WASHINGTON – Going on the offensive even prior to President Bush's speech on corporate responsibility, the two top Democratic House and Senate leaders accused the president of paying lip service to reform without actually backing the changes necessary to prevent corporate fraud.
"The test for the president today is not whether he shares the outrage that the workers and shareholders in these companies feel. I have no doubt that he does," said Senate Majority Leader Tom Daschle, D-S.D. "The question is whether he is willing to take action on that outrage and support the legislation which will actually help solve the problem."
Accompanied by two laid-off Enron and WorldCom employees, Daschle and House Minority Leader Richard Gephardt, D-Mo., said that a Democratic measure sponsored by Senate Banking Committee Chairman Paul Sarbanes, D-Md., provides the appropriate response to the recent corporate scandals
Sarbanes' legislation, now before the Senate, would tighten oversight of the accounting industry with new penalties for corporate fraud and measures to protect investors and pensions.
"I can't believe these laws don't exist already," added Cara Alcanter, a laid-off WorldCom employee from Phoenix, Ariz., whose 401(k) retirement plan was also 100 percent vested in WorldCom stock. "If (companies) have nothing to hide, then they shouldn't have anything to oppose."
The president has endorsed the goals of the legislation, but not all the details. His own plan, presented to Wall Street employees Tuesday, suggests doubling criminal penalties for certain types of fraud; freezing payments to executives whose companies are under investigation; adding $120 million to the Securities and Exchange Commission in the next year to hire more enforcement officers and creating a new task force for the pursuit and prosecution of corporate criminal activity
"Self-regulation is important, but it is not enough," Bush said in his Tuesday speech to Wall Street executives. "Government cannot remove risk from investment -- I know that -- or change for the market. But government can do more to promote transparency and ensure that risks are honest. And government can ensure that those who breach the trust of the American people are punished."
How much the demands differ is the stuff of backroom negotiations. In the television glare, however, Sen. Patrick Leahy, D-Vt., who has offered his own bill, said that the president failed to include protections for whistleblowers, extensions of statutes and a new securities fraud crime.
You can't "jury rig law to fit the crime," Leahy said in response to the president's decision to double penalties on existing fraud, adding that he welcomed many of the president's ideas.
"Some of them seemed very, very familiar," he said.
Daschle said Bush cannot claim to be interested in stopping corporate irresponsibility without backing certain reforms, including the creation of an independent auditing board; clear rules on what accountants can and cannot do; the imposition of stiff penalties on rule breakers and added resources to the SEC to make sure investigations can go forth.
"In our country today we face a debate that is not a dispute between Washington and Wall Street," added Gephardt. "Instead this is a debate between those who are opposed to real reform and those who belive strong initiatives are an appropriate response to the current crisis."
Gephardt also twisted a response by the president Monday when Bush answered reporters' questions about his own profit-taking from the Harken Energy company. In 1992, the company was late filing a report of Bush's nearly $900,000 profit from a stock sale. The company then sold a subsidiary, making it look as if Bush had inside information about the sale. The SEC concluded he did not, and Bush said it goes to show the importance of the SEC's role in oversight of auditing activities.
"All I can tell you is that in the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures, and the SEC's job is to look and is to determine whether or not the decision by the auditors was the appropriate decision.
But Gephardt said the president's response reflects an attitude that favors business and does not take reform seriously.
"Mr. President, with all due respect, accounting should be black and white, clear, precise, and easy for employees and shareholders" to understand, he said.