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Bush Promises to Punish Corporate Executives who Commit Fraud - 2002-06-29

President Bush is promising to punish U.S. corporate leaders who commit fraud after a series of accounting scandals at major companies has shaken U.S. financial markets.

In his weekly Saturday radio address, Mr. Bush said violation of public trust will not be tolerated.

He said the government will fully investigate reports of corporate fraud, saying guilty executives will face financial penalties and possibly jail.

The president said most U.S. business leaders live by the rules and he called the economy fundamentally sound. But he said confidence is the cornerstone of the U.S. economic system.

In the Democratic response, Senate Banking Committee chairman Paul Sarbanes urged the Senate to pass his bill to strengthen government oversight of the accounting industry.

Mr. Bush's comments came during a week when two major U.S. companies say they overstated revenues.

Long distance telephone carrier, WorldCom, said its accountants reported nearly $4 billion in expenses as profits. It began firing 17,000 employees Friday in an effort to cut costs.

Also, office equipment giant Xerox reported Friday that accounting errors forced it to reduce its reported revenues by more than $6 billion for a five year period from the start 1997 through 2001.

Other major corporations tarnished by corporate scandals include Tyco, Global Crossing, ImClone, and Rite Aid.

Tens of thousands of employees of the bankrupt energy giant Enron lost their retirement savings when company executives encouraged them to keep buying company stock even though they knew Enron was failing.

Several top executives of Enron's corporate accountant firm, Arthur Andersen, pleaded guilty to federal charges of obstructing justice, admitting they destroyed documents related to the Enron scandal.