Harken Back

Harken Back

Harken Back

A summary of what's in the major U.S. newspapers.
July 9 2002 5:04 AM

Harken Back

The New York Times and Washington Post lead with, and the Wall Street Journal tops its world-wide newsbox with, word that President Bush held a press conference yesterday and among other things defended his past actions as an executive at Harken Energy. Explaining the late filing of his sale of Harken stock about 12 years ago, the president said, "I still haven't figured it out completely." In years past, as everybody notes, Bush had blamed the SEC for the tardiness. Bush also said that controversy over the accounting practices of Harken while he was a director there is "recycled stuff." The Los Angeles Times leads with news that the Israeli Cabinet endorsed a proposed law that would bar Israeli Arabs from living in Jewish communities built on state land. The government owns about 90 percent of the land in Israel. The LAT says that the decision has "triggered a firestorm." The center-left Labor Party opposes the bill and the NYT says that means the proposal probably won't become law. USA Today leads with news, which the NYT also fronts, that the government has halted a major study of hormone therapy three years early because researchers noted a slightly increased risk of breast cancer (eight more cases per 10,000 every year). Officials said that the increased risk was only found in women who still have their uteruses. Researchers said that the conclusion is further evidence that women should use hormone therapy only to treat menopause-related conditions, such as hot flashes.  

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As everybody mentions, back in the early 1990s the SEC investigated Harken for essentially selling a unit of the company to itself and then using the "profits" from the sale to offset losses. After what the WSJ calls "months of back and forth with the SEC," Harken eventually fixed its ledgers.

"There was an honest difference of opinion as to how to account for a complicated transaction," Bush explained yesterday at his press conference. "In the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures." (The Post says that the president "glared at reporters when he heard titters after that answer.")

The Journal reiterates that Bush in his long-anticipated speech today will call for execs who cook the books to be put in the slammer. The goal of the speech, says the Journal, is to increase investor confidence while trying to "head off sweeping legislative fixes." As Bush said yesterday, "I'll call for a stronger SEC, more investigators, and more budget." (Yesterday's WP pointed out that earlier this year the White House proposed a "zero growth" budget for the SEC, which is widely considered to be underfunded.)

Everybody notes up high that WorldCom's former CEO and its former CFO both appeared before a congressional committee yesterday and refused to testify.

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The papers note that WorldCom's former CEO Bernie Ebbers did actually have something to say during the hearings yesterday:"I believe that no one will conclude that I engaged in any criminal or fraudulent conduct during my tenure at WorldCom." One congressman argued that Ebbers waived his Fifth Amendment rights by defending himself like that. Legal scholars quoted in the Journal say the congressman may have a case.

The papers note that other folks caught up in the WorldCom con also testified yesterday, including the company's former chief auditor Melvin Dick, who said he wasn't sure that WorldCom execs had actually committed a crime. "Oh, stop giving us these happy horsefeathers!" responded Rep. Gary Ackerman, D-N.Y.

The WSJ says that WorldCom memos recently filed with the SEC show that the company's CFO "planned to bury" the now-infamous $3.8 billion accounting "misstatement."

Everybody notes new developments in the investigation of last week's midair collision over Germany between a Russian airliner and a cargo plane: Data from the planes' flight recorders show that a Swiss air controller ordered the Russian jet to descend, while the airliner's own anti-collision device gave the opposite advice. The Russian pilots followed the controller's advice, and the two planes descended into each other.

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The papers also mention that German air controllers noticed that the two planes were on a collision course a few minutes before impact and tried to call the Swiss air-control center that was in charge of that sector. But they repeatedly got a busy signal.

The WP off-leads a piece saying that it's found the latest trend in campaign donations: With the coming ban on big-time direct contributions, "a growing number of corporations" are asking "employees" to cough up dough to company-created PACs, which then redistribute the cash to candidates. The article's 15th paragraph, though, suggests that there's a built-in limit to this plan: Companies seem to basically only be allowed to ask for contributions from "white-collar senior executives."

Everybody notes that Israel's foreign minister met with the Palestinian finance minister yesterday, the first high-level talks in months. According to an Israeli Foreign Ministry spokesman, the talks were basically just a short chat about economic issues, but they will be the first "in a series" of discussions.

The papers note inside that Pakistani authorities announced that they arrested three members of a banned Islamic group for allegedly setting off a car bomb last month outside the U.S. consulate in Karachi. Two of the men publicly confessed. The Post adds that Pakistani investigators haven't offered to work with FBI investigators who are also on the case. "There is no doubt, and I can say it without any hesitation, that we did not share any information with U.S. officials," said a top Pakistani official. (The article doesn't say what might be causing Pakistan's non-sharing attitude.)

USAT's sports section notes that the Charleston Riverdogs, a minor-league baseball team, set an attendance record yesterday of zero. The team worked hard to set that lowly record: They didn't sell tickets, locked the stadium, and sold discounted food and beer to fans in the parking lot. Not that fans objected to being a part of history. "We come to the games when we can, but this was an extra draw," said one parking lot attendee. "It's pretty unique."