[Congressional Record Volume 148, Number 97 (Wednesday, July 17, 2002)]
[Extensions of Remarks]
[Page E1279]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   CORPORATE FRAUD ACCOUNTABILITY ACT

                                 ______
                                 

                               speech of

                        HON. BENJAMIN A. GILMAN

                              of new york

                    in the house of representatives

                         Tuesday, July 16, 2002

  Mr. GILMAN. Mr. Speaker, I rise today in support of H.R. 5118, the 
Corporate Fraud Accountability Act. I urge my colleagues to give it 
their support.
  This bill is a necessary step to control a situation that is erupting 
throughout our economy. Corporate America can no longer take liberties 
to deliberately and purposefully deceive the American public. This 
legislation will create, redefine and strengthen those laws and 
penalties to force corporate America to stand up and be held 
accountable.
  The recent wave of corporate scandals has shattered the companies 
involved, cost thousands of dedicated employees their jobs and shaken 
the faith of investors and the American public in the American model of 
capitalism. Unless this trust is restored, we run the real risk of 
further corporate scandal, continued meltdowns in the financial 
markets, and ongoing hardship for the individual investor who sees 401K 
and other retirement savings disappear.
  While there is little that Congress can do to prevent future problems 
that have yet to be uncovered from the creative accounting practices of 
the recent past, it can act to head off any future shenanigans from 
those CEOs and corporations that might be tempted to pad the bottom 
line in order to inflate a stock price. This legislation seeks to 
accomplish this objective along with the greater goal of restoring 
faith in the American free market system.
  First, this bill will undoubtedly strengthen existing laws that will 
criminalize obstruction of justice such as document shredding, and 
provide prosecutors with the necessary tools to prosecute such actions, 
and create a new ``Securities Fraud'' section. It will also increase 
penalties for mail and wire fraud. The U.S. sentencing commission will 
then have the authority to change guidelines to reflect the grave 
nature of pension, securities and accounting fraud crimes.
  Moreover, this measure will require top corporate executives to take 
responsibility and be held accountable for their actions and those of 
their company. It requires that these company officers certify 
financial statements that accurately represent the financial situation 
of the company. Should they fail to do so, they can then be held liable 
and subject to fines up to $5 million and twenty years in prison. The 
bill also increases the criminal penalties for filing false statements 
with the SEC, and increases the fines for the corporation if a false 
financial statement is uncovered. Furthermore, the legislation also 
affects the personal incomes of the top executives. If their financial 
statements result in an investigation by the SEC any unsusal or large 
payments to the executives will then be frozen.
  In summary, H.R. 5118 is a necessary and positive step in reassuring 
the American public that corporate America is being honest and accurate 
in their financial disclosures. It is imperative that we send a strong 
message to these companies that may be falsifying records or altering 
their accounts that they will be held accountable for these actions, 
and face stiff fines and prison time for breaking such serious laws.
  Accordingly, I urge my colleagues to support H.R. 5118, the Corporate 
Accountability Act of 2002, which sends a clear message to the American 
public that executives and top employees of corporations will be held 
responsible for their actions, or face severe penalties, fines and 
prison time.

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