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Monday, Apr 22, 2024

COLUMN The Middle Ground

Author: Fahim Ahmed

President George W. Bush likes to see things in black and white, as "good" or "evil" and as "moral" or "immoral." In so doing, he has been criticized by detractors as being overly simplistic, politically naïve or even obtuse. Yet, Bush had stood his ground, in his defense of his characterization, with stolid consistency. Accused initially by hardliners and ultra-conservatives in the political divide of straying from his terrorism doctrine, he even went to the extent of excluding Yasser Arafat from his vision of eventual Palestinian statehood. Alluding to Arafat as a "leader compromised by terror," Bush, earlier this summer, urged the Palestinian people to find new leadership. His statement, in effect, had been a reversal of the policy of successive U.S. administrations through the 90's to recognize Arafat as the representative of the Palestinian cause. Controversial as his stance may have been, Bush remained consistent with his conviction of moral integrity.
Until now, that is.
In a recent statement made by the White House, Bush is said to continue to have confidence in Harvey Pitt, the embattled chairman of the Securities and Exchange Commission (SEC) (, Nov. 3, 2002). A former attorney for several top accounting and Wall Street firms, Pitt was appointed to chair the SEC, the federal watchdog for securities trading and corporate oversight, by President Bush in August 2001. Over the course of the past year, Pitt and the SEC have been in the spotlight over some of the biggest corporate scandals ever to hit the business world. The collapse of Enron, Arthur Andersen, Global Crossing and WorldCom, uproars over accounting practices and the role of equity research analysts and the resulting decline in investor confidence have heightened the urgency for reforms in the business sector. To resuscitate the economy from the severe dampening effect the scandals have had requires a leadership with vision and with unimpeachable moral integrity. Pitt fails to make the cut on both counts.
Pitt, as chairman of the SEC, had recently appointed William Webster, a former director of the FBI and the CIA, to head the Public Company Accounting Oversight Board. Pitt overcame stiff opposition from within the SEC, and a divisive 3-2 vote, to confirm hi appointment of Webster to the board. However, Pitt has since come under fire for failing to inform other SEC commissioners, and the White House, that Webster once headed the audit committee of a publicly-traded technology company that is facing allegations of fraud. Pitt is reported to have had knowledge of Webster's involvement with the company (, Nov. 1, 2002), and has therefore been charged by critics of deliberately misleading the SEC. Leading senators including Paul Sarbanes (D-Md., chairman of Senate Banking Committee) have called for his resignation and congressional hearings on the issue.
As the SEC launches a probe into the role of Pitt in the Webster appointment, and Congress mulls a hearing, Bush's staunch defense of the SEC chairman questions his commitment to upholding moral integrity in public office. A lack of confidence in the SEC, which is itself mandated to reinstate trust in corporate accounting practices, deals a severe blow to recovery in the financial markets in the near term. The quandary of setting oneself as a "moral" leader is that one cannot pick and choose as to when to be "moral" and when to be "political." Bush must now walk the walk. To do that he must begin by asking Harvey Pitt to resign.

Editor's note: This article was written before Harvey Pitt resigned as SEC chairman yesterday evening.