in the Henhouse
“Gets Tough” on Corporate Crime
By Michael I. Niman, ArtVoice 7/25/02
Most aspects of the economic collapse presided over by the
current Bush administration, like the Reagan Recession years before it, have
been quite predictable. Tax-cut
induced deficit spending augmented by a slew of fat new military contracts for
Bush campaign contributors have taken a foreseeable toll on the U.S. treasury.
Clinton-era free trade agreements allowing American manufactures to
“outsource” production, Nike style, to foreign sweatshops with few pollution
or worker safety regulations have begun to take a heavy toll on the American
workforce, forcing wages down while increasing unemployment.
And a continuing reduction in social services and education spending,
begun when Papa Doc Bush was Vice President, have assured that those born into
poverty would likely remain in poverty, further crippling the nation’s
But when it comes to the economy there’s always a twist.
What few people could predict was that the main hit to the stock market,
and hence, the economy, would be the result of a sort of capitalistic
cannibalism. Driven by a relentless
greed and shameless lack of ethics that a mere decade ago would have been
culturally unacceptable, even among the corporate set, corporations have turned
to ripping off their own naďve investors.
Welcome to the Bush era.
The Bush administration, far from being the folks able to
police this mess, are up to their necks in complicity.
George Bush, usually seen as a kind of slow behind the curve sort of
fellow, actually turns out to be a pioneer in the field of corporate rip-offs.
In 1989, while Bush was a board member, and a member of the financial
audit committee, of Harkin Energy
Corp, the company pioneered “aggressive bookkeeping,” hiding millions of
dollars in losses through the sale of a subsidiary to a group of insiders.
The SEC censured Harkin and forced it to amend its books to show the
losses. Bush sold his own inflated Harkin stock in for $848,000 in 1990, two
months before the company reported further losses forcing its stock value down
to a quarter of the value it held when Bush sold it.
Though, as an insider, he was required by the SEC to immediately report
the sale, he waited for 34 weeks before reporting it.
Bush was quietly investigated and censured by the SEC but escaped
criminal charges, probably due to the fact that his father was president at the
time. Paul Krugman, writing for the
New York Times, reports that Bush’s profit from his timely dumping of Harkin
stock was “about four times bigger than the sale that has Martha Stewart in
Vice President Dick Cheney is also in a bit of luke warm
water. It seems that in his former
position as CEO of Halliburton, he presided over an Enron style cooking of the
corporation’s books. As with the
Enron case, this bit of “aggressive accounting” was done to inflate
perceived corporate profits, and hence, stock values.
Observers estimate that under Cheney, Halliburton overstated profits by a
minimum of $100 million. Cheney,
who “earned” over $36 million during his last year with Halliburton (2000),
cashed out when stocks were overvalued. Today
he is facing an investor lawsuit as well as a criminal investigation.
Halliburton also received almost $2 billion in federal loans under
Cheney’s watch while it’s subsidiaries conducted business with Libya, Iraq
The scandals tying the White House to the current crisis of
corporate malfeasance seem to have no limits.
Recent disclosures show that former Enron Vice Chair and current Bush
administration Secretary of the Army, Thomas White Jr. was the likely architect
for Enron’s manipulation of the California Energy market. The
resultant energy “shortages” left Californians struggling to cope with
electric brownouts and exponential increases in the wholesale rate of
electricity. White also cashed in his Enron stock before the price dropped
from around $90 to a few cents per share. More
recently in his new position at the Pentagon, White has been lobbying to
privatize energy systems at military bases, a move which would have allowed
Enron to do to the military what it did (under White’s leadership) to
All three scandals involving Bush, Cheney and White came to
light earlier this month, just as Adelphia and WorldCom were going down the
tubes because of their own shenanigans. After
each revelation I’d go out and buy a newspaper, naively expecting some news.
Yes, the Bush and Cheney stories were covered, albeit without the more
incriminating details – but they were downplayed at the same time.
The lead headlines around the country ran from the predictable, albeit
Orwellian, “Bush gets tough on corporate crime,” to the even more
predictable, “Bush: Saddam Must Go.”
The mainstream media has yet to cover the White scandal.
Bush grabbed a few headlines with his rhetorical proposal
to increase penalties for corporate criminals, but it’s as toothless as it is
hypocritical. Yes, Bush and Cheney seem to have violated the law, but White’s
dirty work at Enron, which clearly had the most detrimental effect on ordinary
Americans, was not illegal under current law. And given the climate in the White
House and Congress, similar corporate scams will continue to be legal for years
to come as corporate criminals from the likes of Enron work behind closed doors
writing White House energy policies.
The crowd squatting in the White House these days is not
just corporate-friendly. It’s
corporate – period. Take Enron,
which is this year’s most notorious corporate criminal.
Their connections to the White House seem limitless.
First, there’s Bush’s chief advisor, Karl Rove, who owned a quarter
million dollars of Enron stock, with nobody knowing for sure when he cashed out.
Then there’s Enron advisor Lawrence Lindsey, who became George W. Bush’s
economic advisor, taking an Enron energy policy proposal and incorporating it
into Bush’s election platform along the way.
Another former Enron Advisor, Robert Zoellick, became Bush’s Federal
Trade Representative. Then there’s Bush’s campaign advisor, Edward
Gillespie, who took a half-million dollars from Enron as a lobbyist after Bush
was elected. There’s Texas
Republican Senator Phil Gramm’s wife Wendy, who was on Enron’s board of
Directors, compensated to the tune of about $1 million for her service to the
corporation. Immediately before
joining Enron’s board in 1993, she worked as chair of President Bush
Senior’s Commodity Futures Trading Commission, where she fought to eliminate
energy futures contracts from governmental oversight. Other Republican homies on the Enron payroll include pundit
William Kristol, public opinion pollster Frank Luntz and speechwriter/talking
head Peggy Noonan. Even Harvey
Pitt, the head of the Securities and Exchange Commission, the federal agency in
charge of policing stock transactions, turns out to be part of the Enron family.
Before taking the job at the SEC, he worked for Enron’s accounting
firm, the Arthur Anderson company, which was recently convicted of obstructing
justice for destroying evidence in the Enron case
(for more info on Enron see 2/7/02 ArtVoice “Getting a Grip”).
The Enron connections are just the tip of the proverbial
iceberg at the White House. Many
other multinationals are also represented both in the Republican and Democratic
parties. This is why there has been
no meaningful campaign finance reform other than the recent bill limiting union
and public interest contributions. It
explains why corporations can now buy “pollution credits” rather than
complying with environmental regulations. It
explains why global trade agreements open America’s borders to sweatshop
goods, and why the minimum wage has stagnated below the living wage.
It explains why billionaires just got a tax cut while homelessness is
exploding. It explains why Coke and
Pepsi have free reign to sell their caffienated sugar water in countless public
schools as childhood obesity reaches record levels.
It explains why there is an “acceptable” level of arsenic in our
drinking water. It explains why prescription drugs are so expensive. And it
explains why our democracy is facing an unprecedented threat.
Copyright 2002. Dr. Michael I. Niman’s previous
ArtVoice articles, including “Enron for Dummies” are archived at http://mediastudy.com/articles.