US President George W. Bush, angered at relentless scandals in US boardrooms, will use tomorrow’s radio address and a July 9th speech in New York to urge Congress to approve his plan for corporate responsibility, a senior administration official said today.
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Mr George W. Bush
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Mr Bush has already proposed plans that if enacted, would ban corporate executives from profiting from erroneous financial statements. That was in response to the implosion last year of the Texas-based Enron.
Now, with Worldcom only the latest in a series of examples of a lack of corporate responsibility, Mr Bush will devote his radio address tomorrow to the subject.
He will travel to New York on July 9th to stress the need for better governing at the top level of American businesses and congressional approval allowing for better enforcement and rules to protect pensions, shareholders and employees.
"But it's also a higher calling than just new laws and new rules," said a senior US official.
"He's going to call on corporate America to live up to the standards that has made our economic system the envy of the world. He will stress that fundamentally our economy is strong," the official said.
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The WorldCom scandal, rivaling last year's collapse of Enron, has reignited legislative efforts to tighten accounting standards and hold top company executives and investment houses accountable. Lawmakers said they were angered and dismayed by the ever-lengthening parade of corporate scandals and the impact on the US stock markets, consumer confidence and the economy.
In March, Mr Bush outlined a 10-point plan that would require chief executives to attest personally each quarter to the accuracy of their financial statements and disclosures. To punish accounting-related abuses, top executives would be forced to forfeit their bonuses and other compensation. In extreme cases, they could be barred from serving as officers or directors for other publicly held corporations.
And, under Mr Bush's proposal, accounting firms would be subject to unprecedented oversight.
His plan would require top executives to disclose when they buy or sell company stock within two days of the transaction. Currently, executives can wait a year or more without disclosing personal transactions.
And he would also create a regulatory board to oversee accounting firms. It would be supervised by the Securities and Exchange Commission and dominated by members outside the accounting profession to ensure its independence.