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http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign\

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Intelligence Czar Can Waive SEC Rules

Now, the White House's top spymaster can cite national security to

exempt businesses from reporting requirements

 

 

President George W. Bush has bestowed on his intelligence czar, John

Negroponte, broad authority, in the name of national security, to

excuse publicly traded companies from their usual accounting and

securities-disclosure obligations. Notice of the development came in a

brief entry in the Federal Register, dated May 5, 2006, that was

opaque to the untrained eye.

 

Unbeknownst to almost all of Washington and the financial world, Bush

and every other President since Jimmy Carter have had the authority to

exempt companies working on certain top-secret defense projects from

portions of the 1934 Securities Exchange Act. Administration officials

told BusinessWeek that they believe this is the first time a President

has ever delegated the authority to someone outside the Oval Office.

It couldn't be immediately determined whether any company has received

a waiver under this provision.

 

The timing of Bush's move is intriguing. On the same day the President

signed the memo, Porter Goss resigned as director of the Central

Intelligence Agency amid criticism of ineffectiveness and poor morale

at the agency. Only six days later, on May 11, USA Today reported that

the National Security Agency had obtained millions of calling records

of ordinary citizens provided by three major U.S. phone companies.

Negroponte oversees both the CIA and NSA in his role as the

administration's top intelligence official.

 

FEW ANSWERS. White House spokeswoman Dana M. Perino said the timing

of the May 5 Presidential memo had no significance. " There was nothing

specific that prompted this memo, " Perino said.

 

In addition to refusing to explain why Bush decided to delegate this

authority to Negroponte, the White House declined to say whether Bush

or any other President has ever exercised the authority and allowed a

company to avoid standard securities disclosure and accounting

requirements. The White House wouldn't comment on whether Negroponte

has granted such a waiver, and BusinessWeek so far hasn't identified

any companies affected by the provision. Negroponte's office did not

respond to requests for comment.

 

Securities-law experts said they were unfamiliar with the May 5 memo

and the underlying Presidential authority at issue. John C. Coffee, a

securities-law professor at Columbia University, speculated that

defense contractors might want to use such an exemption to mask secret

assignments for the Pentagon or CIA. " What you might hide is

investments: You've spent umpteen million dollars that comes out of

your working capital to build a plant in Iraq, " which the government

wants to keep secret. " That's the kind of scenario that would be

plausible, " Coffee said.

 

AUTHORITY GRANTED. William McLucas, the Securities & Exchange

Commission's former enforcement chief, suggested that the ability to

conceal financial information in the name of national security could

lead some companies " to play fast and loose with their numbers. "

McLucas, a partner at the law firm Wilmer Cutler Pickering Hale & Dorr

in Washington, added: " It could be that you have a bunch of books and

records out there that no one knows about. "

 

The memo Bush signed on May 5, which was published seven days later in

the Federal Register, had the unrevealing title " Assignment of

Function Relating to Granting of Authority for Issuance of Certain

Directives: Memorandum for the Director of National Intelligence. " In

the document, Bush addressed Negroponte, saying: " I hereby assign to

you the function of the President under section 13(b)(3)(A) of the

Securities Exchange Act of 1934, as amended. "

 

A trip to the statute books showed that the amended version of the

1934 act states that " with respect to matters concerning the national

security of the United States, " the President or the head of an

Executive Branch agency may exempt companies from certain critical

legal obligations. These obligations include keeping accurate " books,

records, and accounts " and maintaining " a system of internal

accounting controls sufficient " to ensure the propriety of financial

transactions and the preparation of financial statements in compliance

with " generally accepted accounting principles. "

 

 

I don't wanna be no war hero

Don't want a movie made about me

I don't wanna be no war hero

Just get away from the madness I see