Posted on 14-11-2002

They're Still A Bunch of Crooks
By William Rivers Pitt*


Amid the din of news stories on Tuesday about bin Laden tapes, Iraq nerve
gas and Homeland Security deals, a man named William H. Webster quit his
job. Webster had enjoyed a distinguished career to that point, having
served as director of both the Central Intelligence Agency and the Federal
Bureau of Investigation. Not long ago, he was hired to head the Public
Company Accounting Oversight Board, a recent creation of the Security and
Exchange Commission. This board had been commissioned to police the
accounting community, and the business community by proxy, in the aftermath
of the astounding Arthur Andersen scandal.

Problems arose when it came to light that Webster had served as head of the
audit committee for a company named U.S. Technologies. Inc. U.S.
Technologies currently stands accused of securities fraud, a charge enjoyed
by a number of Arthur Andersen's former corporate clients, including Enron
and WorldCom. When Webster was nominated for the Oversight Board position
on October 25th, two of the five S.E.C. commissioners tasked to approve his
nomination voted against him, claiming he was unqualified. This was before
they knew about U.S. Technologies. Webster admitted the connection one week
after he was confirmed, and was hounded until his resignation this past
Tuesday.

The fellow who nominated Webster for the position, and subsequently failed
to disclose the U.S. Technologies connection to the approving
commissioners, has also quit his job. Like Webster, S.E.C. chairman Harvey
Pitt quit amid the grinding roar of other news stories. Pitt resigned on
November 5th, the day of the midterm elections. In fact, the announcement
of his resignation came as many of the heavy election returns were coming
across the wires at CNN and MSNBC. The story rumbled for perhaps and hour
and was swept aside.

Pitt was controversial from the moment he arrived at the S.E.C. Before
accepting the chairmanship on August 4, 2001, he had served as a prominent
attorney for the Big Five accounting firms, including Arthur Andersen. Many
feared that the fox had been given the keys to the henhouse washroom.

When the Enron/Arthur Andersen scandal erupted some four months later, Pitt
found himself squarely in the middle of things. His was the agency mandated
to watchdog the kind of fraud Enron perpetuated, as well as the kind of
malfeasance Arthur Andersen tried to cover up when they shredded bales of
Enron documents. The irony of it all is that, in his previous life as an
attorney, Pitt would almost certainly have been part of the legal team
defending Arthur Andersen against prosecution. Pitt flatly denied any
conflict of interest and refused to recuse himself from the matter, hanging
on grimly to his post until election night, when his well-timed resignation
was lost amid the avalanche of election returns.

If a tree falls in the forest and the media refuses to report it, did it
actually happen? Of course. Ask the tree.

The double-barreled resignations of Pitt and Webster are an unmistakable
sign that the corporate scandals which have dogged the administration and
brutalized the stock market remain perched like the raven above George W.
Bush's door. The fact that compromised individuals like Pitt and Webster
were entrusted with such important positions speaks volumes about the
priorities and ultimate loyalties of the Bush White House.

It was widely reported after the Enron scandal broke that Pitt had, in
fact, been chosen for his S.E.C. position by Enron CEO Kenneth Lay because
of Pitt's widely-known disdain for corporate regulations. Lay was Bush's
largest financial contributor, going all the way back to the days when Bush
called the Texas Governor's mansion home. Lay gave Bush the use of Enron
corporate jets during the 2000 campaign and contributed $1.8 million to the
Republicans during that race.

Why is this important? That tree fell in the forest a while ago, and the
media got bored of it when war on Iraq was brought to the table. Now that
the Republicans control Congress, won't all of this be swept tidily under
the rug?

Don't bet on it. The Republicans may control Congress, but they surely do
not control the sovereign state of California, nor do they control its
Attorney General, a Mr. Bill Lockyer. Lockyer is spearheading something
called the Energy Task Force. This task force of 85 attorneys has been
given a $9.7 million budget. Its purpose is to discover exactly how Ken Lay
and Enron bilked California ratepayers out of $8.9 billion by rigging the
electricity grid and energy trading markets during the 2000-2001 energy
crisis. Currently, his group is sifting through 400 boxes of Enron
documents and 400 fully stuffed computer disks for evidence. They have, to
date, filed over 70 legal actions against Enron and its subsidiaries before
the Federal Energy Regulatory Commission.

The Attorneys General of Washington State and Oregon are cooperating with
Lockyer's investigation, because California's energy woes in 2000 and 2001
spilled into their states. Oregon suffered 40% increases in energy rates
during the California crisis, and Washington saw the price per megawatt of
energy spike from $30 to $3,000 at one point. Both states are conducting
their own investigations into Enron and its subsidiaries.

Most interesting of all is the matter of Tim Belden. Mr. Belden was a top
Enron energy trader out of Oregon who pleaded guilty in October to criminal
manipulation of markets. Mr. Belden is cooperating with investigators, and
the information he is divulging is expected to lead to other arrests, other
prosecutions, and further investigations.

Mr. Pitt is gone, and Mr. Webster is gone. Daschle is no longer Majority
leader, Gephardt has basically ceased to exist, and Congress belongs to the
GOP. Bill Lockyer of California, however, holds the keys to the kingdom,
and he is working nights. Tim Belden is there with him, singing like a bird.

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* William Rivers Pitt is a teacher from Boston, MA. He is the author of two
books - "War On Iraq" (with Scott Ritter) available now from Context Books,
and "The Greatest Sedition is Silence," available in April 2003 from Pluto
Press