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Betsy Combier

Help Us to Continue to Help Others »

The E-Accountability Foundation announces the

'A for Accountability' Award

to those who are willing to whistleblow unjust, misleading, or false actions and claims of the politico-educational complex in order to bring about educational reform in favor of children of all races, intellectual ability and economic status. They ask questions that need to be asked, such as "where is the money?" and "Why does it have to be this way?" and they never give up. These people have withstood adversity and have held those who seem not to believe in honesty, integrity and compassion accountable for their actions. The winners of our "A" work to expose wrong-doing not for themselves, but for others - total strangers - for the "Greater Good"of the community and, by their actions, exemplify courage and self-less passion. They are parent advocates. We salute you.

Winners of the "A":

Johnnie Mae Allen
David Possner
Dee Alpert
Aaron Carr
Harris Lirtzman
Hipolito Colon
Jim Calantjis
Larry Fisher
The Giraffe Project and Giraffe Heroes' Program
Jimmy Kilpatrick and George Scott
Zach Kopplin
Matthew LaClair
Wangari Maathai
Erich Martel
Steve Orel, in memoriam, Interversity, and The World of Opportunity
Marla Ruzicka, in Memoriam
Nancy Swan
Bob Witanek
Peyton Wolcott
[ More Details » ]
US Senate Starts To Turn Away From Accountability and Corruption, Unlike the Rest of the World
There is a global movement toward stopping corruption. Except in the US, where the Senate is re-thinking the post-ENRON anti-corruption practices that have had major corporations on the run. Who elects these people? Betsy Combier
March 10, 2005
A New Mood in Congress to Relax Corporate Scrutiny


WASHINGTON, March 9 - In what has seemed a daily ritual, the Senate in the last two weeks has defeated the most modest attempts by Democrats to curb bankruptcy abuses by corrupt or troubled corporations and their senior executives.

The votes illustrate a new reality and a sharp swing of the pendulum in the Senate, which has nearly completed its work on the legislation that everyone expects will soon become law.

Just two and a half years ago, in the midst of plunging stock markets and widening business scandals that left many thousands of workers unemployed and without their retirement savings, fearful lawmakers rushed by a vote of 97 to 0 to adopt the Sarbanes-Oxley Act. It was the most aggressive federal anticorruption law Congress had adopted in decades. On the day of the Senate vote, the Dow Jones industrial average was down as much as 440 points. Days earlier, WorldCom executives disclosed the first details of the largest accounting fraud in history.

Now, as business scandals occupy a less prominent place in newspapers and the stock market is well above 2002 lows, the politics of financial regulation have sharply shifted.

The new mood has emboldened corporate lobbyists to ask for and receive more from lawmakers, who no longer seem to be concerned about recrimination at the polls. At the same time, business interests have picked up new allies in the Senate, giving them significantly more influence over its proceedings.

"How quickly things change," said Ann Yerger, executive director of the Council of Institutional Investors, a group of major shareholders that sought tough corporate governance and accounting rules. "It's been stunning. In the past few months alone, there has been a clear push back from the corporate community, and it has resonated. Folks have short memories, and there is a perception that the Enrons are behind us.

"We now spend much of our time trying to hold onto the reforms we had won," she added.

During the recent debate on tightening the bankruptcy code, the lawmakers rejected a proposal to prohibit corrupt companies from issuing huge payouts to senior executives shortly before entering bankruptcy. They blocked consideration of a measure that would have curtailed the ability of companies like Enron and WorldCom to shop for the most favorable bankruptcy courts; such actions have had the effect of disenfranchising employees and retired workers from the process.

They defeated a proposal to protect those employees and retired workers when their companies go bankrupt. They refused to close the "millionaire's loophole" that permits wealthy individuals to shelter their assets from lenders by creating special asset-protection trusts.

And on Wednesday, they rejected a proposal to put a nationwide limit on the homestead exemption, a provision that has enabled corporate executives to buy expensive homes in states like Florida and Texas to shelter their assets from creditors.

Lawmakers said the votes reflected the prevailing view that the time had come to consider whether Congress went too far in its response to the wave of corporate scandals that began with the collapse of Enron in the fall of 2001.

Senator Richard C. Shelby, the Alabama Republican who succeeded Mr. Sarbanes, a Maryland Democrat, as head of the Senate Banking Committee, said he believed in "the overall thrust" of the Sarbanes-Oxley Act, praising it for having a positive impact on "corporate culture." But he also said he was aware of criticism that it had been costly, particularly for small businesses.

"Nearly three years ago, when we passed Sarbanes-Oxley by an overwhelming vote," Mr. Shelby said in an interview on Wednesday, "it was legislation that was a response to corporate corruption and accounting problems. When you have a response like that, you run the risk that you may have reached too far."

"We're mindful of the problems of Sarbanes-Oxley," he added. "It is not perfect, but it is a good piece of legislation."

Mr. Shelby said he intended to hold hearings this year to examine how the law had worked and whether the experience of the last few years demonstrated a need for legislative or regulatory fixes in some provisions.

"I still believe in the overall thrust that it has been positive," he said, "and that it has restored integrity to corporate America and the accounting process. We've had a return of investor trust."

Mr. Shelby's view that the Sarbanes-Oxley Act may have gone too far is shared by many Congressional Republicans as well as people in some quarters of the Securities and Exchange Commission. It is a position that is being seized upon by business lobbyists.

A coalition of organizations has succeeded in delaying a new accounting treatment for stock options. The S.E.C. is openly and closely divided about the effectiveness of issuing heavy fines on companies. It has also delayed imposing tougher financial controls on many companies. A proposal to give shareholders at least a limited say in removing directors is dead, a casualty of an effective campaign against it by the Business Roundtable, an organization of chief executives from prominent companies.

And in the case of the bankruptcy legislation, Senate Republicans rebuffed most efforts to impose tougher standards, arguing that these would be impediments to final passage by the House.

Elizabeth Warren, a bankruptcy and commercial law expert at Harvard Law School, has for many years led opposition to changes in bankruptcy law like those now pending and has highlighted bankruptcy abuses by the wealthy and by corrupt companies. She is struggling to explain the changing climate in the Senate.

"Is it arrogance - the view that we're doing it because we can?" she asked rhetorically. "Is it political payoffs? Just get the bill passed and lick the boots of industry?"

Professor Warren said that with the current bankruptcy legislation, there was another force at work - the formidable lobbying power of proponents that was unmatched by any countervailing effort. By definition, those in bankruptcy have meager political resources to put up a fight.

"All the money is on one side and all the hurt is on the other," she said.

The Congressional Accountability Project was doing substantial work to stop corruption in the US government...up until 2003

So, what will Amerca do with companies like ENRON, WorldCom, and now TITAN, if we cant do anything (and we dont know about the fraud or corruption in the first place)

S.D.'s Titan Corp. admits bribery, will pay $28.5 million
Civil, criminal penalties a record under 1977 law

By Bruce V. Bigelow, The San Diego Times-Union


March 2, 2005

San Diego's Titan Corp. pleaded guilty to bribery yesterday and agreed to pay a record $28.5 million to end government investigations in a scandal that killed a $1.7 billion buyout offer for the company last June.

The combined civil and criminal penalties are the largest imposed on a company under the 1977 Foreign Corrupt Practices Act.

By pleading guilty to three criminal counts, Titan admitted it made more than $2 million in corrupt payments for the 2001 presidential election campaign in the West African nation of Benin.

In addition, the defense contractor admitted it had instructed its agent in Benin to create false invoices to disguise the payments and claimed the bribes as deductible business expenses on its federal income tax return.

During a hearing yesterday before U.S. District Judge Roger T. Benitez, Assistant U.S. Attorney Eric Beste said Titan's conduct was egregious because the company paid bribes to influence an election in another country. It also was considered extraordinary because Titan had never adopted policies and procedures to comply with the federal anti-bribery law.

In accepting the plea agreement, Benitez sentenced Titan to pay a fine of $13 million, placed the company on three years probation and ordered Titan to institute a compliance program for the law.

Titan also settled a related lawsuit brought by the Securities and Exchange Commission. The company consented to a permanent order that prohibits future violations of the anti-bribery law and to pay $15.5 million to disgorge its ill-gotten gains, with interest.

Allegations that Titan paid overseas bribes were uncovered early last year after Lockheed Martin Corp. had reached an agreement with Titan for a buyout. The companies voluntarily disclosed the problems to government regulators, and the deal eventually unraveled amid the ensuing investigations.

The magnitude of the penalties should be a warning to all U.S. companies, said U.S. Attorney Carol Lam of San Diego. It "demonstrates both the severity and the scope of the misconduct in this case," Lam said in a statement.

In a statement issued by Titan, Vice President David W. Danjczek said, "We are relieved that this chapter in the company's history is drawing to a close."

Danjczek was hired in September to oversee programs implemented last year to ensure that the company complies with laws that govern fees paid on foreign sales of military products.

Titan also said it had reached a related settlement with the government that will allow the company to continue to receive Pentagon contracts.

"The size of the fine is startling," said Alexandra A. Wrage, who heads TRACE, a Maryland nonprofit association that helps companies comply with federal anti-corruption laws.

"But the cost to Titan goes far beyond the fine, which is itself a record," Wrage said. "Just imagine how many hours at Titan have been spent on this. It means lost time, lost profits, lost share value and losses to their reputation."

By requiring Titan to disgorge its unlawful profits, Wrage said, the government has also issued a warning to U.S. companies that figure the potential windfall of foreign business might be worth risking a bribe.

"As a risk-mitigation strategy, companies that used to say we are going to play compliance roulette really can't do that anymore," Wrage said. "The Department of Justice and the SEC are going after more of everything."

But the size of the penalties should come as no surprise to Wall Street, as Titan set aside $28.5 million in August for anticipated settlement costs related to the bribery investigations.

"For me, the bigger thing coming out of this is that the Department of Defense waived their right to disbar Titan from future contracts," said David Garrity, an analyst for Caris & Co. in New York.

He noted that the company has a backlog of more than $6 billion in government contracts. Titan began last summer to withdraw from its international business and commercial markets to focus on its core defense business.

According to court documents, Titan set up a joint venture in 1998 with a government company in Benin to build a telephone network. It also hired a man who was known as a business adviser to Benin's president to serve as the company's agent.

From 1999 to December 2001, the documents say, Titan paid more than $3.5 million to the agent, who was not named. That included more than $2 million used to pay for T-shirts in the president's re-election campaign and to buy an $1,850 pair of earrings for the president's wife.

The payments were made in exchange for quadrupling Titan's management fees for the telephone joint venture, the government alleged in court filings.

The government alleged that Datron World Communications, a San Diego company that Titan bought in 2001, was at the heart of the corruption.

But the SEC also noted that Titan underreported commissions paid in Nepal, Bangladesh and Sri Lanka and falsified documents by underreporting commission payments on equipment exported to Sri Lanka, France and Japan.

"Despite using more than 120 agents and consultants in more than 60 countries," the SEC alleged that Titan "failed to have meaningful oversight over its foreign agents."

Titan implemented a new compliance program last year after problems were uncovered while Lockheed Martin was deep into its transition planning in the buyout, which was initially $2.2 billion.

Lockheed's sensitivity to foreign bribery allegations may have been set by its own brush with the law. Lockheed had paid the previous record penalty of $24.8 million in 1995 when it admitted trying to bribe an Egyptian politician to win an order for transport planes.

After the problems at Titan surfaced in February 2004, Lockheed negotiated a reduction in its purchase offer for Titan, to about $1.7 billion. But the nation's largest defense contractor terminated the deal in June, after Titan failed to resolve the bribery investigation.

Titan's lead outside director, Wall Street financier Peter A. Cohen, confirmed in an interview last summer that the company's attempts to negotiate a settlement were complicated by the State Department and other agencies.

Benin was elected last year to the U.N. Security Council, and U.S. diplomats were acutely sensitive to the idea of filing documents in federal court that described the alleged bribes.

No individuals were named in yesterday's court filings, although the government alleged the bribery scheme included a former senior Titan executive and other employees.

The SEC and the Department of Justice said they are continuing their investigations, however.

Treasury Flunks Audit of High-Tech, High-Cost Personnel System
By Stephen Barr, Washington Post, March 10, 2005


A high-tech personnel system for the Treasury Department has cost more than similar systems elsewhere in the government and has not lived up to expectations, a recent audit found.

Getting Treasury's HR Connect up and running cost $173 million, substantially more than similar human resources computer systems at two other agencies -- the U.S. Coast Guard, which spent $24 million, and the Agriculture Department, which spent $15 million, according to the audit report prepared by the Treasury Inspector General for Tax Administration.

TIGTA, as the inspector general's office is known, calculated that $41 million may have been wasted in the development of HR Connect. Treasury rejected that finding but agreed with most other TIGTA findings and is taking steps to overhaul the program's management.

The audit report underscores the importance of management oversight and contract administration in the rollout of complex technology systems, two areas in which the government often falls short, according to critics.

The HR Connect project goes back to the mid-1990s, when the Internal Revenue Service decided to replace 20 aging computer systems that processed timekeeping, payroll, training, recruiting, hiring and other personnel actions. In fiscal 1997, the IRS project was overtaken by a Treasury decision to create a department-wide system known as HR Connect. Some of the project's goals fell by the wayside when the Bush administration chose to consolidate federal payroll processing at four major centers.

During HR Connect's development, Treasury's program office failed to provide adequate management oversight and relied too heavily on a contractor, which was paid $109 million, according to the audit report.

In addition to spending too much to build the system, which became fully operational in May 2004, the report suggests that Treasury is probably paying too much to operate and maintain it.

Treasury has paid about $22 million annually to run HR Connect, far more than the $5 million to $6 million a year paid by the Coast Guard and the Agriculture Department to operate their systems, the report says.

"Treasury was unable to provide adequate cost data for us to evaluate why its implementation and operating costs are so much higher," the report says.

The contractor on which Treasury relied to manage the HR Connect project is never named in the audit.

The contractor developed project budget requests that cannot be verified independently, the report says. In addition, Treasury's program office allowed the contractor to prepare annual budget documents submitted to the Office of Management and Budget and status reports for the House and Senate Appropriations committees. The contractor also was allowed to order equipment and make purchases without much supervision, the report says.

Some officials said they were aware of only two custom modifications to the off-the-shelf software used in the system, but the contractor provided a list of 1,283 modifications. The list did not identify the costs or benefits of each modification, the report says.

In addition to not naming the contractor, the audit report does not identify Treasury officials in charge of HR Connect. The report notes that Treasury executives responsible for the system left in fiscal 2003 "to attain positions at the Department of Homeland Security."

Ira L. Hobbs, who became Treasury's chief information officer last summer, said his staff is strengthening oversight of HR Connect. "We tried to focus on how do we make the best of what we have [and] make sure that this does not happen again," he said.

"We are going to find ways to bring its costs down and improve effectiveness and efficiency," Hobbs said.

US Department of State: Fighting Global Corruption

Websites on Fighting Global Corruption

OECD Global Anti-Corruption Initiatives

Summary of Sarbanes-Oxley Act of 2002

US SEC Division of Corporate Finance

Sarbanes-Oxley Act Financial and Accounting Disclosure Information

Price Waterhouse Coopers on the disclosure of information in Sarbanes-Oxley

Pakistan's National Anti-Corruption Strategy

Fighting corruption in Australia

Fighting corruption in Nigeria with American money

© 2003 The E-Accountability Foundation