For Immediate Release
Office of the Press Secretary
August 13, 2002
Corporate Responsibility Session
Remarks by the President at the Corporate Responsibility Session Economic Forum - Waco, Texas
Baylor Law Center
9:46 A.M. CDT
SECRETARY EVANS: Mr. President, thanks for joining us. I've got to tell you, you just walked in as Truett Cathy, who
owns Chick-fil-A, who started the year we were born, in 1946, and it stood the test of time. He just told a great story
about why he didn't go public, and that is because he felt like that if the company didn't do well, that anybody that
invested in him, he'd feel a responsibility of bailing them out. So he didn't want to take on a lot of shareholders, in
case the company didn't do well. He said, look, I'm going to do this on my own. But that's a very novel kind of concept,
that you -- you know, if a company didn't do well, you would bail out your shareholders. So Truett, thank you for the
Mr. President, thank you for joining us. We've had a very good discussion about corporate responsibility. We've got a
cross section here of not only CEOs and corporate leaders, but small investors, small business owners, ranchers and
I'd like to call on Dick Holthaus down here on my right, because Dick represents the small investors all across America.
He is the head of the National Association of Investor Clubs, so Dick has a feel for what the small investors are saying
about the issues of the last nine, ten months. So, Dick, why don't you take this chance to tell the President what's on
MR. HOLTHAUS: Thank you very much. And it is good news, so that's good.
As the Secretary said, I represent the NAIC, which is the National Association of Investors Corporation. Just a couple
of dimensions on that. Three to 400,000 members in the U.S., and I was surprised today because I didn't know they were
coming -- would the members in here who came up to me sort of hold up their hands, that are members of the NAIC.
THE PRESIDENT: Great.
MR. HOLTHAUS: It's a small organization; 82 full-time staff, but 2,000 volunteers around the country. Together, the
equity investments of the members both in the clubs and their individual portfolios total about $125 billion. So when
you put it all together, it's a fairly large sample.
Importantly, these people -- and people you see around the room, including myself -- each month put a fixed amount of
money into the club. And if you add all that up across, it's roughly $200 million a month that's flowing into the
system. The members are voting, if you will, on corporate responsibility with how they're putting -- you know, their
investment dollars and what they're doing. Over the past several months, up until this last month, we tracked the
transactions. So we look at every 10 transactions that the clubs, a large sample of the clubs do. If the -- we look at
how many transactions are buys and how many are sells.
Up until this last month, it was running eight sells for every two buys. And in the last month -- and I think this has
to do with corporate responsibility, it has to do with a number of financial factors in the market -- it's now running
zero sells, 10 buys. So the individuals at least represented by our organization, are back in the clubs. And I think
those around the room would -- the ones I chatted with -- are doing it too.
Anecdotally, clubs that have limits on how much each member can put in every month have -- have released those limits so
that they can add more during this time. So, you know, I think that's good news. I think one of the differentiating
factors of how the individual looks at the market versus the institutions are, we don't think in terms of nanoseconds,
we don't think in terms of days, we don't think in terms of months or even quarters. Everybody looks at a time frame
that's about five years, and that gives you a whole lot different -- different decision.
So I think at the bottom of all this, I mean, we are an educational organization and it's key that the citizens of the
U.S., the investors of the U.S., as Dick Grasso said, the 85 million people who are in the market, we need the education
to be spread as widely as possible.
THE PRESIDENT: Dick, thank you. This is -- it's really a fine seminar because the quality of the people are great. Wait
until you see who's here when you go to lunch. It's really impressed. And this is a topic that is a vital topic for the
country, and that's trust. You know, how do we make sure people can trust what they see, can believe what they hear, can
understand -- understand that they're being told the truth when it comes to numbers and make sure the fine print, you
know, is fully exposed.
I want to thank Dick from the New York Stock Exchange for helping set the tone for policing themselves. You know, the
government can only do so much. And I can assure you we're going to hold people accountable. If they lie, cheat or
steal, they're going to be prosecuted, they just are.
But there's a lot others need to do as well, and the New York Stock Exchange set a very good example, starting a process
that will regain the trust of -- you know, of just the average citizen in America. That's what we've got to do, and
that's what we've got to hit head on.
As the man who heads Albertsons in the previous seminar said, CEOs need to get out front. They don't need to hide during
this period of time; they need to be out front. He's starting tomorrow by signing a letter that will verify the truth
and verify reality.
But I want to thank you all for coming. I can assure you that, even though I won't be sitting through every single
moment of the seminars, nor will the Vice President, we will look at the summaries and we will look at any ideas that
come out, as to determine whether or not there is more government can do. In the meantime, I'm going to be calling upon
the leaders in our communities all across our communities to do their job as responsible citizens.
So thanks for coming. This is an important day, and I think for those who are watching on C-SPAN, I think they are going
to find that there's a lot of Americans like themselves who are deeply concerned about the future of this country. And I
think you are going to find that a lot of us are very optimistic about the future of the country, because we are a
fundamentally strong nation, full of great people.
Welcome to central Texas.
SECRETARY EVANS: Thank you, Mr. President.
Let me turn your attention to Harry Alford on your left. Harry is the Chairman of the National Black Chamber of
Commerce, and he absolutely understands that capitalism will not work without a strong sense of values and morality. And
so, Harry, why don't you tell the President what's on your mind.
MR. ALFORD: Very proud to be here, Mr. President. When I went to officer candidate school in Fort Benning, Georgia, the
two essentials of leadership was honor and integrity. And the three evils, lie, cheat and steal. You do one, you're
going to do the other two also. And to lie, cheat and steal means you're not going to accomplish your mission, you're
not going to take that hill, and you're going to get a lot of good Americans hurt or destroyed in the process.
So it really upsets me, enrages me to see Fortune -- corporate officers of Fortune 100 companies get subpoenaed to
Capitol Hill and plead the Fifth Amendment, as if they're Bugsy Siegel or Al Capone. And I have a lot of confidence that
this little bump in the road, history will show that your strong leadership got us through this quickly and kept our
economic lifeblood flowing.
THE PRESIDENT: I can assure you of one thing. If somebody broke the law, they're going to be held accountable. Dick came
and I think Ken, both came to the speech I gave in New York. I was telling this story to one of the other seminars. And
our business schools don't want to teach right from wrong anymore. They're afraid of taking a position, evidently.
Michael probably knows more about that than I do.
But, anyway, in my speech, I said, business schools need to take a stand and teach their youngsters right from wrong.
Just as you mention, Harry, there are some values that are true.
And I was working a rope line. A professor said, well, thanks for saying that; as a business school professor, we needed
to hear that. And a laboring man standing next to him said, yes, if you really want to teach people right from wrong,
put those who did wrong in handcuffs, that's the best ethics lesson that government can do. And we're going to, we're
SECRETARY EVANS: Talking about somebody who is teaching people the difference between right and wrong, Ron James, who
runs Center for Ethical Business. And so, Ron, I mean, to you, how are you teaching the difference between right and
wrong and running an ethical company?
MR. JAMES: Thank you, Mr. Secretary.
Mr. President, we really believe that business leaders do two things very well. They're concerned about all of their
stakeholders, that's their customers, their employees. Yes, the shareholders, but the suppliers as well as their
communities. And they balance short- and long-term tradeoffs. They really create value for the shareholder over the long
term by serving all of these stakeholders. Reports and studies would show that companies that practice this literally
grow revenues four times as fast. They grow the work force eight times as fast as companies who don't, and they grow
stock prices 12 times as fast. So it's not about doing either/or -- you can do both. You can create an ethical
environment that serves multiple stakeholders, but you can ensure that you're creating value for the shareholder.
It really boils down to leadership. Leadership has got to walk the talk, they've got to set the tone. Leadership has got
to instill the right mission and vision and values for the organization and then people fall in line and we can see the
THE PRESIDENT: Where are you --
MR. JAMES: Center for Ethical Business Cultures. We're in Minneapolis, Minnesota.
THE PRESIDENT: Oh, great.
MR. JAMES: We partner with a couple of academic institutions. The Carlson School of Management at the University of
Minnesota and St. Thomas's College of Business.
THE PRESIDENT: But is there a trend in these business schools, like this person pointed out to me, that there's kind of
MR. JAMES: Yes. At these two schools, ethics is a core part of the curriculum and it's literally not just taught as a
stand-alone course, it's actually ingrained in the various disciplines -- whether it's marketing or finance or
manufacturing -- ethical dilemmas are surfaced so that the students have got to wrestle with those.
And one of the interesting things we're seeing is that students are raising questions about not just what's my next
career move going to be, but what kind of organization am I signing up to work for. Does its values and what it stands
for line up with who I really am?
THE PRESIDENT: That's interesting.
SECRETARY EVANS: Let me take your attention to Ana Cabral, she is the President of the Hispanic Association for
Corporate Responsibility. And Ana and her association has obviously been working on this important issue for quite some
time. So why don't you give us your thoughts on the importance of this.
MS. CABRAL: Thank you, Secretary Evans. I want to say that I really applaud you, Mr. President, and you, Mr. Grasso, for
what you have done thus far.
I think in terms of restoring confidence in the marketplace, we have been looking at issues of corporate responsibility
for some time and we define it fairly broadly. We look at not just a company's governance, but also its efforts in the
area of employment and how it's interacting with its employees, what it looks like with regard to procurement and small
business opportunities that it creates.
And also in the way that it gives back to communities -- those that it does business in and those that it has an
obligation to. And we're certainly concerned about the ability of the Hispanic community, which is the largest minority
community in the United States today, to participate fully in the economic system that exists.
We know, for example, that the board rooms have been a place where we have not really engaged significantly. And I think
your leadership at this point really could make a tremendous difference in terms of really opening the doors. We're
looking for outside directors who have a diverse set of opinions, who are able to bring wonderful skill sets, but
understand that they are obligated to protect the shareholders and, ultimately, the consumers.
I mean, we're looking at folk who understand the short and long term balance and who can really enact that. And I think,
you know, together, I know Mr. Grasso and the New York Stock Exchange are looking at ways to provide some training to
individuals who might be able to fill some of these vacant positions that may become available. We would welcome the
opportunity to try and help ensure that that pool of talent is quite diverse and reflects America.
I think at the end of the day we're all served well if we can truly create a quality, not just in the board room, but
also across all facets of the corporation.
THE PRESIDENT: Well, I appreciate that. I think one of the most heartening statistics about Hispanic life in America is
that fastest growing segment of small business growth -- it's a different subject, but along the same lines -- is the
Hispanic owner. The Latino-owned businesses in California, the creation there is just unbelievable. And the same in my
state of Texas, which is a really positive development.
In terms of large, corporate America, there's no question there has to be a degree of sensitivity throughout the entire
corporation in order for it to realize value. In other words, value is not just in numbers, value is in character, as
well. And I really appreciate Ron's point, that a company that has got a culture of responsibility is a company that
benefits financially, as well. It's kind of an interesting analysis.
But thank you very much. I'm going to appreciate you coming.
SECRETARY EVANS: On Ana's left is Jill Gibson, and Jill is an MBA student at Yale University. And the President talked
earlier about, you know, ethics being taught on the university campuses, or is it absent from the university campuses.
And I think it'd be interesting to hear your thoughts on that subject.
MS. GIBSON: Thank you, Mr. Secretary and Mr. President. At the Yale School of Management, we do talk about ethics in the
classroom. It's integrated into the curriculum in all of our courses.
One of the things which I do like is that we talk about ethics in regards to our future as future business leaders and
future managers, and how we make sure that we integrate the corporate values within the day to day practice of
companies, making sure that we reward employees based on their adherence to the company's values, not necessarily simply
based on their financial performance at the company. And so I do see that as a positive benefit in business schools. I
know I see it at the Yale School of Management.
THE PRESIDENT: How about Dean Gordon, how's he doing?
MS. GIBSON: He's doing a great job, excellent Dean.
THE PRESIDENT: Tell him to give you an A. (Laughter.)
MS. GIBSON: I will. I'll make sure to tell him.
THE PRESIDENT: One of the things I hope to get corporate America to do is to give people time off to mentor children, as
part of establishing a set of values within a corporation. One of the things that I think is beginning to happen as
corporate America looks at a potential employee's willingness to help a neighbor in need as part of whether or not that
person will fit into the new corporate culture.
I think a lot of folks would say that it's impossible to develop a culture within a large corporation; that after the
entrepreneurial stage of corporate development, you lose your soul. And one of the interesting challenges for CEO
America, as well as the business schools, is how to instill a culture within a large kind of soul-less organization.
It's one thing to be Chick-fil-A, it's another thing to have evolved to this, you know, conglomerate or a giant -- where
the ownership is dispersed to the point where people really wonder whether or not it's possible. I happen to think it
is, I think you can instill a culture in any large organization. But one of the tricks is how to do so.
And I believe one way to do so is for -- is to encourage employees, as well as, you know, the people who run the company
to do something for somebody other than yourself. Part of that is to be a good community participant and a good
I'm glad you're here.
SECRETARY EVANS: Let me go to June Lennon, small business owner and CPA, who has some thoughts on what has happened in
the accounting world over the last 12 months.
MS. LENNON: Yes, thank you, Mr. Secretary. And, Mr. President, I'm glad to be here.
I do want to say that I have really appreciated hearing the emphasis on moral responsibility and looking -- taking away
from the possible emphasis on the dollar and the financial gain. I think that is very important.
We need to remember that there are already laws on the books that address corporate fraud, and we need to be sure we are
enforcing those laws and not creating new bureaucracies and things that will actually make it harder to do a good job
for presenting the financial information.
We need to be sure that we're being proactive and not reactive in the situation that has happened. And I think several
of the ways that we can do that -- I appreciated Mr. James' comments that there is a place that is actually
incorporating the ethical issues into all the courses. I think that's necessary and that's very proactive.
I think other ways to be proactive are to simplify the accounting rules. And, Mr. Secretary, I appreciate your emphasis
and your history that you have -- that you are a proponent of simple accounting rules.
Another way is to simplify the tax laws do feed into this mess, and I know a lot of people -- I have been trying for
years to get the tax code abolished. And people say, why are you, a CPA, doing that? I said, because it's so I can help
my businesses -- my clients grow their business, instead of doing government paperwork for them.
But then the third thing is for government to lead by example. Some of these reports that we hear of agencies who lose
track of equipment and agencies who can't balance their books are not much better than the corporations who do the same
or balance them wrongly. So I think that would be a wonderful area, too, to give as much effort to -- to showing that
the government wants to be accountable and responsible, too.
THE PRESIDENT: You ought to take a look at -- Franklin can tell you, the government accounting system is pretty -- it's
kind of hard to explain. (Laughter.) I've been there for nearly 18 months trying to figure it out. (Laughter.)
But thank you very much for that, June.
Listen, again, I want to repeat to you all -- I've got to bounce to another seminar, but I do appreciate you coming.
This is -- the other thing that Americans have got to know is that, by far, the vast majority of our fellow citizens are
upright, honest, moral people. By far, the vast majority of people running corporate America are good, honorable people;
good, decent people that care about their shareholders, care about their employees, care about communities in which they
live. And that's important for people to know.
And that there have been some recently whose practices started a while ago and are now coming to light, that cast a
shadow on all of us. And we've got to let the light shine in, and that's what we're going to do.
But this is a unique land we're in. There is a moral compass amongst by far the vast majority of us. And that's what
makes America so great. And our job is to -- my job is to capture that spirit, to insist upon the best, call upon people
to serve, hold people accountable when they don't. There's no question we're in a rough spot. But the good far outweighs
the bad, not only in terms of statistics but, most importantly, because of the people and the character of the land.
I do want to thank you all again for sharing your thoughts. I think this is a very important day. It's important for all
of us here, but more importantly, or as importantly, it's important for people who are paying attention to what is said
So thanks for coming. I'll look forward to seeing you at lunch. I'm impressed by the quality of the folks that have
come. God bless you all. Thank you. (Applause.)
END 10:07 A.M. CDT