Some See Cracks In Reform Law
"The president said all the
right things at the signing
ceremony" July 30, said
Leahy, chairman of the
Senate Judiciary
Committee. "But now given
the tough law, they're
basically saying, 'We're not
going to use it.' "
By Jonathan Weisman
Washington Post Staff Writer
Wednesday, August 7, 2002;
Page E01
In the week since President
Bush signed a corporate
accountability bill, White
House and Justice
Department officials have
issued interpretations and
prosecution guidelines that
could weaken key
provisions, the bill's authors
and consumer groups say.
Members of Congress from
both parties accused the
administration of
undermining or narrowing
the scope of provisions
covering securities fraud,
whistle-blower protection
and punishment for
shredding documents. On
Monday, Sen. Patrick D.
Leahy (D-Vt.) said in a letter
to Attorney General John D.
Ashcroft that the Justice
Department did not help
draft the accounting law's
criminal statutes but now
appears to be contradicting
congressional intent with
guidelines for federal
prosecutors.
"The president said all the
right things at the signing
ceremony" July 30, said
Leahy, chairman of the
Senate Judiciary
Committee. "But now given
the tough law, they're
basically saying, 'We're not
going to use it.' "
White House and Justice Department officials said the critics
misinterpreted technical guidance letters.
"The Department of Justice and the administration strongly
support the act, and we are committed to its full and
expeditious implementation," Justice Department spokesman
Bryan Sierra said. "The purpose of the guidance sent out by
the attorney general last week was to immediately advise
prosecutors of the important tools now available to them.
Congress did its job, and we are now doing ours."
The law, co-authored by Sen. Paul S. Sarbanes (D-Md.) and
Rep. Michael G. Oxley (R-Ohio), established an independent
board to oversee the accounting profession, requires corporate
executives to certify their companies' financial statements,
and sets new penalties for securities fraud and document
shredding.
The guidelines, issued first by White House Counsel Alberto
R. Gonzales and then by Ashcroft, raised concerns that the
administration lacks the resolve to enforce the new laws.
Last week, the White House appeared to narrow the scope of
protections offered to people who draw attention to corporate
wrongdoing. The law's authors said they intended to extend
protection to anyone who raises concerns to an employer, a
federal agency or member of Congress. But Labor Department
guidelines restrict congressional protection to those who
raise issues to members of Congress involved in corporate
investigations.
Sen. Charles E. Grassley (R-Iowa) protested to the president
that whistle-blowers must feel confident that they can bring
complaints to their senators or representatives regardless of
lawmaker's connection to an investigation.
"Any dummy that reads the bill knows what we meant,"
Grassley said. "We couldn't have written it any clearer."
In its guidance last week on a prohibition of document
shredding, the Justice Department referred federal
prosecutors to another law that "bars corrupt acts to destroy,
alter, mutilate or conceal evidence, in contemplation of an
'official proceeding.' "
The shredding language was drafted expressly to free
prosecutors from having to prove that a shredder knew an
official investigation would need the material, Leahy said.
Federal prosecutors, in their case against Arthur Andersen
LLP, had to show that the people shredding documents
related to its audit of Enron Corp. had anticipated an
investigation. Andersen was convicted in June of obstructing
justice for destroying documents related to its Enron audit.
A Justice Department official said Ashcroft's guidance is not
intended to limit prosecutions to shredding documents that
might be required by official investigations.
The Sarbanes-Oxley legislation also created a felony for
securities fraud with prison terms of up to 25 years. But
Leahy complained that Justice Department guidance to
prosecutors on the statute gives short shrift to the new power
it grants law enforcement officers.
The Justice Department official said that after Congress
passes legislation as emphatically as it did the accounting
law, there was no need for Ashcroft to underscore its
significance.
Administration officials also said the whistle-blower issue
was exaggerated. White House guidance says whistle-blower
protections would apply to people raising issues with
congressional investigators. But White House spokesman Ari
Fleischer said Congress is free to determine who would be
deemed a congressional investigator.
Critics were undeterred. In combination, the guidance
appears to be "an effort to undermine the intent of Congress
to protect investors," said Frank Torres, a lobbyist for
Consumers Union.
Leahy said: "I can give the benefit of the doubt on one
mistake. But then you have a second one and a third one.
Well, three strikes and I don't believe it's a mistake. I think
they don't believe in enforcement."
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