AUSTIN -- The State of the Union was fairly surreal Tuesday
night. We won the war against Afghanistan, but we're still at war with Al
Qaeda, so we have to go attack North Korea.
The big paper-shredders at Enron are finally coming to a halt,
so we should go ahead and pass huge corporate tax cuts to help all the other
companies that use aggressive accounting practices and need the dough. They
especially need the rebates on the taxes they didn't pay. We're a better
people than we were on Sept. 10, so let's all donate 4,000 hours to the
country, except for those who are too busy stashing their loot in offshore
banks so they won't have to pay taxes.
To further this noble scheme, the taxpayers will pony up to fund
volunteers with religious groups. Does this mean Mormon missionaries will
get paid to knock on our doors and persuade us that Joseph Smith and Brigham
Young are the light and the way?
I'm clearly confused, but I think some of my colleagues are,
too. During the run-up to the State of the Union speech, I heard apparently
sane commentators state that since George W. Bush is reading a biography of
Teddy Roosevelt, he would speak out against "the malefactors of great
wealth" and possibly even endorse campaign finance reform.
I may be confused by Bush, but these folks have absolutely no
idea who he is. Let's try this again, team. George W. Bush sides with the
malefactors of great wealth not because he is a tool of the rich or because
Enron bought him with campaign contributions -- that's who he is, that's
what he really believes, that's his life experience.
Here's one example from his oilfield career. When Bush was in
the oil business, his failing company Spectrum 7 was bought by Harken
Energy. Bush and his two partners got $2 million in stock in exchange for a
company that had lost $400,000 in the six months prior to the sale. Bush
himself got stock worth about $500,000 and an annual consulting fee of
$120,000, later reduced to $50,000.
In June 1990, Bush sold two-thirds of the Harken stock he had
acquired in the Spectrum 7 deal at $4 a share -- $318,430 more than it was
worth when he got it. A month before Bush sold his stock, the Harken board
appointed Bush and another company director, E. Stuart Watson, to a
"fairness committee" to determine how restructuring would affect ordinary
stockholders.
Smith, Barney, Harris, Upham & Co., the financial consultants
hired by Harken, told Bush and Watson only drastic action could save the
company. So Bush sold his stock before the news became public. According to
U.S. News & World Report, there was "substantial evidence to suggest that
Bush knew Harken was in dire straits." Insiders liquidating large blocks of
stock are required to notify the Securities and Exchange Commission
immediately. Bush reported the sale eight months after the federal deadline.
Although the SEC does prosecute flagrant violators of insider-reporting
rules, according to The Wall Street Journal, first-time violators usually
get only a warning letter.
This not-so-ancient history may not strike you as relevant, so
let's move on to a current policy conflict. The Bush administration's policy
on international money-laundering changed after Sept. 11. Bill Clinton, you
may recall, was leading the charge by developed countries to go after
offshore banks used by terrorists, drug dealers, tax-dodgers and other
trash. Bush had called off that effort, but it gained new urgency after the
attacks, and part of last fall's anti-terrorism law contained new provisions
against international money-laundering.
The Senate Banking Committee held a hearing Tuesday on how the
new law is working. Sen. Paul Sarbanes of Maryland, the committee chair,
criticized two new regulations concerning "shell banks" -- front operations
used by people hiding their wealth. Under the anti-terrorism law, American
financial institutions are not permitted to have correspondent accounts --
that is, deposit accounts that banks have in other banks, with shell banks.
According to The New York Times, Sarbanes said the new regulation lets
American institutions off the hook if their foreign customers certified they
were not fronting for shell banks. Another provision permits correspondent
accounts from shell banks if a real bank owns 25 percent of the shell bank's
shares. Sarbanes said it was "a broad loophole," inviting trouble.
Another way to launder money is International Business
Companies, or IBCs -- shell companies not required to file any public notice
of who their officers and directors are. There's no need to reveal the
identity of its shareholders; no need to file any financial statements or
keep any accounts. No income, capital gains or inheritance taxes. One
pamphlet touting a Bahamian IBC closes with: "'Pinch me! I'm dreaming,' you
may be saying."
Indeed you may.
To find out more about Molly Ivins and read features by other
Creators Syndicate writers and cartoonists, visit the Creators Syndicate web
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