Corporate Pollution Kills
Pollution from eight utility companies cited by the Justice Department
in 1999 and 2000 for violating the Clean Air Act leads to nearly 6,000
premature deaths yearly, according to a report released in April.
The analysis also estimates that pollutants from these companies lead
to 140,000 asthma attacks and 14,000 cases of acute bronchitis every year.
The study was prepared by Abt Associates, one of the Environmental Protection
Agencys (EPA) primary technical consultants on clean air.
It is based on likely emissions in 2007 considering expected reductions
under the federal governments current acid rain program.
Eric V. Schaeffer, who was chief of civil enforcement for the EPA until
he resigned last month, released the report.
This report shows how the Bush administrations failure to
enforce the Clean Air Act is a serious threat to public health,
says Schaeffer. Many children and families suffer the misery of
asthma, bronchitis and even premature death because of the pollution coming
from these eight utilities. From my experience inside the EPA, I know
that these companies would be a lot closer to cleaning up their acts if
the White House could find the courage to say no to the energy lobbyists
and enforce the law.
The eight companies are American Electric Power (AEP), Cinergy, Duke,
Dynergy, First Energy, SIGECO, Southern Company and the TVA.
Xerox: Copying Enron
Xerox has settled a major suit filed by the Securities and Exchange Commission
(SEC) in April in connection with a wide-ranging, four-year scheme to
defraud investors.
The SECs complaint alleges that from at least 1997 through 2000,
Xerox used a variety of what it called accounting actions
and accounting opportunities to meet or exceed Wall Street
expectations and disguise its true operating performance from investors.
These actions, most of which violated generally accepted accounting principles,
accelerated the companys recognition of equipment revenue by more
than $3 billion and increased its pre-tax earnings by approximately $1.5
billion.
Xerox agreed to settle the SECs complaint by consenting to the
entry of an injunction for violations of the antifraud and other provisions
of the federal securities laws, restating its financials for the years
1997 to 2000, agreeing to a special review of its accounting controls,
and paying an unprecedented $10 million penalty.
Xerox used its accounting to burnish and distort operating results
rather than to describe them accurately, says Stephen M. Cutler,
the SECs director of enforcement. For Xerox, the accounting
function was just another revenue source and profit opportunity. As a
result, investors were misled and betrayed.
The accounting actions, which Xerox called one-time actions,
one-offs, accounting tricks and accounting
opportunities, frequently were approved, implemented and tracked
by senior Xerox management.
The accounting actions had an enormous impact on Xeroxs reported
performance. For example, in the fourth quarters of both 1998 and 1999,
accounting actions generated 37 percent of Xeroxs reported pre-tax
profit. The SECs complaint further alleges that by 1998, nearly
$3 of every $10 of Xeroxs annual reported pre-tax earnings resulted
from undisclosed accounting actions.
Wasting Accounting Rules
The Securities and Exchange Commission in April charged the founder and
five other former top officers of Waste Management Inc. with perpetrating
a massive financial fraud lasting more than five years.
In a lawsuit filed in U.S. District Court in Chicago, the SEC charges
that the defendants engaged in a systematic scheme to falsify and misrepresent
Waste Managements financial results between 1992 and 1997.
The complaint names Waste Managements former most senior officers,
including Dean L. Buntrock, the companys founder, chair of the board
of directors, and chief executive officer during most of the relevant
period.
Our complaint describes one of the most egregious accounting frauds
we have seen, said Thomas C. Newkirk, associate director of the
SECs Division of Enforcement.
The complaint alleges that Buntrock was the driving force behind the
fraud. He set earnings targets, fostered a culture of fraudulent accounting,
personally directed certain of the accounting changes to make the targeted
earnings, and was the spokesperson who announced the companys phony
numbers, according to the SEC. At the same time, Buntrock posed as a successful
entrepreneur. With charitable contributions made with fruits of his ill-gotten
gains or money taken from the company, Buntrock presented himself as a
pillar of the community, the SEC charges.
For example, just 10 days before certain of the accounting irregularities
first became public, according to the SEC, Buntrock enriched himself with
a tax benefit by donating inflated company stock to his college alma mater
to fund a building in his name. He was the primary beneficiary of the
fraud, the SEC alleges, and reaped more than $16.9 million in ill-gotten
gains from, among other things, performance-based bonuses, retirement
benefits, charitable giving, and selling company stock while the fraud
was ongoing.
Russell Mokhiber
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