It’s hard to find the exact word to describe the scam which the new board overseeing the U.S. accounting industry is in the midst of trying to pull. “Chutzpah”? “Greed”? “Hypocrisy?” Take all of those, add in “overreaching” and “arrogance,” and you’d be close. In fact, the recent behavior of the four members of the Public Company Accounting Oversight Board resembles nothing so much as the shady goings-on in the big accounting firms that were so amply reported last year-shady goings-on which the board was specifically formed to address. If these are the upstanding citizens who are supposed to clean up the accounting industry, it seems likely that the accounting industry will stay in the gutter.
The board showed its hand last week, when its members voted themselves annual salaries of $452,000-$52,000 more than the President earns and more than twice the salary of the Secretary of State. Apparently, the board members have never heard that public service isn’t about getting rich-it’s about doing good. Who are the members of the PCAOB who have no common sense or shame? They are Kayla Gillan, a former general counsel of a California pension program; Daniel Goelzer, former general counsel of the Securities and Exchange Commission; Willis Gradison, a former nine-term Congressman from Ohio; and Charles Niemeier, former chief accountant of the S.E.C.’s enforcement division. Where’d they come up with these schlock artists?
The board is looking for a chairman, whom they plan to pay $560,000, or three times what U.S. Supreme Court Chief Justice William Rehnquist makes. They almost had a chairman in former C.I.A. and F.B.I. director William Webster, until it was reported that Harvey Pitt, the unscrupulous chairman of the S.E.C., had covered up blemishes in Mr. Webster’s record. It’s unbelievable that the board would further impute its credibility by grabbing at wildly inappropriate salaries.
The four board members are not only enriching themselves; they want to create the highest-paid bureaucracy in Washington. According to The Washington Post , they’re planning to assemble a staff of 270 by 2003, with an average salary of $166,300. How can a government agency get away with paying such astronomic salaries? Well, it probably couldn’t-which is why the PCAOB has set itself up as a nonprofit, to be financed by assessments on accounting firms. In the meantime, the board has asked Congress for a $1.9 million loan to meet expenses for January.
Restoring investor confidence and re-affirming Americans’ faith in the accounting profession was the purpose of the oversight board. It’s clear that the greedy foursome of Gillan, Goelzer, Gradison and Niemeier do not have the integrity for the job. Congress, which created the board, should disband it immediately and find public-spirited men and women who will see their work as a mission rather than a chance to make big bucks.
Indian Point: A Disaster Waiting to Happen
Since Sept. 11, 2001, New Yorkers have been forced to imagine the previously unimaginable. So imagine this: Terrorists attack the Indian Point nuclear-power plant, 35 miles north of Manhattan. The attack could be a bomb in a boat on the Hudson, or a hijacked plane (nuclear plants are not built to withstand the impact of a commercial jetliner). As radiation leaks, there is panic among the 20 million people who live within 50 miles of the plant, including all of New York City. Streets are jammed as parents rush to pick kids up from school; firefighters and emergency personnel, not trained for such a disaster, find themselves at a loss; and because of outdated computer equipment, predictions of where the radiation is headed are wildly inaccurate. Thousands of people die, and in the following years cancer rates in New York skyrocket.
Unfortunately, the above doesn’t take much imagination. Indian Point has the worst safety record of any nuclear plant in the country. The Nuclear Regulatory Commission has estimated that a meltdown would kill 46,000 people immediately, injure 141,000 and spread radiation sickness over an area that includes New York City. Now there’s a study, conducted by James Lee Witt, former director of the Federal Emergency Management Agency, which further indicates that Indian Point is a disaster waiting to happen. As The New York Times reported, Mr. Witt found that “emergency plans are inadequate to protect the public from a disastrous leak of radiation at the Indian Point nuclear plant in Westchester County and do not fully take into account the possibility of a terrorist attack.” Indeed, the current evacuation plans assume that only those living within 10 miles of the plant would need to be evacuated-that eight million New York City residents would sit tight as CNN showed plumes of radiation spewing into the air in Westchester.
New York’s elected officials, including Governor George Pataki, who commissioned the study, as well as Mayor Michael Bloomberg and Senators Charles Schumer and Hillary Clinton, have been derelict in not using their high public profile to apply pressure to the N.R.C. to shut down Indian Point. Surely their unwillingness to take on this issue fully has nothing to do with the fact that Indian Point is owned by a $10 billion company, the New Orleans–based Entergy Corporation.
What will it take for federal and local officials to shut down Indian Point? Apparently they’re waiting for another shocking terrorist attack before they take action. New York voters should ask themselves if this is the kind of leadership they want in a world where another Sept. 11 is not so hard to imagine.
New York: It’s Worth It
It’s no secret that New York is an expensive city. Labor costs here are high. Taxes are high. Rents are high. For years, this undeniable fact has been held up as a negative, as a reason for businesses to set up shop in some low-tax haven, like Alabama or South Dakota. Mayor Bloomberg has a refreshing answer to this argument: nonsense.
In a speech to business leaders at Rockefeller University, the Mayor candidly took on the “too expensive” argument. Yes, he said, costs are high. But guess what: It’s worth it. New York is not Wal-Mart, he said. The city “isn’t trying to be the lowest-priced product on the market.” New York is a luxury product-and besides, isn’t it a truism in business that you get what you pay for? Mr. Bloomberg stated bluntly what other city officials have been afraid to say: This city is never going to be the cheapest place to do business. How could it be? New York is home to some of the planet’s most talented, ambitious people, and they don’t work cheap. No other city in America offers the intellectual capacity, creativity and personality that New York does. And that’s what business pays for, and that’s why smart people flock here, despite the high rents and taxes.
The Mayor is going to refocus the city’s economic-development strategy to reach out to companies that have the vision to look beyond the bottom line and see what New York offers. That’s a smart strategy. And who better to implement it than a businessman turned politician who understands value.