Learn More  • Learn more about what happened at Enron.  • Look up the pay packages of top executives in Executive PayWatch.  • Statement by AFL-CIO President John Sweeney On the Need for New Rules to Ensure Corporate Accountability.

Senate Corporate Accountability Bill Gains Steam

While former WorldCom and Enron workers told a Capitol Hill press conference July 9 how their former companies’ corporate lawlessness and shady accounting had robbed them of their jobs and retirement security, the U.S. Senate continued debate on legislation to curb and punish corporate lawbreakers.

Sen. Paul Sarbanes (D-Md.) is the chief architect of a bill (S. 2673) supported by the AFL-CIO that would strengthen corporate accountability by enhancing the independence and oversight of the accounting industry; improve corporate governance; ban financial analysts’ conflicts of interest and give the Securities and Exchange Commission (SEC) the resources it needs to enforce the law.

“Hard-working American families have been hit hard by recent announcements of corporate irresponsibility.  Jobs are eliminated…and pension funds suffer grave losses.  Other investors and shareholders are seeing their portfolios plummet and their retirement prospects decline.  Corporate wrongdoing is being felt not just at the boardroom table, but at the kitchen table as well,” Sarbanes says.

Since the collapse of Enron in late 2001, business and accounting irregularities that hide losses, create phony profits, cost workers’ jobs and pensions and shatter the public’s confidence in corporate honesty have been revealed at corporations around the country—Adelphia Communications, Rite Aid, Tyco International, MicroStrategy, Xerox and more.

Jeff Faux, president of the Economic Policy Institute, warned, “As this horrifying story unfolds of corruption at one corporate giant after another, it is clear that this is not just an issue of a few individuals consumed by greed….What we are witnessing is lawlessness that has been made possible by inadequate regulation and enforcement.”

Before WorldCom’s $3.9 billion accounting scandal was revealed, congressional Republicans, with the support of the Bush White House and the accounting industry, were expected to offer amendments to weaken the Sarbanes bill and bring it more in line with a weak House-passed bill.  The House Republican bill sponsored by Rep. Michael Oxley (R-OH) fails to address the most critical problems and would even make it harder for the SEC to punish corporate officers and board members involved in misconduct. But public outrage over corporate lawlessness has grown and political observers now expect opponents to back down.

Not only have opponents backed down, amendments to strengthen the bill were approved unanimously July 10. Legislation from Sen. Patrick Leahy (D-Vt.)-S. 2010, The Corporate and Criminal Accountability Act-was approved 97-0 as an amendment. It strengthens criminal penalties associated with corporate crimes such as schemes to defraud investors and also includes new and tougher penalties for shredding and destroying evidence of wrongdoing and provides stronger protections for whistleblowers. Two other amendments increasing jail time for various corporate crimes also passed without a dissenting vote. Amendments closing CEO-friendly legal loopholes that allow executives facing fraud-related verdicts, judgments or settlements to hide assets behind bankruptcy laws are expected.