By Lorraine Woellert Washington loves theatrics, and this year's corporate scandals, from Enron to Martha Stewart, have offered the perfect script. The latest case in point is the WorldCom fiasco, which has all the makings of great political theater: A rich CEO who used company coffers to pay his debts, a brash celebrity Wall Street analyst who made some spectacularly wrong calls for investors, a $3.8 billion accounting discrepancy (hey, a billion here and a billion there, and pretty soon, you're talking real money), and a business -- telephone service -- that the average Joe and Jane can relate to.
Indeed, the white hats in Congress had no shortage of black hats to shoot at on July 8, when House Finance Committee Chairman Michael Oxley rustled up the WorldCom gang before his panel. No six guns necessary when you can wield subpoenas.
Lawmakers had their lines down pat, and the hearing lasted almost until midnight. But let's not kid ourselves: This was no investigation or fact-finding mission. The oath-taking, fears of self-incrimination, chest-thumping indignation, and motions to hold former WorldCom CEO Bernard J. Ebbers in contempt of Congress had one purpose only -- to send a message to voters, who will elect a new Congress in November.
ON THE DEFENSIVE. A growing list of teetering corporations is creating a rich environment for political opportunism. Democrats have grabbed the advantage. They tsk-tsk President George W. Bush for not adequately disclosing details about a 1990 stock sale when he was a director at Harken Energy. They have raised eyebrows at a Securities & Exchange Commission investigation into the books at Halliburton, once headed by Vice-President Dick Cheney. And they're professing profound disappointment in Republicans' reluctance to take definitive action to fix The System.
Republicans, who have been riding high on Bush's poll numbers and the sense of unity in crisis since September 11, now are on the defensive. With a slim six-vote margin protecting the GOP's control of the House, and Senate Democratic control hanging on one seat, Republicans know that Democrats easily could make political hay with their populist rhetoric. Unemployment is bumping 6% again, thousands of ordinary investors have taken a pounding in the market swoon, state pension funds have lost millions, and 401(k) and individual retirement funds are flat or falling.
So the July 8 hearing served two agendas: To make Republicans look responsive and sympathetic to the plight of the less flush and to give Democrats a chance to rail against corporate evildoers and their accomplices in Washington.
SHAME, SHAME. Ebbers seemed to know exactly what he was getting into. Before taking the Fifth, he pleaded with the committee not to subject him to "harassing questions designed to humiliate." Fat chance. The sole reason he was there was to be shamed. Lawmakers need someone to take aim at, and he served as the perfect symbol.
Indeed, nine hours of questioning by nearly two dozen lawmakers revealed exactly nothing about what happened at WorldCom, or who knew what, when. And the soberly professed attempts by lawmakers to solicit serious advice from top corporate insiders -- former Arthur Anderson Vice-President Melvin Dick, Salomon Smith Barney analyst Jack Grubman, or WorldCom CEO John Sidgmore -- generated no answers. No fault of the witnesses -- the lawmakers rarely let them answer.
Representative Maxine Waters (D-Calif.) castigated the "cowboy culture" of Corporate America, but she didn't allow witnesses -- including the cooperative Sidgmore and the eager Grubman -- to finish their responses. Chairman Oxley, who's trying to slow any momentum for new federal regulations, did his best to keep a lid on things. On several occasions, he interrupted Sidgmore's sincere attempts to offer some serious advice. "The gentleman's time has expired," was the well-timed Oxley mantra.
NOTHING LEARNED. So what did the questioning prove? "This hearing shows that existing statutes have been violated," Oxley told BusinessWeek Online with some pride. "This quest to legislate is just Democratic spin."
That's one way of looking at it. But Representative Michael E. Capuano (D-Mass.) put it this way: "I haven't learned anything new. This is all a waste of time," he says. "We have an auditor who can't audit, and we have an independent analyst who's neither independent and apparently doesn't analyze."
His biggest concern, Capuano adds, is that those responsible for WorldCom's woes "would get away with it." Indeed, if these "investigations" and "fact-finding hearings" are the best Congress can do, chances are good they will. Woellert covers Congress for BusinessWeek