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| BETTER BOOKKEEPING | |
 July 11, 2002 
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| KWAME HOLMAN: A midsummer
Senate debate on accounting reform legislation normally is not something
that would generate a lot of public interest. But against the backdrop
of high-profile corporate scandals and a plunging stock market, people
are paying attention.
SEN. PAUL WELLSTONE: These corporate insider scandals are threatening the economic security of families all across Minnesota, North Dakota, New Jersey, Maryland, and all across the country. I mean, it's heartbreaking. You have people who have taken their savings and put them into stock. This is what was going to be their resources to help send their kids to college or to meet other family needs. The value of that has eroded. KWAME HOLMAN: The bill to reform the practices of the accounting industry was brought to the Senate floor this week by Banking Committee Chairman Paul Sarbanes, and it looked like it could trigger a partisan pillow fight. But when President Bush used strong words on Wall Street against those who would manipulate the corporate system for personal gain, the Senate responded yesterday with a series of unanimous votes on amendments adding punch to the Sarbanes bill. SEN. TOM DASCHLE: I think that the Sarbanes bill is going to pass by a large margin. If the votes yesterday are any indication of the strong bipartisan support for the efforts that are represented in this legislation, I think you're going to see a strong vote. I wouldn't be surprised if it were a unanimous vote. KWAME HOLMAN: The major addition to the Sarbanes bill yesterday was a series of criminal penalties designed by Judiciary Committee Chairman Patrick Leahy. The Leahy amendment creates new prohibitions against deceiving shareholders and tacks on a ten- year jail term for doing so. It requires all audit documents be preserved for five years, and adds a five-year jail term for violating that provision. The amendment also toughens penalties for destroying documents related to fraud investigations, and creates whistleblower protection for employees who aid in such investigations. SEN. PATRICK LEAHY: I wrote legislation that is going to punish criminals. I wrote legislation that will preserve the evidence of fraud and protect victims. But I've got to tell you, Mr. President, as one who's prosecuted people, I know nothing focuses their attention more than knowing they're going to go to jail. Suddenly that overlooked ethics course when they were getting their MBA, or that overlooked ethics course in the accounting school or law school... they are going to start looking at it again. If they think because they can walk away with this, they will go to jail, they are going to go to jail. It is not going to be a complacent board of directors they will deal with. It's going to be big bubba in the cell next door. That is what they have to worry about. KWAME HOLMAN: Phil Gramm, the ranking Republican on the Banking Committee, issued a warning along with his support for the Leahy amendment. SEN. PHIL GRAMM: I have to say that I think we have sort of reached the point where a lot of debate on this issue is more about the next election than it is about corporate integrity. I wonder if the debate has not reached the point where we are hurting equity values by making people fear not only the disease, but the absurd prescription of the doctor that might come from the government. And I think the sooner we can finish this bill and go to conference and come out with a final product so that people know with certainty what the new rules are and how we are going to go about them, I think everybody will benefit. KWAME HOLMAN: Still, Kentucky Republican Mitch McConnell has lengthened the debate, insisting corporate regulations and penalties be extended to other professions. Yesterday he tried to hold labor officials liable for the accuracy of their union's financial statements. Today he tried to set new standards for personal injury attorneys. SEN. MITCH McCONNELL: We ought to set standards for corporate attorneys, I favor that. And we ought to set standards for personal injury lawyers, as well. Corporations and corporate attorneys do not have a monopoly on misconduct. We are doing a real disservice to the American public, if during this important debate on professional misconduct we turn a blind eye to abuses in our society that have been piling up way before - long before Enron, WorldCom and Global Crossing. KWAME HOLMAN: But bill sponsor Paul Sarbanes questioned why McConnell chose to bring up his amendments now. SEN. PAUL SARBANES: Now, this is, of course, the second second-degree of McConnell amendment that we've had to deal with on this legislation, and it... I hope the Senator from Kentucky doesn't view this as a kind of a fair hunting game to bring forth at each step along the way here, whenever there's an opening for a second-degree amendment, whatever sort of pet project he's been harboring in his office for whatever period of time. SEN. MITCH McCONNELL: As I listen carefully to my friend from Maryland, he is straining here to think of a good argument against this worthwhile amendment. It's been my experience over the years in the Senate, when we start arguing about... when we start saying there's been no committee action or there have been no hearings, we're having a hard time thinking of a good argument against the proposal on the merits. KWAME HOLMAN: Nevertheless, both of McConnell's efforts were cast aside by a majority of Senators. Still, by early this evening, the Senate still had 58 Democratic and 36 Republican amendments to dispose of, assuring that the Senate debate on legislation to reform accounting procedures will go into next week. |
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