President Bush is again calling for greater corporate responsibility as another U.S. company faces a billion-dollar accounting scandal. The Xerox company announced Friday that it had overstated its revenue by more than $1 billion over the past five years. It is the second major U.S. business scandal in the past week. The president said he will hold corporate managers accountable for mismanagement.
President Bush said business leaders have responsibilities to both shareholders and employees to be above board at all times and give honest and accurate financial reports. It is the third day in a row the president has spoken out against a series of corporate scandals that have rocked the business world.
On Friday, Xerox Corporation stocks fell sharply following reports of accounting irregularities. The company admitted it had overstated revenue by more than $1 billion between 1997 and 2000. That announcement came just days after revelations that the nation's second-largest long-distance telephone company hid nearly $4 billion in expenses to artificially inflate profits.
Speaking at a fundraiser for a Republican member of Congress, President Bush says the Justice Department will prosecute those responsible for corporate wrongdoing. "Corporate America has got to understand there is a higher calling than trying to fudge the numbers, try to slip a billion here or a billion there and hope nobody notices, that you have a responsibility in this country to always be above board," Mr. Bush said. "We expect high standards in our schools. We expect high standards in corporate America as well. I intend to enforce the law to make sure there are high standards."
With legislative elections approaching, some polls suggest the Republican party may be vulnerable to Democratic attacks feeding-off public concern over a series of corporate scandals including the energy firm Enron. The Securities and Exchange Commission is investigating accounting practices at another energy company during the time when Vice President Dick Cheney was its chief executive.
Senate Majority leader Democrat Tom Daschle Friday called the corporate failures a threat to the core of the economy and said the Bush administration is not doing enough to back needed reforms.
White House spokesman Ari Fleischer says the president is confident in the overall recovery of the U.S. economy and is not concerned about the potential political fallout from corporate corruption. "Some in Washington may want to focus on the politics of this," Mr. Fleischer suggested. "The president is focused on people's jobs and the fact that corporations have a responsibility to be above board, to honor the call of ethics and high ethics. Just as the president calls on all in our society to honor their role in the responsibility era, the president calls on corporate America to do the same thing."
The president's weekly radio address Saturday will also focus on corporate responsibility, as will a speech in New York next month where officials say Mr. Bush will outline new measures to improve corporate accounting.