DDD12

Dirt Diggers Network: Digest No. 12
July 15, 2002

Editor: Philip Mattera

1. Disclosure floodgates open on August 14
2. Fraud Inc. website
3. White House website highlights dubious corporate responsibility initiative
4. An opening for promoting social disclosure?

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1. Disclosure floodgates open on August 14

The Securities and Exchange Commission announced recently
<see the press release at http://www.sec.gov/news/press/2002-96.htm>
that all 10-K, 10-Q, 8-K and proxy materials issued on or after August 14
by nearly 1,000 large companies must include personal certifications,
made under oath, by chief executives and chief financial officers as to
the completeness and accuracy of the filing. This new policy is expected
to result in the disclosure of many new cases of questionable accounting
practices. The list of companies covered by the order can be found at
http://www.sec.gov/rules/other/4-460list.htm

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2. Fraud Inc. website

The CNN/Money Magazine website has joined the growing list of business
news outlets that have created special sections devoted to the widening
array of financial scandals. Dubbed "Fraud Inc.," the section (found at
http://money.cnn.com/news/specials/corruption/)  has information
under headings such as BUSTED (with links to material on Andersen and
Sotheby's), SETTLED (Xerox, etc.)  and UNDER INVESTIGATION (Qwest etc.).

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3. White House website highlights dubious corporate responsibility initiative

The White House website has created a special section
<http://www.whitehouse.gov/infocus/corporateresponsibility/>
meant to give the impression that the Bush Administration is
taking a tough stance against corporate evildoers. The site highlights
Bush's executive order last week that creates a Corporate Fraud Task Force
in the Justice Department, but it does not mention the fact that the
person designated to head the task force, Deputy Attorney General
Larry D. Thompson, has an embarrassing link to corporate fraud.

A couple of days ago the Washington Post published an article
<http://www.washingtonpost.com/wp-dyn/articles/A63664-2002Jul12.html>
highlighting the fact that Thompson previously served as a director (and
chairman of the audit and compliance committee) of Providian Financial Corp.,
which has paid out more than $400 million to settle charges of
consumer and securities fraud in connection with its subprime lending
business.

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4. An opening for promoting social disclosure?

Sanford Lewis writes:

Not long ago, the phrase "corporate responsibility" meant the elimination
of corporate abuses of public health, environment, and human rights. How the
times have changed! Now, standing in front of a backdrop stamped hundreds
of times with the phrase "corporate responsibility", the President called
for an end to "the days of cooking the books."

Is Wall Street's current crisis redefining and narrowing the traditional
definition of "corporate responsibility?" If so, what can we do about it?

Perhaps there's a silver lining in the cloud over Wall Street. It is at
least possible that the current crisis presents an opportunity to energize
the discussion of corporate accountability on the full array of risks that
threaten both corporate and societal well-being.

For the last four years, a group of activists and investors has been urging
the Securities and Exchange Commission to enforce existing laws that are
already on the books requiring disclosure of corporate environmental and
human-rights liabilities. It turns out that the SEC's rules require much broader
disclosure on these issues than is common practice. Just as lax SEC oversight
brought on the era of "cooking the books", it also has resulted in minimal corporate
environmental and social disclosure.

A critical mass of institutions has already enlisted in this effort. For
instance, the Social Investment Forum, the trade association of socially
responsible investors, recently asked the SEC to establish new, clearer
standards in this area. And the Corporate Sunshine Working Group, an
alliance which includes investors, labor activists, environmentalists, and
academics, is distributing a new film to raise the public's awareness of the
need for enforcement and tighter standards. "Off the Books! Environment &
Human Rights" written/filmed/produced by attorney and environmental
activist Sanford Lewis, will be screened in communities across the United
States in the coming months.

Each of us can play a role in fostering this discussion. For additional
information on how you can participate, visit www.offthebooks.org and
www.corporatesunshine.org.


Philip Mattera
pmattera@goodjobsfirst.org