SEC's Pitt Seeks Probe of Webster Appointment: Securities and Exchange Commission Chairman Harvey Pitt asked Thursday for an internal investigation of William Webster's selection to head an accounting oversight board after the disclosure that Mr. Pitt concealed information about Mr. Webster. [...] Ms. Harlan confirmed the request for the investigation in the wake of a revelation that Mr. Pitt had failed to tell other commission members -- in advance of last Friday's SEC vote -- that Mr. Webster had headed an auditing committee of a company facing fraud charges. Mr. Webster's approval to lead the accounting-oversight board, created by Congress this summer in part to reassure investors spooked by corporate accounting scandals, was approved in a 3-2 party-line vote by the SEC.

(NY Times, registration required) Audit Overseer Cited Problems in Previous Post: ....."I told them that people are making accusations," Mr. Webster said of his conversation with Mr. Pitt before he was appointed last Friday. "I said if this is a problem, then maybe we shouldn't go forward. I raised it because I didn't want it to become an issue." Mr. Webster said he was assured by Mr. Pitt that the staff of the commission had looked into the issue and that it would not pose a problem. Mr. Pitt had urged Mr. Webster to take the job. But U.S. Technologies' former outside accounting firm, other members of the audit committee, company executives, and investors and their lawyers who say they were defrauded say they were never called by anyone at the commission about Mr. Webster's candidacy for the new oversight board. Last Monday, three days after Mr. Webster was appointed, he called Mr. Pitt again to say he had heard over the weekend from another former director that a government investigation had recently begun to examine possible fraud by the chief executive of the company, Mr. Webster said. Lawyers involved in the case say the inquiry, by federal investigators in Manhattan, is actually examining whether Mr. Earls, who recruited Mr. Webster, used the company to violate criminal fraud laws. Mr. Webster is not a target of the investigation. Mr. Pitt did not tell the other commissioners about the Monday conversation either, S.E.C. officials said.

Leaving aside the issue of Mr Webster's actual competence, the one thing that is clear is that if you wish to instill confidence in an accounting oversight board, perhaps the one thing you would not do is to install someone who had been affiliated with a company quite recently accused of accounting fraud, however innocent that person may or may not be. If nothing else, they would be tainted by association -- as, in fact, Mr Webster seems to have been, given all this furore in the face of repeated statements by investigators that he is not a target of the investigation.

That said, one wonders precisely why he's not a target of the investigation. However tactfully the NY Times chooses to put it, what appears to have happened is that BDO Seidman accountants reported to the audit committee of US Technologies that there were serious accounting problems. Said committee, of which Mr Webster was head, responded by hiring a "more experienced chief financial officer" and dismissing BDO Seidman as their auditor, ostensibly because they were concerned about timeliness and the size of the bills. True as that may or may not be, it's the sort of thing that one would think would raise enough of a flag that you would investigate specifically to make sure that they weren't shopping for an Arthur Andersen to make their books look better.

Apart from THAT ... why on earth isn't the rest of the SEC calling for an investigtion of Mr Pitt? The chairman of the commission concealed material information from the commission before the confirmation. He concealed material information that arose after the confirmation. Apart from the ethical issues, the man has to be dumb as dirt. Congress has not been entirely thrilled with him. The SEC members themselves were none too thrilled with him. The press has been snooping around him for weeks, precisely because nobody likes him. He then commits what any sensible person would see as both egregious and unnecessary actions that further call into question his ability and desire to conduct fair oversight of the business industry. Clearly, if nothing else, the man is not enough of a political animal to survive in that position -- he hasn't got the sense god gave a goose -- and he should be removed for his own sake as well as ours.