and early 1990s, brushing aside suggestions of a conflict between his actions more than 10 years ago at Harken and the rules he recently proposed as president requiring top executives to promptly disclose when they buy or sell company stock.
Eager to distance his administration from scandals at Enron Corp. and WorldCom Inc., Bush will issue a fresh call for corporate responsibility and a crackdown on misconduct in an address on Wall Street on July 9.
"If there are any bad players in our free enterprise system, they will be held accountable by this administration and by the government," said Fleischer, offering a preview of Bush's address to business leaders.
A 1991 Securities and Exchange Commission memorandum found that Bush was late on at least four occasions in filing reports about transactions involving Harken stock.
One report -- filed 34 weeks late -- disclosed that Bush had sold $848,560 of Harken stock on June 22, 1990, just weeks before the company filed a quarterly report revealing that it had hemorrhaged $23 million during that period.
Bush sold his stock for $4 a share. By the end of the year it was trading not much above $1, according to the Center for Public Integrity, which provided Reuters with a copy of the April 9, 1991, SEC memo.
Fleischer dismissed suggestions of wrongdoing by Bush, saying certain filings were late due to "a mix-up, a clerical mistake involving the lawyers at Harken."
A Harken Energy spokesperson was not immediately available to comment.
Fleischer said Bush properly disclosed the sales of stock in a separate June 1990 filing. "The president, in his own personal action, disclosed promptly the intent to sell," he said.
The SEC did not take action against Bush, whose father was president at the time.
Bush's political fortunes could depend on his stewardship of the U.S. economy and his response to a flood of corporate accounting scandals that have contributed to a sell-off in stocks.
In the run-up to November congressional elections, Democrats would like to blame Bush and his fellow Republicans for creating a lax regulatory atmosphere conducive to corporate greed.
In addition to Bush, Vice President Dick Cheney's conduct while at the helm of Halliburton Co. is under scrutiny. The company said in May that the SEC had begun a preliminary investigation of its accounting treatment of cost overruns on construction jobs. Cheney served as chief executive of Halliburton from 1995 to 2000, but a spokeswoman for the vice president said he has not been contacted by SEC investigators.
In March, Bush called for a crackdown on corporate and accounting misconduct. But he stopped short of tougher reforms advocated by lawmakers and his own treasury secretary after the collapse of Enron, one of the president's biggest financial backers in the 2000 campaign.
In the wake of the scandal at WorldCom and renewed attacks by Democrats, officials say Bush is considering new measures to crack down on corporate abuse.
Treasury Secretary Paul O'Neill wants to give the Securities and Exchange Commission the right to freeze the assets of officials implicated in scandals like that at WorldCom. O'Neill had also proposed changing legal standards -- from recklessness to negligence -- to make it easier to punish executives accused of misleading shareholders.
Other Bush advisers want to provide additional resources to the SEC to police the industry and punish misconduct by chief executives.
"The president's message next week is going to be the faith he has in our free enterprise system," Fleischer said. But he added: "We are all in this together, and the president calls on corporate America to live up to high ethics and high standards, and they will be held accountable by the federal government."
"and they will be held accountable by the federal government."
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