Tag Archives: Nevada Representatives

Whatever Happened to HR 3364? The Amazing Disappearance of the Russian Sanctions Law

On July 25, 2017 members of the House of Representatives voted 419-3 to pass the Countering America’s Adversaries Through Sanctions Act; and on July 27, 2017 the Senate voted to pass it 98-2.  [HR 3364]  This is about as close to “veto proof” as any bill is likely to get.  The President* signed it on August 2, 2017.  [Hill]  Thus, HR 3364 became PL 115-44.

“Per the legislation, the administration was required to issue guidance by October 1 on how it was implementing the sanctions against Russia. That process includes publishing a list of the people and organizations who will be targeted by the sanctions, which are primarily aimed at Russia’s defense and intelligence sectors.” [TDB]

Yes, it’s now October 25, 2017 and what have we heard about those published lists of people and organizations targeted for (among other things) cyber attacks on our election systems and democratic institutions?

About all that’s come from the Oval Office is “we’re working on it,” at the Treasury Department, State Department, and Director of National Intelligence…but that October 1 deadline is in the rear view mirror and members of Congress aren’t getting any answers.  Senator Lindsey Graham (R-SC) did the ‘aw shucks’ reaction last Sunday:

“The Trump administration is slow when it comes to Russia. They have a blind spot on Russia I still can’t figure out,” Sen. Lindsey Graham (R-S.C.) said Sunday on NBC’s Meet the Press. When asked what Congress could do to force the administration to act, Graham was vague, saying only: “The Congress will have a way to hold the president accountable.”  [TDB]

Perhaps the South Carolina Senator can’t figure it out, but it’s getting ever more obvious the President* is singularly unwilling to address anything even remotely critical of Russia and its klepto-dictator Putin. [see also VF]  A person might even think PL 115-44 has been sent to Siberia? That “blind spot” doesn’t seem to be going away any time soon. [MSNBC]

However, there is some evidence the administration is aware of the requirements of the sanctions bill, there simply isn’t a sensation of alacrity or urgency?

“Several recent actions suggest that the Trump administration is aware of the bill’s sectoral sanctions requirements. For example, on September 29, President Trump issued a presidential memorandum delegating “to the Secretary of State, in consultation with the Secretary of the Treasury, the functions and authorities vested in the President by” Section 231. Additionally, the administration has complied with other 60 day sectoral sanctions-related deadlines. For example, Sections 222 and 223 effectively codified and intensified pre-existing sectoral sanctions that had been imposed under Executive Order 13662. The government made the modifications that Section 223 required be done within 60 days on September 29. Moreover, although President Trump’s signing statement included a number of constitutional objections to specific provisions of the bill (including Section 222), Section 231 is not among them.”  [Lawfare]

There’s no great urgency demonstrated when a bill is signed on August 2, 2017 and the initial instructions don’t go out to the departments until September 29, 2017.  Section 231 (Russia) isn’t all that complicated, and more could certainly have been done to implement the provisions.

It isn’t often that every member of the Nevada congressional delegation votes in unity on any major piece of legislation, and it seems a shame that the President* hasn’t seen fit to move on this topic of important national interest.  Unlike the South Carolina Senator, I think we can guess why little action is taking place concerning Section 231.

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Filed under Foreign Policy, Heller, Lindsey Graham, Nevada politics, Politics

Nevada Congressional Delegation Votes For Enron Redux?

Enron LogoIt’s not just the Dodd-Frank Act to reform our financial sector regulatory structure that is the target of Wall Street lackeys in the Congress of the United States — Remember Enron?  Rep. Robert Hurt (VA-5) has his sights set on the Sarbanes-Oxley Act in his ironically labeled  “Audit Integrity and Job Protection Act.”  (H.R. 1564)

The CRS summary reads as follows:

“Audit Integrity and Job Protection Act – Amends the Sarbanes-Oxley Act of 2002 (SOX) to deny the Public Company Accounting Oversight Board any authority to require that audits conducted for a particular issuer of securities in accordance with SOX standards be conducted by specific auditors, or that such audits be conducted for an issuer by different auditors on a rotating basis.”

Sounds simple doesn’t it?   First, let’s get rid of the superfluous appendage “job protection act” portion of the title — the only jobs protected by the act are those of corporate executives, managers, and supervisors who are involved in the auditing process of corporations.

Secondly, the bill all but wipes out the independent auditing required of U.S. or international companies which have registered equity or debt securities with the Security and Exchange Commission, AND the accounting firms which do business with those corporations.

The current statute requires that all financial reports coming from a registered corporation include an internal control report.  According to the SEC an internal control report must contain the following:

 “…  (1) a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the company; (2) management’s assessment of the effectiveness of the company’s internal control over financial reporting as of the end of the company’s most recent fiscal year; (3) a statement identifying the framework used by management to evaluate the effectiveness of the company’s internal control over financial reporting; (4) and a statement that the registered public accounting firm that audited the company’s financial statements included in the annual report has issued an attestation report on management’s assessment of the company’s internal control over financial reporting.” [SEC] (numbering added)

Note that the last (4th) item in the list requires the independent auditor selected by the corporation to review its books to attest to the adequacy of the internal controls.   Thus, the auditors are supposed to let the public (and the investors who read such things) know that the corporation has been avoiding those questionable practices which brought us the great Enron Debacle.

Now, how do we insure that there’s  no replication of the Enron/Arthur Andersen crash and burn?  We’ve had a tragic object lesson in what happens when the corporation and the auditing firm get too snugly:

“…a firm (Arthur Andersen) that once stood for trust and accountability ended 90 years as an auditor of publicly traded companies under a cloud of scandal and shame. Its felony conviction for obstructing a federal investigation into Enron Corp., its now-notorious client, cost Andersen the heart of its practice. It will continue with a tiny fraction of the 85,000 employees it spread across the globe just months ago.” [ChiTrib 9/01/2002]

The Securities and Exchange Commission adopted rules to preclude these long term love-matches which resulted in the auditing firm being far more concerned with the “health” of its well paying client than with the “wealth” of the investors, shareholders, and the public.  It sought to establish a sturdy curtain, if not exactly a wall, between the auditors and the corporations.

In setting the rules the SEC was to — and did — “establish rules that an accountant would not be independent from an audit client if any “audit partner” received compensation based on the partner procuring engagements with that client for services other than audit, review and attest services.” [SEC]  The SEC went one more logical step and defined the role of the “audit partner.”

“Section 203 of the Sarbanes-Oxley Act specifies that the lead and concurring partner must be subject to rotation requirements after five years. The rules will specify that the lead and concurring partner must rotate after five years and be subject to a five-year “time out” period after rotation. Additionally, certain other significant audit partners will be subject to a seven-year rotation requirement with a two-year time out period.” [SEC]

The reforms were plugging along as of September 19, 2006 when SEC Commissioner Christopher Cox reported to Congress:

“Beyond the independence of audit committees, Sarbanes-Oxley has strengthened auditor independence. The entirety of Title II of the Act is devoted to the topic of auditor independence. The intense focus on this topic reflects Congress’s appreciation that the audit process is most effective when investors are assured that audits are performed by objective and unbiased professionals. The Act bans auditors from providing the kinds of non-audit services to audit clients that could give rise to financial conflicts of interest. It emphasizes the role of audit committees in approving other services provided by auditors. And it requires audit partner rotation. All of this is more protection for investors, and less incentive for the auditors to do anything that detracts from their core mission.” (emphasis added)

The rotation of the audit partners, the selection of a new auditing firm periodically, combined with the prohibition of tacking on more, and often more remunerative, services was specifically intended to prescribe that “intent focus” on the actual financial situation of the corporation, and to proscribe the cozy long term love affairs between corporations and auditing firms that resulted in the collapse of Enron and the demise of Arthur Andersen.

It  would be entirely too easy to dismiss Representative Hurt’s bill as a classic example of historical attention deficit disorder, but Wall Street has been paying attention to the Sarbanes-Oxley Act since its passage in 2002 — paying attention as to how it might be able to gut the law.  What easier way than to prohibit the Public Company Accounting Oversight Board from enforcing the sections and rules promoting independent auditors?

Common sense and history notwithstanding, the House of Representative passed Rep. Hurt’s bill on July 8, 2013 by a vote of 321-62. [roll call 306]  Nevada Representatives Amodei (R-NV2), Heck (R-NV3), and Titus (D-NV1) all voting in favor of the measure. Rep. Horsford (D-NV4) is recorded as not voting.

H.R. 1564 deserves to get buried in the Senate, or find itself the victim of the Veto Pen, along with other so-called “job protection” bills like repealing the Affordable Care Act and Patients Bill of Rights for the umpteenth time….

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Filed under Economy, Politics