For Immediate Release Office of the
Press Secretary July 30, 2002
President Bush Signs Corporate Corruption Bill
The East Room
Policy
in Focus: Corporate Responsibility
10:15 A.M. EDT
THE PRESIDENT: Thank you very much. Welcome to the White House,
and welcome to this historic occasion.
During the past year the American economy has faced several
sudden challenges, and proven its great resiliency. Terrorists
attacked the center and symbol of our prosperity. A recession cost
many American workers their jobs. And now corporate corruption has
struck at investor confidence, offending the conscience of our
nation. Yet, in the aftermath of September the 11th, we refuse to
allow fear to undermine our economy. And we will not allow fraud to
undermine it either.
With well-timed tax cuts we fought our way out of recession and
back to economic growth. And now with a tough new law we will act
against those who have shaken confidence in our markets, using the
full authority of government to expose corruption, punish wrongdoers
and defend the rights and interests of American workers and
investors.
My administration pressed for greater corporate integrity. A
united Congress has written it into law. And today I sign the most
far-reaching reforms of American business practices since the time
of Franklin Delano Roosevelt. This new law sends very clear messages
that all concerned must heed. This law says to every dishonest
corporate leader: you will be exposed and punished; the era of low
standards and false profits is over; no boardroom in America is
above or beyond the law.
This law says to honest corporate leaders: your integrity will be
recognized and rewarded, because the shadow of suspicion will be
lifted from good companies that respect the rules.
This law says to corporate accountants: the high standards of
your profession will be enforced without exception; the auditors
will be audited; the accountants will be held to account.
This law says to shareholders that the financial information you
receive from a company will be true and reliable, for those who
deliberately sign their names to deception will be punished.
This law says to workers: we will not tolerate reckless practices
that artificially drive up stock prices and eventually destroy the
companies, and the pensions, and your jobs.
And this law says to every American: there will not be a
different ethical standard for corporate America than the standard
that applies to everyone else. The honesty you expect in your small
businesses, or in your workplaces, in your community or in your
home, will be expected and enforced in every corporate suite in this
country.
I commend the Congress for passing a strong set of reforms. I
particularly thank Senator Paul Sarbanes and Congressman Mike Oxley.
Both are very thoughtful, and were persistent voices for reform.
They are true advocates of corporate integrity. I appreciate their
working together to send a signal to the rest of the country that
it's possible in Washington, D.C. to set aside partisan differences
and to do what's right for the American people. I also appreciate
the bipartisan leadership in the Congress, and I particularly thank
Senator Daschle and Senator Lott who are with us here today.
I want to thank members of my Cabinet who worked on this bill:
Secretary of Treasury O'Neill and Attorney General Ashcroft,
Secretary Evans, Secretary Chao. I appreciate the FBI Director being
here, along with the Chairman of Securities and Exchange Commission,
Harvey Pitt. I appreciate the Corporate Fraud Task Force members who
are here. I want to assure the American people, they're just getting
started.
America's system of free enterprise, with all its risk and all
its rewards is a strength of our country, and a model for the world.
Yet free markets are not a jungle in which only the unscrupulous
survive, or a financial free-for-all guided only by greed. The
fundamentals of a free market -- buying and selling, saving and
investing -- require clear rules and confidence in basic fairness.
The only risks, the only fair risks are based on honest
information. Tricking an investor into taking a risk is theft by
another name. Corporate executives must set an ethical tone for
their companies. They must understand the skepticism Americans feel
and take action to set clear standards of right and wrong. Those who
break the rules tarnish a great economic system that provides
opportunity for all.
Their actions hurt workers who committed their lives to building
the company that hired them. Their actions hurt investors and
retirees who placed their faith in the promise of growth and
integrity. For the sake of our free economy, those who break the law
-- break the rules of fairness, those who are dishonest, however
wealthy or successful they may be, must pay a price.
Today, we are taking practical steps to encourage honest
enterprise in our nation. Under this law, CEOs and chief financial
officers must personally vouch for the truth and fairness of their
companies' disclosures. Those financial disclosures will be broader
and better for the sake of shareholders and investors.
Corporate officials will play by the same rules as their
employees. In the periods when workers are prevented from buying and
selling stock in their pensions or 401(k)s, corporate officials will
also be barred from any buying or selling.
Corporate misdeeds will be found and will be punished. This law
authorizes new funding for investigators and technology at the
Securities and Exchange Commission to uncover wrongdoing. The SEC
will now have the administrative authority to bar dishonest
directors and officers from ever again serving in positions of
corporate responsibility. The penalties for obstructing justice and
shredding documents are greatly increased. Corporate crime will no
longer pay. CEOs who profit by betraying the public trust will be
forced to return those gains to investors. And the maximum prison
term for common types of fraud has quadrupled from five to 20 years.
For the first time, the accounting profession will be regulated
by an independent board. This board will set clear standards to
uphold the integrity of public audits, and have the authority to
investigate abuses and discipline offenders. And auditing firms will
no longer be permitted to provide consulting services that create
conflicts of interest.
This law gives my administration new tools for enforcement. We
will use them to the fullest. We will continue to investigate,
arrest and prosecute corporate officials who break the law. The
Corporate Fraud Task Force I established is now hard at work,
overseeing investigations of alleged fraud and insider trading. More
than 200 federal prosecutors are at work detecting and punishing
corporate crimes. Every corporate official who has chosen to commit
a crime can expect to face the consequences. No more easy money for
corporate criminals, just hard time.
As the work of enforcement proceeds, I hope Congress will join me
in other important efforts to protect the savings and investments of
Americans preparing for retirement. We've seen how workers can lose
a lifetime of savings overnight, locked into pension plans without
adequate choices and information.
Workers should be able to sell company stock and diversify into
other investments after three years in their own company's plan.
They should receive updates on their retirement accounts, not once a
year, but every three months. They should have access to sound
investment advice. I have proposed pension protection reforms; the
House has passed them. I hope the Senate takes them up soon.
We must also work together to promote more growth in the economy
and jobs for the American people. The fundamentals of our economy
are sound. After all, sales of automobiles and new houses are on the
rise. New unemployment claims have been falling since April.
Inflation is low, productivity is increasing, and growth continues.
Those are signs of strength in our economy, and with the right
policies we can build on it.
We must continue to work to control federal spending, and make
the tax cuts permanent, so Americans can save and plan for their own
future. We must tear down trade barriers, so people everywhere can
buy American. We must make terrorism insurance available to spur
more construction.
And on energy, we must encourage conservation through new
technology and produce more energy at home, to give our economy safe
and steady sources of power, and make our country less reliant upon
foreign sources of power.
The attacks against our economy in the last year have caused deep
hardship, and highlighted the economy's fundamental strength. The
American economy is more diverse and more innovative than ever
before. And its greatest strength, the people who make it work, are
better trained and more productive and more highly skilled than ever
before.
Whenever we face challenges, from the fear that threatened our
economy after September the 11th to the fraud that threatens
investor confidence today, we've tackled them head on. The American
economy depends on fairness and honesty. The vast majority of
businesses uphold those values. With this law, we have new tools to
enforce those values, and we will use those tools aggressively to
defend our free enterprise system against corruption and crime.
It is now my honor to sign the Sarbanes-Oxley Act of 2002.
(Applause.)
(The bill is signed.)
END 10:28 A.M. EDT
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