Selectric:
Guess steps have been taken to ensure that the flagrant violations of companies do not reoccur..
CORPORATE POWER
The War Against Reform
After the massive financial meltdowns at Enron, WorldCom, and a host of other
companies, Congress passed legislation to clean up corporate America. The law,
called Sarbanes-Oxley, requires corporations to adopt more responsible
accounting practices, publicly disclose more details about their finances and
improve corporate governance. Three years later, unscrupulous members of the
business community have launched an under-the-radar campaign to roll the
reforms back
(http://www.washingtonpost.com/ac2/wp-dyn/A43168-2005Jan2?language=printer) .
The battle pits Treasury Secretary John Snow, who appears willing to capitulate
to the demands of big business (saying we need " a more balanced environment
(http://www.businessweek.com/bwdaily/dnflash/jan2005/nf2005016_3280_db052.htm)
"), against SEC Chairman William Donaldson, who strongly defends the law. The
outcome will have a profound impact on our ability to reduce future corporate
scandals and, ultimately, the health of the American economy.
CORPORATE CRONIES SEEK OUSTER OF EFFECTIVE SEC CHAIRMAN: William Donaldson, a
long-time Bush family friend who was installed as chairman of the SEC, has done
an admirable job in using the new powers granted to the agency under
Sarbanes-Oxley to reign in corporate abuse. Under Donaldson's leadership the SEC
"has instituted a program to get ahead of problems by finding risks.
(http://online.wsj.com/article/0,,SB110350099382804351-search,00.html?collection=wsjie%25)
" Now Bush's corporate allies want him ousted. Several major industry groups --
including the Business Roundtable, the U.S. Chamber of Commerce and the National
Association of Wholesaler-Distributor -- are "part of a quiet effort to
convince the president that it's time for a new Securities and Exchange
Commission chair
(http://www.accountingweb.com/cgi-bin/item.cgi?id=100230&d=815&h=817&f=816&dateformat=%25B%20%25e,%20%25Y)
." Thomas Donohue, president of the Chamber of Commerce, hasn't been so quiet.
He described the implementation of Sarbanes-Oxley as a "runaway system of
corporate destruction being run by [New York Attorney General] Eliot Spitzer and
the people who work a the SEC." Donaldson says he is become the subject of
criticism because some groups are " dedicated in deed and rhetoric to
perpetuating a myopic focus on the status quo
(http://online.wsj.com/article/0,,SB110350099382804351-search,00.html?collection=wsjie%25)
."
SARBANES-OXLEY GOOD FOR BUSINESS: Chicken Littles - like Donohue - claim that
because of Sarbanes-Oxley, the sky is falling on corporate America. Business
Week disagrees. A new analysis of the impact of the law by the magazine
concludes that the law is " worth the trouble
(http://www.businessweek.com/bwdaily/dnflash/jan2005/nf2005016_5163_db016.htm) "
for business. One benefit: "the intense scrutiny of accounting methods and
internal controls has unearthed lingering problems in the way companies
operate." Also "fixing weak financial controls has nipped a lot of the problems
in the bud." Executives from GE and United Technologies credit the law for
spurring improvements in their business practices. Philip Strand, a top
executive at SAS (a large software company) argues "many public companies should
be looking at the new Sarbanes-Oxley financial disclosure the same way most of
us should view spinach -- it's just plain good for you
(http://www.s-ox.com/features/article.cfm?articleID=230) ." There is extra work
involved "but it is work that can provide long-term benefits for the enterprises
that take the right approach."
SARBANES OXLEY GOOD FOR INVESTORS: One huge advantage of tighter controls on
financial accounting: " greater confidence investors have in financial results
(http://www.businessweek.com/bwdaily/dnflash/jan2005/nf2005016_5163_db016.htm)
." Ultimately, renewed investor confidence means a stock market that is more
stable and produces better returns.
DIRTY TRICKS HAVE ALREADY BEGUN: Whatever the benefits, some companies are
reflexively opposed to it and remain determined to do whatever is necessary to
undermine Sarbanes-Oxley. In November, lobbyists for Fidelity Investments
persuaded Sen. Judd Gregg (R-NH) to secretly slip in an amendment to a
fast-moving spending bill
(http://www.washingtonpost.com/ac2/wp-dyn/A43168-2005Jan2?language=printer)
"directing the Securities and Exchange Commission to justify a new
[Sarbanes-Oxley related] rule that forces fund companies to appoint directors
without ties to management." Reps. Michael Oxley (R-OH) and Barney Frank (D-MA)
sent a letter to Gregg's committee saying that slipping the provision into the
bill at the last minute, without debate, was "imprudent." The U.S. Chamber of
Commerce -- which argues vehemently against the right of individual consumers
to protect their rights
(http://www.uschamber.com/press/releases/2005/january/05-03.htm) -- has taken
the SEC to court over the same rule. |
