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From the LA Times Website:

Washington Outlook
By Ronald Brownstein

Bush Creates a Harder Challenge on Ethics After Easing Corporate Rules

It's easy to imagine the frenzy that would be engulfing Washington if it were President Clinton now revising his explanation of a controversial 12-year-old stock deal.

Rush Limbaugh would be roaring in outrage. Robert H. Bork would be decrying the loss of moral authority in the Oval Office. Sen. Arlen Specter (R-Pa.) would be demanding a special prosecutor. Congressional committees would be subpoenaing the president's old business partners.

President Bush probably will be spared all that, even after suddenly altering his explanation for why he was eight months late in reporting to the Securities and Exchange Commission his 1990 sale of stock in Harken Energy Corp.--a company on whose board he sat--shortly before it announced large losses. (For years he blamed it on the SEC; now he's fingering Harken's lawyers.) After the fanatical ethics wars of the Clinton years, few in Washington have much stomach for a full-scale confrontation--though the Washington Post raised eyebrows by revealing Bush's former personal attorney was the SEC general counsel at the time the commission cleared him of wrongdoing in the stock sale. (The attorney, James Doty, says he recused himself.) The demands of the real war underway against terrorism also will discourage a political firefight over the sale. But even so, the disclosures are still creating awkward moments for Bush as he prepares to call for greater corporate responsibility in a speech Tuesday in New York.

Actually, the focus on Bush's behavior 12 years ago may frame the wrong debate. It's likely that the dominant argument in Washington will be over whether it's credible for Bush to demand better corporate behavior while facing these personal questions. The more relevant issue is whether it's credible for Bush to threaten a crackdown now after his administration spent its first 18 months promising business kinder and gentler enforcement of the range of federal laws against corporate misconduct--from the environment to the stock markets to the workplace. In other words, can Bush plausibly shake the iron fist after stroking the Fortune 500 for so long with a velvet glove?

For all the nouvelle elements of Bush's thinking on social issues such as education or homeownership, he's always been a conventional conservative on government oversight of business. As governor of Texas, presidential candidate and president, Bush has focused more on intrusive government than irresponsible corporations. His consistent message has been that, in pursuing its goals and enforcing its laws, government should be more cooperative and less coercive. During the 2000 campaign, he crystallized his view on government's relationship with business when he said: "I do not believe you can sue your way or regulate your way to clean air and clean water."

Bush has put flesh on that philosophy by staffing many federal agencies with alumni of the industries they now regulate. The Interior Department is crowded with former lobbyists for the coal and oil industries. A former timber lobbyist is watching the national forests. Harvey L. Pitt, the SEC chairman, came from the accounting industry; Bush already has appointed another accounting industry alum to the five-member commission and nominated yet a third. (That means Bush is seeking to construct an SEC, for the first time, with a majority of commissioners tied to the accounting industry.)

To monitor safety in the workplace, Bush found an executive from the chemical industry; to monitor safety in the mines, he appointed an executive from the mining industry. The list goes on.

In chorus, Bush's appointees have sung the same tune. At her confirmation hearing last year, Environmental Protection Agency Administrator Christie Whitman promised more negotiation and less litigation against recalcitrant companies. "Instilling fear does not solve problems," she insisted. Over at the Occupational Safety and Health Administration, director John Henshaw as late as last month told a business audience: "Hopefully, we can put the days of OSHA as an adversary behind us."

And before Enron and WorldCom and Martha Stewart forced the SEC chair to try to morph into Harvey Pitt-bull, he was sending the same message, telling the accounting industry last fall that he viewed them as the agency's "partner" and pledging "a new era of respect and cooperation" after the confrontations of the Clinton years.

Partnership with industry has its place. But enforcing federal law to police the marketplace isn't it. No cop anywhere would agree with Whitman; they instead would argue that the best way to discourage drug dealing or street crime is to instill fear--of relentless enforcement. The same is true in the boardroom. Polluters or stock swindlers are more likely to stop because they fear being caught than because Washington asks them nicely.

The tsunami of corporate scandals has made the chocolates-on-the-pillow approach to enforcement untenable at the SEC. But the velvet glove still dominates in other arenas that haven't attracted as bright a spotlight. OSHA has asked employers only for voluntary steps to reduce repetitive stress injuries. Several top EPA lawyers have quit since Bush took office, bristling at budget cuts for enforcement and accusing the administration of undermining their pursuit of tough settlements against companies violating clean air and clean water laws.

And even in the securities field--while promising vigorous pursuit of individual wrongdoers--the White House still hasn't endorsed the systematic changes in accounting oversight included in the reform bill Senate Democrats will bring to the floor this week.

It's good for Bush to add his voice to the demand for more ethical corporate behavior. But his words would carry more weight if matched with action. If Bush is sincere about confronting corporate misbehavior, he'd be changing direction not only at the SEC but at the agencies protecting the environment, the workplace and public lands too. Eric Schaeffer, who resigned in protest as head of civil enforcement at the EPA earlier this year, asks the right question: Does it make sense to rely "on corporate self-policing" to safeguard the public "after what we've learned about corporate responsibility from Enron and others."

Until Bush has an answer, his call for a corporate cleanup will remain muffled--as if he were speaking into a velvet glove.

The real story here is that Bush filed the "intent to sell" paperwork the day before he sold his stock. That is the paperwork that he personally is required to file. The paperwork filed when the stock is actually sold is the responsibility of the Harken lawyers and that was delayed eight months. This story has been hashed over through three campaigns and has never amounted to anything precisely because there is nothing there. No effort to defraud, no malfeasance of any kind. A paperwork snafu. I predict that by the end of the week this story is dead.

BTW, a more honest title for this thread would be "Why We Need To Be Vigilant Of President Bush". He is the real target here. This whole article is a laundry list of why the left hates Bush.

I am finding it quite funny watching George drop his pretense of being a reasoned, rational, thinking person.

For 5 years of so, all we heard out of the Left was "it's only sex. He's doing a good job, so let him do his job. It's all a vast right wing conspiracy". Now, while Tom Daschle runs around demanding GW's stock sale from 12 years ago be investigated for the 4th time, they still won't talk about how Hillary turned 1,000 into 100,000 in a week, or how Tom Daschle managed to make 18 million or something like that the same way, or how Bill "I'll sleep with anything" Clinton and his wife Hillary "The Hun" Clinton gutted the White House of millions of dollars worth of art and furnishings. We can't talk about that. That would be evidence of a "vast right wing conspiracy". But we should investigate a stock sale that has been turned inside out 3 times already once again.... all simply for the sake of getting at the truth, you know.

What pleases me is how every day more and more Americans are realizing just how bankrupt the Democrat party is. George is a shining example of it. Keep up the good work, George!

And as I pointed out earlier, the stock he sold dipped slightly then topped out two years later at a price over 100% higher than what GW sold for. Not a great insider trade, in my book.

from The Daily Enron

TIME TO EXHUME THE BODY?
SEC Harken Investigation Under Fire

While the President went fishing in Maine over July 4th, it was a working weekend for White House staffers. It seems that a scruffy flock of old Texas chickens came home to roost in the executive branch and staffers spent the weekend trying to round them up.

Long believed safely buried a decade ago, President Bush's Harken Energy stock deals now threaten to implicate the President in the very corporate misbehavior he was planning to criticize in a major policy address tomorrow.

So, supporters of the President fanned out to the weekend talk shows, talking points in hand, hoping to blunt the case against their boss. Harken was a bogus issue, they claimed. They offered three reasons why we should not worry ourselves over Bush's Harken Energy deals:


Not-to-Worry Reason #1 - Bush's failure to notify the SEC for 34 weeks that he had sold his Harken stock was a simple mistake.

But, was it a "mistake" with a purpose? Timely reporting of the stock sale might have raised some potentially embarrassing questions at the time:
Bush sat on Harken's audit committee, which had learned by May 1990 that Harken was in deep financial doo-doo. The company would have to report a large loss that fall.
The company had mitigated a $23 million loss by cooking up a phony $10 million "sale" of a Harken subsidiary to some of Bush's fellow Harken insiders. The "sale" was financed by money borrowed from the company itself. (Later, the SEC forced Harken to reverse the transaction and claim the full loss.)
It is likely that when Bush sold his Harken stock on June 22, 1990 that he was aware of his father's intention to attack Iraq in less than two months. At the time, the only deal keeping Harken's stock afloat were high hopes for Harken's exclusive contract to explore for oil in the soon-to-be war zone nation of Bahrain.
Curious journalists have a way of connecting dots that big when they involve a sitting President's son. By waiting 34 weeks before reporting his Harken stock, time and events would diminish the size of those dots, along with the curiosity to connect them.

Not-to-Worry Reason #2: Yes, Bush had served at the time on both Harken's board and its audit committee, but he was out of the loop. He was not aware that consultants at Smith Barney, who had been hired by the audit committee and were working for them, had discovered that the company was $150 million in debt and would lose $23 million that year.

Well, maybe if Bush had only held a seat on Harken's board this excuse would have some degree of plausibility since it might be argued that the audit committee's findings had not been presented to the board before Bush dumped his stock. But Bush also sat seat on Harken's audit committee, which had been tasked by the board earlier in the year to work on a restructuring plan for troubled Harken. As part of his service on the audit committee Bush would have certainly been privy to the earliest discussions and drafts of that report.

If Bush's excuse is that he was not paying attention, had not read the reports, or had not been consistently AWOL from audit committee meetings, how does that square with his current position holding board members accountable?

What is missing is testimony under oath - what did Bush know, and when did he know it before dumping his stock? (See chart in Featured Content on our homepage.)

Not-to-Worry Reason #3 - The SEC investigated the whole Harken matter in 1990 and found no reason to pursue it.

True, as far as it goes. But take a closer look and this reason loses all its luster.

At the time of the SEC investigation, Richard Breeden was SEC Commissioner. Breeden was appointed to his point by President George H. Bush. Then he was asked to investigate the boss's son. (Previously Breeden had served in the Reagan/Bush administration as deputy White House counsel for Vice President Bush.)

Breeden passed this hot potato to his deputy, James R. Doty, to investigate. In private life Doty had been the accused's attorney.Among other things, Doty had negotiated Bush's acquisition of the Texas Rangers baseball team. Letting Doty investigate this transaction was as if the Clinton administration had tasked then Deputy Attorney General Webster Hubble to investigate the Whitewater transaction.

Doty quickly slammed the coffin lid shut on the investigation - without interviewing a single Harken board member. And there it has lain buried ever since - case closed.

All this raises an inevitable question: Why shouldn't the Harken case be exhumed for a full independent autopsy?

--------------------------------------------------------------------------------
Harken and Arthur Andersen - Kissin' Cousins?
It was all in the family for Harken Energy and Arthur Andersen. Harken drew its top layer of executives directly from Arthur Andersen.

Harken's CEO, Mikel D. Faulkner had been employed by Arthur Andersen in its energy audit division - the same division that later audited Enron. Anna M. Williams, Harken's Executive Vice President-Finance and Chief Financial Officer also worked in Andersen's energy audit division, as a senior auditor.

Bruce N. Huff, Harken's President, Chief Operating Officer, had worked in Andersen's audit division as had Wayne Hennecke, Harken's Senior Vice President-Finance and Chief Accounting Officer.

When Harken Energy had to select an outside auditor they selected Arthur Andersen. And it was Andersen auditors who sanctified Harken's books in 1989 when the company arranged the phony $10 million sale of a subsidiary to Harken insiders - financed entirely by a loan from the company.

So, it would seem that long before he became America's CEO, President Bush had enjoyed a front row seat from which to observe the very accounting problems he now condemns.

Like everyone else on the entire planet.

He reported his intent to sell the day before he sold it. The "dots" should have been big enough then.

I will be amused to watch you guys try to fan this into a scandal with this sort of "unbiased" investigating. :rolleyes:

Both the Washington Post and the NY Times did independent investigations of this and found nothing. Were there Bush cronies running these two icons of the unbiased free press?

Do we need to be vigilant of politicians?

Yes.

Do we need to be vigilant of people who cloak their agendas behind innocuous phrases?

Yes.