July 9, 2002
Cracking Down On Corporate Crime
President Announces New Plan To Battle Corporate Corruption
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(AP / CBS)
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Interactive Risky Business Corporate America is finding itself in some sticky predicaments lately. Here are some dubious examples.
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Interactive Bush Presidency The president's agenda, plus facts, figures, major events and key personalities.
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
He also gave qualified support to legislation now before the Senate written by Banking Committee Chairman Paul Sarbanes, D-Md., that would tighten oversight of the accounting industry.
But Democratic leaders in Congress continued to criticize Mr. Bush as talking tough but failing to take strong action.
"It is not enough to talk about accountability; you have to act to ensure it," Senate Majority Leader Tom Daschle, D-S.D., said Tuesday at a news conference with House Minority Leader Dick Gephardt, D-Mo., and laid-off workers from WorldCom and Enron.
Without support for the accounting oversight bill, Daschle said, the president's speech ``will ring hollow.''
In his speech, 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:
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, 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.
©MMII CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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