Accountability in Action

0 Comments | Insight on the News, July 8, 2003 | by Jennifer G. Hickey

Byline: Jennifer G. Hickey, INSIGHT

Speaking to a group of antiwar Democratic primary activists, presidential candidate Sen. John Kerry of Massachusetts attempted to deflect questions about his own vote in favor of military action in Iraq by raising doubts about President George W. Bush and the administration's mandate for war. Calling for a thorough investigation of the intelligence used to justify taking action, Kerry told New Hampshire Democrats he would not "let [Bush] off the hook throughout this campaign with respect to America's credibility." And, Kerry asserted, "I can hold President Bush accountable if they have misled us.''

Accountability is the crux of Demo-cratic Party efforts to shake the confidence the American people have in Bush. Will presidential aspirants and congressional antagonists hold the U.N. Security Council to the same standard of accountability? Or the governments of other nations, including Britain and France? Or those same antiwar protesters who disagreed with the means rather than the need for disarmament? After all, every one of them was in agreement that Iraq was in possession of weapons of mass destruction. With the days of the presidential primary season growing shorter, it is unlikely.

The accountability game is being played with ever-changing standards, and this is as true in Washington as it is on the campaign trails of New Hampshire. With restoration of consumer confidence in mind, for instance, legislators acted quickly to pass corporate reforms that increase corporate-disclosure requirements. Despite the fact that most businesses long have adhered to the letter and spirit of the law, infamous malfeasance by Enron and WorldCom has shaken the faith of small and large investors alike.

Big Business is a big target, and an easy one whenever a handful of corporate chiefs can be hauled before congressional populists and arrogantly refuse to take responsibility or even to speak. The immediate calls for accountability are then deafening. But even the hard of hearing could have heard a pin drop when Robert Georgine, who resigned in May as head of Ullico Inc., raised his hand swearing to tell the whole truth and nothing but the truth.

Appearing under subpoena on June 17 before the House Education and the Workforce Committee, Georgine hesitated slightly before asserting, "While I am confident that I have done nothing wrong, on the advice of my attorney, I respectfully decline to answer based on my Fifth Amendment rights under the United States Constitution."

The questions he did not want to answer pertained to an ongoing investigation into whether board members and executives at Ullico, a Maryland-based insurance holding company owned by labor unions, were permitted to purchase stock at artificially low values and then sell the shares at inflated prices. The board members apparently were allowed to enter into related stock trades with no restrictions, an opportunity not afforded to the company's union members, whose investments in the company suffered accordingly. Unions and their pension funds hold 98 percent of the company's stock, yet weren't offered the favorable terms. And most board members did not object until news of the scandal emerged in the press.

According to former Illinois governor James Thompson, who was brought in to produce a report on these and other goings on at Ullico, Georgine profited from all this by approximately $4 million between 1999 and 2001, while three other senior officers cleared between $320,000 and $605,000 each. In total, the arrangement netted almost $6 million for the participating officials.

The resigned executive further declined to answer questions concerning whether he instructed Thompson to avoid examining if federal pension and labor laws, including the Labor-Management Reporting and Disclosure Act (LMRDA), were being violated. Damon Silvers, Ullico's new special counsel, said he believed "the record shows that the labor movement has one standard, and that standard has been enforced at Ullico," which elected a new board and instituted reforms. Furthermore, Silvers testified, unlike other cases of corporate wrongdoing "there will be no spectacle of workers being left behind while managers walk away with millions of dollars."

Similar comparisons to other business scandals were made by ranking Democratic committee member Rep. George Miller of California. He contended there was little cause for holding the hearing but said it was his hope that "the inaction by the [Bush administration's] secretary [of labor] is the subject of the next hearing," a point loudly echoed by fellow Democratic Rep. Robert Andrews of New Jersey.

Labor Department spokeswoman Lisa Kruska responded, "The investigations into Ullico and Enron are both ongoing investigations and as such we have no comment at this time." In addition to the Labor Department investigation, the Securities and Exchange Commission (SEC), Justice Department and Maryland attorney general have ongoing probes. Determining what happened is important, and House Education and the Workforce Committee Chairman John Boehner (R-Ohio) noted that the oversight responsibilities of Congress concerning LMRDA and pension laws were not covered by Thompson's report.