The Whistleblower #13
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The Whistleblower

The Whistleblower #13 - Mar 26, 2002

Andersen above the law? That's what former Federal Reserve chairman Paul Volcker seems to think. Volcker, whom Andersen brought on to restore the firm's image, has been pushing for the U.S. Department of Justice to drop its indictment of the rogue accounting firm, as he promises to reform the company. This would amount to a "criminal bailout," of a firm that the Justice Dep't says "is charged with a crime that attacks the justice system itself by impeding investigators and regulators from getting at the truth." And, despite Andersen's weak bargaining position, Volcker is trying to hurry the Justice Dep't along, stating that Andersen "will need answers in a matter of days" from the Attorney General, according to The New York Times. From Andersen's perspective the law didn't seem to matter, and neither does the public process. But, from our perspective, the Justice Department should ignore Andersen's demands and push ahead with its prosecution of the firm until justice is served.

If you don't learn from history…blah, blah, blah. Improper conduct in the world of accounting is a hot topic these days, but it's not a new problem. The General Accounting Office, in a report examining the savings and loan scandal of the 1980s, found that the accounting firms "didn't really try to determine what was going on." And the Federal Judge in a major S&L case wondered "why at least one professional would not have blown the whistle." Each time a new scandal crops up there's a lot of huffing and puffing, but lawmakers fail to the blow the house of cards -- accounting industry self-regulation -- down. We ignored accounting gaffes in the 80's with S&Ls, costing Americans billions; we ignored them in the 90s as Enron made the numbers dance, costing billions more. It's time to fix this problem, or else we are doomed to -- what's that expression, again?

Renewable energy renewal. Last week, the US Senate assured big energy companies that it would not impose meaningful renewable energy requirements by defeating legislation proposed by Senator Jeffords (I-Vt). California lawmakers, however, are poised to double the amount of renewable electricity powering California by 2010, raising the total proportion of electricity derived from wind, solar and the like to 20%. In our January report, Hoax: How Deregulation Let the Power Industry Steal $71 Billion From California, FTCR called for an energy plan including this type of a program. Not only is this beneficial from a public health standpoint, as it would decrease our reliance on emission-causing fossil fuels, but it also would improve reliability of the electric system. As Californians learned last year, fossil fuels are volatile commodities, and diversification of fuel sources would create more stability in terms of rates and service. Recently Cal. Governor Davis joined a wide range of consumer, environmental and public health groups in support of the proposal, SB 532 (Sher), known as the Renewable Portfolio Standard.

On display now: The new Public Utilities Commission. California Gov. Davis' newest appointee to the Public Utilities Commission, Michael Peevey, exposed his bias last Thursday. As his first major action, Peevey was one of three Commissioners who voted to allow large manufacturers and other big businesses to escape the state's costly long-term electricity contracts, thereby forcing residential and small business consumers to take on an even larger share of the state's overpriced power bill. Readers will remember that Peevey comes from the private energy industry, selling power through the same type of transaction as those that have been upheld by this decision (see WB #8). The vote showcased Governor Davis' "new look" PUC, in which his most recent appointees, Peevey and Geoff Brown, will join with Wilson appointee Henry Duque to aggressively antagonize consumers while Davis is fundraising from the big businesses his PUC protects.

The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit, non-partisan advocacy organization. For over a decade FTCR and its advocates have exposed and challenged injustices that betray the public trust. The Whistleblower newsletter addresses core issues of the corporate and governmental crises of today and blows the whistle on the brewing fiascos of tomorrow. FTCR does not take a position on candidates for any elected office.
For more information about FTCR's work, to DONATE, to join the fight, or to comment, visit our web site at 310-392-0522 xt.309.
© 2002 FTCR

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