Angered Bush to Give Speech on Corporate Reforms
By Steve Holland
Friday June 28, 11:07 am Eastern Time
WASHINGTON (Reuters) - President Bush, angered at relentless scandals in U.S. boardrooms, will use his Saturday radio address and a July 9 speech in New York to urge Congress to approve his plan for corporate responsibility, the White House said on Friday.
Bush has already proposed plans that if enacted, would ban corporate executives from profiting from erroneous financial statements. That was in response to the implosion last year of the Texas-based Enron Corp. (Other OTC:ENRNQ.PK - News), one in what has become a string of recent corporate scandals.
WorldCom (NasdaqNM:WCOME - News), the telecommunications giant, revealed $3.8 billion in accounting irregularities this week and Xerox Corp. (NYSE:XRX - News) on Friday discovered a $2 billion revenue gap in its books.
Bush will devote his Saturday radio address to the subject of corporate responsibility and will travel to New York on July 9 to stress the need for better governing at the top level of American businesses. He will also emphasize the importance of Congress approving better enforcement and rules to protect pensions, shareholders and employees.
"But it's also a higher calling than just new laws and new rules," said a senior official, speaking on condition of anonymity. "He's going to call on corporate America to live up to the standards that has made our economic system the envy of the world. He will stress that fundamentally our economy is strong," a senior administration official said.
In recent months the ex-businessman Bush, as he reads the headlines detailing corporate scandals, has told friends and aides that he is "mad as hell at corporate America."
TOUGH MESSAGE
White House spokesman Ari Fleischer said Bush delivered a tough message on June 13 to corporate leaders in a meeting in the White House Roosevelt Room.
"This is a message the president delivers straight and hard in private and in public. It's something he feels very passionate about," Fleischer said.
Fleischer said the Securities and Exchange Commission has stepped up enforcement and "the president does think that if you falsify your profits and you personally gain you should give it up. It should be taken back from you." The WorldCom scandal, rivaling last year's collapse of Enron, has re-ignited legislative efforts to tighten accounting standards and hold top company executives and investment houses accountable.
Lawmakers said they were angered and dismayed by the ever-lengthening parade of corporate scandals and the impact on the U.S. stock markets, consumer confidence and the economy.
Democrats have seized on the corporate scandals as a possible weapon in November mid-term elections along with the fragile economy, rising budget deficits and a falling dollar.
Bush, successful in the war on terrorism, wants to avoid falling into the same trap as his father when the former president, victorious in the Gulf War, lost his reelection bid on accusations that he was disconnected from domestic concerns like the economy.
10-POINT PLAN
In March, Bush outlined a 10-point plan that would require chief executives to attest personally each quarter to the accuracy of their financial statements and disclosures.
To punish accounting-related abuses, top executives would be forced to forfeit their bonuses and other compensation. In extreme cases, they could be barred from serving as officers or directors for other publicly held corporations.
And, under Bush's proposal, accounting firms would be subject to unprecedented oversight.
His plan would require top executives to disclose when they buy or sell company stock within two days of the transaction. Currently, executives can wait a year or more without disclosing personal transactions.
And he would also create a regulatory board to oversee accounting firms. It would be supervised by the Securities and Exchange Commission and dominated by members outside the accounting profession to ensure its independence.
"The president has been frustrated that the Congress has not acted on his proposal he outlined weeks ago. And the types of authority he has requested for the Securities and Exchange Commission is exactly what they need to pursue these cases that are under way right now," said the senior official, speaking on condition of anonymity.
"The president believes it is important they move quickly in enacting these things," the official said.
Bush, in his public remarks, will stress that the vast number of people in business are abiding by the rules and that the ethic responsibility he emphasizes repeatedly must extend to American boardrooms.
"He will also say we cannot let the actions of a few cast a cloud over the good acts of the many. The strength of our economy and free enterprise system is based on trust and integrity and the ability to do the right thing," the official said. |
