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Sunday, 30 June, 2002, 13:55 GMT 14:55 UK
Accounting concerns focus on GE
Former GE chairman and CEO Jack Welch
Jack Welch turned GE into America's most respected corporation
The industrial and financial giant General Electric is the latest big US corporation to be hit by worries about accounting practices.

The company, nursed to near-legendary status by former chief executive Jack Welch, reportedly made $2.1bn (1.4bn) in profits from its pension fund in 2000 and 1999 - despite the fact that the fund has been losing money thanks to sliding stock markets.

The practice has become common among large corporations, and helps them to meet Wall Street's expectations for earnings, but it is now being hit by the hailstorm of criticism directed at US corporations' accounting practices.

Billionaire investor Warren Buffett, for one, has said that GE, General Motors, Exxon and other heroes of USA Inc are basing their pension fund profit contributions on "pretty heroic assumptions" about future performance.

Anger

The new focus on GE comes as President George W Bush adds his voice to the chorus of disapproval from regulators, politicians and commentators.

In a regular radio address on Saturday, Mr Bush demanded jail terms for corporate fraudsters.

"A few bad actors can tarnish our entire free enterprise system," he told listeners.

And he also wants to see senior corporation figures stopped from making financial gains from false company profit statements, while people guilty of such abuses should be prevented from holding high-level business positions again.

Trouble at the top

Unfortunately for Mr Bush, that could well include his own second in command.

Among the big corporations currently in the firing line of the Securities and Exchange Commission is Halliburton, the oil giant whose chairman and chief executive - till July 2000 - was current US vice president Dick Cheney.

The SEC is examining allegations that Halliburton relabelled $100m in disputed costs on oil contracts to bolster its financial position during tough merger negotiations.

At the time of the alleged switch - 1998 - the firm's auditors were Arthur Andersen, the accountants already disgraced by a conviction for obstructing justice following the Enron scandal and implicated in WorldCom's misdeeds as well.

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