President Bush wants new rules governing the conduct of corporate executives, following the collapse of the U.S. energy firm Enron. Mr. Bush wants to hold business leaders personally responsible for the truth of their financial statements.
President Bush wants an independent regulatory board to monitor corporate ethics and punish executives who violate the public trust. "All people involved in our capitalistic system must assume responsibility for leadership. In the world of publicly held corporations, there are laws and regulations, which hold people accountable," he said. "They need to be clear, and they need to be tough when people misuse the public trust."
The president is pushing a series of corporate reforms following the collapse of the politically powerful energy firm, Enron, which has left thousands of former employees without proper pensions.
Enron declared the largest corporate bankruptcy in American history last December, after hiding more than $1 billion of debt in offshore partnerships. Auditors approved the company's financial statements, and executives were selling-off stock at the same time they were telling workers and the public to buy Enron shares.
The U.S. Justice Department and Congress are investigating whether Enron broke the law, with some legislators questioning ties between the firm's executives and members of the Bush administration. Enron gave money to politicians from both parties, but is most closely associated with the president, as it was the largest corporate donor to the Bush presidential campaign.
The White House says Enron officials did ask for help as their company was failing, but the administration decided not to intervene. President Bush says Enron got no special favors, and he is encouraging the Justice Department to make a thorough investigation of the firm's collapse.
Without mentioning Enron by name, the president has spent the last few weeks calling for greater corporate responsibility, saying executives must obey the law, and tell the truth about their firms' financial health. "Anytime a chief executive officer of a publicly-held company signs a financial statement, he is personally vouching, he is personally saying the numbers are correct and accurate," he said. "And if one were to receive a bonus, any corporate officer receive a bonus, and the numbers are misleading as a result of misconduct, the bonus needs to go back to the treasury on behalf of the shareholders. These guys should not be allowed to keep their bonuses."
The president wants executives to announce publicly whenever they buy or sell company stock. If executives abuse their power, the president says, they should lose their right to serve in any corporate leadership.
Mr. Bush said all investors should have quarterly access to information needed to judge a firm's financial performance, condition, and risks.
Senate Democrats say the president's plan falls short of what is needed. For example, Mr. Bush wants external auditors blocked from offering other services, if those services would compromise the independence of the audit. Democrats want a complete ban on accounting firms providing any other services, including consulting, for companies whose books they audit.