Look in the mirror

August 02, 2002

CONFRONTED WITH a tsunami of corporate scandal, President Bush increasingly seems unqualified to lead this nation to higher ground. Hardly a week goes by without further indication that, when it comes to curing the corporate abuses spawned in the 1990s, this president is not credible because of his own questionable record as a businessman.

Though hardly on the scale of, say, Enron -- to which many in his administration had deep ties -- the still-emerging reports on the details of Mr. Bush's business dealings leave little question he's deeply steeped in the very practices and culture now unraveling with great national harm. As a consequence, even his relatively tepid condemnations of corporate excess resound with profound hypocrisy.

The latest such example involves the report this week first in the Daily News of New York that, while Mr. Bush sat on the board of the Harken Energy Corp. in 1989, the company set up a subsidiary in the Cayman Islands, an oft-used offshore haven for companies seeking to avoid paying federal income taxes on income earned overseas.

This was revealed Tuesday shortly after the president, in signing the sweeping Corporate Responsibility Act to rein in wayward accounting, had condemned U.S. firms that incorporate abroad to avoid taxes. Apparently undeterred by self-reflection, Mr. Bush added yesterday: "I think American companies ought to pay taxes here and be good citizens."

That's easy enough for the president to say these days -- particularly when even congressional Republicans are signaling an eagerness for taking steps this fall to prevent companies from moving offshore, perhaps initially through a moratorium or by barring such firms from military or all government contracts. Offshore incorporations -- 13,000 of them, most from America, are in Bermuda alone -- cost the U.S. Treasury an estimated $4 billion a year.

Most galling, however, is the White House's response to questions about Harken's offshore entity, a subsidiary set up to help manage the company's contract to drill for oil off the coast of Bahrain. There was never any avoidance of U.S. taxes in this deal, said Bush spokesman Ari Fleischer, because the subsidiary never found oil and so never had any profits that could have been taxed.

Translation: Harken intended to avoid federal taxes but was unsuccessful, so where's the problem?

The problem isn't that any of this was illegal; it still isn't. The problem is that, in the context of the other questions about Mr. Bush's favorable deals at Harken and the Texas Rangers baseball club, it's clear that the president made millions of dollars in the same sort of milieu that he's now saying violates American values.

In far too many cases these days, such criticism -- and stronger -- is valid. But before launching any more condemnations, the president ought to look in the mirror. If he's been slow off the mark to contend with this national financial crisis and if he's had to be pushed into any strong actions by Congress, it's because he's been a lifelong member of the club that thrived on such wheeling and dealing.

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