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Accounting watchdog appoints old crony
Dirty deals at the SEC

By Eric Ruder | November 8, 2002 | Page 2

GEORGE W. BUSH sent a goat to guard the lettuce. Last year, Bush appointed Harvey Pitt--one of the accounting industry's top lawyers--to head the Securities and Exchange Commission (SEC). Then Enron collapsed, thanks in part to book cooking overseen by Arthur Andersen, and Pitt was suddenly faced with demands for a housecleaning among his old clients.

But that hasn't stopped him from helping out when he can. Take, for example, a new panel created to make sure that the accounting industry adheres to "ethical standards."

Pitt seemed about to appoint John Biggs, an industry critic, to head up the new panel. Biggs even quit his job in anticipation of taking the position. But then Pitt got some phone calls from industry pals--who thought that Biggs would be "too aggressive."

The offer to Biggs was withdrawn, and Pitt pushed the five commissioners of the SEC to vote instead to nominate William Webster, the former director of the CIA and FBI. But Webster is knee-deep in accounting scandals of his own.

Until July of this year, Webster led the audit committee of U.S. Technologies, a dot-com bomb now being sued by investors for fraud. Pitt knew about all of this because Webster told him. But Pitt was so desperate to confirm Webster as an alternative to Biggs that he hid the information from the other SEC commissioners.

At one point there were three separate investigations into Pitt's handling of Webster's nomination--including one ordered by Pitt himself! Until, of course, Pitt was finally forced to resign on November 5. Pitt is a prime example of the Bush administration's buddy-buddy relationship with Corporate America.

So far, about 1 million Americans have lost their jobs in the torrent of corporate scandals, and retirement accounts have taken a $175 billion hit. How much more havoc will the Bush gang wreak before they're through?

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