President Bush Calls for Harsher Corporate Fraud Penalties
Mr. Bush said in a speech before Wall Street leaders today, ”We must usher in a new era of integrity in corporate America.”
“The business pages of American newspapers should not read like a scandal sheet. … I am calling for a new ethic of personal responsibility in the business community — an ethic that will increase investor confidence, make employees proud of their companies and regain the trust of the American people.”
The president vowed his administration would “end the days of cooking the books, shading the truth and breaking our laws.”
“Self-regulation is important, but it is not enough,” Mr. Bush said, speaking from a hotel ballroom in New York City.
The president announced he would create a Corporate Fraud Task Force which would operate like a “financial crimes SWAT team, overseeing the investigation of corporate abusers and bringing them to account.”
The new task force, to be led by Deputy Attorney General Larry Thompson, would enhance inter-agency investigation and prosecution of civil and criminal cases relating to corporate fraud.
The Securities and Exchange Commission, which oversees publicly traded companies, would also be given more authority to punish those engaging in corporate fraud, the president said.
The president urged Congress to pass a $20 million emergency funding request for the SEC to allow the agency to hire 100 enforcement agents. Mr. Bush asked legislators to approve an additional $100 million for the SEC in his 2003 budget. Earlier this year, the White House introduced a leaner budget for the SEC that called for staff reductions in securities fraud investigation units.
Other proposals in the president’s ten-point plan included doubling prison terms for mail and wire fraud to ten years, and toughening laws for document shredding and other ways of obstructing federal investigations.
Except for the creation of a task force, the president’s proposals require approval from Congress, stock market executives, securities regulators, or the corporations themselves.
Earlier today, Senate Majority Leader Tom Daschle (D-S.D.) and House Minority Leader Richard Gephardt (D-Mo.) gave a press conference with former WorldCom and Enron employees and issued an “investor’s bill of rights” designed to protect employees and individual investors from corporate fraud.
Both Democratic leaders, who described the White House’s proposals as inadequate, criticized President Bush’s own business transactions in the last decade, notably his sale of stock in Harken Energy Corp. more than 10 years ago before the company announced big losses. An SEC probe later determined Mr. Bush did not have access to insider information.
“It is not enough to talk about accountability; you have to act to ensure it,” Daschle said.
“The test for the president today is not whether he shares the outrage that the workers and shareholders in these companies feel. … The question is whether he is willing to take action on that outrage and support the legislation which will actually help solve the problem.”
Daschle warned the White House’s proposals would “ring hollow,” if the president does not support the Senate’s Democrat-backed accounting reform bill.