Bush Fraud Squad Gets It On
The Bush administration's task force on corporate fraud met for the first time Friday at the Justice Department, with Attorney General John Ashcroft in attendance, according to a U.S. official.
The group, headed by Deputy Attorney General Larry Thompson, was summoned to meet with President Bush later in the day in a closed session at the White House.
At the Justice Department, the task force talked about the mission and goals the president laid out and discussed further meeting possibilities.
Bush established the task force Tuesday, and gave Thompson until July 19 to convene its first meeting. But in a surprise move, the president decided to hold the first session before week's end and to include a meeting at the White House.
That ensures the president gets maximum credit for taking action. Photographers were permitted to capture and distribute images from the meeting, but reporters were barred.
The task force's members also include Treasury Secretary Paul O'Neill, FBI Director Robert Mueller, Securities and Exchange Commission Chairman Harvey Pitt and the heads of the Federal Energy Regulatory Commission, the Federal Communications Commission and the Commodity Futures Trading Commission.
Pitt has been under fire for his ties to the accounting industry in recent days, and absent from Washington, reportedly on vacation. It wasn't clear whether he was attending Friday's meeting.
On Wall Street Tuesday, Bush described the new task force as a SWAT team for cracking down on accounting and other business wrongdoing. The executive order he signed creating it described it in more reserved terms: It is to "provide direction" on pursuing corporate fraud and make recommendations to Ashcroft and Bush on how to enhance cooperation between agencies and improve corporate-crime policy.
Bush urged the business leaders to let their consciences be their guides in the board room, and he outlined proposals for tougher penalties for fraud.
The speech did little to boost stock markets, and lawmakers of both parties moved to outflank the president with more aggressive proposals. For example, the Senate this week endorsed stiffer prison terms than Bush called for, and an extension on the timeframe in which investors could sue corporations that defraud them.
Sen. John McCain, R-Ariz., has called for Pitt's resignation and has proposed requiring companies to count executives stock options as an expense against earnings. Otherwise, investors will continue to get misleading information on companies' true financial performance, he said.
Bush's task force meeting was designed to show an aggressive response on an issue where he could be vulnerable politically. Democrats charge Bush's own record as a businessman, and the tide of donations from corporate America that helped carry him to office in 2000, undercut his credibility as a reformer.
They have seized on his performance as a director of the Harken Energy Corp., where he flouted some of the very proposals he outlined Tuesday.
He called on corporations to stop loaning officers and directors money, though he borrowed some $180,000 from Harken. Bush called on corporate leaders to promptly report their transactions of company stock, though he waited eight months to report a sale of Harken stock.
On a fund-raising trip Thursday to Minnesota, Bush got a taste of how thorny a political issue the corporate scandals could be this election year. He flew to Minneapolis to raise money a second time for Norm Coleman, the White House's hand-picked candidate to unseat Sen. Paul Wellstone, D-Minn.
But Wellstone's campaign pounced on the front-page stories that renewed questions about Bush's corporate history to charge that Bush and Coleman are both too cozy with big business.
Twice this week, Coleman has returned campaign donations from major corporations plagued by accounting scandals — Global Crossing and WorldCom.
Coleman works for a legal and lobbying firm that lists many corporations as clients. His list of political donors is heavy with businessmen and corporate political action