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The
Corporate Reform Weekly:
Citizen Works' look at the Campaign
for Corporate Reform
April 1, 2002
1) The week in Washington
(a summary of post-Enron reform and rhetoric)
2) News and views
3) Public opinion
4) Action items and how to make your voice heard
THE WEEK IN WASHINGTON:
Quick Summary
Papers
on Vice President Dick Cheney's Energy Task Force
The Bush administration released 11,000 pages of documents relating to Vice
President Dick Cheney's Energy Task Force. The documents revealed that in
preparing the national energy strategy, the administration met three dozen energy
industry representatives but not a single environmental or consumer group.
But even those 11,000 pages have been carefully edited. Hundreds of the pages are virtually blank, often with only a cryptic word or phrase.
"There is a lot missing," said Sharon Buccino, a senior lawyer at the Natural Resources Defense Council, which, along with Judicial Watch, sued for the release of the documents. "We have 11,000 pages of scrubbed, purged, and sanitized documents. Even despite those efforts to hide the documents, they are littered with evidence of industry access."
Apparently, the Bush administration thinks Energy Secretary Spencer Abraham's behavior was just fine. "He's the energy secretary, he meets with these folks about energy issues," said Jill Schroeder, spokeswoman for the Energy Department. "It's his job."
Army
Secretary Thomas White
The pressure continues to mount on Army Secretary Thomas White, the former
Enron executive who has been suspiciously slow in disclosing his close contact
with Enron executives.
During October, White sold about $3 million in Enron stock and made contact with former Enron colleagues at least 13 times. In total, he made more than $31 million from selling Enron stock, according to the Washington Post. The Post also reports that White had 73 contacts with Enron since taking over as Army Secretary.
But White predictably denies that there was any insider wrongdoing.
"There was never, ever anything that could be construed as insider information, nonpublic information," Mr. White told reporters in an hour-long discussion at the Pentagon. "I never sold any stock based on what anyone told me at Enron."
Campaign
Finance Reform
Campaign Finance Reform became law with President Bush's reluctant signature.
After signing the bill, which calls for a ban on soft money, Bush left Washington
to raise $4 million for Republican candidates with no apparent sense of irony.
Meanwhile, suits calling the law unconstitutional have already been filed in federal court. Sen. Mitch. McConnell (R-KY) and the National Rifle Association went to court separately to challenge the provision that limits advertising by outside groups before elections.
Federal
Criminal Investigation
The federal criminal investigation into Enron executives is picking up speed.
Last week, federal prosecutors in Houston convened a special grand jury to
look into crimes relating to Enron's collapse.
According to the New York Times, federal investigators are "devoting the closest attention to specific transactions involving a series of partnerships controlled by the company's chief financial officer, Andrew S. Fastow." The Times also reports that the investigators are looking into possible perjury cases stemming from statements Enron executives made under oath before Congressional committees.
Council
of Institutional Investors
At its annual meeting in Washington, The Council of Institutional
Investors (CII) voted to adopt a policy requiring publicly traded companies
to include the cost of stock options as an expense on their reported income
statements.
The resolution marked a major reversal of position for the CII, which manages $2 trillion in retirement assets comprising 120 large pension funds. The CII changed its stance because the size of the options program has exploded in recent years, price options are now obscured, and large shareholders have lost their right to vote on many option plans, according to a CII press release.
The legislature was out of session last week.
Click here to view Citizen Works' complete summary of post-Enron legislation.
NEWS AND VIEWS:
The Fault, Dear Investors, Lies in Ourselves
LAWRENCE E. MITCHELL, Washington Post
…A short-term mentality has taken hold in America: In the past decade, the average period for holding U.S. stocks has dropped from two years to eight months (five months for Nasdaq stocks); for mutual funds, the average has plummeted from 11 years to four. The average annual trading volume is 120 times greater than it was 30 years ago, while the number of Americans owning stock has grown only 2 1/2 times. Enron's executives aren't the only ones who can be accused of being greedy.
In the Public Interest
By RALPH NADER
After years of indifference to reports of corporate crime and abuse in the mainstream media, a significant shift toward alarm, indignation and revulsion is occurring in Congress by some senior members of both Parties. The charge that more large U.S. corporations have no allegiance to this country or community, other than to control them, use them and milk them, will increasingly resonate throughout the land by workers, taxpayers and, now more and more, elected officials. So too will ring throughout the land the cry of comprehensive corporate reform.
Following Suit
By MARGARET PRICE, New York Newsday
Amid reports of questionable activities at a number of companies lately, experts say insider dealings have been drawing national attention. Indeed, at New York-based research firm Thomson Financial, "We've never seen this much interest in insiders' filings" with the Securities and Exchange Commission, said Lon Gerber, the company's insider research director… To be sure, insiders' buying of their company's stock is more revealing than their selling, experts say. The reason: insiders may have multiple reasons for unloading their company's stock, such as the need to pay expenses or to diversify their portfolio. But insiders often buy their company's stock for market-related reasons.
GIMME AN 'E'! ENRON: Uncovering the Uncovered Story
BY SCOTT SHERMAN, Columbia Journalism Review
…It's a scandal with numerous culprits and accomplices, some of whom were named in a page-one story in The New York Times on January14 by the business writer Gretchen Morgenson. "The bull market euphoria," Morgenson wrote, "convinced analysts, investors, accountants, and even regulators that as long as stock prices stayed high, there was no need to question company practices." One could add an additional culprit to that list: the Fourth Estate… "Gurus, analysts, and the media must take some blame for what happened," Richard Lambert wrote in the Financial Times on December 15…The print media coverage of Enron's top executives was pure hagiography. According to Fortune, Kenneth Lay was a "revolutionary," while Worth, explaining Lay's "personal strengths," quoted an analyst saying he possessed "the best combination of vision and execution of anyone." Jeffrey Skilling, in Fortune's sonorous pronouncement, was "the most intellectually brilliant executive in the natural gas business."
New life for the US lawyers who help shareholders sue: Corporate scandal and falling stock markets have boosted class action litigation
By PETER THAL LARSEN, London Financial Times
According to Stanford Law School, shareholders filed 327 federal class action lawsuits against US companies last year - a rise of 60 per cent over the previous year. This excludes another 138 class actions related to the allocation of shares in initial public offerings of high-tech companies…The resurgence of such action has revived a debate about the purpose of securities class action lawsuits and the law firms that help bring them. For most corporate executives, it is hardly better than an extortion racket designed to enrich unscrupulous lawyers - with little or no benefit to shareholders…But others see the threat of expensive litigation as one way of ensuring that US corporations treat investors properly.
PUBLIC OPINION
According to the latest Gallup Poll, 70% of Americans say favor the concept of campaign finance.
But will it do any good? Two-thirds of those polled said that special interests would maintain their influence in Washington. Just 28% said they felt things would improve.
As for the President's popularity, the latest Harris Poll puts the Bush's approval at 77%, its lowest level since before September 11. As for Congress, 50% of those polled had a positive impression of the Republicans; 48% had a positive impression of the Democrats.
Almost a quarter (24%) of Americans say the economy is the most important issue for the government to address. That puts it in a first-place tie with terrorism for most important issue.
What are the lasting results of Enron among investors? According to the Phoenix Lending Survey, 84% of lenders say that investor skittishness, heightened sensitivity toward financial reporting, and increased scrutiny by lenders would last into 2003 as a result of the Enron bankruptcy.
THIS WEEK'S ACTION ITEM
This April 6th is Big Business Day. That's this Saturday. Across the country, citizens will be standing up to corporate power and speaking out for democracy. There will be rallies, teach-ins, press conferences, parties, and many other events.
Check our Big Business webpage to see if there's an event planned for your community.
MAKE YOUR VOICE HEARD
White House Comment Line
- (202) 456-1111
White House Fax Line - (202) 456-2461
US Capitol Switchboard - (202) 224-3121
President George W.
Bush's e-mail - president@whitehouse.gov
Vice President
Dick Cheney's e-mail - vice-president@whitehouse.gov
White House Address - 1600 Pennsylvania Ave, Washington, DC 20500
Contact your senators
Contact your representative
Visit Working Assets webpage and sign a petition to tell President Bush to donate his $550,000 share of Enron's ill-gotten gains to funds, such as the Enron Employee Transition Fund and REACH, that benefit the company's employees who lost their retirement savings and provide relief to low-income consumers in California, who can't afford to pay for their basic energy needs. Click here for more information.
Working Assets is also calling for Kenneth Lay to donate the millions he made in selling Enron stock to funds that repair some of the damage he wrought. Click here for more information.
Join the AFL-CIO's fax campaign asking Enron and corporate creditors Citigroup, J.P. Morgan Chase, Wells Fargo and Bank of New York to support full severance packages for laid-off Enron workers.
Sign an electronic petition calling for the Justice Department to appoint a special prosecutor on Enron at Democrats.com and Moveon.org
Call your congressman in support of House Resolution 333, which calls for a special prosecutor on Enron.
Know
of another way to make your voice heard?
e-mail Lee Drutman
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Copyright © 2001 Citizen Works