Ethics Newsline®

Source: Transparency International. All figures in U.S. dollars.

It’s one thing to avoid unethical behavior. It’s something else to avoid even the appearance of such behavior. That distinction showed up in sharp relief during last week’s flap over the testimony of Richard A. Clarke.

Mr. Clarke, who served presidents Bill Clinton and George W. Bush as counterterrorism chief, told the commission investigating the 9/11 terrorist attacks that the Bush administration largely ignored the threat to the United States posed by al Qaeda. Predictably, his testimony enraged the commission’s Republicans and delighted its Democrats. But as he marshaled details and dates to support his conclusions and as he apologized directly to the families of 9/11 victims for the fact that “those entrusted with protecting you failed you,” he seemed to many viewers to speak with sincerity, authority, and credibility.

So he had the opportunity to be what the nation most needs: an objective political expert. Why are such creatures so rare? Because politics has its own version of Heisenberg’s famous indeterminacy principle. That principle of quantum mechanics says that you can know either the speed or the position of a particle in space, but not both. Its counterpart in politics would suggest that you can have either expertise or objectivity, but not both. The reason: Nonpartisan observers working outside the political fray don’t really know what’s happening on the inside — while those with inside knowledge are rarely free from partisan leanings. Objective political expertise is pure gold.

At times like this in our nation’s history, that gold is hugely valuable. The findings of the 9/11 commission will influence counterterrorism policy for years to come. Was al Qaeda merely fortunate in penetrating the defenses of an underzealous nation or are we up against an enemy of inordinate potency? If it’s the former, the nation needs to get its act together. If it’s the latter, the nation needs an entirely new act. These are two strikingly different policy options. Determining which is nearer the right may save thousands of lives. Despite this being an election year, this is no time for partisan bickering, political posturing, or electioneering. Just now we desperately need the pure gold of objective expertise.

If Mr. Clarke missed the opportunity to become that gold, it wasn’t for lack of moral courage. Speaking truth to power, even in a democracy, is rarely risk-free. Nor was it from any overtly unethical behavior. Even if inconsistencies appear between his views last week and his earlier support of the Bush administration’s post-9/11 approach, he might plausibly argue that his views have changed on mature reflection. Changing one’s mind is not, after all, prima facie evidence of unethical behavior.

No, what undermined Mr. Clarke’s efficacy was the appearance of unethical behavior. However he positions himself, he cannot now avoid the suspicion that he used his testimony before the commission to sell his new book, Against All Enemies: Inside America’s War on Terror. On learning of his appointment to testify, his publisher, Simon & Schuster, got him onto the CBS television program “60 Minutes” on Sunday, March 21. The next day his book was released, a week ahead of schedule. On Wednesday, Mr. Clarke testified. By Thursday, his book was the top seller on Amazon.com.

It’s certainly true, as his supporters say, that the book was written already and the topic already hot. It’s also true that former public officials deserve to be compensated well for sharing useful reflections in book-length formats. But it’s equally true that Mr. Clarke, until last week, had hardly any name recognition. So if last Wednesday’s testimony had been unremarkable, his book might have fizzled. In other words, he had every personal reason to stir up controversy and get noticed. And when the too-good-to-be-true opportunity presented itself — the chance for extensive national media coverage just as the book is about to appear — he took it.

And that’s where the appearances are so important. The most valuable gift Mr. Clarke could have offered the nation would have been his unique perspective untainted by any suspicion of self-dealing. On substantive matters, he may well be right. Maybe history will agree with his assessment of the Bush administration. But that’s not the point. Saying what’s right is one thing. Being heard, understood, and credited is something else.

Good codes of ethics focus on ethical behavior. Great ones focus, in addition, on the appearance of ethics. When the appearance fights with the ethics, as it did last week before the 9/11 commission, truth itself is sometimes the victim.

(c)2004 Institute for Global Ethics

“While the headlines are going to all the guys who are doing it wrong, there is a very strong corps of people who are really committed to doing it right. Part of doing it right is you’re not doing it to get headlines. You’re doing it to really make a difference in the lives of people.”

– Georgetown College President Bill Crouch, speaking last week at a business ethics conference sponsored by the Ethical Leadership Institute. (“Strong Ethics Help Businesses Succeed, Conference Speakers Say,” AP, Mar. 25)

BRUSSELS
The European Union last week hit Microsoft Corp. with a $613 million fine, ordering the company to change the way it does business and sell a stripped-down version of its Windows operating system.

The sweeping penalties follow allegations that Microsoft, whose software runs more than 90 percent of the world’s personal computers, uses its market dominance to quash competition and innovation.

The EU ruling comes six years after Sun Microsystems accused Microsoft of withholding vital information about its code, keeping Sun and others from building server software that would run smoothly on Windows PCs.

Over the years, EU investigators switched their focus from servers to media players, which enable PCs to play music and video files, reported the Washington Post.

Last week, the European Commission concluded that Microsoft used its market dominance in one area — operating systems — to achieve dominance in another by bundling its Media Player with Windows.

As punishment, the EU ordered Microsoft to pay a $613 million fine and release two versions of Windows for Europe — one with Media Player, the other without — within 90 days. Microsoft also must divulge details about its code to competitors within 120 days, reported the New York Times.

“Dominant companies have a special responsibility to ensure that the way they do business doesn’t prevent competition,” said EU antitrust head Mario Monti, reported the Associated Press.

“We are simply ensuring that anyone who develops new software has a fair opportunity to compete in the marketplace,” Monti said. “Our decision is about protecting consumer choice and stimulating innovation.”

Microsoft last week denounced the EU ruling as “unwarranted and ill-considered,” arguing that the EU ruling actually would hurt consumers and creativity by giving rivals less incentive to chase the leader, reported the Post.

Microsoft noted that EU regulators rejected several settlement proposals, including an offer to install three competing media players on Windows PCs — a move the company said would have been more to consumers’ benefit.

“The European Commission has the first word, but the European courts have the final word,” Microsoft general counsel Brad Smith said last week, vowing an appeal of the ruling.

GENEVA
The tiny island nation of Antigua and Barbuda last week bested the United States in a trade dispute over Internet gambling, sparking renewed debate over the ethics of online betting and U.S. trade policy.

The flare-up follows a ruling by the World Trade Organization (WTO), which sided with Antigua and Barbuda’s complaint that the current U.S. ban on Internet gambling violates WTO free-trade rules.

The ruling — interim and originally confidential — was disclosed by the small Caribbean state, moving the issue into the headlines and prompting U.S. promises to appeal, reported the New York Times.

Antigua and Barbuda claimed that the U.S. law banning online bets was protectionist — designed to insulate U.S. gaming operators from the stiff competition of foreign rivals operating over the Internet.

U.S. authorities say the law was designed to cut down on possible money laundering and online betting by minors, prosecuting U.S. banks and other finance firms that process the wagers.

Despite the law, millions of U.S. residents have found ways to gamble online, accounting for 65 percent to 75 percent of the $6 billion Internet gambling industry, according to the Interactive Gaming Council (IGC).

Last week’s ruling should force U.S. regulators to face that fact and begin installing effective regulations against abuses instead of believing an outright ban does the job, IGC deputy director Keith Furlong told the Agence France-Presse.

“Prohibiting credit cards creates other alternatives like anonymous e-cash, which causes more concerns like money laundering and underage gambling,” he said.

The WTO ruling, which is expected to become final in about a month, sparked outrage among some U.S. lawmakers, who said they will consider pushing for a U.S. pull-out from the trade group.

“It’s appalling,” Rep. Bob Goodlatte (R-Va.), told the Times. “It cannot be allowed to stand that another nation can impose its values on the U.S. and make it a trade issue.”

Sir Ronald Sanders, chief foreign affairs representative for Antigua and Barbuda, dismissed such pronouncements, saying the issue is not social policy but consistent and honest trade policies.

“The U.S. says it wants open competition,” Sanders contended to the Times. “But it only wants free trade when it suits the U.S.”

The WTO ruling could take longer than a year to become effective, though a promised appeal by the U.S. Trade Representative’s Office could push back that date even further, reported MSNBC.

NEW YORK
As prosecutors try to reel in corruption convictions at Enron, WorldCom, and other scandalized U.S. firms, many observers are examining the breeding grounds of tomorrow’s executives — business schools — to ascertain whether the ethics lesson is being learned.

According to a survey of program changes — or lack thereof — the New York Times last week noted that the signs seem to point in several directions.

While some schools — including Harvard — have announced beefed-up ethics programs, others say they are making no changes, insisting that their programs always have emphasized ethics sufficiently.

But such assurances may not be borne out by a recent Aspen Institute survey, which polled 1,700 graduate business students and found that 20 percent said they were not being prepared at all to make tough ethics decisions.

An informal survey from the Association to Advance Collegiate Schools of Business, which accredits MBA programs, recently found that only 35 percent of its member schools required an ethics course. That figure is up only two percent from a 1988 survey predating the recent wave of corporate scandals, noted the Times.

More hopeful signs come from the University of California at Berkeley, which recently added new ethics courses and a Center for Responsible Business, and from the Wharton School of the University of Pennsylvania, which will begin offering a Ph.D. program in business ethics next fall.

“It’s been slow going,” noted Fred Evans, dean of the business school at California State University at Northridge, who told the Times that many MBA professors are not prepared to teach ethics.

“Schools bear some of the responsibility for the behavior of executives,” Evans added. “If they’re making systematic errors in the world, you have to go back to the schools and ask, ‘What are you teaching?’”

BOSTON
Putnam Investments, the first U.S. firm to settle charges in the roiling mutual-fund scandal still gripping the country, last week took a swing at U.S. regulators, who they accused of trying to gouge the firm with unreasonable penalties.

Putnam has admitted that at least six employees, including four portfolio managers, engaged in at least 251 improper trades, making more than $1 million in profits at the expense of average investors.

Federal authorities have accused Putnam executives, including general counsel William Wolverton, of suppressing knowledge that such trades were ongoing from 1998 until 2003, reported the New York Times.

When the scandal went public, it cost the jobs of Putnam chief executive Lawrence Lasser and of the soon-to-be-replaced Wolverton, who also served as both the compliance officer and code of ethics officer.

It also has cost Putnam an estimated $54 billion in funds yanked by investors angry about the illicit trades, noted the Times.

While Putnam agreed last November to settle federal charges, last week it balked at the SEC’s proposal to fine the firm the equivalent of the fees earned on the $54 billion pulled by investors.

Had Putnam been honest with investors when it learned of the problems in 2000, those funds likely would have been withheld given investors’ current ire, according to the SEC. Any profits, therefore, are unfair and should be forfeited.

Putnam concealed knowledge of wrongdoing “to protect the jobs and reputation of several high-level executives and to avoid the massive loss of clients and their management fees that would — and eventually did — follow,” the SEC said. “By concealing its fraud, Putnam unjustly received massive amounts of management fees during nearly four years in which it continued to operate its business as usual.”

Last week, Putnam denounced that claim, accusing the SEC of “a transparent attempt to find a way to reach a headline-making number.”

“Putnam is prepared to pay a reasonable penalty,” company spokeswoman Nancy Fisher told the Washington Post. “Any such penalty, however, must be proportionate to the conduct at issue.”

A recent investigation by a panel of independent Putnam trustees faulted the company for the problems, but also said the firm “made extensive efforts to identify and deter excessive short-term trading.”

WASHINGTON
The U.S. Senate last week passed a bill that would make it a federal crime to commit a violent act against a pregnant woman’s fetus, a move critics claim is part of a backdoor strategy to eventually outlaw abortion.

The new law, strongly backed by President Bush, would make it a crime to harm a fetus during the commission of any of 68 violent federal crimes, such as interstate kidnapping or a crime on federal land.

The bill’s wording, deeming a fetus to be a human “at any stage of development,” will write into law a new definition of personhood that extends from conception to birth, said Sen. Diane Feinstein (D-Calif.) according to a report from the Los Angeles Times.

“Once you give an embryo at the point of conception all of the legal rights of a human being you’ve created the legal case to go against” the constitutionally protected right to choose,” Feinstein charged.

Sen. Mike DeWine (R-Ohio), lead sponsor of the Senate bill, insists the measure is “about simple justice” and further penalizing those who attack pregnant women, noting that the bill specifically does not cover women who choose to have an abortion.

Such assurances failed to assuage the concerns of pro-choice proponents, who say the terminology of supporters, including President Bush and anti-abortion activists pushing for such a law since 1999, suggest otherwise.

“We must continue to build a culture of life in our country, a compassionate society in which every child is welcomed in life and protected by law,” Bush said in a statement after the vote.

By writing into law a premise that likely will be used later to challenge the legality of abortion, the new law could lead to court findings that “embryonic stem cell research becomes murder and abortion in the first trimester becomes murder as well,” Feinstein claimed.

An alternative law proposed by Feinstein, which would have allowed for double charges to be filed against those who attack pregnant women without wading into the firestorm over the debate about when life begins, was defeated on a largely party-line 50-to-49 vote, reported the Times.

The Senate bill gained momentum after the 2002 murder of Laci Peterson, who was eight months pregnant at the time of her death. Her husband Scott, charged with murder, has pleaded not guilty.

SYDNEY
Nearly one-fifth of Australian workers have faced sexual harassment while on the job, according to a new national survey released last week by the government.

Nearly 30 percent of women and 7 percent of men reported being targeted by harassment, including unwelcome touching, suggestive comments, explicit email, graphic imagery, or intimidation, reported the Age.

Even more troubling, according to the country’s Human Rights and Equal Opportunity Commission (HREOC), is the fact that less than one-third of victims reported the harassment.

Of those who did report, most took the matter to their supervisor or boss. Only one percent lodged an official complaint with a government agency, according to poll figures cited by the Age.

“There is a large group who don’t report it because they don’t think that think it will be dealt with seriously and a lot even fear that they will sacked or disadvantaged at work,” federal Sex Discrimination Commissioner Pru Goward told the Australian Broadcasting Corporation.

Goward said the HREOC will use the poll as a prod to encourage employers to redouble their efforts to fight harassment.

Special to Newsline from Canadian correspondent Errol P. Mendes

OTTAWA
The Canadian government is demanding more than $120 million from Hewlett-Packard (HP) Canada for work that the government claims was never done by subcontractors involving information technology defense contracts.

Claiming that no work was actually done by the subcontractors even though the invoices for the work were paid, the Canadian government sent a letter to HP Canada demanding repayment of the monies by March 22.

The company refused to pay, denying any responsibility for the subcontractors or for what happened.

The government is currently contemplating legal action against HP and has hired a leading Canadian corporate lawyer to look into legal avenues to recoup the money claimed.

This latest controversy arose as a result of the findings of an internal Defence Ministry audit and subsequent police investigation into the billing by subcontractors for alleged work done on the defense contracts.

LONDON
In a scathing report, a British watchdog group last week claimed that a voluntary initiative to stop embezzlement, skimming, and backroom deals between international energy firms and corrupt governments has failed.

Global Witness said such deals are continuing to cripple the economies of developing nations while lining the pockets of their corrupt leaders and making Western executives wealthy, reported the Guardian.

The group concludes that a voluntary initiative backed by U.K prime minister Tony Blair has failed, claiming that, “political and business elites currently have a vested interest in avoiding transparency.”

The group’s report focuses on five struggling nations — Angola, Congo-Brazzaville, Equatorial Guinea, Kazakhstan, and Nauru where, the group says, the situations are especially dire and egregious.

In Angola, according to Global Witness, a quarter of the nation’s oil revenues — $500 million last year — go missing annually, leaving the oil-rich nation’s people among the poorest in the world while its leaders send an enormous amount of funds to a bank in Washington.

As those missing funds add up each year, international donors and other nations are forced to make up the difference, paying an estimated $200 million each year in food aid, Gavin Hayman of Global Witness told the BBC.

The group’s report claims that Tony Blair’s voluntary Extractive Industries Transparency Initiative has failed, with powerful Western energy firms continuing to sign “confidentiality clauses” with oil-rich governments that shelter bribes and illicit fees from scrutiny.

“These scandals could not have happened if companies had been obliged to publish their payments to governments, and governments to publish their earnings,” Hayman charged in the Guardian report. “But leading countries and companies are doing next to nothing and revenues that should be used to reduce poverty are being wasted.”

Masood Ahmed of the International Monetary Fund denies that the voluntary scheme has failed, saying that Azerbaijan, Ghana, and Nigeria are planning to join the effort.

Even if it were failing, he told the BBC, the British government cannot afford to make the voluntary guidelines into law since doing so would put U.K. firms at a competitive disadvantage as long as other nations refuse to follow suit.

From Transparency International:

“‘Political corruption undermines the hopes for prosperity and stability of developing countries, and damages the global economy,’ said Peter Eigen, Chairman of Transparency International (TI), launching the TI Global Corruption Report 2004 (GCR 2004) today.

“‘The abuse of political power for private gain deprives the most needy of vital public services, creating a level of despair that breeds conflict and violence. It also hits the pockets of taxpayers and shareholders worldwide. The problem must be tackled at the national and international level,’ he said.

“‘The GCR 2004, with a special focus on political corruption,’ said Eigen, ‘is a call to action to bring integrity and accountability into governance, to stop bribery by multinational companies, and to curb the flow of stolen assets into secret bank accounts in the West.’…

“The GCR 2004 details funds allegedly embezzled by political leaders of the past two decades. During his misrule, Mohamed Suharto, president of Indonesia from 1967 to 1998, is alleged to have stolen $15 billion to $35 billion in a country where the GDP per capita hovers at around $700. Suharto tops the table of corrupt politicians….”

Much madness is divinest sense
To a discerning eye;
Much sense the starkest madness.
‘Tis the majority
In this, as all, prevails.
Assent, and you are sane;
Demur, — you’re straightway dangerous,
And handled with a chain.

– Emily Dickinson (U.S. poet, 1830-1886)

Is ethics a zero-sum game? Is there only a finite amount of it in the universe? If you use up a lot in one place, is there less left elsewhere?

Observers of the U.S. House of Representatives may think so. Over the last six years, as ethics has come roaring into public prominence, it has all but vanished from the House radar. I can think of no period in the last decade when the word “ethics” appeared more frequently in the headlines — not only in stories about government, but in reference to business, education, sports, scholarship, science, the judiciary, the military, and even the church. During that same period, ethics issues in the House have fallen into a chasm of silence.

Now a group of eight nonprofit watchdog groups convened by the Campaign Legal Center and including Common Cause wants that changed. The coalition seeks to strengthen the House ethics committee, officially named the Committee on Standards and Official Conduct. In the past, House ethics battles were high-stakes dramas, resulting in one former Speaker resigning (Texas Democrat Jim Wright) and leading to a $300,000 fine for another (Georgia Republican Newt Gingrich). Exhausted by these battles, members inaugurated in 1997 a kind of truce between Republican and Democratic members to prevent ethics charges from being used as political weapons.

At the same time, a House rules change also prevented outsiders from raising ethics charges against members. The watchdog coalition, spotting some alarming ethical hotspots in the House, wants that rule changed back. Nobody inside the House is willing to raise alarms, it says — and nobody outside is able to.

That’s a good suggestion. But the real problem lies in confusion over the roles of morality and legality. We need clarity on three things:

1. Ethics and law aren’t the same. Ethics is best understood, as Lord Moulton of Bank wrote some 80 years ago, as “obedience to the unenforceable” — obedience to those broad but unactionable values and virtues of a culture. Law, by contrast, is obedience to whatever can be enforced through penalties and sanctions. The Committee on Standards and Official Conduct is concerned less with ethics than with law. Its task is to enforce specific rules which, if broken, lead to punishment. It has no mandate to be the ethics police.

2. Letting itself become an ethics body blurs its real duty to regulate. As a result, the House committee ends up practicing Ethics Lite, a hybrid that combines unsystematic and ad hoc methods of values-based moral reasoning with watered-down versions of judicial practice unprotected by rigorous due process. Like most multipurpose tools that do several things indifferently and nothing really well, it is constantly in danger of producing either flaccid ethical chatter or the rigorless findings of a kangaroo court.

3. Standards and conduct are necessary but not sufficient. A separate body, with the word ethics in its title, needs to consider cases where the regulations are silent — where neither a House rule nor a federal statute has been breached. Ethics addresses issues where nothing is illegal but where public judgment questions the rightness of an action. Such issues come in two flavors: right versus wrong (involving good and bad behavior) and right versus right (involving two ethically defensible but mutually opposing views).

Increasingly the nation is faced with issues demanding moral resolution that lie beyond the law. Consider two current examples:

One concerns egregious compensation among some charitable foundations. Legally, foundations can pay trustees what they wish. Ethically, the public is outraged. Unless the foundation community itself effectively mounts a regime of self-regulation — based on its own ethics — it may find itself facing new legal restraints.

The other concerns reports of U.S. Supreme Court Justice Antonin Scalia’s duck-hunting trip with Vice President Dick Cheney. Here there are compelling moral arguments on both sides: allowing the justices the right to enjoy friendships and interchanges usual to people in their positions on the one hand, and preventing justices from being swayed (or, more importantly, giving the impression that they may be swayed) by the perks of office and personal loyalties on the other.

Both sorts of issues — right-versus-wrong and right-versus-right — need our careful attention these days. To go after these complicated questions with only the blunt instrument of compliance is, finally, to reinforce that tired old saw that says, “Well, if it ain’t illegal, it must be ethical.” Nothing could be further from the truth. The nation deserves a higher conception of ethics than that.

(c)2004 Institute for Global Ethics

“We were dealing with it as a compliance issue. In hindsight, we missed some opportunities . . . to engage earlier.”

– Jonathan Capacasa, Environmental Protection Agency director of water quality for the U.S. region that includes the District of Columbia. According to the Washington Post, federal authorities “responsible for ensuring the safety of Washington’s water knew about the toxic levels of lead and the likely solution more than a year ago but took no action.” (“D.C. Lead Issue Was Debated for Months,” Washington Post, Mar. 16)

WASHINGTON
Days before shareholders approved a merger of the two firms, Bank of America and FleetBoston Financial last week agreed to pay $515 million for alleged mutual-fund trading violations that hurt smaller investors.

As part of the settlement, eight members of the board of directors of Nations Funds, which oversees Bank of America’s mutual funds, will resign or not be reappointed when their terms expire next year.

The firms’ $515 million in penalties, coupled with an agreement to reduce investors’ fees by $160 million over the next five years, makes last week’s deal the largest settlement to date in the ongoing mutual fund scandal.

Allegations of market timing and other abuses have rocked the $715-million mutual fund industry since last September, when New York attorney general Elliot Spitzer pledged to rout out abuses.

One of Spitzer’s earliest victory’s found Canary Capital Management LLC agreeing to pay $40 million to settle charges that it engaged in market timing and after-market trading.

Though not charged at the time, Bank of America was implicated as one of Canary’s trading partners, noted the Associated Press. Last week’s deal ends Spitzer’s scrutiny of the firm.

The agreement also marks the first time that the mutual fund crackdown has targeted a board of directors. Spitzer last week said that shift is deliberate and should put other boards on notice to do the right thing.

“What we are signaling to the fund world is that board activity is going to be a subject of significant inquiry on our part,” Spitzer said, according to the New York Times. “Where boards were not sufficiently inquisitive about the role of market timers and late traders, we will seek appropriate redress.”

Of the penalties assessed last week, Bank of America will pay $125 million in fines and $250 million in restitution to investors. FleetBoston will pay $70 million in fines and another $70 million in restitution.

Special to Newsline from Canadian correspondent Errol P. Mendes

OTTAWA
Nortel shares plummeted 21 percent on news last week that the company’s audit committee and a law firm were disputing recently announced financial results that stated that Nortel made a profit of $732 million in 2003.

In the wake of this news, the company has put its chief financial officer and controller on paid leave while the company works on a restatement of its financial reports, which will be the second restatement in recent months.

Meanwhile, the financial sectors in Canada and the United States are questioning the status of $140 million in bonuses for the management of the company — bonuses paid for stock performance based on results that are now in dispute.

A Nortel spokeswoman told the Globe & Mail that it would be “inappropriate to speculate” about whether the bonuses could be revoked.

Both the U.S. Securities and Exchange Commission and the Ontario Securities Commission are conducting inquiries into the accounting dispute.

WASHINGTON
The federal government last week tried to quell a mounting controversy by launching a probe into allegations that a former official barred the release of cost estimates for the new Medicare bill.

Richard Foster, an actuary at the U.S. Department of Health and Human Services (HHS), says he was threatened with firing if he provided figures showing that the Medicare bill would cost much more than the Bush administration was saying.

The Medicare bill, which was signed into law last December after a marathon session of congressional arm-twisting and head butting, was set at a maximum cost of no more than $400 billion over the next ten years.

In January, the White House disclosed that its actual cost would be $534 billion, reported the New York Times.

Foster, who says his boss, Thomas Scully, threatened to fire him if he responded to congressional requests for estimates, had been predicting since last June that the bill’s true cost would be between $500 billion and $600 billion.

After Foster went public with his allegations, Republican and Democratic lawmakers alike blasted the HHS for withholding information that likely would have impacted their vote on the Medicare bill last November.

“They had to keep the vote open three hours to get this bill passed,” Rep. Gil Gutknecht (R-Minn.) told the Times. “If members had known that there were already in hand estimates that were significantly higher than the one that was advertised, I think it would have been even harder to get the votes.”

“You undermine the credibility and integrity of the legislative process any time you deliberately withhold information from Congress,” added Sen. Olympia Snowe (R-Maine). “You hamstring our ability to do the best job we can.”

So far, Scully, who left the government in December for private consulting work, denies threatening to fire Foster, although he admits joking about it, reported the Washington Post.

Scully told a reporter with Knight Ridder, which first reported Foster’s allegations, that Liz Fowler, a lead lawyer for the Democrats on the Senate Finance Committee, would confirm his efforts to ensure the actuary’s independence.

“He’s a liar,” she said of Scully, according to Knight Ridder.

Scully’s former boss, HHS head Tommy Thompson, also failed to back Scully last week, characterizing him as a tough-to-manage employee who may have crossed the line.

“Tom Scully was running this. Tom Scully was making those decisions,” Thompson insisted to the Post.

“There seems to be a cloud over this department because of this,” Thompson added last week, announcing the probe. “We have nothing to hide. So I want to make darn sure that everything comes out.”

In related news, the House of Representatives’ ethics committee last week said it was launching a formal investigation into allegations that Republican leaders tried to bribe Rep. Nick Smith (R-Mich.) into voting for the Medicare bill. Although the bill passed, Smith refused to change his vote and has since backed away from his accusations that he was offered a bribe, according to the Associated Press.

WASHINGTON
The U.S. Environmental Protection Agency (EPA) circumvented the standard rule-making process when drafting new guidelines for mercury emissions, blocking required scientific studies and drafting the rule with portions of text written by energy industry advocates, according to a report in the Los Angeles Times.

The revelations have forced EPA administrator Michael Leavitt to announce a review of the proposed rule and the process that created it.

Many environmental regulators, both Republican and Democratic, said the process of drafting the mercury rules violated accepted standards and appeared to have been driven not by science, but by politics.

Bush appointee Jeffrey Holmstead, who heads the EPA’s Office of Air and Radiation, and his senior advisor, William Wehrun, told EPA staffers that the normally required studies on the effects of mercury were not to be performed. Both men formerly worked as attorneys for Latham & Watkins, a national law firm representing large coal-fired utility plants, which wanted lenient regulations, noted the Times.

“I was floored,” one participant, who has served several administrations, told the Times. “We pointed out that the studies were required that the data runs were promised to a federal advisory committee.”

After being promised the research, that committee — a 21-member advisory panel tasked with making recommendations on evaluating the science behind mercury regulations — was effectively disbanded by the EPA.

“We were cut off without any warning or explanation,” panel co-chair John Paul, the Republican director of the Ohio Regional Air Pollution Control Agency, told the Times.

The Bush administration, packed with former energy industry executives, chose a process “that would support the conclusion they wanted to reach,” Paul charged.

The EPA then drafted the provisional rule for mercury emissions, slated to become effective in December, with portions of text written by Latham & Watkins and by West Associates, an energy industry advocacy group, according to the Times.

“I think it is outrageous,” Russell Train, a Republican who headed the EPA during the Nixon and Ford administrations, told the Times. “The agency has strayed from its mission in the past three years.”

Those charges echo separate reports released earlier this month by two groups of scientists alleging that politics instead of science are driving many of the Bush administration’s decisions, affecting policy and quality of life for decades to come.

EPA head Michael Leavitt last week said he now has asked for recommendations of needed studies — the same information that staffers say they were barred from gathering last year, according to the Times.

Former EPA head Christie Todd Whitman, who oversaw the agency while the mercury regulations were drafted, said she “did not know that we were cutting a process short or shortchanging the analysis.”

Taking fire, the EPA last week also admitted that its proposed regulations, which predicted a 70 percent drop in power-plant mercury emissions by 2018, ignored the agency’s determination that such a reduction would not be reached until 2025, if ever.

“What our models now show is that we wouldn’t get there as soon as we expected we would,” Jeffrey Holmstead, the Bush appointee accused of blocking the normal studies, told the Washington Post last week.