What shall we do for diversion now that the Winter Olympics are over? There are no more breathtaking ski runs and speed skaters to watch; no more kids in baggy pants aiming their snow boards for the sky; no more fraudulent figure-skating judges; no more tear-jerking TV bios of athletes who grew up without running water or indoor plumbing.
Two choices present themselves: One is the final chapter of campaign finance “reform”; the other is the widening saga of Enron-type collapses of erstwhile hot corporations. Followers of both can enjoy the fact that they intersect.
The House’s version of finance “reform,” the Shays-Meehan bill, much like last year’s McCain-Feingold bill in the Senate, passed the other day, warts and all. Senator Mitch McConnell (R-KY) is working to stitch together 41 votes with which to sustain a filibuster of the matching bill the Senate must now pass. If he succeeds, the bill can be amended, then sent to a Senate-House conference committee for reconciliation. There, the legislation’s worst feature, prohibition of certain “issue” ads 60 days prior to an election, could be eliminated, thus ridding it of this restriction on free speech. And, “coordination” between candidates and citizens could be clarified, lest the bill’s current arcane language prohibit an organization that had lobbied a member of Congress from running an ad for against that member during an election campaign.
Watching this debate on C-Span will not match the excitement of seeing a skater land on her derrière whilst executing a Triple Axel, but its outcome will have a great impact on the way political campaigns are conducted in the future.
Speaking of campaign finance, it turns out Senator McCain was the member of Congress who received the largest amount of money — $31,000—last time around from Global Crossing, the fiber optics telecom outfit that went belly-up recently. He said he was “tainted” by such contributions, along with everyone else who accepted their money. Will the campaign finance “reform” legislation prevent this kind of donation in the future? No, for this was “hard” money from Global Crossing PACs and individual executives. Hard money will be unaffected by the new law except that maximum allowable annual contributions to a candidate by individual donors will go up from $1,000 to $2,000. What a relief this must be to some members of Congress. They can be reformers and, at the same time, double their taint.
The Olympics crowded Enron into second place in media coverage, but not before former Enron CEO Kenneth Lay went before a Senate hearing to plead the Fifth Amendment. Prior to his actual statement we had a sort of living tableau in which the senators had an opportunity in front of the television cameras to emit a full hour’s worth of bipartisan gaseous pomposity.
The secondary shocks from Enron’s fall continue to be felt. At WorldCom, which owns the long-distance carrier MCI, word is out that the company — whose stock is now worth a sackful of coins per share — lent something on the order of $340 million to its chief executive, one-time whiz Bernard Ebbers. He’s selling a huge cattle ranch in Canada to raise cash in order to make a dent in the loan (the value of his WorldCom stock has dropped below the amount he owes).
At the annual meeting of the Disney Corporation a shareholder proposal to require the company’s auditors to be independent of any consultants received a remarkable 43 percent of the votes. Rarely do shareholder proposals in large corporations go above 20 percent. Ironically, Disney announced last month that it would no longer use PricewaterhouseCoopers, its auditors, as consultants, anyway. That was okay with PricewaterhouseCoopers for, like the other big accounting firms in the wake of the Enron collapse, it was already at work spinning off its consulting practice.
Curiously, corporate America could not see the obvious conflict of interest in using the same firms to audit books and provide management consulting. Juicy consulting contracts (it is said Enron paid Arthur Andersen $52 million a year) were a temptation for these firms to okay whatever creative accounting the client companies were engaged in.
Having grown up in a business climate in which CPAs were considered to be the soul of probity (and among the most respected folks in town), this writer was deeply disappointed — but not entirely surprised — to find that the ethics of major accounting firms had succumbed to corner-cutting. Alas, it now seems to have been inevitable in an age of moral relativism and after eight years of Clintonism (wherein the end always justified the means). What is surprising — and reassuring now — is the widespread public outrage and the sudden corrective surgery that is taking place. Caesar’s wife was on to something, after all.