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News room
For
Immediate Release:
July 9, 2002 |
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Grading
The President's Speech On Corporate Governance Reform: Will
The Bush Administration Support Efforts To Stop Corporate
Crime, Or Just Talk About Tough Penalties For CEOs Who Get
Caught?
Statement
of Consumer Program Director Ed Mierzwinski
We
expect the President to talk some more about punishing corporate
crooks tomorrow, but will he also support the broader reforms
needed to stop corporate crime before it starts? Will his
proposals protect small investors and employee pension funds
from being looted or will he just talk about prosecuting the
crooks after they've already stolen and spent the money, as
happened at Enron? It's not enough to just punish corporate
CEOs. We need to restore the public's confidence by safeguarding
our financial system to guarantee that the markets pick winners,
not cheaters.
The
following are talking points that reporters and investors
can use to evaluate the President's speech:
-
We
Need A Strong Oversight Board for Accountants, Not One
Prone To Industry Takeover: Did the President support
the stronger Sarbanes bill (S. 2673) proposal for an auditor
oversight board, or did he embrace the much weaker House-passed
bill (Oxley, H.R. 3763) or SEC-proposed auditor oversight
boards? The House and SEC proposals are both dangerously
flawed and would lead to industry capture of the boards.
The Sarbanes bill itself should be amended on the Senate
floor to guarantee that its majority of independent members
are really independent.
-
We
Need To Guarantee That Consulting By Accountants Doesn't
Become The Tail that Wags the Auditing Lapdog: Did
the President say he would support a strong auditor independence
requirement, to prevent the watchdogs from becoming lapdogs?
One of the bricks in that wall is the Sarbanes bill's
requirement that a company board's audit committee must
both approve and disclose approval of non-audit services.
The House-passed bill does not include this requirement.
The independence provisions of both bills should be strengthened
to ensure that audit decisions are no longer made on the
basis of whether the audit firm might jeopardize a lucrative
consulting contract if it insists on tough treatment.
-
We
Need To Significantly Increase SEC Funding: The President's
budget did not significantly increase SEC funding. Both
the Sarbanes bill and the House-passed H.R. 3764 nearly
double SEC funding, from $438 million in FY 2002 to $776
million in FY 2003. In his speech, did the President support
the much higher Sarbanes and House funding level for the
SEC?
-
We
Need To Protect Whistleblowers and Make It Easier To Sue
Accountants and Lawyers Who Aid and Abet Corporate Wrongdoers:
The Judiciary Committee-passed bill (Leahy/ McCain,
S. 2010) will be offered as an amendment on the Senate
floor. It received bipartisan support in committee. It
imposes new penalties for shredding or falsifying documents,
protects whistleblowers, and extends the statute of limitations
for victims to sue securities fraudsters. Did the President
support the Leahy bill during his speech? Did the President
say he would support the Shelby bill, S. 1933, to remove
a Supreme Court-imposed bar on victims suing accountants
and lawyers who aid and abet securities fraudsters, but
who aren't the primary violators?
We
commend the President for joining the call by consumers, retirees
and other investors to stop the white-collar crime epidemic.
His comments today may help provide Congress with the kick
it needs to guarantee that it does more than just wring its
hands about Enron and Worldcom before it goes back to business
as usual. The President should recognize that we should do
more than just punish corporate criminals. We must change
the systemic lapses that made it so easy for them to commit
their crimes.
U.S. PIRG
is the national lobbying office for the state Public Interest
Research Groups. State PIRGs are non-profit, non-partisan public
interest advocacy groups.
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