Corporate scandals cost more than $200 billion, report says
By MARCY GORDON, AP Business Writer
Thu Oct 17, 6:32 PM ET
story.news.yahoo.com
WASHINGTON - Recent corporate scandals have cost Americans more than $200 billion in lost investment savings, jobs, pension losses and tax revenue, according to a report released Thursday.
The report issued by the "No More Enrons" coalition, partially funded by consumer groups and labor unions, said losses from 401(k) investment accounts alone totaled $175 billion and public pension funds nationwide lost at least $6.4 billion as the stock market plummeted amid a crisis of investor confidence.
It estimated that more than a million workers lost their jobs at the affected companies, while company executives cashed out billions of dollars of their stock.
Senate Majority Leader Tom Daschle, D-S.D., seized on the report to decry the scandals' impact and blame President Bush (news - web sites) and Republican lawmakers for what he said was failure to take strong action.
"Tens of thousands of jobs, lost. Billions of dollars in personal and public retirement savings, gone. Confidence in our companies and our markets, badly damaged," Daschle said.
"The lesson ought to be clear: When corporate fraud leads to corporate failure, we all get hurt. Unfortunately, this administration and many of our Republican colleagues continue to deny that obvious fact."
Daschle renewed his call for Bush to remove Securities and Exchange Commission (news - web sites) Chairman Harvey Pitt, accused by Democrats of heeding the accounting industry and blocking a tough candidate to head a new accounting oversight board.
"It appears that the administration is undermining the new board the law created to hold the accountants accountable," Daschle said. "Replace Harvey Pitt with someone who will enforce the law."
Republicans said the Democrats were simply playing politics.
"With the elections almost two weeks away, the Senate Democratic leadership seems to be more interested in scoring political points than in helping solve people's problems," said Ron Bonjean, a spokesman for Senate Minority Leader Trent Lott, R-Miss.
Bush and administration officials have pointed to the growing number of executives who have been taken away in handcuffs in recent months for corporate malfeasance.
When Andrew Fastow, Enron's former chief financial officer, was charged with fraud and conspiracy earlier this month, Bush told a White House audience: "You might have noticed ... that people are being brought to justice."
In late September, he cited "broad and dramatic progress."
"Our law enforcement agencies are after 'em," Bush said.
Treasury Secretary Paul O'Neill suggested Thursday that the high-flying 1990s, in which the stock market soared, allowed some corporate leaders to stray from their values.
"By the time they realized how far they had strayed, ... it was too late," O'Neill said in a speech at Harvard Business School. "Like frogs in boiling water, they didn't feel the heat until they were cooked."
The new report put together data from government and other public sources to detail the impact of accounting failures at Enron, Arthur Andersen, WorldCom, Global Crossing, Adelphia Communications, Xerox, Tyco International, Qwest Communications and others.
The $200 billion total is "an extremely conservative estimate," said Mike Lux, president of American Family Voices, part of the "No More Enrons" coalition.
The report identified nearly $13 billion in lost federal tax revenue from companies with questionable accounting practices underreporting their profits to the IRS. But Lux said the amount likely was higher.
___
On the Net:
The report is available at http:www.americanfamilyvoices.org |
