Speaking to business leaders on Wall Street on July 9, 2002, President George Bush called for a new ethic of responsibility in Corporate America, consisting of truthful books, honest people and well-enforced laws against fraud and corruption. To achieve these results, he laid out a comprehensive agenda that would expose and punish acts of corruption, move corporate accounting out of the shadows, develop a stronger and more independent corporate audit system, and provide more information and protection for investors and pension holders.
Key elements of the President's plan:
- A new financial crimes SWAT team known as the Corporate Fraud Task Force to oversee and coordinate the investigation and prosecution of fraud and related criminal activity.
- Increased funding for the Securities and Exchange Commission (SEC) and new provisions to strengthen the SEC's ability to freeze improper payments to corporate executives while a company is under investigation.
- A doubling of penalties for mail and wire fraud statutes (statutes often used in cases involving corporate wrongdoing), stiffer sentencing, and laws that would ban any guilty officers and directors from ever holding similar positions in the future.
- More independent auditors. The President indicated the SEC is currently drafting rules that will ban audit firms from providing all non-audit services, unless approved in advance by the audit committee.
- More independent corporate boards of directors. President Bush wants a majority of a company's directors to be independent, and he wants all the members of a company's audit, nominating and compensation committees to be truly independent.
- Shareholder approval for all stock option plans of companies listed on major exchanges.
- Plain-English commentary in annual reports that explains why the pay packages for the chief executives of public companies are in the shareholders' best interest.
- An end to the practice of corporate officers receiving loans from their companies.
- Accounting standards that are responsive to the needs of investors.