"Yes George" "Yes George"

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    From AAP today:

    The White House said President George W Bush was determined to "vigorously" pursue corrupt firms and executives, and welcomed an agreement between House and Senate conferees on a key corporate reform bill.

    Once approved, the bill would establish an oversight board to monitor auditors of public companies, following corporate accounting scandals that led to spectacular bankruptcies and torpedoed investor confidence.

    The White House also underscored US economic growth was solid and that fundamental economic indicators were strong, despite other factors fuelling the crisis of confidence in US markets.

    US Treasury Secretary Paul O'Neill, meanwhile, decided to postpone a scheduled trip to Latin America to focus on the administration's agenda to strengthen US economic recovery.

    Bush asked O'Neill to put off the trip to work with Congress on approving the corporate reform bill, as well as legislation approving trade negotiating authority and a bill establishing the new Department of Homeland Security.

    After US markets closed, the lead SEC investigator said in Washington the US Security and Exchange Commission (SEC) has opened investigations into 12 Wall Street investment firms for possible conflict of interest violations.

    This ABC Nightline refers to :Bush Baggage?
    His Call for Corporate Responsibility Raises Questions of His Business Past

    By Chris Bury

    July 19
    — Since President Bush went to Wall Street demanding, "a new ethic of personal responsibility in the business community," the stock markets have responded with a resounding "raspberry."

    Investigative Report
    Indeed, the Dow Jones Industrial Average has now plunged hundreds of points since his highly anticipated July 9th address to shore up confidence in corporate America.
    Bush's clarion calls for cleaning up corporate corruption have largely fallen on deaf ears, analysts suggest, because Wall Street sees them more as rhetoric than reform. Even that rhetoric has lost steam since it has collided with questions about the president's own business past.

    Bush has insisted, often quite testily, that such questions have long been put to rest. Stories about a Securities and Exchange Commission investigation into his activities in the Harken Energy Company did surface briefly in previous Bush campaigns, including his 2000 race for president.

    But the recent wave of corporate scandals has reporters re-examining old SEC documents posted on the Web site of a Washington watchdog group, the Center for Public Integrity. Its director, Charles Lewis, says the documents demonstrate a certain "hypocrisy" in the president's current calls for corporate reforms.

    "Here he is lecturing Wall Street about corporate responsibility, including loans to themselves … when he himself was with a company that was skating on the edge of propriety," notes Lewis.

    Bush Got Loans of Type He Now Condemns

    In his Wall Street speech, President Bush called for "an end to all company loans to corporate officers." But back when Bush was a corporate director at Harken, he got the very loan deals he now condemns.

    In 1986 and 1988, those loans allowed him to buy 105,000 shares in the company at interest rates far below the prevailing prime rates. Such loans, while perfectly legal, are surely politically inconvenient in today's climate.

    Other questions involve allegations of insider trading when he sat on Harken's board of directors. In June, 1990, Bush sold about $850,000 worth of Harken stock. Two months later, the company revealed a quarterly loss of $23 million. The stock temporarily tanked.

    For more than two years, the SEC enforcement division investigated whether Bush sold his stock knowing that the company was about to report a huge loss. In the end, the SEC took no action.

    One internal memo says, "the vast majority of the [second quarter] loss was unknown to management, let alone to Bush." But other SEC documents criticize Bush for filing notice of his stock sale 34 weeks late.

    Aloha Accounting Maneuvers

    Over the years, Bush's explanations for that late filing — technically a violation of the law — have changed. In 1994, when he was running for governor of Texas, his campaign blamed the SEC for losing the notice.

    Now, the White House faults a "mix-up" among Harken's corporate attorneys; an explanation that government watchdog Lewis derides as a, "dog ate my homework," excuse. Adds Lewis, "It depends what day you ask him what the reason is why he didn't report promptly. "

    In light of his recent scolding from the bully pulpit, the most troublesome item from the president's past may be something known as, "the Aloha deal."

    In 1989, Harken Energy sold a big stake in Aloha Petroleum — a chain of gas stations in Hawaii. The buyers? Harken's own chairman, a company director, and other investors. They put up only $1 million and gave Harken an "IOU," for the remaining $11 million.

    But the company counted its paper profits on the insider deal — profits that were never realized — as income. That accounting maneuver, courtesy of the beleaguered accounting firm Arthur Andersen, allowed Harken to hide $8 million in losses at a time the company was struggling.

    PR Problem for President

    Albert King, vice chairman of Valuation Research Corp., an independent firm that measures corporate value, compares the Aloha transaction to accounting abuses at Enron, "At Enron, they did exactly the same thing. They sold assets to 'independent companies' that were essentially owned by Enron management and they reported a profit and it wasn't a real sale."

    The president, in a July 8th press conference, dismissed the Enron comparison. "In the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures." He cited "an honest difference of opinion" between Harken and government investigators.

    But in 1991, the SEC, in a rare move, forced Harken to restate its earnings — minus most of the Aloha transaction.

    The public relations problem for the president? He served on Harken's audit committee at the time. The White House and Harken Energy have so far refused to release minutes of meetings that Bush attended.

    Says Charles Lewis, "He either had knowledge of something that was essentially a shady transaction" as a member of the audit committee, "and if he didn't know, he should have known."

    For now, the White House strategy is clearly to treat the questions as stale crumbs dredged up from the dusty fields of West Texas. President Bush calls it "recycled stuff," "old politics," and adds that "There's no 'there' there."

    Perhaps the president is correct to categorize the allegations as old news. But his business past is relevant now precisely because the old stories make his new concern about corporate shenanigans such a hard sell.

    Methinks a bounce!,
    Im sticking with Gold
    go AOR
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