Daily Archives: December 13, 2006

Ready to be Enron-ed Again?

Well, it’s official: the Bush Administration and Alberto Gonzales’ Justice Dept are ignoring the lessons of Enron and WorldCom and TyCo and Adelphia and Arthur Anderson and all the other financial pirates who scammed $$$Billions$$$ from investors and treated the law as if it were a minor inconvenience to be dodged whenever necessary and without consequences. The JD has announced a regulatory rollback to make it harder for prosecutors to take crooked corporations to court. And in one for the books, Dep Atty Gen Paul McNulty admitted openly that the rule change was being done because business had demanded it.

The Justice Department announced new rules yesterday that will make it harder for prosecutors to bring criminal charges against companies, bending to intense pressure from business groups that claim the government has overreached in its pursuit of financial malfeasance.In presenting the revised rules, Deputy Attorney General Paul J. McNulty called the changes a substantial and direct response to a lobbying drive by the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Association of Criminal Defense Lawyers, among others.

Since devastating bankruptcies at Enron and WorldCom prompted Congress to pass a stringent corporate accountability law four years ago, business interests increasingly have pushed back on efforts to police their operations, arguing that the government has imposed too many costs on companies with too few benefits for investors. (emphasis added)

In essence, prosecutors all over the country will now have to ask permission of their Washington bosses – Gonzales and McNulty – before they will be allowed access to information the corporation considers “private”.

The new concessions focus on the sensitive issue of when prosecutors can force companies to waive their legal rights to protect e-mail messages and other internal communications, essentially instructing government lawyers that they must jump through additional hoops before winning access to information they desire. Previously, prosecutors could consider the failure to waive those rights in deciding whether to charge a company with a crime.

Here’s the problem: those “rights”? They don’t exist. Under the law, contrary to common belief, corporations are NOT people – they don’t have “rights’, they have “privileges” granted by the state which can be abrogated or cancelled at any time for any reason the state chooses, within reason, and suspicion of criminal activity would certainly be a good reason.The idea that corporations have “rights” in the same way that people do has built up over the years not as law but as custom, with the corporations doing everything in their power to convince everyone, especially lawyers, that their so-called “rights” have the force of law. With compliant puppets like McNulty in every administration since Rutherford B Hayes, they haven’t had to work very hard. They complain, they demand, and the McNultys rush to comply.

What’s going on here isn’t all that hard to figure out – the corporatocracy is sweating bullets because they’re expecting mega-trouble from the newly-elected Democratic Congress (not “Democrat” Congress, as Bush said, a neoconservative grammatical change intended as an insult) over the liberties they’ve taken with the law since Bush’s election. They want cover.

And the Bush Administration is only too willing to oblige. Lest one think it’s just McNulty, the NYT notes:

Last month, the Committee on Capital Markets Regulation, an independent group formed with the blessing of Treasury Secretary Henry M. Paulson Jr., called for a sweeping overhaul of securities market rules, including greater protection of companies, their directors and employees, and their outside auditors from regulators, investigators and civil suits.At the same time, there are growing calls to scale back the Sarbanes-Oxley Act of 2002, the legislation aimed at increasing corporate accountability in the aftermath of the Enron collapse.

What a difference a couple of short years makes. We, the public, have supposedly forgotten all about those halcyon days when corporations ran wild and racked up a lot of loot with the stroke of a pen, stealing from the treasury, from investors, from the public (California? Remember?) and are ready to sit idly by while the corporatocracy re-creates its glory days by shoving the putative regulators aside yet again. So, before the new Congress sits, they wanted the regs changed in their favor. And they got them.Money, after all, talks. Hell, in America, it screams. And there’s a lot of moolah to be made out there. Goldman Sachs, an investment brokerage specializing in guiding mergers and acquisitions, repoorted a – wait for it – 93% profit! For the year? No, no, no, no. In the last quarter. Three months. Their earnings weren’t reported but they can be guessed at: Goldman’s expecting to hand out bonuses – bonuses – totaling $$$16.5 Billion. That’s Billion with a B. In one brokerage house. Who wouldn’t want a piece of that? And be willing to do anything to get it?

So the corporatocracy is attacking quickly on all fronts through its employees in the Bush Administration. Besides ordering McNulty and Paulson to back off, they got the new GSA Administrator to cut the agency’s inspector-general program, laying off govt inspectors and outsourcing them to the private sector.

The inspector general is one of the independent watchdogs created by Congress to make sure taxpayers get their money’s worth from mammoth agencies like the G.S.A. But the G.S.A. chief, Lurita Alexis Doan, plans a $5 million cut for the inspector’s office, aiming to replace some government auditors with hires from the private sector. Ms. Doan, who was appointed by President Bush, arrived from the private sector herself as a dynamic company executive vowing to wield a cost-effective broom.

Uh-huh. Sure. This is about saving money, is it? Odd about the timing, though. Odd that entirely different members of the Bush Admin from entirely different depts are all making the same corporate-friendly moves in the same week – the first week of the Congressional recess.

Wake up, people. The corporatocracy’s getting ready to Enron us again.

addendum: The SEC joined the crowd today and relaxed its rules like everybody else.

Securities regulators unanimously embraced a plan that they said would slash costs and restore common sense to an audit rule attacked as too expensive by business groups and lawmakers.

The Securities and Exchange Commission voted 5 to 0 yesterday to instruct corporate managers to focus their reviews on the areas that pose the greatest risk of fraud on financial statements.

Congress required executives and auditors to scrutinize corporate financial controls in the 2002 Sarbanes-Oxley Act, which was passed after huge frauds at Enron and WorldCom. The rule, which cost businesses millions of dollars more than regulators anticipated, has been a lightning rod almost ever since, becoming what SEC Chairman Christopher Cox called “the single biggest challenge” in the accountability law.

SEC staff members said that under the new proposal, they would urge corporate managers to use their best judgment in evaluating controls, rather than requiring them to scrutinize specific things such as the integrity of executives and the accuracy of petty cash accounts. But, rejecting an approach advocated by some business interests, regulators refused to create special exemptions for small companies. Instead, they said their plan encourages managers to develop tailor-made reviews based on the size and complexity of their businesses.

That little phrase – “their best judgment”? That’s what they were doing before that got them in so much trouble. Arthur Anderson’s managers claimed – in court – that they were using “their best judgment” when they signed off on Enron’s illegal deal-making.

So is it official now? A mob of corporate lobbyists have pushed us back to where we were in the EnronTime? Damn close….