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The Honolulu Advertiser
Posted on: Monday, July 8, 2002

Why let disgraced CEOs walk away with riches?

President Bush says he wants to crack down on corporate wrongdoing in the wake of improper accounting practices at WorldCom and Enron. We certainly hope he does, but it's going to take a major overhaul to restore public trust in corporate leaders.

He's also going to have to overcome a major credibility problem as he seeks to explain his own intriguing sale of stock in 1989, just before its value plunged in the face of bad news, in Spectrum 7, a tiny money-losing energy company with large debts.

Now Bush wants executives to disclose such insider transactions within two days — rather more snappily than the 34 weeks it took him to file his own disclosure in '89.

Similarly, Vice President Dick Cheney has some explaining to do about misaccounting when he was running Halliburton, and Bush hasn't yet stopped trying to appoint tainted Enron executives to federal positions.

Certainly we agree with Bush, if he's truly sincere, that corporate titans who sign off on fraudulent financial statements should be aggressively prosecuted, and sent to jail if guilty.

This is "white-collar" crime that calls for harsh penalties. This kind of cheating and lying ruins lives — lots of them.

All too often, disgraced executives walk away with obscene riches even as their company unravels. For instance, Jean-Marie Messier, who leaves a lurching Vivendi Universal, takes a lavish $17.8 million severance package.

Former Enron chief Kenneth Lay was paid $300 million in salary and stock in the past four years, and his $20 million portfolio of luxury homes and properties included two $6 million vacation spreads in Aspen, Colo.

If such wealth were amassed because executives took advantage of insider trading or cooking the books, then their assets are in effect ill-gotten gains and should be confiscated.

But Bush finds himself on shifting ground and appears conflicted as he attempts to appear stern. After Enron padded its accounts by $3.9 billion, he talked about a few "bad apples." Now, with Xerox, WorldCom, Tyco, Adelphia, et al., he is talking about threats to "our entire free-enterprise system."

That's only a slight exaggeration. If Bush can't restore corporate America's luster, Congress must act decisively. Yet that august body seems more concerned at the moment with reining in whistle-blowers like New York's attorney general than in reform, or in shoring up investor confidence and an economic recovery that now looks shaky.