- The Washington Times - Friday, November 1, 2002

The Securities and Exchange Commission started an investigation into the selection of William Webster to head an accounting-oversight board after the disclosure that Chairman Harvey Pitt concealed information about Mr. Webster from fellow commissioners.
The investigation by the agency's inspector general, Walter Stachnik, was requested by Mr. Pitt, already besieged with calls for his resignation, and other commissioners, SEC spokesman John Heine said.
Commission spokeswoman Christi Harlan said the internal investigation was "the normal route" for such inquiries. "This is simply a look at the process, and it is not a review of Judge Webster," she said.
The White House firmly backed Mr. Pitt, even as spokesman Scott McClellan acknowledged, "We don't know the facts." He said the administration did not learn that Mr. Pitt had reportedly withheld information until it received a phone call from a reporter.
Top Democrats renewed calls for Mr. Pitt's resignation.
"Mr. Pitt not only deprived his fellow commissioners of vital information about one of the most important appointments they would ever make, he knowingly endorsed a candidate for chairman of the accounting-oversight board without seriously investigating the matter," said House Democratic leader Richard A. Gephardt of Missouri. "I again urge President Bush to ask Harvey Pitt to step aside from his post today."
"President Bush made this unfortunate appointment. He should fire him," Rep. Edward J. Markey, Massachusetts Democrat, said of Mr. Pitt.
Mr. Bush stood by Mr. Pitt.
"Chairman Pitt has done a good job in cracking down on corporate wrongdoing, and the SEC has a very strong record under his leadership," said Bush spokeswoman Claire Buchan. "We support him."
Miss Harlan confirmed the request for the investigation in the wake of a revelation that Mr. Pitt had failed to tell other commission members in advance of last Friday's SEC vote that Mr. Webster had headed an auditing committee of a company facing fraud charges.
A sharply divided SEC approved Mr. Webster's appointment that day. The two Democrats on the commission had supported another candidate whom they believed would advocate tough regulation of the accounting industry.
In an interview with the New York Times, Mr. Webster said he told Mr. Pitt and Robert K. Herdman, the SEC's chief accountant, days before the vote that he had headed the auditing committee for U.S. Technologies, a company facing lawsuits by investors claiming fraud.
"I told them that people are making accusations," Mr. Webster told the newspaper. "I said if this is a problem, then maybe we shouldn't go forward."
He said he was assured by Mr. Pitt that SEC staff had looked into the issue and that it would not pose a problem.
U.S. Technologies' former accounting firm, other members of the auditing committee, company executives and investors told the Times they were never contacted by anyone at the commission about Mr. Webster's appointment.
Mr. Webster said he called Mr. Pitt again on Monday, three days after he was appointed, saying he had heard during the weekend that a government probe had been opened to investigate potential fraud by the chief executive of U.S. Technologies, C. Gregory Earls. Mr. Pitt did not tell the other commissioners about the Monday conversation either, SEC officials told the Times.
The SEC auditing-oversight board was created by legislation inspired by accounting scandals that led to the financial debacle at Enron, WorldCom, Global Crossing and other large companies. It was designed to supervise and discipline the accounting industry.

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