Who'll stop the corporate crime wave?

The Bush administration can't be trusted to crack down on behavior its leaders once indulged in.

By Arianna Huffington
Published July 10, 2002 1:18AM (EDT)

Every scandal, it seems, produces at least one classic and defining euphemism -- a judiciously chosen word or phrase diligently employed to sugarcoat the sour reality at hand.

In Watergate, it was press secretary Ron Ziegler's mechanical assertion that all his previous statements were "inoperative." In Vietnam, it was the military's use of "friendly fire" to soften the dreadful truth of soldiers killed by their own side.

And now we have corporate America's glittering contribution: "restatement of earnings." It sounds so benign. Possibly even a good thing. Earnings are good, after all. And "restating" is just the boardroom equivalent of asking for a do-over on the playground. It connotes a slip of the tongue, a wrongly chosen word, a failure to carry the 1 when doing your math homework.

What it doesn't sound like is, well, what it is: out-and-out fraud involving the fleecing of billions of dollars from shareholders and pension funds.

But that's the beauty of our endlessly flexible English language: Defrauding investors to the tune of $3.8 billion, as WorldCom did, can be passed off as nothing more than a harmless "earnings restatement." This same linguistic legerdemain allowed Xerox to lie to shareholders about $6.4 billion in revenue and present it as "a restatement."

Indeed, a Xerox spokeswoman blithely dismissed the accounting scam, saying: "There's no revenue that is going away. It's just going from one place [in Xerox's books] to another." But be forewarned: That level of weasel wordplay is for professionals only. If you don't believe me, just try saying something like that to the IRS the next time you decide to shift some moolah from the "income" to the "deductions" side of your tax return.

Of course, the reason these companies can get away with both the euphemisms and the fraudulent practices they seek to hide is because the government clearly doesn't take corporate crime seriously. How else can you explain the fact that Xerox, which was hit with a $10 million fine -- the largest financial penalty ever levied by the SEC -- did not even have to admit any wrongdoing?

The rapacious shareholder swindles perpetrated by WorldCom and Xerox are merely the latest outbreaks of an epidemic of fraud. Restatement of earnings has become the Ebola virus of corporate America, with close to 1,000 U.S. corporations restating their earnings since 1997. (Which means, I suppose, that Xerox could argue that it was merely copying others.) And Wall Street expects a flood of restatements in the next few weeks as CEOs scramble to come clean before a new rule takes effect in mid-August forcing them to swear under oath that their company's books are accurate.

And how is the Bush administration responding to this corporate crime wave? Apparently by screening a lot of classic movies at the White House.

Watching the president unleash his newfound "outrage," coming after months of silence and ho-hum shrugs, conjures up the image of Louis, Claude Rains' police chief in "Casablanca," announcing that he is "shocked, shocked!" to find that gambling has been going on in Bogie's joint -- just seconds before picking up his winnings from the previous night.

After all, phony-baloney accounting tricks at Harken Energy helped Bush collect winnings -- make that "earnings" -- of $848,560 in 1990 on an insider transaction his father's SEC investigated but ultimately declined to prosecute. All he needs now is Rains' pencil-thin mustache and Brit-doing-a-Frenchman accent. And given the fact that the SEC is currently investigating accounting tricks at Halliburton under former CEO Dick Cheney, one can easily picture Rick and Louis -- I mean, Dick and Georgie -- ambling off down the tarmac at Dulles after dispatching their underlings to "round up the usual suspects" and embarking on what promises to be the continuation of a beautiful -- i.e., highly profitable -- friendship.

You can tell the president's heart isn't really in his new tough rhetoric. Take his recent call on corporate executives not to "fudge the numbers." Given the daily revelations of corporate criminality and its devastating impact -- on jobs, savings and faith in our economy -- admonishing crooked CEOs not to "fudge the numbers" is like suggesting that suicide bombers not "spoil the day" of their intended victims.

The president himself revealed the desultory nature of his commitment to cleaning up the corporate sewer at a fundraiser late last month: "Let me tell you how strongly I feel about this," he said. "I believe if somebody is running a corporation, if somebody has got responsibilities to shareholders and employees, they have the responsibility to be above-board at all times, to be frank and honest with all numbers." Wow -- that is strong! What is he going to come out in favor of next: the butcher keeping his thumb off the scale when he weighs your rump roast? The supermarket cashier giving you the right amount of change when you pay for your groceries? Students not cheating on a pop quiz?

And what are we to make of SEC chairman Harvey Pitt's utterly unconvincing attempts to paint himself as a combination of Dirty Harry and Howard Beale? The same corporate mouthpiece who once authored a white paper arguing against government efforts to eliminate conflicts of interest among corporate accountants, and who continued to meet privately with former clients under SEC investigation even after taking office, now wants to be seen as the "very tough cop on the beat."

Like a wannabe Clint Eastwood, Pitt reacted to the WorldCom revelations with his best tough-guy snarl: "Criminal charges may be too good for the people who brought about this mess." What does he have in mind instead -- public execution? Can't you just picture "Dirty Harvey," standing above a cowering Bernie Ebbers, pointing his .44 Magnum at his head and asking the WorldCom CEO: "Do you feel lucky today, punk? Well, do you?"

He even went so far as to quote Beale's famous "I'm mad as hell, and I'm not going to take it anymore" rant from "Network," during a speech at the tony Economic Club of New York. Hearing Pitt go ballistic over corporate malfeasance is about as believable as hearing R. Kelly sing the praises of the Mann Act or Al Gore fume "to hell with the polls" and promise to really "let it rip" next time he runs.

In his essay "Politics and the English Language," George Orwell wrote: "The great enemy of clear language is insincerity. Political language is designed to make lies sound truthful and murder respectable." And to allow corporate coddlers like Pitt and Bush to repackage themselves as born-again crusaders for reform. I'm sorry, fellas, but I'm just not buying your "restatement of yearnings."

As the president prepares for a highly touted reading of the riot act to Wall Street on Tuesday, he should remember that as long as he continues to tolerate a corporate culture in which CEOs can call fraud "restating," and don't have to admit wrongdoing even when caught picking their shareholders' pockets, his sudden change of heart is, pardon the euphemism, utterly "inoperative."

Arianna Huffington

Arianna Huffington is a nationally syndicated columnist, the co-host of the National Public Radio program "Left, Right, and Center," and the author of 10 books. Her latest is "Fanatics and Fools: The Game Plan for Winning Back America."

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