Let us now take a walking tour of Washington, D.C., to see whether the Enron scandal has loosened corporate America’s grip on our nation’s capital. (Okay, the answer is no.)
At the White House yesterday, President Bush announced a 10-point plan that he said will “improve corporate responsibility and help protect America’s shareholders.”
It will not.
In fact, a quick analysis shows that the federal government already has the authority to implement Bush’s proposals. No new laws are needed. It’s merely a question of will power.
Even the toughest of the Bush ideas (#5 — CEOs or other officers who clearly abuse their power should lose their right to serve in any corporate leadership positions) can be executed by the Securities and Exchange Commission (SEC) today, right now, with no law changes.
But given that the top cop on the securities fraud beat in Washington is the accounting industry’s former top lawyer — that would be current SEC chair Harvey Pitt — we may conclude this: there is no will, and there is therefore no way this Bush’s 10-point proposal will “improve corporate responsibility.”
It’s all smoke and mirrors.
Let’s remember that when Bush’s Treasury Secretary, Paul O’Neill, last month proposed that corporate executives be held liable for their negligent wrongdoing, he was quietly sent packing.
When asked about why O’Neill’s proposal was shot down, a senior administration official told reporters yesterday morning at the White House: “Businessmen can make boo-boos. When you invest in a company in which a businessman makes a mistake, a business judgment mistake, no one wants to have to have anyone be guaranteed for those returns.” (Translation: can’t hold the executive responsible for mistakes under the “business judgment rule.”) “And we’re trying to be very careful to steer away from that issue and still leave investors on the hook for the choices businessmen make about business.” (No that is not a typo. According to the White House transcript, he said “on the hook.”)
Let us now proceed across the street, to the Treasury Department annex, where the Office of Foreign Assets Control (OFAC) has for years been engaged in a kind of protection racket — enforcing the law against large corporations for alleged violations of the Trading with the Enemy Act, allowing the companies to settle those cases for a few thousand dollars, and yet never informing the public about those settlements.
Until last week, that is, when as a result of a lawsuit we filed last year, OFAC began releasing the documents detailing about 100 to 150 such cases from 1998 to 2000.
But still, the Treasury Department says it won’t inform the public, in a timely manner, about which of our giant corporations are “trading with the enemy.”
Let us now proceed cross town to the U.S. Sentencing Commission, where it is the tenth anniversary of the sentencing guidelines for corporate criminals.
These guidelines were drafted in 1991. They created a carrot-and-stick approach. If a corporation had a strong ethics program, an 800-number for whistleblowers, a compliance officer with teeth, but despite all of that, was still convicted of crime, a judge would give that “good” convicted corporation a lighter sentence.
If a corporation didn’t have a strong ethics program and wantonly violated the law, the judge, under the sentencing guidelines would give that “bad” corporation a harsher sentence.
The result of the guidelines: there are now 800 corporations with ethics officers. The officers even have their own trade group — the Ethics Officers Association.
But have the corporate crime sentencing guidelines reduced corporate crime? We doubt it.
The U.S. Sentencing Commission says it wants to know the answer, so it has announced the creation of a 15-member ad hoc panel to study the effect the guidelines have had on corporate crime.
But get this: 12 of the 15 members are corporate white collar criminal defense attorneys or others from the corporate sector. Why no one from the public interest community? Why no lawyers who sue corporations alleging wrongdoing? Why no legal scholars critical of corporate influence over our democracy? (The grip is tight.)
Let us now proceed to Capitol Hill, where Representative Dennis Kucinich (D-Ohio) is introducing legislation that would create a Federal Bureau of Audits.
Today, corporations hire their own auditors. If the auditors find something wrong and try to get it fixed, a corporation can lawfully fire the auditor and hire another more to its liking.
Kucinich’s bill would require that publicly held companies go to the Federal Bureau of Audits and be assigned a government auditor.
It’s one of the few reforms we’ve seen floated in recent months that has a chance of preventing future Enrons.
And yet, at the press conference where Kucinich announced his legislation, there were two reporters. And no co-sponsors.
The Democrats, who like the Republicans, are marinated in corporate cash and culture, see Kucinich’s bill as too hot to handle.
The reason: accounting firms stand to lose tens of millions of dollars in auditing business to the federal government.
Let us now proceed down Pennsylvania Avenue, to the J. Edgar Hoover building, where the Federal Bureau of Investigation (FBI) is about to release it’s yearly “Crime in the United States Report.”
If history is a guide, the report will document all kinds of street crimes, but not even mention the wave of corporate crime and violence sweeping over our country — this despite the well documented reality that corporate crime and violence inflicts far more damage on society than all street crime combined.
Let us now proceed uptown, to the K street corridor, where we find thousands of corporate lobbyists working diligently late into the night to ensure that whatever citizen energies were released from the Enron earthquake are contained within reasonable bounds.
After all, businessmen make boo-boos.
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)
(c) Russell Mokhiber and Robert Weissman