- The Washington Times - Saturday, October 26, 2002

From combined dispatches

The Securities and Exchange Commission, bitterly divided on party lines, voted yesterday to name former FBI and CIA chief William Webster as head of a new board to oversee the scandal-plagued accounting industry.

The 3-2 vote for Mr. Webster at a public meeting came after rancorous discussion among the five SEC commissioners. The two Democrats were angry and disappointed because they had supported another candidate widely viewed as advocating tough regulation of the accounting industry.

The dispute split the SEC just when it is being called on to resolve a massive wave of accounting scandals in big companies that rattled Americans' confidence in the stock market and corporate integrity.

Democrats on Capitol Hill condemned SEC Chairman Harvey Pitt for pushing through the Republican candidate. Senate Banking, Housing and Urban Affairs Committee Chairman Paul Sarbanes, author of the legislation creating the accounting board, said Mr. Pitt should step down.

"Chairman Pitt failed to build a consensus within the commission as he publicly promised he would do for a strong oversight board that would command instant respect by the investing public," said the Maryland Democrat.

Roel Campos, one of the two Democrats on the commission, said the selection of Mr. Webster feeds the perception that the SEC has been influenced by the accounting industry.

He said the new five-member oversight board is being "born with a scar" because it was "subjected to the approval of the accounting lobby."

The board "will begin in a deep hole," said Mr. Campos, who along with Commissioner Harvey Goldschmid had supported pension fund head John H. Biggs for the job.

Mr. Campos also raised the possibility of a legal challenge against the new board, which he said would hamstring it. He did not say who or what group might bring the legal action.

The beseiged Mr. Pitt made an emotional defense of his choice of Mr. Webster. He accused Mr. Campos of citing a lobbying effort against Mr. Biggs by the accounting industry while he, himself, had made "an intense lobbying effort in favor of Mr. Biggs."

"I am fiercely independent. I am beholden to no one," Mr. Pitt insisted, his voice breaking at times.

No one from the accounting profession, the Republican Party or the Bush administration had sought to influence his judgment, he said.

Mr. Webster has, in fact, been criticized for knowing little about the arcane profession of accounting.

"I am not an accountant; I do not pretend to be an accountant," Mr. Webster told reporters after the vote. "I'll bring whatever skills I have to achieve a system that has the confidence of the American people."

Mr. Pitt this week asked Mr. Webster, now in private law practice, to consider taking the job. Mr. Pitt and the other two Republican SEC commissioners then decided to name Mr. Webster.

Mr. Goldschmid and Mr. Campos supported Mr. Biggs the chairman of TIAA-CREF, a teachers' pension fund that is one of the nation's largest. Mr. Pitt had recently informally offered him the job, but opposition from the industry and Republican lawmakers was said to have prompted withdrawal of the offer.

Also selected as members of the new oversight board were Daniel Goelzer, a former SEC general counsel; Kayla Gillan, a former official of the California state pension fund; Willis Gradison Jr., a former Ohio congressman; and Charles Niemeier, chief accountant in the SEC's enforcement division.

The board, to be independent of the industry, was established in a new law enacted this summer in response to the wave of company accounting scandals that shook public confidence in the stock market and the integrity of corporate America.

The vote comes about a year after the scandal at now-bankrupt Enron Corp. first came to light. Enron's longtime auditor, the Arthur Andersen firm, was convicted in June of obstructing justice for shredding Enron audit documents.

Democratic leaders have accused Mr. Pitt, a Republican appointed by President Bush, of blocking Mr. Biggs. Mr. Pitt once represented Wall Street's big players and all Big Five accounting firms as a private securities lawyer.

Mr. Webster did not return a telephone call seeking comment. Mr. Biggs could not be reached for comment; his spokesman has previously declined comment on the issue.

The new oversight board will be invested with subpoena authority and disciplinary powers and financed by fees from publicly traded companies.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide