Obama’s Top Adviser on Job Creation Has Presided Over a Company That Shed Jobs
(CNSNews.com) – The chairman of the new President's Council on Jobs and Competitiveness has presided over a corporation that has seen a steady U.S. job decline since 2005.
President Barack Obama named Jeffrey Immelt, chief executive officer of General Electric since 2001, as chairman of the jobs council last month. GE faced hefty fines from the Securities and Exchange Commission in 2009 and 2010.
According to GE’s own Web site, in 2005, GE employed 160,000 U.S. workers. By 2009 that fell to 138,000. Meanwhile non-U.S. jobs gradually increased from below 160,000 in 2005 to about 170,000 in 2008. But in 2009, the figures dropped below 160,000 jobs again.
The jobs council met Thursday at the White House to discuss how to grow jobs in the United States.
During the meeting, Immelt said the council is focused on job growth, and it will likely have future meetings outside of Washington to get an understanding about the jobs picture in the United States.
“You’ve given us some things to focus on. What we’re going to try to look to is short and long-term growth. We’re going to really focus on jobs and competitiveness,” Immelt told the council members. “Maybe the next meeting can be out in the field.”
Obama told the council he believes they were off to a good start, but said that Americans will want to see progress before they are comfortable about the direction of the economy.
“Our focus has to be on jobs here in the United States,” Obama said. “The reason is because our ability to sustain long-term things like, an aggressive trade agenda, or investments in R and D [research and development] or investments in education will depend on the degree to which the American people feel a stake in your success.”
When announcing Immelt as chairman on Jan. 21, Obama said, “Jeff is somebody who brings a wealth of experience to the table. He is one of the nation’s most respected and admired business leaders, and that’s a reputation he earned over 10 years at the helm of this company.”
But Tom Borelli, director of the Free Enterprise Project at the National Center for Public Policy Research, a conservative think tank, believes Immelt was a horrible choice to be a presidential adviser on job growth.
“You couldn’t find a worse CEO to put on a jobs and economics panel, in terms of jobs and ethics – two SEC fines in the last two years,” Borelli told CNSNews.com. “He is the poster child for a failed CEO, and the GE board is the poster child of a failed board for keeping him around.”
A GE press spokesperson did not return phone or e-mail messages from CNSNews.com Thursday.
In 2009 and 2010, GE paid millions in SEC fines, but did not admit to any wrongdoing.
The SEC fined GE $50 million in August 2009, alleging the company used improper accounting on four separate occasions in 2002 and 2003 to “increase its reported earnings or revenue and avoid reporting negative financial results.”
“Beginning in January 2003, an improper application of the accounting standards to GE's commercial paper funding program to avoid unfavorable disclosures and an estimated approximately $200 million pre-tax charge to earnings,” an Aug. 4, 2009 SEC news release highlighting the four offenses said.
“A 2003 failure to correct a misapplication of financial accounting standards to certain GE interest-rate swaps. In 2002 and 2003, reported end-of-year sales of locomotives that had not yet occurred in order to accelerate more than $370 million in revenue. In 2002, an improper change to GE's accounting for sales of commercial aircraft engines' spare parts that increased GE's 2002 net earnings by $585 million,” it added.
In July 2010, the SEC slapped GE with a $23.4 million penalty for its involvement in the oil-for-food scandal. GE agreed to pay the fine, but again did not admit to any wrongdoing.
The SEC, in a July 27, 2010 news release, said four GE subsidiaries “made illegal kickback payments in the form of cash, computer equipment, medical supplies and services to the Iraq Health Ministry or the Iraqi Oil Ministry in order to obtain valuable contracts under the [United Nations] Oil-for-Food program” from 2000 to 2003.
The U.N. Oil-for-Food program instituted in 1996 was designed to allow Iraq to sell oil in exchange for humanitarian aid and medical supplies to go to Iraqis despite the sanctions that were imposed on the country then under Saddam Hussein’s dictatorship. But, the SEC found that Iraqi ministries demanded kickbacks on contracts. Several other U.S. and foreign corporations were also implicated in the scandal.
The SEC took 15 Foreign Corrupt Practices Act enforcement actions against companies involved in the oil-for-food scandal, collecting $204 million in penalties, the agency said.
GE owned two of the subsidiaries involved in the scandal before the U.S.-Iraq war began in 2003, and acquired two other companies after Saddam’s regime was toppled.
“What kind of perception does that create if the president of the United States would appoint someone with two SEC fines that happened during his term in office?” Borelli said. “Doesn’t he do background checks?”
Borelli said GE’s highest corporate interest is pushing renewable energy projects, and he expected Immelt would use this position to do that.
“GE has been screaming for a carbon tax,” Borelli said. “To do that would raise the cost of fossil fuels. That would not make America more competitive.”
GE has invested heavily in green energy and lobbied heavily for legislation to regulate carbon emissions.
Obama suggested during the jobs council meeting that there should be more focus on building energy-efficient buildings as a way to make up for the construction jobs lost after the downturn in the housing market.
Immelt strongly agreed it should be a priority.
“We want to take on a few things that we can move the needle pretty quickly. I think this fits that bill,” Immelt told the president and other council members. “A lot of this stuff capitalizes today without any stimulus or anything like that. I just think it’s out there and we ought to be focused on things we can move the needle on.”