What About the Gander?

April 28, 2005 

Aesop correctly noted that, “We hang the petty thieves and appoint the great ones to public office.”  Nowhere is this truer than in Washington, D.C. where the elite govern by one set of rules for “you and me” and another set of rules for themselves.   

It’s hysterical how the Sarbanes-Oxley Act of 2002 threatens the CEO of General Motors with jail if some putz in a Peoria warehouse cooks-the-books, but the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold) allows your elected officials to practice Enron-era accounting and whistle Dixie on the way to the bank.  The latest Clinton scandal (as in Hillary) is a gold-standard example of the Beltway’s “Do as I say, but I’ll throw you in jail if you do as I do” arrogance. 

Mrs. Clinton's Senate campaign threw an August 2000 Hollywood gala fund-raiser that stuffed Hillary’s coffers with over $1 million in hard money donations.  David Rosen, the national finance Director for Hillary's 2000 Senate campaign is charged, under federal elections laws, with failing to report to the Federal Election Commission almost a million dollars of expenses for that “gala”.  Rosen goes to trial for these charges on May 3. 

Why is Rosen the only party indicted thus far?  Wouldn’t it make sense that Hillary would have known about shady accounting practices that made her close to a million extra dollars just when she needed it the most?  The fund-raiser organizers, Peter Paul and Aaron Tonkin, believe that Hillary was fully aware of this financial slight-of-hand (fraud?).   

A Kennedy in-law, Ray Reggie, secretly tape recorded conversations with Rosen about the fund-raiser..."and may have taped Hillary herself".  Reggie was an undercover informant for the FBI for over two years.  Reggie, who is Sen. Ted Kennedy’s brother-in-law, upheld the family honor and plead guilty to two federal counts of bank fraud last week.  Believe me; the Beltway is breathless as it awaits the secrets of those taped conversations. 

So why is Rosen the only indicted party to date?  Unless Reggie’s tapes or Rosen’s tongue rat Hillary out as a party to this fraud, under existing federal campaign law...Senator Clinton has done nothing wrong.  Under § 434 “Reporting Requirements” of federal election law, “Each treasurer of a political committee shall file reports of receipts and disbursements in accordance with the provisions of this subsection. The treasurer shall sign each such report.”   

Under federal law, Hillary, nor any other federal candidate, is required to review, let alone sign, their campaign’s financial reports.  Somehow, Congress has given the people who control the multi-trillion dollar U.S. budget absolution from being even vaguely familiar with the content or accuracy of their own campaign’s financial reporting.  It was this kind of corporate insulation from prosecution that prompted the Senate’s unanimous passage of the Sarbanes-Oxley Act in 2002. 

The Sarbanes-Oxley Act (SOX), formerly known as the Corporate and Auditing Accountability and Responsibility Act, became public law in July of 2002.  Among SOX’s key provisions are: (1) Establishment of a Public Company Accounting Oversight Board, where public companies must now be registered; (2) Stricter disclosure within company financial statements, and ethical guidelines to which senior financial officers must adhere and (3) Enforcement methods available for punishment of activities deemed criminal by the Act. 

Section 302 of SOX (CORPORATE RESPONSIBILITY FOR FINANCIAL REPORTS) is a real doozy.  This is where the politicians really SOX-it-to American corporate management.  Section 302 requires, under penalty of federal criminal prosecution, that: “the principal executive...and the principal financial officer ...certify in each...report...submitted...that (1) the signing officer has reviewed the report; (2) ...the report does not contain any untrue statement of a material fact; and (3) ) based on such officer’s knowledge, the... information included in the report, fairly present in all material respects the financial condition and results of operations....”  

In simple terms, the C.E.O. and C.F.O. of every public company must validate and sign the company’s financial statements.  If there is any misrepresentation in the financial reports, these corporate officers are liable for criminal prosecution...even if they actually were not aware of the transgressions.  There is little wiggle-room for “he said-she said” finger-pointing.  This is not the case for the financial reporting required of any governmental agency or politician.   

SOX burdens American companies with well over $5 billion in annual compliance costs.  You can expect that number to double in a few years because SOX is a creation of mostly unaccountable Beltway airheads and everything stamped “Made in Washington” doubles in cost every few years.  What the hell...it’s only your money.  If you don’t pay for it in taxes, you’ll end up paying for it in euthanized competitiveness and the reduced growth created by political grandstanding. 

As Ronald Reagan reminded us, “The government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other.”  To this, I will add that no law which does not apply in substance to the makers of that law shall be valid.  Or...What is good for the Goose is also good for the Gander. 

To require layer upon layer of regulation for corporate financial reporting while not applying the same standards to political financial reporting is an arrogant usurpation of power by the Legislature.  It is no different from being sued in a Federal building for an access violation under the Americans With Disabilities Act when that very same Federal building is not required to have handicapped access under the very same Act. 

A good first step towards slowing down the madness in this country would be a new Federal code which requires the Geese to live by the same standards they expect of the Ganders.  But then again, that would be like asking Rosie Odonnell to endorse the Second Amendment and allow the “little people” to enjoy the protections afforded to her by armed body guards.   

But...wouldn’t that make us all equal?  We can’t have that!

 

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