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.