- The Washington Times - Monday, July 15, 2002

Sen. Joseph I. Lieberman, Connecticut Democrat, said yesterday that the U.S. economy will suffer unless President Bush and Vice President Richard B. Cheney release more details of their actions as private-sector corporate executives.
"Because of the president's involvement in the Harken Energy case, there is a large cloud hanging over his head," Mr. Lieberman said on ABC's "This Week."
"I am afraid if he doesn't eliminate it soon by giving full disclosure, [the suspicions] will diminish his moral authority his presidential authority to lead the critical effort to restore confidence in the [stock] market."
Stock markets have been faring badly in recent months. The Nasdaq Composite Index and the Standard & Poor's 500 Index hit five-year lows last week, and the Dow Jones Industrial Average closed the week at less than 8,700, a level not seen since shortly after the September 11 terrorist attacks.
Mr. Lieberman joined a chorus of Democrats calling for the president to ask the Securities and Exchange Commission to release its files on Mr. Bush's 1990 sale of more than 212,000 shares of Harken Energy Corp. stock while he was a director there. Two months after he sold the stock, Harken announced a $232 million loss.
Mr. Bush delayed reporting the sale, but a resulting SEC insider-trading investigation found no evidence of wrongdoing. Although Harken did announce some losses, the Los Angeles Times reported yesterday, the company's stock did not collapse after the announcement.
The SEC also is investigating accounting practices related to cost overruns at Halliburton Co., an energy trading firm in Texas, while Mr. Cheney was its president and CEO.
In an interview made public yesterday, the current CEO of Halliburton said Mr. Cheney knew the company was posting cost overruns as revenue when he ran the oil-services company, one of the practices for which Halliburton is under SEC investigation.
"The vice president was aware of who owed us money, and he helped us collect it," David Lesar told Newsweek magazine.
Mr. Lieberman also attacked the vice president's role at Halliburton, saying yesterday that "whereas the president's disclosures, so far, on Harken Energy have been inadequate, the vice president's disclosures regarding Halliburton have been nonexistent."
"I just think that the longer this goes on, the worse it's going to be for the administration, but, more to the point, the worse it's going to be for our economy," Mr. Lieberman said. "Every day that the market drops and individual investors lose millions of dollars is another day crying out for the kind of restoration of confidence that has to come from the very top of our government as well as from the very top of the American business community."
Both the White House and one of Mr. Bush's Cabinet members dismissed Mr. Lieberman's words as political posturing.
"This is nothing but political garbage that the American people are sick and tired of," Secretary of Commerce Donald L. Evans said on "Fox News Sunday" when asked about continued demands by Democrats that Mr. Bush release the 11-year-old SEC records.
White House spokesman Scott McClellan said, "All relevant SEC documents have been shared with the media. This is 10 years old. It's been used by [Bush] opponents in every campaign. The SEC said long ago it looked into it, and there was nothing there."
But Mr. Lieberman yesterday reiterated his opposition to counting the value of stock options as expenses, a measure experts such as Federal Reserve Chairman Alan Greenspan and millionaire investor Warren Buffett say is needed to address what they say is at the root of corporate scandals.
Coca-Cola said yesterday that starting in the fourth quarter, it would count stock options as expenses.
The fixation of executives with maximizing short-term profits, often at the expense of long-term growth, was heightened during the 1990s by generous grants of options to sell company stock. The grants were used as a way to tie executive compensation to company performance and companies were not required to deduct them as expenses in their financial statements.
As a result, taking a gamble such as using aggressive accounting tactics to prop up the stock price can pay off richly for executives. Also, the down side has been limited because the executive cannot lose money, as he never had to pay for the stock and does not have to "sell" the option.
Mr. Lieberman made his charges on the eve of a visit by the president to Birmingham, Ala., for a roundtable discussion on the economy. Mr. McClellan confirmed a Fox News report that the president will stress that, despite market struggles, the economy is fundamentally sound.
Mr. McClellan said Mr. Bush will be "focusing on solutions" to the market problems, such as "pro-growth" initiatives he has already implemented and others he believes are necessary.
He said the president will also discuss "corporate governance reforms" he's seeking to prevent situations where top executive of firms on the verge of bankruptcy were left with millions of dollars, while others kept in the dark about the company's fiscal status were wiped out financially.
Mr. Evans said in several news talk shows yesterday that the economy is on the rebound despite the stock market's losses.
"We're seeing the signs of a recovery, a pretty healthy recovery and I'm optimistic that will continue," the commerce secretary said on Fox. "We had strong first-quarter growth; the GDP grew 6.1 percent in the first quarter and I think there are a lot of positive indicators in the economy right now."
Asked why Wall Street is tanking, Mr. Evans said the stock market and the economy "aren't always in sync and right now they happen to be a little out of sync."
"I think the stock market will soon follow."
Harvey Pitt, the embattled SEC chairman, whose ouster is being sought by some in Congress who believe he is too cozy with big business, also appeared on political discussion shows yesterday and vowed to remain in his position.
"I'm the right person for the job," he said on NBC's "Meet the Press." "This guilt-by-occupation is really a needless diversion."
"I'm beholden to no one," Mr. Pitt said. "I represent the American people."
President Bush said last week that he remains firmly behind Mr. Pitt, and Mr. Evans said yesterday that the SEC chairman is doing a "terrific" job.


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