[Congressional Record Volume 148, Number 105 (Monday, July 29, 2002)]
[Extensions of Remarks]
[Pages E1462-E1463]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




H.R. 3763, THE CORPORATE AND AUDITING ACCOUNTABILITY AND RESPONSIBILITY 
                                  ACT

                                 ______
                                 

                               speech of

                             HON. TOM UDALL

                             of new mexico

                    in the house of representatives

                        Thursday, July 25, 2002

  Mr. UDALL of New Mexico. Mr. Speaker, I rise today in strong support 
of the Conference Report on H.R. 3763. I would like to commend the hard 
work of the conferees on this critically important legislation. The 
recent string of accounting scandals has badly damaged the confidence 
of many Americans in our nation's corporations and markets. This 
legislation is a strong step toward restoring their confidence and 
stabilizing our nation's economy.
  It seems like every day we hear a new story of executives who misled 
their investors and their workers and stole millions of dollars. These 
executives are called irresponsible; they are accused of mismanagement 
or unorthodox business practices. But these corporate leaders aren't 
unorthodox; they are criminals, plain and simple. They have stolen more 
money than any thieves I've ever heard of, and their crimes have real 
victims.
  The victims of these corporate crimes are workers, like the workers 
at Enron who just wanted an honest job with a fair expectation of job 
security. For all their hard work, these workers got 10 minutes to 
clear out their desks. In some cases they were even denied their 
severance packages if they refused to sign documents giving up the 
right to sue Enron for defrauding them. Defrauding workers and forcing 
them to give up their legal rights isn't irresponsibility; it is a 
crime.
  Even workers who never had anything to do with Enron were hurt by the 
collapse of that company. As Enron declared bankruptcy, public 
employees in 30 states lost anywhere from $1.5 billion to $10 billion 
from their pension plans. Stealing money from public employee pension 
plans is not irresponsibility; it is a crime.
  Even those of us who had absolutely nothing to do with the Enrons or 
Worldcoms of the world are hurt by corporate crime. The unethical 
behavior of the executives at Worldcom, which was recently forced to 
admit it had invented $3.8 billion in earnings, has had a devastating 
effect on that company's stock price. But the stock market as a whole 
has also suffered from the lack of confidence created by widespread 
corporate abuse. Less than 3 percent of all publicly traded companies 
misstate their earnings, but this small group casts doubt on the 
statements of other, more ethical businesses.
  A free-market system cannot function if investors do not trust 
executives, and therefore the crimes of Worldcom and Enron are crimes 
not only against their stockholders, but against the very system that 
allowed these companies to flourish.
  Even after the collapse of Enron and the exposure of billions in fake 
earnings at Worldcom, many in Congress were working to protect their 
corporate patrons from any real accountability. The initial House-
passed version of this legislation, sponsored by Mr. Oxley, did nothing 
to protect against corporate abuse and bring back public confidence in 
corporate governance. In some cases, the

[[Page E1463]]

bill even would have made it more difficult to enforce auditing 
regulations. In its most glaring failure, Mr. Oxley's legislation left 
the wolf in charge of the henhouse by ensuring that no independent 
agency had the power to effectively police the internal auditing 
industry to prevent conflicts of interest and protect investors.
  The Senate version of this legislation, however, responded much more 
effectively than the House leadership to corporate crime. A proposal 
introduced by Senator Paul Sarbanes for auditing the auditing industry 
goes much farther than either the sham House bill or the June 20 
proposal for revamping the SEC. The Sarbanes bill would create an 
independent board to oversee accounting practices. It would prohibit 
accounting firms from destroying documents. Most importantly, the 
Sarbanes bill would prevent conflicts of interest by preventing 
auditors from selling other services to the companies they are supposed 
to be regulating. I wish this House were able to vote up or down on 
Senator Sarbanes' bill.
  Fortunately, the House-Senate conference report adopts several key 
elements of the Senate proposal. The conference agreement, in addition 
to including the provisions mentioned above, also bars auditors from 
performing most other services to the same companies they audit, 
requires corporate officers to reimburse their companies for any 
bonuses or profits made from stock sales if their misconduct resulted 
in the firm issuing a revised financial statement. It also generally 
bars corporations from providing loans to any of its executive 
officers, just to name a few of the provisions included in the 
agreement.
  While it is not a perfect bill, it is far stronger than the original 
House bill. The American people want to feel confidence in the market 
system that has brought so much prosperity. It is our responsibility to 
fix the system so we can move forward to a time when workers and 
investors are secure, and corporate crime is a thing of the past. 
Voting yes on this conference agreement is a step in that direction. I 
urge my colleague to support this agreement.

                          ____________________