Fire "Judge Webster"-and his Boss
Progressive Populist
December 1, 2002
by Nathan Newman
SEC Chairman Harvey Pitt has resigned.
One down, many more to go.
In the end, he was forced out by the Bush administration not because he was giving corporate criminals a pass, since protecting the corporate class was always Pitt's responsibility. No, Pitt was forced out because he made a stupid political move and didn't clear it with his political handlers at the White House.
Having dutifully prevented any serious reformer from heading the new accounting responsibility board, Pitt instead appointed former judge and CIA and FBI director and all around establishment figure, William Webster, to head the new board. Except Pitt failed to tell the White House that Webster had been on the audit committee of a firm, U.S. Technologies, that is itself under investigation for corporate fraud.
Well, Pitt was dumped on election night, to bury it under election news, just as the whole corporate corruption scandal has been buried under the "war on terror" drumbeat from the White House.
But the appointment of Webster, as much as Pitt himself, reveals the core of corruption running through this administration.
"Judge Webster" is about to suffer the worst fate of a "respected Washington insider"-- actually having what such insiders do looked at closely.
And it's not a pretty sight.
While Webster served on the audit committee at U.S. Technologies, back in August 2001, the company fired BDO Seidman as its auditor after the accounting firm said that the company's financial records were disorganized and that some transactions had not been recorded. Now nearly backrupt, the Internet company is under criminal investigation for possible fraud.
And Webster also is a director of NextWave Telecom, a telecom upstart that defaulted on billions owed to the Federal Communications Commission (FCC). Entering Chapter 11 bankruptcy-court protection in 1998, it is still battling in court to hold onto the rights to $16 billion worth of public airwaves it never paid for. Many establishment leaders appalled that Webster is being allowed anywhere near corporate oversight. According to Gerald Faulhaber, a Wharton School professor who served as the F.C.C.'s top economist in 2000 and 2001, NextWave was a "bottom feeder.Do I feel comfortable with my watchdog being involved with these guys? No."
Along with the corporate board positions such as the one at U.S. Technologies that currently have him in trouble, Webster also managed to get appointment in the early 1990s to the three-member government panel overseeing corruption in the Teamsters. Yet despite being paid $100,000 per year for the job, paid out of hardworking Teamsters' dues, many union officials have argued that Webster has been doing very little to earn his money.
In serving on the board, Webster has clear conflicts of interest, since he serves on the corporate board of Anheuser-Busch, which negotiates contracts with the Teamsters. As well, Webster serves on the board of Pinkerton Security and Investigations Services, notorious in labor history for its strikebreaking. Unions and affliated groups like the Labor Party have passed resolutions condemning the Teamster review board for allowing Webster to serve in such a position.
And Webster has been consorting with the worst of the old corrupt Teamster leaders.
Back in May 11, Webster spoke at a New York Marriott Marquis Hotel dinner hosted by one of the worst of the old Teamsters, George Barasch. As legal scholar Deborah Geier has stated, Barasch has been a poster boy for corruption for decades; in the 1960s, his misuse of over $4 million of union funds for personal uses became a national scandal. Writes Geier, "The escapades of pension fund fiduciary George Barasch epitomized the abuses that prompted pension fund regulation reform."
Webster was addressing the Union Mutual Benefit Association (UMBA), which the garment workers union, UNITE, has charged in a lawsuit with draining millions from Barasch's Allied Trade Council (ATC) for his personal use. And Wester spoke at this Barasch-hosted event, despite the fact that the Teamster Independent Review Board he serves on back in 1999 had found that Barasch and his family were siphoning money from benefit plans of the ATC and the Barasch-controlled Teamsters Local 815.
A few months ago, conservative columnist Bob Novak highlighted the scandal of Webster consorting with the corrupt union officials he was supposed to be getting out of the union. But instead, as Novak reported, he's been acting as a character witness for them, with a lawyer in the UNITE lawsuit being told by Barasch's son, Stephen: "Judge Webster seems to think we're OK."
Webster is clearly unfit to serve as chairman of the new board established to watchdog against fraud by accounting firms. Bush officials may be claiming that Webster is a fine civil servant, who just happens to consort with corporate deadbeats, business fraud promoters, and union-busters. But let's just say we should be on the safe side in a position entrusted with enforcing corporate responsibility.
Fire his ass.
And start working our way up to his boss by 2004.
Nathan Newman is a union lawyer, longtime community activist, a Vice President of the NYC National Lawyers Guild and author of the just published book NET LOSS (Penn State Press) on Internet policy and economic inequality. Email nathan at newman.org or see http://www.nathannewman.org.