From: "Nathan Newman" <newman at socrates.Berkeley.EDU> To: <lbo-Talk at Lists.Panix.Com> Subject: Elecctoral Reform - plus a little on Enron Date: Sat, 19 Jan 2002 07:58:33 -0500
Here is a bit more on the SF campagn for instant runoff voting, with a letter by Jesse Jackson Jr. outlining some reasons why Dems may support the reform, primarily to avoid the racial bloodletting we've seen in races like the Los Angeles and New York mayoral races-- the idea being that if you need to campaign for peoples second choice as well as their first, you can't afford to go as negative during a campaign.
Through on a little bit more as well on Arthur Andersen's close financial ties to the Bush administration.
Nathan Newman
----- Original Message ----- From: "Michael Eisenscher" <meisenscher at igc.org>
IN THIS MESSAGE: * Congressman Jesse Jackson Jr. endorses instant runoff voting * Anderson Donations to Bush ----------------------------------------------------------------------
Below is a letter from Congressman Jesse L.Jackson, Jr., endorsing Proposition A, San Francisco's charter amendment for instant runoff voting. He also is sending a letter to Mayor Willie Brown, asking him to support Prop A.
Also, the Prop A campaign recently was honored to receive the endorsements of the SF Labor Council, AFL-CIO, and the City Democratic Club. This is in addition to more than two dozen endorsements we have received from other organizations.
Please email this letter from Congressman Jackson to your own lists, friends, and colleagues. And much thanks to Congressman Jackson for his support.
Thanks,
Steven Hill
***********
January 16, 2002
From: Congressman Jesse L. Jackson, Jr.
Dear Friends of Democracy,
I am writing to urge you to lend your support to Proposition A, the instant runoff voting charter amendment that will appear on the March 2002 ballot in San Francisco. This will be the first ballot measure to implement instant runoff voting in the United States since a 1974 victory in Ann Arbor -- a victory that was essential to the election of the city's first African American mayor in 1975. I was pleased to see that its official supporters now include the San Francisco Democratic Party and the San Francisco Labor Council, AFL-CIO.
I strongly support instant runoff voting, both for general elections and for replacing runoff elections in cities and primaries. It promotes coalition-building and liberates traditionally disenfranchised groups, including racial minorities and recent immigrants, from the difficulties of having to mobilize voters for a second election. Traditional "delayed" runoff elections are a drain on the resources of organizations that depend on voter mobilization -- better instead to use an instant runoff to maximize turnout in one general election. Instant runoff voting in San Francisco also will save nearly $2 million each election cycle, since it will not be necessary to pay for a second election. And voters and election administrators will not have a headache of a December election in the middle of a holiday season.
I have a particular interest in adopting instant runoff voting in general elections for president in order to expand the electorate and lessen the impact of "spoilers" - in fact, I've introduced federal legislation in this regard (H.R. 3232) - but the past year has demonstrated clearly to me that the system would have great value in our city elections as well. The mayoral races in Houston, Los Angeles and New York City showed how the head-to-head combat that comes with traditional runoff elections can be racially polarizing. In Los Angeles, Antonio Villaraigosa was attacked by television ads from his opponent James Hahn showing crack pipes and other drug paraphernalia; whether one likes Hahn or not, it was unfortunate that his campaign in the runoff increased friction between African Americans and Latinos.
Similarly, in New York City, the divisive Democratic primary runoff between Mark Green and Fernando Ferrer made it difficult for Green to mobilize and win Latino and black voters in the general election, contributing to four more years of a Republican mayor. The Houston mayoral runoff ultimately won by Lee Brown over a Latino candidate also contributed to unnecessary divisions between the black and Latino community. Instant runoff voting likely would have led to the same winners in these elections, but in a way that would not have divided progressive constituencies.
Please contact me if I can be of any assistance on this matter.
Sincerely yours,
Jesse L. Jackson, Jr. Member of Congress ========================================= Special Report Administration Ties to Arthur Andersen Nearly as Tight as Those to Enron
By John Dunbar and Nathaniel Heller <http://www.public-i.org/story_01_011602.htm>
(WASHINGTON, Jan. 16) -- Arthur Andersen LLP, the accounting firm that has been implicated in the collapse of Enron Corp., was a top contributor to President George W. Bush's political campaigns. (See the tables below)
Since 1998, Andersen and its employees have contributed $212,825 to Bush, including $25,000 in donations to Bush's inaugural celebration when he was governor of the state of Texas. The total makes Andersen one of Bush's biggest financial backers.
Overall, since 1998, Andersen has spent $8.1 million to influence the federal government, including $6 million on lobbying expenditures.
Like its client Enron, Andersen had strong ties to the Bush campaign and administration. Two former lobbyists for the firm now occupy high-level positions in the administration.
Stephen Goddard Jr., a managing partner in charge of Andersen's Houston office who was relieved of management responsibilities on January 15, 2001, was a Bush "pioneer," meaning he raised at least $100,000 for Bush's presidential campaign.
Andersen's political action committees also gave generously to members of Congress. They contributed $27,000 to Rep. Billy Tauzin (R-La.) over the last three years. Tauzin, the chairman of the House Energy and Commerce Committee, is currently leading one of the congressional investigations of Enron and Andersen. Over the last three years, he's been the top congressional recipient of Andersen political action committee contributions, according to the Center for Responsive Politics.
Andersen is in the midst of growing investigations into the collapse of energy giant Enron Corp., which filed for bankruptcy in December following a company disclosure that it had hidden massive amounts of debt off its balance sheet. Andersen was the company's independent auditor, and assured investors that, in their opinion, the company's financial statements presented "fairly, in all material respects, the financial position of Enron Corp."
Andersen has admitted to destroying a "significant but undetermined number" of documents relating to the Enron audit. The firm announced it fired the partner in charge of Enron's audits, David B. Duncan, who rushed subordinates to shred records of Enron's audits that had been requested, but not yet subpoenaed, by government investigators.
Like Enron, Andersen is a defendant in shareholder lawsuits that allege the firm did not properly disclose Enron's financial position to investors.
Andersen, a huge accounting and consulting business with 85,000 employees in 84 countries, has been a prodigious spender on other political activities.
In researching "The Buying of the President 2000," the Center determined Andersen was Bush's 13th largest career patron through June 30, 1999. By comparison, former Vice President Al Gore received $8,200 from Andersen employees when he ran for president, according to documents from the Federal Election Commission.
Capitol Hill connections
The company's political action committee has spent $1.3 million on House and Senate members since 1998, with Democrats receiving slightly less than half as much as Republicans. Among the recipients was current Attorney General John Ashcroft, who accepted $10,000 for his unsuccessful Senate reelection campaign, according to CRP.
Ashcroft recused himself from the criminal investigation of Enron after the Center reported one of his campaign committees received a $25,000 contribution from the company.
Tauzin has been critical of Andersen. "Anyone who destroyed records simply out of stupidity should be fired; anyone who destroyed records intentionally to subvert our investigation should be prosecuted," he is quoted in a committee press statement. "One way or another, our committee will get to the bottom of this debacle."
Andersen also spent a little over $500,000 in unregulated, soft money contributions to political parties, the vast majority going to the GOP.
Outstripping those numbers by far, however, is the amount Andersen spends on lobbying. Since 1998, the company has spent $6 million in-house on lobbying Congress, according to lobby disclosure records. They also retained outside firms to lobby for them.
Among the issues the company pushed was legislation to consider the retail deregulation of the electric utility industry, a key issue for Enron and its chairman, Kenneth Lay.
Andersen's stable of lobbyists includes names from Washington's power elite.
Former Andersen lobbyists Nicholas Calio and Kirsten Ardleigh Chadwick, who worked for the firm O'Brien Calio, now head up President Bush's legislative affairs office at the White House. The two are the White House's top lobbyists to Congress and are charged with pushing the administration's legislative agenda on Capitol Hill.
According to federal lobbying records, Andersen paid O'Brien Calio $60,000 to lobby on Internal Revenue Service reform legislation in the first half of 1998. Calio and Arleigh Chadwick worked on that effort, according to the lobbying disclosure form. They moved to the White House shortly after President Bush's inauguration.
Interests beyond accounting
Andersen began lobbying on the issue of electricity deregulation as early as 1996, and continued into 1998. Enron had been trying to get Congress to create a wholly competitive environment in the electric utility industry for years. One state that deregulated, California, still has utilities that owe millions of dollars to Enron. Similar efforts to pass legislation to deregulate electric utilities at the federal level have failed.
Andersen has also spent large amounts of money to influence the Securities and Exchange Commission to allow large accounting and consulting firms to perform both services for their corporate clients.
Among the sharpest criticisms of Andersen's role in Enron's collapse is the fact that Andersen provides both auditing and consulting services, considered by many experts to be a conflict of interest.
Last year, SEC Chairman Arthur Levitt, Jr. proposed a rule that would have restricted the amount of non- audit-related consulting work that companies like Arthur Andersen and other Big Five accounting firms could do for their audit clients. Andersen opposed the rule, and hired the powerful lobby shop of Clark & Weinstock to argue its case.
Among the Clark & Weinstock lobbyists working Capitol Hill on behalf of Andersen were former congressman Vic Fazio (D-Calif.); Jim Matthews, former chief of staff to Rep. Thomas Manton (D-N.Y.); and Anne Urban, formerly Sen. Robert Kerrey's (D-Neb.) legislative director.
Under pressure from the Big Five, the Commission ultimately adopted a weak version of the rule that favored the accounting industry and left their consulting services virtually untouched. The rule required only the disclosure of how much money the accounting firm earned for consulting services from each company it audited. No limits were placed on the amount of money an audit firm could earn.
'The most incredible fight'
Levitt called the brawl with the accounting industry "the most incredible fight I have ever been involved in." At the time, Jeffrey Peck, a managing director for Andersen, said the rule would cut his firm's market potential by 40 percent.
Given the stakes, allies of the accounting firms mounted a vigorous campaign against any limitation on their market potential. Among those arguing against the proposed rule was Harvey L. Pitt, then an attorney with the firm of Fried, Frank, Harris, Shriver & Jacobson. Bush appointed Pitt chairman of the SEC; the Senate confirmed him in August 2001.
Pitt represented Andersen, as well as the four other Big Five firms, as a private lawyer before returning to government service in 2001. As chairman of Fried, Frank's Washington, D.C., office, Pitt worked on behalf of the Big Five "on a wide range of regulatory issues relating to their scope of services and firm structures," according to a company biography.
Despite his ties to Andersen, Pitt has said he will not recuse himself from the SEC's Enron investigation. "It is not the function of the chairman of the SEC, or any commissioner, to manage an investigation," Pitt explained in a written statement.
Pitt opposed limits on the amount of consulting work the Big Five could do for their audit clients before Levitt proposed the SEC rule. In a 1998 article, Pitt and colleague David Birenbaum wrote that "there is no empirical basis for the proposition that the provision of non-audit services for audit clients leads to audit failure," according to a Washington Post story published last summer.
According to reports, Enron paid Arthur Andersen $52 million in 2000. Twenty-seven million came from consulting services, $25 million from auditing services. In a congressional hearing in December, Bernardino said the consulting fees not related to audit functions were only $13 million of the $52 million total.
Andersen's audits have been questioned before. The firm was the accountant for Sunbeam, which grossly overstated its profits, and Andersen agreed to pay $110 million to settle shareholder suits without admitting or denying blame. Waste Management, another client of Andersen, overstated income by $1 billion. Andersen agreed to pay part of a $220 million class-action settlement and a $7 million civil penalty, without admitting liability, according to a New York Times story.
[See web version for table of contributions -- psMod]
In August 2000, Andersen Consulting, a division of Andersen Worldwide, formally split from Arthur Andersen, the more traditional auditing and accounting component of the firm. After arbitration, Andersen Consulting changed its name to Accenture, a change it made in January 2001. Accenture became a publicly traded company four months later.
For this story, contributions made by Andersen Consulting or its employees or PAC before August 2000 were counted toward the totals above.
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