The Differentiating President
George Bush makes a fool of himself as a moral apostle
by Thomas Kleine-Brockhof
[This article originally published in: DIE ZEIT, 30/2002 is translated from the German on the World Wide Web, www.zeit.de/2002/30/Wirtschaft/print_200230_bush_cheney.html.]
When George W. Bush now sets out to protect America's capitalism from capitalists, he quickly runs into a delicate problem, namely a manager and oil man named George W. Bush. When he looks around in the circle of his friends, he sees as many former top managers as any president before him. This would not be so bad if some of the government millionaires didn't have so much experience with those accounting tricks and stock options for executives that now should be abolished. The problem begins here with the credibility of a government and the congressional election in the fall.
No one opposes George Bush when he announces stronger prison sentences for criminal managers and a special commission to hunt for business gangsters. However many in the country ask whether the people in the White House embody that "new ethic of responsibility" that should now mark America's business world. Bush and how own seem to call to businessmen: Do as we say, not as we do. Since the president gave his address, details about earlier business deals of the current residents of the White House regarding the Halliburton and Harken firms are made known daily.
Halliburton sells services around oil and is now subject to an investigation by the Securities and Exchange commission. Did the firm reinterpret costs into profits? The Securities and Exchange commission will question Halliburton's former top executive, Richard Cheney. The Vice-President hasn't commented but rather his successor, David Lesar. This man caused problems for Cheney this week. He was quoted in Newsweek that the vice-president knew of the firm's accounting methods. If Halliburton's profits were partly fantasy, Cheney's wealth amounts to a charade to the burden of investors.
The current vice-president earned $45 million in five years with Halliburton, two-thirds when he left and pocketed the profits from his option notes for company shares. The stock price was wondrously high in August 2000 thanks to accounting cosmetics, four times higher than today. In the meantime, Halliburton dismissed 18,000 employees. Congressional representative Henry A. Waxman, a democrat, urges Cheney to deposit his option profits in an equalization fund for released workers "as a sign of personal responsibility". Cheney has not responded.
That he cannot march through the country as an apostle of business morality is logical but also a catastrophe for his administration. George Bush alone must play this role although he is a miserable actor. The president now demands that firms no longer be bankers of their managers or give credits for purchasing the firm's stocks.
Thus the top executives had an interest in the pseudo-profits of their firms... The businessman George W. Bush once received credits that should now be abolished. This was as an advisor of the firm Harken Energy Corp. The credit to buy the firm's shares amounted to $180,375. Other ingredients of present scandals can be found in George Bush's business deals. As a member of the board of directors, he had a balance sheet showing dubious profits. In 1990, he sold his own shares just before the firm announced massive losses and the stock price temporarily collapsed. The Securities and Exchange commission began an investigation on account of suspicion of insider trading. Bush said he only sold them to redeem a credit, not on account of threatening losses. The Securities and Exchange commission believed the son of the former president without even interrogating him.
Considering daily disclosures, the president sees himself forced to explain several things. In the case of Harken, an "honest difference of opinion" occurred between the Securities and Exchange commission and the firm, Bush said, not a balance falsification. "In the business world", Bush lectures, "there are things that are not simply black or white." This amuses some in Washington who endured for months Bush's motto of a crystal-clear battle, a "with us or against us". Bush discovers differentiation or discernment in his own affairs.
Nothing recalls the great gestures of his predecessor, the Republican Theodore Roosevelt who set out to break the power of the cartels or the verve of the Democrat Franklin D. Roosevelt who invented the Securities and Exchange commission. George W. Bush believes there is no fault or defect in the system, only a few wicked rascals in management. Therefore his proposals only aim at the prosecution of evil-doers. In contrast, Congress sees itself as a decisive reformer. With a Soviet-sounding poll result, the Senate on Monday agreed to a bill that regulates more strongly than Bush's own proposal. The association of institutional investors appears pleased. The new law, if it survives in the hearings, will generate "more objective audits and examinations". Then the president must agree to a law that goes too far for him.
The democrats are jubilant. They found their theme for the congressional elections in November. Their populist diagnosis is that America is in the stranglehold of mammoth corporations led by a CEO president. How strange! Didn't the democrats snuggle up to the Internet firms in the nineties and agree to all the deregulation proposals of the republicans? For them, the misdeeds of America's top executives occurred in the term in office of Bill Clinton. Their motto was "Everything is possible". According to this version, a direct way leads from the sperm spot on Monica Lewinsky's blue dress to the cooking the books scandals. Still America has found a second political theme for the fall besides terrorism. the motto of Bush's predecessor in office applies again: "It's the economy, stupid."