The Self Made Pundit
Friday, November 01, 2002
ARROGANCE PITTSONIFIED: Harvey Pitt’s job as chairman of the SEC may now be in jeopardy, though not for Pitt’s failure to do his job. As Paul Krugman notes in his New York Times column today, by not doing his job, Pitt is doing the job expected of him by the Bush administration.
Instead, the reason Pitt’s job may now be in jeopardy is his recent display of arrogance. Since Bush’s colossal arrogance is one of his few actual accomplishments, he may well be offended by Pitt’s acting as if he were a Bush.
As The New York Times reports today, Pitt arrogantly hid from his fellow SEC commissioners that William Webster, his pick to head the new government board overseeing the accounting profession had performed oversight duties as head of the audit committee of U.S. Technologies, a company now facing allegations of fraud. Pitt’s failure to mention this salient fact was particularly contemptuous of his colleagues since the SEC voted to appoint Webster in a 3 to 2 vote only over the strenuous objections of the Democratic commissioners that Webster lacked the credentials to head an accounting board.
Traces of Pitt’s deception can also be found in the SEC release announcing Webster’s appointment to the accounting board. The release contained a glaring omission, describing Webster’s audit committee experience as follows:
He has served on a number of audit committees, including Anheuser-Busch Companies Inc., Pinkerton Inc. and Maritz Inc.
Webster’s highly relevant experience as chairman of the audit committee of U.S. Technologies was somehow deemed not important enough to make the release.
As the Times comments sarcastically in an editorial today, it and other critics of the Webster appointment were wrong in thinking that Webster lacked relevant experience:
A correction is in order here. Last week we mistakenly wrote that William Webster lacked any relevant experience to serve as chairman of the new oversight board for the accounting profession. It turns out that Judge Webster has some very relevant experience, but of the kind that should have automatically disqualified him from being considered for the post, to which he was appointed last Friday.
From April 2000 until last July, Mr. Webster, a former C.I.A. and F.B.I. director, headed the audit committee of the board of U.S. Technologies, a company that is now nearly insolvent. The company and its former chief executive officer are being sued and investigated for possible fraud. Mr. Webster's committee fired the company's auditors in the summer of 2001 when they raised concerns about internal financial controls. Mr. Webster has not been accused of any wrongdoing, but even the most generous reading of his performance would disqualify him from heading a body whose mandate is to establish and police tough new auditing standards.
Pitt’s arrogance in preventing the other SEC commissioners from fulling vetting Webster’s qualifications should also disqualify him from heading the SEC.
Do I really think Pitt’s job is in jeopardy? Not yet. Since Pitt apparently remains loyal to Bush and has not been convicted of any crime, he meets all the stringent requirements demanded by Bush of his appointees. There will have to be a deafening chorus critical of Pitt to jar the Bush administration out of its smug satisfaction with its cronies.
If the Bush administration had any interest in an effective SEC – or even if the administration had a modicum of shame – it would replace Pitt now. Instead, the Bush administration is awash in the arrogance that Pitt now personifies.