Hell will freeze over before those
bozos touch their corporate owners.
Treasury Secretary O'Neill Warns CEOs
By Melissa Goldfine
CHICAGO (Reuters) - U.S. Treasury Secretary Paul O'Neill, without referring by name to collapsed energy trader Enron Corp. , warned chief executives on Monday that they may be held liable for accounting lapses at their firms.
In remarks to the Chicago Economic Club, O'Neill, a former captain of industry himself in his previous job as head of aluminum giant Alcoa Inc. (NYSE:AA - news), said company chief executive officers should ensure that quarterly statements give investors enough information to know a company's position and its prospects for success.
``That doesn't mean investors should be forced to figure out what's important in a dense report the size of the Chicago or New York City phone book. The CEO should be able to identify the five or 10 most important things. And if there's negligence, there should be some recourse,'' O'Neill said in a speech that capped off a day of meetings with business leaders in Chicago.
The collapse of Enron, once the nation's seventh-largest company, in the biggest bankruptcy filing in U.S. history has wiped out thousands of jobs and billions of dollars in shareholder equity.
O'Neill is part of a high-level multi-agency group that has been charged with finding ways to improve corporate disclosure in the wake of the Enron collapse. Federal law enforcement officials, as well as several congressional panels, are looking into the collapse.
After his speech, O'Neill answered questions prepared by the Economic Club in advance. When asked to comment on whether he believes CEOs should verify their companies' financial statements as accurate, the Treasury secretary said, ``I would have CEOs certify.''
O'Neill said the disclosure group, which includes not only the Treasury Department but the Federal Reserve, the Securities and Exchange Commission and Commodity Futures Trading Commission, will report to President Bush ``shortly.''
The Treasury secretary did not mention Enron by name, framing his speech instead as relating to ``a topical subject.''
'A DUTY TO TELL THE TRUTH'
During the question-and-answer period, O'Neill elaborated slightly, saying that corporate leaders have a responsibility to those whose money they use for their business endeavors.
``They have a duty to tell the truth and tell all of the truth,'' he said. ``It's not OK to live by omission.''
Elsewhere in his speech, O'Neill said the U.S. economy was in the ``early stages'' of recovering from recession and returning to 3 percent to 3.5 percent annual growth rates. Those rates of growth should mean a return of budget surpluses ahead, he said, ``so long as we exercise discipline in federal spending.''
O'Neill also addressed the economic climate in various countries abroad in response to questions from the Economic Club. He said Japan, which has experienced 11 years of average growth of less than 1 percent, will not be able to sustain its economic situation in the long term.
``Where they are is not sustainable for too much longer a period of time,'' O'Neill said. ``Something will give.''
Japan has been plagued by a troubled banking system due to bad loans, and corporate bankruptcies hit a postwar high for the month of January. Interest rates are near zero in Japan, and policy makers are expected to announce an anti-deflation package on Wednesday.
Echoing remarks from last week, O'Neill said that Argentina is headed in the right direction after the government defaulted on part of its $141 billion public debt.
As for Turkey, where a financial crisis last February sparked the country's deepest recession since 1945, O'Neill said the Bush administration is hopeful about the progress it is making.
Earlier on Monday, O'Neill met with local business leaders at the world's second-largest futures exchange, the Chicago Mercantile Exchange. He also toured the CME's tumultuous open-outcry trading pits, a hotbed of capitalism where traders shout buy and sell orders and gesticulate wildly to one another. |
