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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: dave rose who wrote (1885)	3/7/2002 3:55:49 PM
From: stockman_scott	Read Replies (1) \| Respond to of 3602

Bush Proposes Post-Enron Crackdown on CEOs Thursday March 7, 3:06 pm Eastern Time By Adam Entous WASHINGTON (Reuters) - President Bush announced on Thursday he was cracking down on corporate and accounting misconduct but stopped short of tougher reforms advocated by lawmakers and his own treasury secretary after the Enron Corp.'s collapse. Under Bush's plan, chief executives would be required 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. Senate Democratic Leader Tom Daschle of South Dakota and other critics said the plan lacked the punitive measures and enforcement powers advocated after Enron, Bush's biggest financial backer in the 2000 campaign, declared the largest bankruptcy in U.S. history. The high-flying energy trader's sudden collapse destroyed thousands of jobs and billions of dollars in investor equity. ``Reforms should begin with accountability. And reforms should start at the top,'' Bush said, decrying executives who use ``artful and intricate financial arrangements to hide the true risks'' from investors. Roughly 80 million Americans own stock, either individually or through their pension plans. The president did not mention Enron or its long-time auditor, accounting giant Andersen, by name, but said: ``We've seen lately just how important these standards are and the harm that can follow when they are ignored. Exactly where the blame lies may take a long time to determine.'' The White House balked at a proposal by Treasury Secretary Paul O'Neill that would have made it easier to punish officers and directors accused of misleading shareholders. ``Our goal is better rules so that conflict, suspicion and broken faith can be avoided ... without inviting a rush of new lawsuits that exploit problems instead of solving them,'' Bush told a gathering of small business leaders and educators. Bush would, however, give top officers and directors two business days to disclose that they bought or sold company stock. Currently, corporate leaders can go as long as a year or more without disclosing personal transactions. NEW ACCOUNTING BOARD PROPOSED Alluding to Andersen, Bush said he would set up an independent regulatory board to oversee accounting firms, saying, ``We must ensure that the integrity of their work is never compromised.'' He stopped short of endorsing proposals to block corporate auditors from doing consulting work for audit clients. Instead he directed the Securities and Exchange Commission to review the issue. Andersen has been sued by shareholders alleging the $25 million in auditing fees and $27 million in other fees it collected from Enron in 2000 biased its audit judgement. To bolster investor confidence, which was shaken by Enron's spectacular downfall, Bush said he would require companies to disclose more information between reporting periods. White House officials said most of Bush's proposals could be carried out by the Securities and Exchange Commission within its existing authority. But legislative action will be needed to give the SEC the power to ban individuals from serving as corporate officers or directors. CRITICS SAY PLAN 'FALLS SHORT' Daschle and other Democrats blasted Bush's approach. ``It falls short of what I think would have to be the minimum standards,'' Daschle said. ``The lack of any penalty for corporate fraud, I think, is a glaring omission that would have to be addressed.'' ``Enron and the spate of other business failures demonstrate that we need tougher new laws to protect shareholders,'' added Rep. John Dingell of Michigan, the top ranking Democrat on the House Energy and Commerce Committee. Ten congressional committees, the SEC and the Justice Department are investigating the collapse of Enron, once America's seventh-largest corporation. An internal inquiry ordered by Enron's board alleged senior managers used off-the-books partnerships to hide losses, fool investors and enrich themselves.