The New York Times leads with, and others front, word that SEC investigators have tentatively concluded that various mutual fund companies have been giving cash kickbacks or extra business to brokers in order to get them to promote their funds. Thirteen of 15 mutual funds investigated gave such payola. The Los Angeles Times leads with President Bush’s announcement that Canada will be allowed to bid in the next round of Iraq reconstruction contracts. “They want Iraq to succeed, they want Iraq to be free,” said Bush. Secretary of Defense Rumsfeld said “there were three or four” other countries that the U.S. is also considering letting into the bidding. Canada missed the first round of contracts, worth about $5 billion. Russia, France, Germany, and others are still off the list.The Washington Post leads with word that the Senate Finance Committee has ordered the IRS to hand over tax documents from various Muslim charities that have been under suspicion for connections to Mideast terror groups. “We want to look into where all their money comes from,” said one unnamed committee aide. “Is it from foreign embassies? Does money come from obscure individuals in the Persian Gulf? We’re the only ones that can look at this.” The Post notes that the FBI has already been investigating many of the charities. USA Today leads with news that former Enron CFO Andrew Fastow and his wife have agreed to plea deals, admitting that they knew about the fraud at the company. Fastow will be going to jail for 10 years. The deals had earlier fallen off track after a judge questioned whether Fastow’s wife would serve enough time.
The LAT, which off-leads the SEC investigation, emphasizes that such seeming graft isn’t illegal. But brokers are required to tell investors about it, and only half did. Even then, says the NYT, disclosure often appears to have been “inadequate.”
The NY Times’ Stephen Labaton, who has the most aggressive coverage of the funds story, explains that many of the shady deals were essentially barters: “The mutual funds would steer their trades of their portfolio shares to a particular brokerage house, and in exchange, the brokerage houses would promote the shares of the fund.” Labaton adds that direct payoffs have long been suspected “but for years been largely ignored by securities regulators.”
The SEC isn’t releasing the names of the brokerages or mutual funds involved, citing the ongoing investigation. The Wall Street Journal explains that the agency is about to file charges and will out the companies once it does.
The papers all add that the mutual fund disclosures come as the SEC is set to unveil today a variety of tougher proposed regulations, including requiring most mutual fund board members to be independent of the funds they’re overseeing.
According to early-morning reports, a Palestinian suicide bomber killed at least four people near the crossing with the Gaza Strip.
The NYT off-leads an about-be-announced $1.5 billion plan by the White House to promote (heterosexual) marriage. As the Times puts it, the money would be spent to “help couples develop the interpersonal skills that sustain ‘healthy marriages.’ ” An unnamed ‘presidential advisor’ explained, “This is a way for the president to address the concerns of conservatives and to solidify his conservative base.” The Times suggests it also might be good policy, saying there’s a “growing body of evidence” that children in married two-parent families fare better.
According to early-morning reports caught in the LAT, a suicide car bombing in central Iraq killed at least two people and wounded 14. In other Iraq violence: an Apache helicopter was shot down and the crew survived; the NYT says two Iraqis were killed after GIs opened fire on a demonstration, “possibly after being shot at”; and about a dozen Iraqis were injured in continued anti-government protests in Kut, south of Baghdad.
The Journal mentions that Spain’s prime minister, who is buddies with Bush, is urging the president to give NATO a significant role in Iraq.
The NYT fronts a letter from Saddam found in his hideout that warned Baathist guerrillas not to get cozy with al-Qaida-types. As the Times reminds, AQ detainees have also told U.S. interrogators that while they once considered working with Iraq, Osama rejected the idea.
The WP stuffs word that top administration officials ordered the watering down of a federal report on racial disparities in health care. No facts were changed, but the wording was tweaked. An early version of the report mentioned “disparity” 30 times in its “key findings” section. The revised report does so twice. Acknowledging the changes, a (soon to be unemployed?) government spokeswoman explained, “The idea is not to say, ‘We failed, we failed, we failed,’ but to say, ‘We improved, we improved, we improved.’ “
P.S. Given that the WP appears to have a non-tweaked copy the report, why not post it?