President Bush's Radio Address - WorldCom Scandal
For Immediate Release
Office of the Press Secretary
June 29, 2002
President's Radio Address
The Cabinet Room
THE PRESIDENT: Good morning. This week, we learned of another deeply troubling accounting scandal at a major American corporation. Reports allege that the company hid nearly $4 billion in expenses, and reported profits when it may have actually lost more than a billion dollars. The Securities and Exchange Commission immediately filed suit against the company to preserve documents, so that a complete and thorough investigation can take place, and to ensure that the company cannot give massive payments to executives during the investigation.
Despite recent abuses of the public's trust, our economy remains fundamentally sound and strong, and the vast majority of businesspeople are living by the rules. Yet, confidence is the cornerstone of our economic system, so a few bad actors can tarnish our entire free enterprise system. We must have rules and laws that restore faith in the integrity of American business. The government will fully investigate reports of corporate fraud, and hold the guilty parties accountable for misleading shareholders and employees. Executives who commit fraud will face financial penalties, and, when they are guilty of criminal wrongdoing, they will face jail time.
In March, I unveiled a ten-point plan designed to enhance the economic security of Americans by providing better information to investors, making corporate officers more accountable, and delivering a stronger, more independent auditing system. Among other measures, the plan would give the Securities and Exchange Commission two critical tools to hold corporate officers accountable.
First, corporate officers who personally benefit from false accounting statements should lose all the money gained by their fraud. An executive whose salary or bonus is tied to his company's performance makes more money when the company has done well. That is fair when all of the accounting is done above board. Yet, when bad accounting practices make the company appear to be more successful than it actually is, corporate executives should lose their phony profits gained at the expense of employees and stockholders.
Second, corporate leaders who violate the public's trust should never be given that trust again. The Securities and Exchange Commission should be able to punish corporate leaders who clearly abuse their powers by banning them from ever serving again as officers or directors of publicly held corporations.
Since my call for action, the Securities and Exchange Commission has sought to take away the profits of senior executives from four different companies, and in this year the SEC has sought to bar 54 officers and directors. On Thursday, the SEC ordered the CEOs and CFOs of the 1,000 largest public companies to certify that the financial information they submitted in the last year was fair and accurate.
In addition to bringing a new measure of accountability to American businesses, my administration is committed to protecting the retirement savings of American workers. The plan I unveiled in February would give workers greater freedom to diversify and manage their own retirement funds. It would ensure that corporate executives are held to the same restrictions as workers during blackout periods, when employees are prohibited from trading in their accounts. It would give workers quarterly information about their investments. And it would expand workers' access to investment advice. These measures should give American workers confidence that their investments will not fall prey to unethical executives.
America is ushering in a new era of responsibility, and that ethic of responsibility must extend to America's boardrooms. I want every American to know that the vast majority of businesspeople are honest individuals who do right by the employees and their shareholders. The unethical actions of a few should not be allowed to call into question our whole free enterprise system.
No violation of the public's trust will be tolerated. The federal government will be vigilant in prosecuting wrongdoers to ensure that investors and workers maintain the highest confidence in American business.
Thank you for listening.