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The
Corporate Reform Weekly:
Citizen Works' look at the Campaign
for Corporate Reform
April 8, 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
Big
Business Day
April 6 was Big Business Day. In Washington D.C., Ralph Nader and representatives
from several public interest, consumer, and labor organizations spoke out on
how unchecked corporate power in America is bad for democracy, dangerous for
the environment, unfair to workers, and inimical to the Constitution.
The D.C. event also featured a giant corporate shredder, a true sight to behold at 240 cubic feet. The shredder was put to the test as demonstrators dressed as anonymous corporate executives fed the hungry shredder cherished American values like truth, justice, democracy, families, communities, and spirituality, all in relentless pursuit of profits and power.
Across the nation, citizens took to the streets in protest, theater, and parades to talk about how Big Business is hurting them in their local communities and to discuss the role big corporations play in their lives. There were activities in almost 100 locations throughout the country, from Puerto Rico to Portland, Oregon.
Click here for the complete report.
Enron
Criminal Investigation
The criminal investigation of Enron is expanding in scope. Last week,
the Overseas Private Investment Corporation (OPIC) asked the Justice
Department to look into whether Enron lied about its financial shape when
it sought more than $1 billion in taxpayer funding for international projects.
Sen. Charles Grassley (R-IA), ranking Republican on the Senate Finance Committee, also wants to know whether Enron could be criminally liable for such financial misrepresentations made to both the OPIC, which has about $660 million in financing and insurance exposure to overseas Enron projects, and the Export-Import Bank, which has about $500 million in outstanding loans and guarantees on overseas Enron projects.
Between 1992 and 2001, U.S. government agencies, including OPIC and the Export-Import Bank, have contributed $3.68 billion in taxpayer money to finance 25 overseas projects. OPIC, the leader, contributed more than $2.6 billion for risk insurance for 14 Enron projects.
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.
Liberman's
Reform Agenda
In a major policy speech, Sen. Joe Lieberman (D-CT) outlined a broad
reform agenda addressing the collapse of Enron. Speaking to law and business
students at New York University, said that in the future, prosecutors should
be more aggressive with alleged corporate crime.
Lieberman also called for increased funding for the Securities and Exchange Commission, proposed giving the SEC new authority to remove corporate board members, and said the government should be more active in ensuring the independence of Wall Street stock analysts. In addition, Lieberman suggested that Bush establish a task force made up of "respected former CEOs and investor advocates."
Lieberman's remarks, however, fall far short of meaningful corporate reform. He wants U.S. companies to embrace "voluntary reforms." He also remains opposed to requiring companies to count stock options as an expense on their balance sheets. In fact, Lieberman was a key force in preventing that requirement from becoming law eight years ago, much to the delight of Big Business.
"We cannot put the business ethics police on every corner that might be cut," Lieberman said. "There will always be a place and a space where human conscience alone must guide our actions."
Pitt's
Stock Option Reforms
Securities and Exchange Commission Chairman Harvey L. Pitt called
for stock option reforms at a speech at Northwestern University. Pitt, formerly
the attorney for the Big Five accounting firms, called for a number of weak
"reforms," including:
What Pitt did not even discuss was the controversial issue of whether or not companies to count stock options as an expense on their balance sheets.
"We should, of course, be careful not to overreact," Pitt said, "Not to regulate for regulation's sake and especially not to adopt regulations that run significant risks of doing more harm than good…Most of these ideas, and they are just that, go well beyond what the federal government should be asked, or expected, to do."
The legislature was out of session last week.
Click here to view Citizen Works' complete summary of post-Enron legislation.
NEWS AND VIEWS:
Pursuit of corporate crime can't end with Enron
USA Today Staff Editorial
Mouthing platitudes about reform without changing the way the laws are enforced won't accomplish anything. Criminal justice isn't just supposed to punish wrongdoers, but also deter would-be criminals. Few will be put off their criminal bent if they view Enron as a spectacular exception to an otherwise lenient treatment of corporate crime. Otherwise, companies will have nothing to fear in breaking the law.
Cardboard Board: Too often, corporate directors are mere decoration
BY MATTHEW BENJAMIN, US News and World Report
It may sound perverse, but there is a group of people who actually seem grateful to Enron's management. "Enron has created the best possible situation we've ever had," says CalPERS spokeswoman Pat Macht. The giant pension fund is one of the louder voices in the good-corporate-governance movement. Activists, including institutional investors and other corporate watchdogs, have been hounding corporate boards for years to clean up their act and start effectively monitoring management. And they're delighted that recent corporate meltdowns are laying bare the sordid facts about the way too many boards really function.
Army Chief Should
Quit
Los Angeles Times Staff Editorial
Secretary of the Army Thomas E. White worked as an executive at Enron for 11 years but claims he knew nothing of the shady practices that led to its downfall. Maybe White really was clueless during his time at Enron, but he is not doing himself any favors by failing to properly explain his dealings with the failed energy giant after he left it…White may not have done anything illegal. But the secretary of the Army needs to be like Caesar's wife--beyond suspicion. White's conduct during and after his tenure at Enron does not meet that standard. He should resign.
More Tipsters Report Fraud to SEC: Complaint Center Got 12,000 E-Mail Messages in March
By JACKIE SPINNER, Washington Post
Back in 1994, John Reed Stark, a lawyer in the Securities and Exchange Commission enforcement division, might get 10 e-mails on a really busy day, and a few hundred a month. Last month the fully computerized SEC complaint center, whose staff has grown to 20, received 11,947 e-mails, the most ever. They dealt with a wide variety of alleged securities violations, including post-Enron reports of accounting abuses.
"It just got bigger and bigger and bigger," Stark said in an interview. "Nobody really knew what would happen when we set it up." The number of tips from e-mail informants has been rising steadily for several months, to more than 11,000 in January and February from 9,368 in December, according to SEC figures.
Executive Pay: A Special Report; Did Pay Incentives Cut Both Ways?
By DAVID LEONHARDT, New York Times
Just as the nation's top executives received fat raises during the 1990's boom, those who had tied pay to their companies' results were almost certainly going to receive leaner paychecks last year, when profits suffered their worst annual decline in decades. But in the clubby culture of the boardroom, many executives also knew that they could convince their directors to overlook the bottom line and keep the raises coming - if the directors had not already taken it upon themselves to look the other way.
PUBLIC OPINION
The Enron scandal may be fading from public attention. According to a Fox News/Opinion Dynamics Poll, now only 27 percent of Americans read the news about the Collapse of Enron; 36 percent skim the Enron news. That puts Enron behind the war in Afghanistan (44 percent read, 38 percent skim), the economy (39 percent read, 42 percent skim), the Middle East conflict (32 percent read, 46 percent skim), and the Catholic Church scandal (29 percent read, 36 percent skim).
According to a poll conducted by Stan Greenberg and Bill McInturff, 59 percent of Americans favor more government oversight of private pensions.
THIS WEEK'S ACTION ITEM
Did your elected officials take money from Enron? Find out by visiting Open Secrets. If they did, call them and find out whether they've given that money to back to employees. If they haven't, demand that they do!
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