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Lawmakers See Crisis of Confidence in US Economy - 2002-07-07

Recent accounting scandals involving several large companies are causing debate about plans for corporate reform in the United States. The issue is being featured on U.S. television talk shows.

Appearing on the ABC television program This Week, the chief executive officer of International Paper, John Dillon, said he supports legislation in the U.S. Congress that would tighten oversight of corporate accounting and auditing practices so no one can cook the books.

Mr. Dillon said it is the rare company that fudges the numbers. "This is a situation where a few CEO'S of major American corporations are incorrect," he said. "They have taken advantage of their situation, they have not followed the accounting rules, they have not understood the difference between right and wrong, and the president and the administration have said they should be dealt with."

President George Bush is to give a speech Tuesday on Wall Street outlining his proposals for corporate reform.

The sponsor of one of the bills that would clean up the accounting industry says he hopes the president will support his measure.

Maryland Senator Paul Sarbanes, also appearing on ABC'S This Week, said he fears scandals involving not only Enron, but WorldCom, Global Crossing, and others, have created a crisis of economic confidence in the United States.

"I think what we are going through could have a very severe impact on the economy. We need to straighten this out... in order to avoid it happening again," he said.

Meanwhile, a Senate subcommittee released a report highly critical of Enron's board of directors. The 60-page document concluded the highly-paid board had evidence of irregularities, but turned a blind eye when Enron management engaged in creative accounting practices and hid losses in dummy corporations.

Enron declared bankruptcy in what was the biggest corporate failure in U.S. history.