Steve Quayle News Alerts

July 9, 2002

“More scandals are hiding in corporate America. We must find and expose them now so we can begin rebuilding the confidence of our people and the momentum of our markets.” - President Bush

THE PRESIDENT'S PRESCRIPTION
* Create, by executive order, a task force to provide direction for investigations, prosecutions and better coordination between agencies.

* Recommended doubling — to 10 years — the maximum prison term for mail fraud and wire fraud.

* Called for longer prison time for corporate officers and directors convicted of criminal fraud.

* Proposed strengthening laws that criminalize document shredding and other forms of obstruction of justice.

* Proposed strengthening the Securities and Exchange Commission's ability to freeze improper payments to corporate executives while a company is being investigated.

* Called on companies to prevent officers from receiving loans from their companies.

* Challenged CEOs to explain how their compensation packages are in the best interests of their companies' shareholders and clearly disclose the details of those packages.

* Urged Congress to appropriate another $20 million to allow the SEC to hire 100 new enforcement officers and to provide $100 million in FY 2003 so the SEC can hire more enforcement officers and provide them with state-of-the-art technology.

* Called on the nation's stock markets to require that a majority of a company's directors and all members of the audit, nominating and compensation committees be barred from having a material relationship with the corporation. He wants to require listed companies to receive shareholder approval for all stock option plans. (AP)

(CBS) President Bush called for stiff new penalties for corporate criminals and a crackdown on boardroom scandals Tuesday, promising in a speech on Wall Street that his administration would ``end the days of cooking the books, shading the truth and breaking the law.''

Confronting a wave of corporate wrongdoing that has undermined investor confidence and threatened political damage to the White House, Mr. Bush said, “We will use the full weight of the law to expose and root out corruption.”

The president called on the U.S. Sentencing Commission to recommend longer prison terms for corporate executives guilty of fraud and announced a new task force for the pursuit and prosecution of corporate criminal activity. The task force would be headed by Deputy Attorney General Larry Thompson and include investigators from the Department of Justice and other agencies.

Mr. Bush likened it to a “financial crimes SWAT team, overseeing the investigation of corporate abusers and bringing them to account

Mr. Bush said the mushrooming corporate scandals threatened to undermine economic recovery and damage the financial well-being of workers.

“The business pages of American newspapers should not read like a scandal sheet,” he said. “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.”

Mr. Bush, wearing a Big Apple lapel pin, spoke from a hotel ballroom on Wall Street.

“More scandals are hiding in corporate America,” he said. “We must find and expose them now so we can begin rebuilding the confidence of our people and the momentum of our markets.”

Mr. Bush also wants to double the maximum prison term for mail fraud and wire fraud to 10 years, and strengthen laws criminalizing document shredding and other forms of obstruction of justice.

Mr. Bush released a 10-point plan that builds on another one he issued in March. Aside from the task force, all proposals will require approval from lawmakers, stock market executives, regulators or the companies themselves.

The president’s proposal would:
* Enhance the ability of the Securities and Exchange Commission to freeze improper payments to corporate executives while a company is under investigation.
* Persuade publicly traded companies to prevent corporate officers from receiving loans from their own companies.
* Ask stock markets to require that a majority of a company's directors — and all members of the company's audit, nominating and compensation committees — have no material relationship with the company so that they are truly independent.

In Washington, Senate Majority Leader Tom Daschle, D-S.D., said Democrats welcome what he called the president's new support for reforming the corporate culture, reports CBS News Correspondent Howard Arenstein. But he noted that Mr. Bush still hasn't endorsed the measures now being considered in the Senate to punish wrongdoers and impose new rules on companies and their accountants.

Speaking on the Senate floor Tuesday, Daschle said, “The administration needs to understand that the time for half measures is long past. The American people expect and deserve comprehensive reform.”

Mr. Bush addressed the corporate scandals and their political implications for his administration at a White House news conference Monday.

He was bombarded by questions about his record as a director at Harken Energy Corp. in the early 1990s. The SEC forced the company to amend its books to reflect millions of dollars in losses that had been hidden by the sale of a subsidiary to a group of insiders.

As Mr. Bush described it Monday, when the SEC cried foul on Harken's sale of a subsidiary to a partnership of its own executives, which had the effect of concealing $10 million in losses, “There was an honest difference of opinion as to how to account for a complicated transaction.”

The president rejected comparisons to Enron Corp., where sham off-the-books partnerships were used to hide hundreds of millions of dollars in losses. Arthur Andersen LLP was the accounting firm in both cases.

Asked if he, as a member of Harken's board at the time, approved of the questionable transaction, Mr. Bush shrugged. “You need to look back on the directors' minutes,” he said.

http://www.cbsnews.com/stories/2002/07/08/politics/main514453.shtml