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January
12, 2002
Cockburn/St.
Clair
Forbidden
Truths
January
11, 2002
Lee Balllinger/Dave
Marsh
Neil
Young's Duet with Ashcroft
January
10, 2002
Tom Turnipseed
Bush,
Enron, UNOCAL
and the Taliban
St. Clair/Cockburn
Greenpeace
to Greenwash?
Hans von
Sponeck
Iraq:
Is There an Alternative
to Military Action?
Jim Lobe
Israeli
Human Rights Group Assails Army
Marina Mayakova
Russia's
Top Military Astrologer Predicts More Attacks from OBL
January
9, 2002
David
Vest
The
Super-Burqa
and the Big Tent
ND Jayaprakash
Winnable
Nuclear War?
Rafiq
Kathwari
Kashmir
Will Make Ground Zero Look Like a Bonfire
January
8, 2002
Prudence
Crowther
Sting
Like a B-52
Nelson
Valdés
Al-Qaeda
at Guantanamo Bay
John Chuckman
Dark
Tales from the
Ministry of Truth
Richard
Corn-Revere
Do
We Fear Freedom?
Joan Hoff
The
Nixon You Haven't Heard
January
7, 2002
Lawrence
McGuire
Confusing
Economic Tales About Argentina
Wael Masri
They
Are Taking
Our Rights Away
Philip
Farruggio
Better
Medicine
January
6, 2002
Ralph
Nader
Students
Put the Heat on Foreign Sweatshops
Tariq
Ali
Battleground
Kashmir
January
5, 2002
Mark Schneider
Kifah:
The Movie Star
Israel Killed
Edward
Said
Is
Israel More Secure Now?
January
4, 2002
CG Estabrook
Anti-War
= Anti-Globalization
Jordan
Green
What's
Changed in New York
January
3, 2002
Walt Brasch
Exit
Cheney, Enter Ridge
Mokhiber
and Weissman
The
10 Worst Corporations
of 2001
Robert
Hunter Wade
America's
Empire Rules an Unbalanced World
Shahid
Alam
Is
There an Islamic Problem?
January
2, 2002
Ross Regnart
Patriot
Act Redefines the Mob as "Terrorist Associates"
John Chuckman
The
Republicans' Secret Plan X
David
Vest
Turn,
Turn, Turn
January
1, 2002
Kathy
Kelly
Iraq's
New Year
December
31, 2001
John Absood
An
Alternative to War in Iraq
Ramzi
Kysia
Iraq
Goes Radioactive
December
28, 2001
John Chuckman
Observing
George Bush
Suren
Pillay
Civilian
Bodies
Aaron
Lehmer
Inviting
Future Terrorism
December
27, 2001
Patrick
McNamara
Palestinian
Children Bear Brunt of Mideast Violence
Nelson
Valdés
A
Possible Scenario on the Location of bin Laden
Jensen
and Mahajan
Remember
the Afghan Dead
Philip
Farruggio
A
New Year's Resolution
Ramzi
Kysia
The
People of the Valley
December 26, 2001
John Chuckman
In
Praise of the Unspeakable
Sam Bahour
2002:
Year of the Twos
December 25, 2001
Jennifer Loewenstein
Israel's
Human Rights Record
December 24, 2001
Sam Bahour
It
Happened One Morning
Yair Khilou
Why I Resisted
Being Drafted into the Israeli Army
Michael
Chisari
War
as Diversionary Tactic
Cockburn/St. Clair
Enron
and the Green Seal
A Photographic Journal of Life
in an Afghan Refugee Camp
By Judith Mann
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CIA's Assassination Plan a History of
Torture in US Prisons
bin Laden and Bush
Business Connections
Aisha Ikramuddin on the Hidden Hype
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Christopher Hitchens' Love for Mrs. Thatcher
Jiang Zemin Tells Bush:
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Press
by Alexander
Cockburn
and Jeffrey St. Clair
The Memphis Blues Again:
Six Decades of Memphis Music Photographs
Photos by Ernest Withers
Text by Daniel Wolff
The New Intifada:
Resisting Israel's Apartheid
Edited by Roane Carey
A Pocket Guide to
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The
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January
14, 2002
When In Doubt, Shred
It
By Russell Mokhiber and Robert
Weissman
Arthur Andersen, one of the nation's Big Five
accounting firms, admitted this week that it destroyed a "significant"
number of documents related to its audit of Enron, the Houston,
Texas-based energy trading giant that collapsed spectacularly
into a pile of worthless securities late last year, wiping out
$30 billion worth of shareholder value -- but not before top
executives bailed out early.
The Enron practice of shifting liabilities
off the books to more than 3,500 subsidiaries raised so many
red flags that you'd think you were in a military parade somewhere
in China.
As the criminal investigation geared
up this week, Attorney General John Ashcroft and the entire staff
of the U.S. Attorney's office in Houston recused itself from
the investigation. The whole bunch has been conflicted out. The
investigation is going to be headed by Michael Chertoff, head
of the Justice Department's criminal division.
Whether justice can be had in a case
where both Enron and the accounting industry has marinated Washington
in campaign cash is unclear.
What is clear is that Enron and the accounting
industry were so drunk with their corporate power that they mistook
a modest proposed rule that might have prevented the Enron collapse
for threat to their profits and nuked it.
In the summer of 2000, Securities and
Exchange Commission Chair Arthur Levitt sought to pass a rule
that would have said to accounting firms -- if you are going
to audit a client, you can't take consulting fees from that client.
The accounting industry went bananas.
Why? Because they see audits as a way to get a foot in the door
of big companies. First audit the company, then ream the company
for exorbitant management fees.
But Levitt insisted that auditors be
"independent" of the clients they audit. How can an
auditor be independent if at the same time it's auditing the
company, it's raking in millions in consulting fees?
With Levitt's proposed rule, the accounting
industry saw a booming profit center threatened, and it began
to marshal its friends -- both Democratic and Republican alike
-- in Washington to beat back the Levitt rule. And beat it back
they did. Congressional leaders told Levitt, in no uncertain
terms, that if he proceeded, they would slash the SEC's budget.
Levitt backed down.
Last year, while Andersen was paid $27
million for its audit work at Enron, it received $28 million
in management consulting fees from the same Enron.
Let's say that Andersen's audit partner
in Houston saw the red flags, and began to raise questions. Are
Andersen executives going to risk losing the lucrative consulting
contract by offending the company with a harsh audit? Probably
not.
As for the destruction of documents,
let's put it this way -- much of the history of corporate crime
and violence in this country has never seen the light of day
because of corporate executives who follow closely the advise
of corporate counsel -- when in doubt, shred it.
Corporate lawyers have become so cavalier
about the subject that they publicly discuss destruction of documents.
Andersen was apparently following to
the letter advice often dished out by white collar defense lawyers,
including that of Harvey Pitt, the accounting industry star defense
lawyer until he became chair of the Securities and Exchange Commission.
(Pitt will probably have to recuse himself from the Andersen
investigation because he did work for the firm when in private
practice.)
White collar defense lawyers like Pitt
often advise corporate clients to implement flexible "document
retention" programs so that incriminating documents are
destroyed before they see the light of day.
In 1994, Pitt co-authored a law review
article ("When Bad Things Happen to Good Companies: A Crisis
Management Primer").
"At the crux of many corporate crises,
there are typically a handful of key documents," Pitt wrote.
"Corporate counsel must take every available opportunity
to imbue company executives with the understanding that their
documents will take on separate lives when they enter the treadmill
of litigation. . Ask executives and employees to imagine all
their documents in the hands of a zealous regulator or on the
front page of the New York Times. . Each company should have
a system of determining the retention and destruction of documents,"
Pitt wrote. "Obviously, once a subpoena has been issued,
or is about to be issued, any existing document destruction policies
should be brought to an immediate halt."
Former Securities and Exchange Commission
enforcement chief John Fedders, writing in a 1980 law review
article titled "Document Retention and Destruction: Practical,
Legal and Ethical Considerations," took this advice one
step further.
"On occasion, counsel will be shown
a document which could expose the corporation to liability if
it became available to adverse parties," Fedders wrote.
"If the document is not yet scheduled for destruction under
the terms of the program, management may advocate a waiver of
the program to allow the document to be promptly destroyed."
Things are destined to get worse before
they get better. The SEC has the accounting industry's pit bull
as its chair. In addition, Bush has nominated two new SEC commissioners,
both of whom are former partners of big five accounting firms
-- Paul Atkins, a partner with PricewaterhouseCoopers, and Cynthia
Glassman of Ernst & Young.
That gives the accounting industry absolute
control over what was once the top cop on the corporate crime
beat. Get ready for more Enrons.
Russell Mokhiber
is editor of the Washington, D.C.-based Corporate Crime Reporter.
Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor. They are co-authors of Corporate
Predators: The Hunt for MegaProfits and the Attack on Democracy
(Monroe, Maine: Common Courage Press, 1999)
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