SEC commissioners naming head of new accounting oversight board amid political controversy

Friday, October 25th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ In a politically contentious vote, the Securities and Exchange Commission is naming former FBI and CIA chief William Webster as head of a new board to oversee the scandal-plagued accounting industry.

SEC Chairman Harvey Pitt this week asked Webster, now in private law practice, to consider taking the job. Pitt and the other two Republican SEC commissioners have decided to name Webster, a Republican congressional source confirmed Friday, speaking on condition of anonymity.

The agency on Friday released biographies of Webster and the other four people chosen for the oversight board, effectively confirming the choices.

The two Democratic board members, on the other hand, prefer John H. Biggs, setting up a split vote.

Also selected as members of the new oversight board were Daniel Goelzer, a former SEC general counsel; Kayla Gillan, a former official of the California state pension fund; Willis Gradison Jr., a former Ohio congressman; and Charles Niemeier, chief accountant in the SEC's enforcement division.

The SEC commissioners were voting at a public meeting Friday.

The board, to be independent of the industry, was established in new law enacted this summer in response to the wave of company accounting scandals that shook public confidence in the stock market and the integrity of corporate America. The deadline is Monday for the SEC to name its five members _ two must be accountants, while the other three must not have worked as accountants.

The vote comes about a year after the scandal at now-bankrupt Enron Corp. first came to light. Enron's longtime auditor, major firm Arthur Andersen LLP, was convicted in June of obstructing justice for shredding Enron audit documents.

Democratic leaders have accused Pitt, a Republican appointed by President Bush, of blocking Biggs' candidacy to head the board. They said Pitt was acting against Biggs, an advocate of tough regulation of the accounting industry, at the industry's behest.

Democrats recently called on Bush to remove Pitt, who previously represented Wall Street's big players and all Big Five accounting firms as a private securities lawyer and has been accused by his critics of being too closely aligned with the industries he is regulating.

One of the two Democratic SEC commissioners, Harvey Goldschmid, supports Biggs _ the chairman of TIAA-CREF, a teachers' pension fund that is one of the nation's largest. SEC officials recently offered him the job, a government source confirmed recently, speaking on condition of anonymity. But opposition from the industry and Republican lawmakers was said to have caused them to withdraw the offer.

Pitt then went to Webster, raising new ire from Democratic critics.

``Harvey Pitt's erratic performance in this matter is undermining the SEC's credibility,'' Rep. Edward Markey, D-Mass., a senior member of the House Energy and Commerce Committee, said Thursday. ``I urge Chairman Pitt to endorse Mr. Biggs, who would immediately bring credibility and expertise to the new board. Chairman Pitt must declare his independence from the accounting industry he has so staunchly defended.''

SEC spokeswoman Christi Harlan declined comment. Webster did not return a telephone call seeking comment. Biggs could not be reached for comment; his spokesman has previously declined comment on the issue.

The new oversight board will be armed with subpoena authority and disciplinary powers and financed by fees from publicly traded companies. Senate confirmation is not required for its chairman and members, but the SEC must consult with the Treasury Department and the Federal Reserve Board.