The fireworks from our annual celebration of liberty, and contemplation of the good government designed by our patriot Founders, were followed this week with further evidence of a central government progressively empowered by a lack of self-government among the people. As William Penn so rightly observed, “Men must be governed by God, or they will be ruled by tyrants.”
Following on the heels of Enron and Global Crossing, communications giant WorldCom now tops the list of major corporations culpable for gross accounting malfeasances. On June 24 WorldCom drastically restated its earnings after the revelation that the company improperly accounted for $3.8 billion in expenses for the fiscal year. WorldCom stock has dropped from a high of $64 in 1999 to mere pennies per share in recent days, creating a devastating ripple effect throughout the financial markets.
Prompted by the gross accounting malfeasance of WorldCom and others, President Bush this week addressed top executives on Wall Street, urging a “new era of integrity in corporate America,” but warning, “There is no capitalism without confidence, no wealth without character.” While he stopped short of proposing more rigorous corporate legislation, the president did announce his intent to create a “Financial crimes SWAT team” under the direction of the Justice Department’s Deputy AG Larry Thompson. Mr. Bush also called for doubling the maximum jail sentence for fraud to 10 years, and strengthening laws concerning document shredding and other means of obstruction of justice – two focal concerns from the collapse of Enron. The Senate gave teeth to the president’s corporate fraud proposals on Wednesday, in a series of unanimous votes adding penalties to the chamber’s new accounting oversight legislation. President Bush summarily stated the crux of the matter, concluding, “At this moment, America’s greatest economic need is higher ethical standards.”
Reaganomics, anyone? In addition to Bush’s free market solutions, Bruce Bartlett, senior fellow, National Center for Policy Analysis, suggests: “It would be useful to require major corporations to release their tax returns to the public. This would give financial analysts and investors important data on company operations and prevent the kind of games WorldCom played. Alternatively, organizations like the New York Stock Exchange could require the release of tax returns as a condition for listing.”
At the heart of Mr. Bush’s proposal is a commitment to the tenets of free market capitalism. The president has rejected pressure to further regulate the market, and instead has issued a proposal that by and large conforms to government’s appropriate function in a free market system: to punish theft, deception and breach of contract. And that’s it. Government doesn’t protect investors by regulating the market, but by vigorously punishing injustice, thus defending justice.
Mr. Bush went on to offer staunch support for SEC Chairman Harvey Pitt, amid a flurry of calls for his replacement: “Harvey Pitt was put in place to clean up a mess. And he’s working hard to do that. It’s an amazing town where the man barely got his uniform on, barely had a chance to perform, and now, for whatever reason, people think he ought to move on. The very ones who voted for him,” President Bush said of the much-maligned SEC Chairman in his Wall Street speech on Tuesday, adding that every senator voted in favor of Pitt’s appointment only last year.
Unwarranted criticism, however, has not been limited to Harvey Pitt. Abert Arnold Gore, understudy to the most infamous Prevaricator-in-Chief, put on his campaign face and commented with sagacity, “I believe that a president of the United States facing this kind of situation ought to be restoring confidence in our economy and ought to be instructing the people in charge of these agencies to lay down the law.” Of course, Daschle-Gephardt, et al., followed suit with similar charges.
Memo to Tom, Dick and Albert: Most of the malfeasance currently under investigation occurred during the Clinton administration, only to be uncovered and punished by the free market and current administration – and in that order! Since 1997, more than 1,000 U.S. companies have “restated” earnings after seemingly not being sure what the definition of earnings is….
It is our considered opinion that George Bush exemplifies among the highest ethical standards in Washington, though his 1990 sale of stock in Harken Energy Corp. had many in the Leftdemos and their Leftmedia cadres suggesting otherwise. Here are the facts (for a change) on Mr. Bush’s stock sale. Bush served on Harken’s board of directors, and on June 22, 1990 sold his stake in the company, valued at $850,000. As a director of a publicly traded company selling company stock, laws required Bush to report the transaction to the Securities and Exchange Commission, which monitors the activity of U.S. corporations and their officers. However, the Bush paperwork was months late for filing the transaction with the SEC. (At the time, Mr. Bush was poised to sink his proceeds from the sale into his purchase of the Texas Rangers baseball team.) Five months after the sale, Harken stock lost 50% of its value, which at first glance looks suspicious. Nine months after that, however, Harken stock was worth twice Mr. Bush’s selling price. The SEC thoroughly investigated and cleared Bush of any wrongdoing – the report of the sale was inadvertently and inconsequentially delayed.
The resurrection of this non-story is nothing but another example of the shameless, politically-motivated slander characterizing the political Left and their media arm.
And what about the accusations of corporate book-cooking against Vice President Dick Cheney? Mr. Cheney was named Wednesday with Halliburton, Inc., where he served as CEO from 1995 until he joined the Bush presidential campaign in August 2000. The suit, like red meat to the Leftmedia feeding frenzy, alleges that Halliburton (with Cheney’s knowledge) overstated revenues for 1998 by $538 million, by illegally claiming as revenue accounts in dispute and not yet collected. An SEC investigation is underway; both the White House and Halliburton reject the suit’s claims.
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