Statement by SEC Commissioner:
New Public Company Accounting Oversight Board
Commissioner Roel C. Campos
U.S. Securities and Exchange Commission
SEC Headquarters, Washington, D.C.
Open Commission Meeting
October 25, 2002
I do not support, and must dissent from, the recommendation that Judge William Webster be named Chairman. I do support the other four candidates that are in the slate presented to the Commission Daniel Goelzer, Kayla Gillan, Willis Gradison and Charles Niemeier. At the outset, there will be those that will describe the position taken by the various Commissioners as being driven by partisan politics. I categorically reject any such characterization. I for one am making my decision based upon the argument, the case, and the statutory law as I present in my statement as follows. I for one will not worry nor will I dignify with a response any claims that politics have motivated me. I will rest upon the strength of the argument I present here today.
As I have said in other public meetings, being the last Commissioner to have his turn to speak can be a disadvantage. By the time my turn comes around, my able colleagues have articulated many of the same thoughts that I have and have made many of the points that I share. Therefore, much of what I will now say may be somewhat repetitive.
There are good reasons for having called this public meeting of the Commission. However, the selection of a Board from a pool of distinguished candidates was never intended to be done in a public setting. Imagine how anyone would feel if applying for a job meant that you would be compared to other qualified applicants in a public forum. It is clear that privacy is required both to protect the applicants and to permit candid discussions among those who are doing the selecting. It is evident to me that the Sunshine Act has impeded the ability of our Commission to meet and discharge our duties as well as we otherwise might have. I hope that all who observe and listen to the discussions today will understand that it is as if people were discussing, from a select group, the question of who was the greatest of the American Presidents. If one for example, were to argue that Abraham Lincoln was greater than George Washington or Thomas Jefferson, it would not change that Washington and Jefferson were great human beings and made invaluable contributions to the country and the American way of life. In the same way, the select group of candidates for the Oversight Board that we have considered are all great Americans and nothing said today should diminish their stature or their reputations.
Selection of the Chairman
It is appropriate to review the background facts that have led us to this day. It is a fact that John Biggs was identified as an individual who was aptly qualified to be chairman of this Oversight Board. It was my clear understanding that in September, the Chairman, Commissioner Goldschmid and the Chief Accountant, Robert Herdman visited with Biggs and, after probing discussions, indicated to him that he would have their support for the position of Chairman and that they would present him to the other Commissioners. With that understanding, I interviewed Mr. Biggs and became convinced he would make an outstanding Chairman of the Oversight Board.
Indeed, Mr. Bigg's qualifications are extraordinary. John Biggs graduated from Harvard and earned his Ph.D. in economics from Washington University, where also served as the Vice Chancellor for Administration and Finance. Mr. Biggs has been Chairman, CEO, President, and Trustee of Teachers' Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF) for almost a decade. As the person in charge of investments on behalf of pensioners, Mr. Biggs has demonstrated a commitment to safeguarding the interests of investors. In addition, having served as a trustee of the Financial Accounting Standards Board, which writes accounting rules, and its international counterpart - the International Accounting Standards Committee, he has an excellent understanding of complex accounting issues. Furthermore, as a former member of the Public Oversight Board that previously oversaw the profession, he has an in-depth understanding of auditing. He has also been a Director of the Boeing Company, Ralston Purina Company, and Chairman of the Board of the National Bureau of Economic Research, all of which lent to his understanding of corporate and economic decision-making.
In all of these positions, he has for many years dealt and wrestled with complex and difficult issues involving the accounting and auditing professions. His views and wisdom have been repeatedly sought by Congress as he has been called upon to testify on issues such as, accounting for stock options, corporate governance issues raised by the collapse of Enron, and accounting and auditor independence. I am not aware of anyone that would be a better candidate, which is probably why the Chairman initially approached him.
In the last several weeks, the matter of the selection of the Chairman of the Oversight Board has been the subject of significant media attention. The financial publications of America have one-by-one examined Biggs and concluded he is an excellent candidate for Chairman of the Oversight Board. The Wall Street Journal concluded that Biggs has all the right qualifications for the job and the credibility that the markets now need.
There are simply no rational reasons not to support John Biggs to be Chairman. Some of my colleagues have indicated that they were concerned that there appeared to be a campaign waged in the press on behalf of Mr. Biggs' candidacy. First of all, if there has been such a campaign, I see no reason to blame Mr. Biggs for that. Clearly there are individuals who have spoken to the press who passionately support Mr. Biggs and well they should. In any case, this issue is a red herring. It is beside the point. It has nothing to do with Mr. Biggs' qualifications or the manner in which he would discharge his duties as Chairman of the Oversight Board. In my judgment, to use this as a reason not to support Mr. Biggs is a failure of disciplined logic and analysis.
The Perception Problem
In the last few weeks, the press has repeatedly reported that members of the accounting profession and their lobbyists have made it known that they do not support John Biggs and prefer a candidate who is not as versed in the issues involving their industry. Indeed, the meeting among Mr. Biggs, Commissioner Goldschmid and Chairman Pitt in September had been reported in the press and the explanation has appeared in many stories that the retraction of support for Mr. Biggs was caused by pressure from the accounting lobby. I am certain that there is more than one side to the story and that the accounting lobby would argue that the press stories go to far. That, to some extent is beside the point. The truth is that there is a perception that Chairman Pitt and the entire Commission are being influenced by the views of the accounting profession. The existence of this perception is extremely unfortunate.
In my short tenure on the Commission, I have come to know personally, the Chairman and my fellow commissioners. I can say without any hesitation that the Chairman is an honest man who cares deeply about this agency. As certain as I am that the sun will rise tomorrow, I am that certain Chairman Pitt will not allow himself to be influenced by an outside lobby or politicians. I also believe that he places as his foremost objective the interests of the American investor. I believe the same is true of all of my fellow Commissioners.
However, the American public and American investors do not have the benefit of the personal acquaintance that I have with the Chairman and the other commissioners. Therefore, the perception of this Commission being influenced by the very industry that we seek to regulate through the Oversight Board is real and rational, based on the events that have occurred.
I care deeply and passionately about this Commission. It is not right that the Commission should ever be viewed as being subject to the influence of an outside agent or lobby. It is not right that the Oversight Board should be born with the scar of its members having been subjected to the approval of the accounting lobby. It is not right that the Commission should put itself in this position of creating doubts about its integrity and its motives. It is not right that this Commission should jeopardize its position as an independent governmental agency by appearing to sway to the political winds. How is it, then, that it is not obvious that the only choice in these circumstances is John Biggs? Selecting John Biggs will place a person who is universally admired and has unassailable qualifications. Selecting John Biggs will also eradicate permanently any question, any doubt that anyone may have that this Commission was influenced by any lobby on behalf of the accounting industry. There can be no other rational conclusion.
Comments about William Webster
In reaching my conclusion regarding the necessity of selecting John Biggs, I in no way mean to diminish the stature of Judge William Webster. As I told Judge Webster in my meeting with him, I believe he is a legend and he is one of the individuals I most admire in life. Having been a federal prosecutor, I perhaps appreciate more than others the courage, the dedication, and the tremendous service that he has rendered in his career as a Federal Judge, as head of the Central Intelligence Agency and as head of the Federal Bureau of Investigation. However, I simply believe that Judge Webster can better serve America in other positions. He currently is providing tremendous and invaluable service to our country by acting as head of the President's Homeland Security Advisory Council. We need Judge Webster's focus and attention in those areas in which he has devoted his illustrious career and so ably developed insight and wisdom: areas involving International relations, law enforcement, terrorism, and diplomacy.
Our statutory mandate set forth in Section 101(e) of the Sarbanes-Oxley Act provides that the Oversight Board must, among other things, have "a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures." It is undeniable that John Biggs possesses all of these characteristics. I am not certain that, in spite of his remarkable career, Judge Webster satisfies this statutory mandate. As I indicated above, I cannot express strongly enough my respect for Judge Webster as a man and as a public servant, but it does not seem to me that his experience is relevant to the important job at hand. Mr. Biggs' experience clearly is.
Because I believe that there is a possibility of a legal challenge, I ask why would we want the oversight board to begin with the possibility of a lawsuit challenging its very existence and legitimacy. Why would we hamstring the oversight board from the very beginning. I submit that selecting Judge Webster as Chairman, sadly, is a grievous mistake. Nonetheless, if my colleagues cannot see rationality in my argument and the danger of the permanent taint to the Oversight Board, as well as the real danger of a legal challenge, I will roll up my sleeves and work as hard as I can to support the work of the Oversight Board in the future. As I told Judge Webster when I met him, I believe that, if he is selected as Chairman, the Oversight Board will begin in a "dcep hole," but I will work tirelessly to do my part to pull the board out from that hole and achieve success in implementing all of the provisions of the Sarbanes-Oxley Act.