Friday, July 19, 2002
Paranoia Inc. An editorial in today's Washington Post takes Bush to task for defending Vice President Dick Cheney.
PEOPLE SAY that Harvey Pitt, the chairman of the Securities and Exchange Commission, damages the president's post-Enron credibility. On Wednesday, however, it was the president who damaged Mr. Pitt's credibility. At a news conference with Poland's president, Mr. Bush was asked whether he was confident that the SEC's current investigation into Halliburton Co. would exonerate Vice President Cheney, who used to run that company. "Yes, I am," the president replied. This sort of comment is almost enough to kindle nostalgia for the old days when independent counsels investigated top government officials.
To paraphrase Shakespeare: Givest thou me a break.
Seriously. This SEC investigation is a joke, unless they come up with something more than just the change in accounting practices. Wednesday night's "Special Report with Brit Hume" was very informative about what exactly this accounting change was. If you missed it, luckily you can find the transcript of the piece here
What the entire issue comes down to is this: If Halliburton did in a one fiscal year, but the payment for the work hadn't come in yet, it still counted the money as revenue.
Let's say that in late 2000, Halliburton was hired to build an oil derrick. On December 1, construction is completed. Halliburton spends $1 million to build the derrick. The steel, the labor, etc. All of the expenses for that work are counted on the year 2000 balance sheet. But the check for the work doesn't come in until Jan. 1, 2001. So the balance sheet in 2001 shows $2 million in income with no associated costs.
So, prior to the accounting change, Enron's 2000 balance sheet would show the company doing worse than it actually was in 2000. But better than it really was in 2001.
The accounting change in no way misled investors. It actually made their accounting statements more accurate.
The Democrats can keep on lamely beating this drum, but the American public isn't hearing it.