National News
Bush’s stock sale history
weakens his reform stance
By Gregg Fields
Knight Ridder Newspapers
(KRT)
MIAMI — As the Bush adminis
tration struggles to secure the moral
high ground in corporate corrup
tion reforms, its position is being
undermined politically by the al
leged abusive practices of top
White House officials themselves.
There is the president’s extremely
fortunate timing with a stock sale in
a company where he was an insider.
Regulators are investigating
the accounting practices of Vice
President Dick Cheney’s former
company.
And Secretary of the Army
Thomas White, a former Enron exec
utive, sold millions of dollars in
shares as that Texas eneigy giant hur
tled toward a financial cataclysm.
All have denied wrongdoing. But
critics are pounding the drum, say
ing this administration isn’t up to
reining in corporate abuses.
“We think they are wrong for the
job simply because Bush and Ch
eney were clearly involved in the
same corporate shenanigans and ac
counting practices they’re now criti
cizing,” said Mike Lux, president of
the Washington-based American
Family Voices organization, which is
often at odds with Republicans.
“Secondly, virtually everybody
they’ve appointed to regulatory posi
tions is close to the industry they’re
in charge of overseeing.”
AFV begins airing television ads
in New York and Washington to
day. They begin: “Remember the
saying about foxes guarding the
hen house? Well guess what’s hap
pening in Washington?”
Nevertheless, in a speech set to be
delivered on Wall Street Tuesday
morning, the president asserts that he
will raise the bar of business ethics
and forcefully punish violators.
“We will vigorously pursue peo
ple who break the law,” Bush said
at a news conference late Monday.
“I think that will help restore con
fidence to the American people.”
Among other things, he will en
dorse beefing up the Securities and
Exchange Commission. The presi
dent is also expected to give some
support to increased oversight of
auditing firms, which often are
blamed for inaccurate corporate fi
nancial statements.
Congressional Democrats — no
strangers to corporate money them
selves — have nonetheless attacked
the White House’s credentials for
the job.
Monday, Richard Gephardt, the
House Democratic leader, unveiled
his party’s plan for toughening
penalties on white-collar crime.
“The enclosed agenda makes it
clear that Democrats are leading the
charge to impose tough new crimi
nal penalties on corrupt corporate
executives,” Gephardt said.
Bush blamed politics for the con
tinuing interest in the saga.
“The way I view it is, it’s old
style politics, and I guess that’s the
way it’s going to be,” he said.
“There’s no ‘there’ there.”
That brought a response late Mon
day from Democratic National Com
mittee Chairman Terry McAuliffe.
“Today, President Bush offered
his third and latest explanation
over his role in Harken Energy’s
questionable business practices,”
McAuliffe said.
“President Bush should stop re
fusing to release his SEC files and let
the American people, and not his
lawyers, decide what is relevant.”
Nevertheless, Charles Harper,
former head of the SEC’s Miami of
fice, now with the forensic account
ing firm of Lewis B. Freeman and
Associates, said he believes the
SEC acted appropriately.
“That was looked into, and peo
ple found there was nothing
wrong,” he said.
©2002, The Miami Herald. Distributed by
Knight Ridder/Tribune Information Services.
News briefs
Drug company
inflates its reported revenue
When consumers pay a co
payment to their pharmacy for a
prescription drug, who gets the
money?
The retail pharmacy keeps the
entire amount, which typically
ranges from $5 to $25, depending
on the insurance plan.
“The pharmacy is like a doc
tor’s office under managed care,”
said Robert Field, director of the
graduate health policy program at
the University of the Sciences in
Philadelphia, the nation’s oldest
pharmacy school. “Under most
insurance plans, you will pay a
co-pay. The doctor gets the insur
ance payment, plus the co-pay.
“That’s the same for your phar
macy. Pharmacies keep the co
pays,” Field said.
Who gets patients’ drug co-pay
ments gained new visibility
Friday when Merck & Co. Inc.
disclosed to the Securities and
Exchange Commission that it had
recorded about $14 billion as rev
enue from its pharmacy-benefits
Medco unit the last three years
and the first quarter of 2002.
Merck never actually collected
that money.
By including retail pharmacy
co-payments, Merck inflated its
overall reported revenue by about
10 percent since 1999.
The Whitehouse Station, N.J.
based drug maker has said its
accounting procedure was proper
because the same amount record
ed as revenue was also subtracted
as an expense and had no effect
on profits. The SEC has not said
including co-payments in rev
enues is inappropriate.
The National Association of
Chain Drug Stores in Alexandria,
Va. objected Monday to Merck’s
accounting practice. “They are
claiming our revenue to inflate
their stock value,” said Crystal
Wright, spokeswoman for the
trade group, whose members
include CVS, Rite Aid, Walgreen
and Wal-mart.
— Linda Loyd, The
Philadelphia Inquirer (KRT)
FBI investigates
immigrant-run jewelry stores
A nationwide sweep of immi
grant-run jewelry stores launched
two weeks ago by federal investi
gators appears to be aimed at
determining whether these com
monplace stores are linked to in
ternational terrorism.
In the opening hours of the
sweep, witnesses say FBI and INS
agents raided a jewelry kiosk in
a Philadelphia mall on June 26, tak
ing a Pakistani man into custody
and questioning his coworkers
about illicit cash, suspicious travel,
and the al-Qaida terror network.
Within 48 hours, agents report
edly swept through more than 65
jewelry stores in Pennsylvania,
Florida, California, Alabama, Geor
gia and North Carolina — most be
longing to a chain of mall kiosks
operating as Intrigue Jewelers.
Federal officials confirm only
that the Immigration & Naturaliza
tion Service did carry out an “en
forcement operation” that day as
part of an ongoing investigation
with the FBI.
“I cannot give out any names of
any arrests or anything,” said INS
spokeswoman Nicole Edwards.
But interviews with law-enforce
ment sources, attorneys, and de
tainees suggest that federal officials
are investigating Intrigue Jewelers
to see whether it plays a role in a
vast money-laundering operation,
possibly funneling money to terror
ists abroad, with or without em
ployees’ knowledge.
“I’ve talked to the INS agents,”
said Neil St. John Rambana, a Flori
da immigration attorney who is
representing three Pakistani men
and a Nepalese woman
arrested June 26 in a raid at the
Governor’s Square mall in Tallahas
see, Fla. “I’ve seen their paperwork.
It’s a fishing expedition. It’s ‘Let’s
see what we come up with.’”
Across the country, media reports
suggest that at least 32 foreign na
tionals have been detained: 19 in At
lanta, five in North Carolina, seven in
Florida, and one in Pittsburgh.
— MatthewP. Blanchard, The
Philadelphia Inquirer (KRT)
Officials examine
Florida’s death penalty
The Florida Supreme Court halt
ed executions Monday while it
considers whether the state’s death
penalty is unconstitutional — just
six hours and 15 minutes before
Linroy Bottoson was set to die for
killing Eatonville, Fla.’s post
mistress in 1979.
The move puts capital trials
across the state into a legal limbo
and potentially could result in sen
tences being overturned for 371 in
mates on death row at Florida State
Prison in Starke.
“It’s quite a momentous thing,”
said Robert A. Harper of the Flori
da Association of Criminal Defense
Lawyers. “The Florida Supreme
Court has to take a long, hard look
and answer some tough questions.”
The state court’s surprise 6-1 de
cision to indefinitely halt the exe
cutions of Bottoson, 63, and of
Amos King, 47, who was scheduled
to die on Wednesday, comes as the
criminal justice community tries to
figure out the effect of a landmark
death-penalty decision the U.S.
Supreme Court handed down last
month in an Arizona case.
In that case, the nation’s high
court said that juries, not judges,
should decide whether a convicted
murder’s crime merits putting him
to death. In Arizona, judges deter
mined the punishment; in Florida,
juries make recommendations on
whether a criminal should live or
die, but the final decision is left to
the judge.
At the heart of the debate is
whether that distinction in Florida
is enough to meet the U.S. Supreme
Court’s new mandate for sentenc
ing a criminal to death. The Florida
Supreme Court set a hearing for
Aug. 21.
— Susan Clary, The Orlando
Sentinel (KRT)
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