It doesn’t sound good, when President George W. Bush’s outright condemnation of US corporate malpractice is still echoing around the world’s airwaves, to have the president himself accused of skulduggery over a share sale.
The first thing to note, however, is that the allegations come from a bitter political rival, Democrat leader Sen. Tom Daschle. The second is that the Securities and Exchange Commission at the time mounted an investigation into the 1990 share sale and found Bush innocent of any wrongdoing. Nevertheless, their decision still surprises many stock market professionals. Bush was a director of a Texas oil company that had hit bad times. Two months before the business announced a $23 million quarterly loss, Bush sold shares worth almost $850,000, whose value was to fall when the investing public heard the results. Bush’s case has not been helped by the White House admission that the documents relating to this sale, which in the normal course of events ought to have been filed immediately, was not in fact submitted until the following year, over eight months late. Matters have been made the murkier by the White House spokesman putting the blame on the oil company’s lawyers, while the president himself has maintained that the SEC lost the papers.
Twelve years back is a long time to ask a man to dredge his memory. However, Bush was surely incautious to blame the SEC for the mix-up. At the very least, this powerful body, already under fire over the Enron, WorldCom and Xerox debacles, will go to any lengths to refute, if it can, the president’s claim that the delay was its fault. And who, one may rightly wonder, briefed the president’s spokesman with a completely different explanation ? Daschle has been calling on the SEC to release all the papers relating to the 1991 insider-dealing investigation. Bush’s claim of SEC error is likely to make such a release more, rather than less, likely. Once those documents are in the public domain, every allegation, however untrue it later proved to be, will be mulled over by the media and Democrat politicians will have a field day, dominating the headlines with demands for further documentary release.
Democrats will be in no mood to be merciful. This will be payback time for the relentless Republican campaign against Democrat President Bill Clinton over the Whitewater affair. It may make for entertaining Washington political knockabout, but, unfortunately, there are important issues at stake here which could be seriously damaged in a political bare-knuckle fight. Corporate America, the world’s economic powerhouse, stands suspected of cooking the books. At a time like this, the world wants to know that America has a president who really means it, when he says he is going to stop the rot and crackdown on corporate cheats. But that president is not going to be believed, if he himself stands accused of illegal behavior.
So far, the White House has made a poor job of explaining away Daschle’s allegations. Unless it can do better and soon, the SEC papers into the original investigation may well have to be published. The subsequent fuss will derail any chance of Bush himself cracking down on corporate lies. That could prove a tragedy, not just for Americans, but for investors everywhere.
