[Congressional Record (Bound Edition), Volume 148 (2002), Part 9]
[Senate]
[Pages 12315-12323]
[From the U.S. Government Publishing Office, www.gpo.gov]




  PUBLIC COMPANY ACCOUNTING REFORM AND INVESTOR PROTECTION ACT OF 2002

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 2673, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 2673) to improve quality and transparency in 
     financial reporting and independent audits and accounting 
     services for public companies, to create a Public Company 
     Accounting Oversight Board, to enhance the standard setting 
     process for accounting practices, to strengthen the 
     independence of firms that audit public companies, to 
     increase corporate responsibility and the usefulness of 
     corporate financial disclosure, to protect the objectivity 
     and independence of securities analysts, to improve 
     Securities and Exchange Commission resources and oversight, 
     and for other purposes.

  The PRESIDING OFFICER. The majority leader is recognized.


                           Amendment No. 4174

 (Purpose: To provide for criminal prosecution of persons who alter or 
  destroy evidence in Federal investigations or defraud investors of 
          publicly traded securities, and for other purposes)

  Mr. DASCHLE. Madam President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Daschle], for Mr. Leahy, 
     for himself, Mr. McCain, Mr. Daschle, Mr. Durbin, Mr. Harkin, 
     Mr. Cleland, Mr. Levin, Mr. Kennedy, Mr. Biden, Mr. Feingold, 
     Mr. Miller, Mr. Edwards, Mrs. Boxer, Mr. Corzine, and Mr. 
     Kerry, proposes an amendment numbered 4174.

  (The amendment is printed in today's Record under ``Text of 
Amendments.'')

[[Page 12316]]


  Mr. DASCHLE. Madam President, on behalf of Senator Leahy and others, 
I offer this amendment which is identical to the Corporate and Criminal 
Fraud Accountability Act, S. 2010, passed unanimously by the Judiciary 
Committee some time ago.
  I view the Leahy amendment as a necessary complement to the Sarbanes 
bill. In fact, I think of them as two parts of a vital whole--one 
element guarantees the truth and honesty of corporate accounting. The 
other is a deterrent. It says that corporate misrepresentation will be 
forcefully punished--with jail time.
  We need both. We need to improve oversight and independence of the 
accounting profession and hold corporate wrongdoers accountable for 
their actions.
  We need to act comprehensively to fulfill our promise to the American 
people that integrity, honesty, and accountability will be restored to 
our markets.
  Last week Senator Leahy and I wrote to the President requesting his 
views on this bill and the Sarbanes accounting reform bill.
  Unfortunately, the President has not answered our letter yet. But I 
hope to hear today--and I think we need to hear today--that he supports 
and will sign both.
  We welcome the President's apparent new enthusiasm for reforming our 
corporate culture, and we look forward to working with him.
  The administration needs to understand that the time for half 
measures has long passed. The American people expect and deserve 
comprehensive reform.
  Combining the Leahy bill and the Sarbanes bill accomplishes just 
that. The Sarbanes bill revamps the regulatory structure that protects 
our markets. There will be better rules and a new oversight body to 
send corporations and accountants a clear message that they must tell 
the truth on their balance sheets.
  The Leahy bill is every bit as vital. Let me summarize a few of its 
provisions very quickly. The amendment has three aims: punishing 
criminals; preserving evidence; and protecting victims.
  The Leahy amendment punishes criminals by creating a tough new 10-
year felony for securities fraud. It provides prosecutors with a new 
tool that is flexible enough to keep up with the most complex new fraud 
schemes and tough enough to deter violations on the front end. It also 
provides a mechanism to raise the fraud sentences that are already on 
the books.
  The amendment also preserves evidence of fraud. It creates two new 
criminal anti-shredding provisions in federal law. As we say in the 
Arthur Andersen case, even the most straight-forward obstruction of 
justice cases can be difficult to prove under current law.
  Senator Leahy's bill closes the loopholes and makes document 
destruction in fraud cases an unambiguous crime.
  The amendment does not just protect ``paper evidence,'' it also 
protects valuable testimony from people. For the first time, the Leahy 
bill creates federal protection for whistleblowers. People like Sherron 
Watkins of Enron will be protected from reprisal for the first time 
under federal law. This bill is going to help prosecutors gain 
important insider testimony on fraud and put a permanent dent in the 
``corporate code of silence.''
  Finally, the amendment will protect victims of fraud. By extending 
the time period during which victims can bring cases to recoup their 
losses, the Leahy bill removes the reward for those fraud artists who 
are especially gifted at concealing what they've done for lengthy 
periods of time.
  Cases where victims have lost their entire life savings should be 
decided on the merits, not based on procedural hurdles that may now be 
used to throw legitimate victims out of court.
  The Leahy bill also prevents fraud artists from declaring bankruptcy 
to shut out their victims. The amendment would accomplish this by 
making security fraud debts nondischargeable in bankruptcy.
  Again, the Leahy provisions enjoyed broad bipartisan support in the 
Judiciary Committee when passed unanimously in April. They are needed 
now more than ever, as the number and magnitude of corporate 
misstatements continues to pile up and the lost jobs, lost pensions, 
and ruined lives continue to mount.
  We must act to punish criminals, no matter what color their collar. I 
hope all Senators will support this amendment.
  Madam President, the country will be listening intently to what the 
President says this morning. A crucial test will be whether he 
explicitly supports--and pledges to sign--the Sarbanes bill with the 
Leahy legislation attached. We cannot restore confidence in the 
integrity of our markets with anything else.
  Senator Leahy is on the floor.
  Mr. LEAHY. Will the majority leader yield?
  Mr. DASCHLE. Yes.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.
  Mr. LEAHY. Madam President, I very much appreciate what my good 
friend, the distinguished majority leader, has said. I also compliment 
him for his leadership on corporate accountability. Sometime ago, he 
asked the Chairs of the various committees with possible jurisdiction 
in this area to get together and craft comprehensive legislation. I 
recall that meeting very well. I recall the majority leader--back at 
the time of Enron, before WorldCom and these other business scandals 
came forward--expressing his concern that not only is this a blight on 
the business community, it is a blight on our system of doing things. 
He also spoke about how terrible it was for those people, not only 
workers who had their pensions tied up in the fortunes of the companies 
they are working with and are relying on for truthfulness--what they 
assumed is the truthfulness--of the accounting statements of those 
companies, but also many other people who invest, whether it is a 
farmer in South Dakota or a merchant in a small town in Vermont who is 
putting savings in and hoping this will be part of his retirement.
  The majority leader made it very clear to all of us that we were to 
set politics aside, we were to set any kind of special interests aside, 
and we were to bring up the best legislation possible for the people of 
America. That was what Senator Daschle charged us to do, and that is 
what I am trying to do with this amendment.
  We have excellent accounting reform legislation, S. 2673, crafted by 
Chairman Sarbanes and the Senate Banking Committee. I commend Senator 
Sarbanes and the other members of the Banking Committee--for their 
bipartisan leadership. Senator Sarbanes had people on both sides of the 
aisle come out with this legislation, and I am proud to cosponsor it.
  My amendment is to add to Senator Sarbanes legislation, not to 
detract from it. As he knows, I offered to add a criminal penalty and 
other provisions that are within the jurisdiction of the Judiciary 
Committee.
  My amendment is cosponsored by Senator McCain and the majority 
leader, Senators Durbin, Harkin, Cleland, Levin, Kennedy, Biden, 
Feingold, Miller, Edwards, Boxer, Corzine, Kerry, Schumer and 
Brownback. Our amendment is identical to S. 2010, the Corporate and 
Criminal Fraud Accountability Act that was reported unanimously by both 
Republicans and Democrats in the Judiciary Committee on April 25.
  Again, following the very clear direction the distinguished majority 
leader gave us when he said we have to protect the people of this 
country, we have to make sure corporate America can do its best to help 
our economy, this would create tough new penalties for securities fraud 
and would preserve evidence of fraud to make sure there is 
accountability for crimes that not only cheat investors but rob the 
markets themselves of the public trust. The markets have stolen the 
public's trust.
  According to press reports, President Bush has changed his mind on 
corporate reform and may support new penalties for corporate fraud, and 
I welcome the President's change of heart. The Corporate and Criminal

[[Page 12317]]

Fraud Accountability Act creates tough, new, criminal penalties for 
corporate fraud, and Senator Daschle and I have written to the 
President asking for his support.
  The time for watching and hand-wringing is over. We have to take 
action to start the slow but critical process of restoring confidence 
in the books of our publicly traded companies.
  The collapse of Enron has become a symbol of a corporate culture 
where greed has been inflated and accountability devalued. 
Unfortunately, Enron is no longer alone. Joined by Arthur Andersen, 
Global Crossing, Tyco, Xerox, and, most recently, WorldCom, the 
misrepresentations about the financial health of our Nation's largest 
companies have shaken confidence in our financial markets.
  If we do nothing to learn and apply the repeated lessons of the last 
months, we are only going to compound the problem. That was obviously 
the belief of the unanimous Judiciary Committee vote when the committee 
approved S. 2010. Innocent consumers, investors, and employees depend 
on stock investments for their children's college funds, for their 
retirement nest eggs, and for their savings. Every week brings news of 
a new financial scandal. Just look at the effect on the stock market. 
It has been devastating. This has repercussions not just for companies 
that depend on our capital markets to grow their businesses and our 
economy, but certainly also for the average American family. More than 
one in every two Americans invest in our financial markets, and they 
are watching what we do here. They deserve action.
  Those who defraud investors should be held accountable for their 
crimes. The Leahy-McCain amendment, the Corporate and Criminal Fraud 
Accountability Act, is all about accountability and transparency--two 
bedrocks of our market.
  The PRESIDING OFFICER. The Chair states that the majority leader has 
yielded for a question only while retaining the floor. Is that the 
intent of the majority leader?
  Mr. DASCHLE. Madam President, it was my intention to yield for a 
question, but I thank the distinguished chair of the Judiciary 
Committee for his extraordinary leadership and the effort he has made 
to bring this legislation to the floor.
  This is the Leahy amendment and, as I noted, it passed unanimously in 
large measure because I think he was able to work with our colleagues 
on both sides of the aisle.
  I am happy to yield the floor so he and others may seek recognition.
  Mr. LEAHY. My question would be this to the majority leader: Would he 
agree, in his experience, that nothing would focus the attention more 
of those executives who have defrauded their own companies and 
investors than the idea that they would actually go to jail for it, and 
not walk off with hundreds of millions of dollars?
  Mr. DASCHLE. Madam President, it is for that reason that I believe 
this package ought to be viewed in its entirety. The Sarbanes bill lays 
out the framework. The Leahy bill lays out the penalties for violating 
that framework. So I don't know that you can have one without the other 
and not have a complete package.
  So I appreciate very much the work of the Judiciary Committee, and 
the chair of the Judiciary Committee especially, for the work in 
allowing this package to come to the floor. I thank him again for the 
contributions he made.
  Several Senators addressed the Chair.
  Mr. LEAHY. Madam President, I seek recognition in my own right.
  The PRESIDING OFFICER. The Senator from Texas is recognized.


                Amendment No. 4175 to Amendment No. 4174

  Mr. GRAMM. Madam President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  Mr. LEAHY. Madam President, parliamentary inquiry.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. What is the rule on recognition? Is it not the Senator who 
seeks recognition first?
  The PRESIDING OFFICER. The Chair understands that the managers of the 
amendment are entitled to be recognized.
  Mr. LEAHY. On my amendment? May I be recognized on my own amendment 
which is pending before the Chair? Is that correct?
  The PRESIDING OFFICER. The managers of the legislation have priority.
  Mr. LEAHY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas, the manager of the 
underlying bill.
  Mr. LEAHY. Would the managers of the amendment include the 
distinguished senior Senator from Kentucky? Is he one of the managers?
  The PRESIDING OFFICER. The managers of the legislation are the 
Senator from Maryland and the Senator from Texas.
  Mr. LEAHY. The distinguished Presiding Officer has recognized, 
however, the Senator from Kentucky.
  The PRESIDING OFFICER. The Chair has recognized the Senator from 
Texas. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm], for Mr. McConnell, 
     proposes an amendment numbered 4175 to amendment No. 4174.

  Mr. GRAMM. Madam President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Is there objection?
  Mr. LEAHY. I object.
  The PRESIDING OFFICER. Objection is heard. The clerk will continue.
  The assistant legislative clerk continued with the reading of the 
amendment.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Madam President, I want to make sure people understand 
what the Leahy-McCain amendment is. I realize there may be those who 
want to amend it to make life easier.
  The PRESIDING OFFICER. Will the Senator from Vermont suspend? The 
regular order is the reading of the amendment.
  Mr. LEAHY. I ask unanimous consent that the reading of the amendment 
be dispensed with.
  The PRESIDING OFFICER. Is there objection to calling off the reading 
of the amendment? Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To provide for certification of financial reports by labor 
  organizations and to improve quality and transparency in financial 
  reporting and independent audits and accounting services for labor 
                             organizations)

       At the end of the amendment add the following:

     SEC. 302. CORPORATE AND LABOR ORGANIZATION RESPONSIBILITY FOR 
                   FINANCIAL REPORTS AND DISCLOSURE REQUIREMENTS.

       (a) Financial Reports.--
       (1) Certification of reports.--
       (A) Certification of periodic reports.--Each periodic 
     report containing financial statements filed by an issuer 
     with the Commission pursuant to section 13(a) or 15(d) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) 
     shall be accompanied by a written statement by the chief 
     executive officer and chief financial officer (or the 
     equivalent thereof) of the issuer.
       (B) Certification of financial reports by labor 
     organizations.--
       (i) In general.--Each financial report filed by a labor 
     organization with the Secretary of Labor pursuant to section 
     201(b) of the Labor-Management Reporting and Disclosure Act 
     of 1959 (29 U.S.C. 431(b)) shall be accompanied by a written 
     statement by the president and secretary-treasurer (or the 
     equivalent thereof) of the labor organization.
       (ii) Definition.--In this subparagraph, the term ``labor 
     organization'' has the meaning given the term in section 3 of 
     the Labor-Management Reporting and Disclosure Act of 1959 (29 
     U.S.C. 402).
       (2) Content.--The statement required by paragraph (1) shall 
     certify the appropriateness of the financial statements and 
     disclosures contained in the periodic report or financial 
     report, and that those financial statements and disclosures 
     fairly present, in all material respects, the operations and 
     financial condition of the issuer or labor organization.
       (3) Conforming amendment.--Section 201(b) of the Labor-
     Management Reporting and Disclosure Act of 1959 is amended, 
     in the matter preceding paragraph (1), by inserting ``(and 
     accompanied by the statement described in section 
     302(a)(1)(B) of the Public Company Accounting Reform and 
     Investor Protection Act of 2002)'' after ``officers''.

[[Page 12318]]

       (b) Reporting Requirements.--
       (1) Financial reporting for labor organizations equivalent 
     to required reporting of public companies.--Section 201 of 
     the Labor-Management Reporting and Disclosure Act of 1959 (29 
     U.S.C. 431) is amended by adding at the end the following:
       ``(d)(1) In the case of a labor organization with gross 
     annual receipts for the fiscal year in an amount equal to 
     $200,000 or more, the information required under this section 
     shall be reported using financial reporting procedures 
     comparable to procedures required for periodic and annual 
     reports of public companies pursuant to sections 12(g), 13, 
     and 15 of the Securities and Exchange Act of 1934 (15 U.S.C. 
     78l(g), 78m, and 78o).
       ``(2)(A) Such information shall be reviewed by a certified 
     public accountant using generally accepted auditing standards 
     applicable to reporting companies under the Securities and 
     Exchange Act of 1934.
       ``(B) Such audit shall be conducted subject to requirements 
     comparable to the requirements under section 10A of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78j-1).
       ``(3) Such information shall be reported using generally 
     accepted accounting procedures comparable to the procedures 
     required for public companies under sections 12(g), 13, and 
     15 of the Securities and Exchange Act of 1934 (15 U.S.C. 
     78l(g), 78m, and 78o).
       ``(4) The authority provided under this subsection shall be 
     in addition to the authority provided under subsection (b) 
     and section 208, regarding reporting procedures and review of 
     information required under this section.''.
       (2) Remedies and penalties for violations of reporting 
     requirements.--Section 210 of the Labor-Management Reporting 
     and Disclosure Act of 1959 (29 U.S.C. 440) is amended--
       (A) by striking ``Whenever'' and inserting ``(a) 
     Whenever''; and
       (B) by adding at the end the following:
       ``(b)(1) If the Secretary finds, on the record after notice 
     and opportunity for hearing, that any person has willfully 
     violated any provision of section 201(d), the Secretary may 
     impose a civil monetary penalty in an amount not to exceed 
     the amount for any comparable violation under section 21B(b) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78u-2).
       ``(2) In the case of a violation of an auditing requirement 
     under section 201(d)(2) by a public accountant, the Secretary 
     may impose a civil monetary penalty in the same manner as 
     penalties are imposed under section 10A(d) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78j-1(d)).
       ``(3) For purposes of any action brought by the Secretary 
     under paragraph (1), any person who knowingly provides 
     substantial assistance to another person in violation of a 
     provision of section 201(d), or of any rule or regulation 
     issued under such section (including aiding, abetting, 
     counseling, commanding, or inducing such violation) shall be 
     deemed to be in violation of such provision to the same 
     extent as the person to whom such assistance is provided.
       ``(c)(1) Any person who makes or causes to be made any 
     statement in any report or document required to be filed 
     under section 201(d) which statement was at the time, and in 
     the light of the circumstances under which it was made, false 
     or misleading with respect to any material fact, shall be 
     liable to any person (not knowing that such statement was 
     false or misleading) who relied upon such statement. A person 
     seeking to enforce such liability may sue at law or in equity 
     in any court of competent jurisdiction.
       ``(2) In any such suit the court may, in its discretion, 
     require an undertaking for the payment of the costs of such 
     suit, and assess reasonable costs, including reasonable 
     attorneys' fees, against either party litigant.
       ``(3) The recovery and statute of limitation provisions of 
     subsections (b) and (c) of section 18 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78r) shall apply for purposes 
     of any action under this subsection.
       ``(d) In any action arising under subsection (c) or (d) or 
     in connection with any provision of section 201(d), the 
     provisions of section 27(c) of the Securities Act of 1933 (15 
     U.S.C. 77z-1(c)) regarding abusive litigation shall apply.''.
       (3) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Labor, shall 
     promulgate such regulations as the Secretary determines 
     necessary to carry out the provisions and purposes of this 
     subsection (including the amendments made by this subsection) 
     and to ensure the provisions of this subsection are carried 
     out in a manner comparable to the manner any similar 
     provisions are carried out by the Securities and Exchange 
     Commission.

  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Madam President, so people understand what the Leahy-
McCain amendment is, it is the Corporate and Criminal Accountability 
Act. It is about accountability, and it is about transparency. I think 
everybody--investors, corporate managers, or anybody else--will tell 
you that accountability and transparency are the bedrock of our 
economy, of our markets.
  If one is going to invest in a company, one wants to know what the 
company does and what the books say. One wants to be able to rely upon 
their reports.
  Transparency will instill confidence, and accountability helps 
enforce transparency and forthright financial decisions. We do not just 
rely on the better angels of our nature; we rely on the fact that 
somebody is going to be there to enforce it.
  We cannot stop greed, but we can stop greed from succeeding. This 
bipartisan amendment is going to send wrongdoers to jail and save 
documents from the shredder, and that sends a powerful and clear 
message to potential wrongdoers: Don't do it.
  The measure enjoys wide support. The amendment is supported by law 
enforcement officials, regulators, and numerous whistleblowers, and 
consumer protection advocates. I have letters of support from these 
advocates, and I will, at the end of my statement, ask consent to print 
them in the Record.
  Let me summarize some of the provisions. This bipartisan amendment 
has three prongs to restore accountability: punishing and preventing 
fraud, preserving the evidence of fraud, and protecting victims of 
fraud.
  S. 2010, as unanimously reported, accomplishes these goals in a 
number of ways. It is going to create a tough new Federal felony for 
securities fraud for a 10-year maximum penalty. The idea of 10 years in 
the slammer is going to focus the attention of those who are more 
interested in taking their money and hiding it in offshore bank 
accounts.
  As one who was a prosecutor, I was surprised to learn that unlike 
bank fraud, health care fraud, and even bankruptcy fraud, there is no 
specific Federal crime of securities fraud to protect victims of fraud 
related to publicly traded companies.
  Can you imagine, Madam President, while all this talk has been going 
on, it turns out there is no specific crime of securities fraud. This 
bill would create such a felony with a tough 10-year jail sentence.
  The amendment provides for a review of the existing sentencing 
guidelines for fraud cases and for organizational misconduct to make 
them tougher as well.
  The new crimes and enhanced criminal penalties in this bill were 
worked out among Senators Hatch, Schumer, and me, and unanimously 
supported by the Judiciary Committee, and I thank Senators Hatch and 
Schumer for their support.
  The Leahy-McCain amendment also creates two new anti-shredding 
penalties which set clear requirements for preserving financial audit 
guides and close loopholes in current anti-shredding laws.
  These provisions close loopholes in current laws and set a clear 
requirement that corporate audit documents must be saved for 5 years. 
We, incidentally, picked that time period because that is the statute 
of limitation for most Federal crimes.
  These provisions are crucial in preventing recurrences of what 
happened at Arthur Andersen.
  These provisions will preserve evidence that helps law enforcement 
officers and prosecutors focus immediately on the evidence. It takes a 
few minutes to warm up the shredder, but it can take years for 
prosecutors and victims to put together a case without key documents.
  The amendment protects corporate whistleblowers. Senator Grassley and 
I worked out these bipartisan measures in the Judiciary Committee. I 
thank the Senator from Iowa for his assistance and his constant 
leadership over the years on whistleblower rights.
  When sophisticated corporations set up complex fraud schemes, 
corporate insiders are often the only ones who can disclose what 
happened and why.
  Unfortunately, the Enron case also demonstrates the vulnerability of 
corporate whistleblowers to retaliation under current law. This is a 
memo from outside counsel to Enron management. They were afraid there 
might be a whistleblower. It said:


[[Page 12319]]

       You also asked that I include in this communication a 
     summary of the possible risks associated with discharging (or 
     constructively discharging) employees who report allegations 
     of improper accounting practices.

  Then he goes on to give them the good news:

       Texas law does not currently protect corporate 
     whistleblowers. The supreme court has twice declined to 
     create a cause of action for whistleblowers who are 
     discharged. . . .

  In other words, if they dare tell about corporate misdeeds, fire 
them, it is not going to hurt.
  After this high-level employee of Enron reported improper accounting 
practices, the Enron executives were not thinking about firing the 
accountants who were doing wrong; they wanted to fire the 
whistleblower, their own employee. Why? Because they were pocketing the 
money. They were getting that money out to their bank accounts as fast 
as they could, and they did not want anybody to say so.
  The bipartisan whistleblower protections are supported by the 
National Whistleblower Center, the Government Accountability Project, 
and Taxpayers Against Fraud. They call S. 2010 ``the single most 
effective measure possible to prevent further recurrences. . . . ''
  The measure lengthens the statute of limitation by extending it from 
the earlier of 1 year from discovery or 3 years from the fraud to 2 
years from discovery or 5 years from the fraud.
  Senators Feinstein and Cantwell worked hard to craft a fair 
compromise on this provision in the Judiciary Committee.
  Indeed, the last two SEC Chairmen from both parties, Arthur Levitt 
and Richard Breeden, both agreed that the current short statute of 
limitations is unfair to fraud victims.
  Attorney General Christine Gregoire testified before the Judiciary 
Committee in the Enron State pension fund litigation that the current 
short statute has forced some States to forego claims against Enron.
  In Washington State alone, the short statute of limitations could 
cost hard-working State employees--firefighters and police officers--
nearly $50 million in lost Enron investments.
  Last week, Xerox announced it was restating its revenue back 5 years 
by $6.4 billion. Madam President, as a law student, I remember sitting 
in the gallery listening to the distinguished Senator from Illinois, 
Mr. Dirksen, give his well-known speech: ``A billion here and a billion 
there, and soon you're talking about real money.''
  Imagine a corporation claiming they made a mistake in their revenue 
of $6.4 billion for the past five years. The disclosures raise the 
specter of innocent investors who, through no fault of their own, will 
be barred from recouping losses.
  We make the debt from security law violations nondischargeable in 
bankruptcy. We protect fraud victims by amending the bankruptcy code to 
make judgments and settlements based upon security law violations 
nondischargeable. Corporate leaders should not be allowed to take the 
money, run, file bankruptcy, and keep from ever paying any securities 
fraud judgment. The State security regulators strongly support this 
change. You cannot have one set of rules which say if you steal $500 
from a store, you can go to jail. But if you steal $50 million from the 
corporate boardroom, keep the money. That makes no sense. Everywhere I 
went in the State of Vermont last week, people were saying: If I 
committed an act, if I stole something, if I cash a bad check for $100, 
I run the risk of going to jail.
  But what do you do if you get $50 million or $100 million? You are 
home free.
  Criminal conduct deserves criminal penalties. Corporate CEOs who rob 
their company, who rob the pension funds of their employees, who rob 
the trust of the American people, are criminals. They ought to go to 
jail.
  The steel bars, maybe that will give a conscience to some of these 
people like Kenneth Lay and others who obviously do not have one. This 
gives prosecutors, the investigators, and victims the tools to hold 
corporate wrongdoers accountable.
  The people who are involved in such massive criminal activity ought 
to pay. The American people ought to know they will have to pay. If 
they don't, there will be a whole lot more fraud.
  I ask unanimous consent to have a number of letters printed in the 
Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                      Taxpayers Against Fraud,

                                                   Washington, DC.


                            Government Accountability Project,

                                     Washington, DC, July 5, 2002.
       Dear Senator: The Government Accountability Project (GAP) 
     and the Taxpayers Against Fraud (TAF) reaffirm our support 
     for the Leahy Corporate and Criminal Fraud Accountability 
     amendment to S. 2673, the Public Company Accounting Reform 
     and Investor Protection Act of 2002.
       Initially introduced as S. 2010, the Corporate and Criminal 
     Fraud Accountability Act, was unanimously reported by the 
     Senate Judiciary Committee on May 6, 2002. This amendment is 
     a landmark proposal. It promises to make whistleblower 
     protection the rule rather than the exception for those 
     challenging betrayals of corporate fiduciary duty enforced by 
     the Securities and Exchange Commission. It would be the 
     single most effective measure to prevent recurrences of the 
     Enron and Worldcom debacles as well as similar threats to the 
     nation's financial markets, shareholders and pension holders.
       GAP is a nonprofit, nonpartisan public interest law firm 
     dedicated since 1976 to helping whistleblowers, those 
     employees who exercise freedom of speech to bear witness 
     against betrayals of public trust that they discover on the 
     job. GAP has led the campaign for passage of nearly all 
     federal whistleblower laws over the last two decades. TAF is 
     a nonprofit, nonpartisan public interest organization 
     dedicated to combating fraud against the Federal Government 
     through promotion and use of the federal False Claims Act and 
     its qui tam whistleblower provisions. TAF supports effective 
     anti-fraud legislation at the federal and state level.
       The Leahy amendment to S. 2673 is outstanding good 
     government legislation. It closes the loopholes that have 
     meant whistleblowers proceed at their own risk when warning 
     Congress, shareholders, and their own management's Board 
     Audit Committees of financial misconduct threatening the 
     health of their own company, investor confidence and the 
     nation's economy. We hope we can count on your support to add 
     this state of the art whistleblower protection system in S. 
     2673. If you have any questions regarding the Leahy 
     amendment, please call Tom Devine at GAP (202-408-0034 ext. 
     124), or Doug Hartnett (ext. 136).
           Sincerely,
                                                      Jim Moorman,
                                          Executive Director, TAF.
                                                       Tom Devine,
     Legal Director, GAP.
                                  ____

                                         North American Securities


                            Administrators Associations, Inc.,

                                     Washington, DC, July 5, 2002.
     Hon. Patrick Leahy,
     Washington, DC.
       Dear Senator Leahy: NASAA supports S. 2673, The Public 
     Company Accounting Reform and Investor Protection Act of 
     2002, and opposes efforts to weaken its provisions. State 
     securities regulators believe there is an immediate need to 
     restore investor confidence in our securities markets.
       Passage of the Leahy amendment, which incorporates S. 2010, 
     the Corporate and Criminal Fraud and Accountability Act of 
     2002, into the accounting reform bill would send a strong 
     deterrent message to potential securities violators by 
     providing prosecutors with new and better tools to punish 
     those who defraud our nation's investors. Our focus is on 
     Section 4, which would prevent the discharge of certain debts 
     in bankruptcy proceedings. At the present time, the 
     bankruptcy code enables defendants who are guilty of fraud 
     and other securities violations to thwart enforcement of the 
     judgments and other awards that are issued in these cases.
       We support passage of the Leahy amendment because it 
     strengthens the ability of regulators and individual 
     investors to prevent the discharge of certain debts and hold 
     defendants financially responsible for violations of 
     securities laws. This issue is of great interest to state 
     securities regulators, and we hope you'll support it on the 
     Senate floor.
       In addition, state securities regulators enclose Title V of 
     S. 2673--Analyst Conflicts of Interest--in its current form 
     and strongly oppose any amendment to this title that would 
     reduce our ability to investigate wrongdoing and take 
     appropriate enforcement actions against securities analysts. 
     An amendment drafted by Morgan Stanley was circulated that, 
     we believe, would have prohibited state securities regulators 
     from imposing remedies upon firms that committed fraud, if it 
     involved securities analysts and perhaps even broker-dealers 
     that deal with individual investors. Clearly this approach is 
     ill-advised, especially in today's climate.

[[Page 12320]]

     What message would be sent to Main Street investors if the 
     states' investigative and enforcement authority were 
     weakened? (Additional information on this proposal was 
     delivered to your office last week.)
       Please vote for passage of S. 2673, for the Leahy 
     amendment, and against any amendments to curtail state 
     securities enforcement actions.
           Sincerely,
     Joseph P. Borg,
       NASAA President, Alabama Securities Director.
     Christine A. Bruenn,
       NASAA President-elect, Maine Securities Administrator.
                                  ____

                                  American Federation of Labor and


                          Congress of Industrial Organization,

                                   Washington, DC, April 17, 2002.
     Hon. Patrick Leahy,
     Senate Judiciary Committee, Washington, DC.
     Legislative Alert!
       Dear Senator Leahy: The sudden and spectacular collapse of 
     Enron has jeopardized the retirement security of millions of 
     hardworking Americans and exposed systemic failures of our 
     securities laws. If we are to prevent future Enrons and 
     restore the credibility of America's capital markets, 
     aggressive reform is required. This week the Judiciary 
     Committee will markup S. 2010, the Corporate and Criminal 
     Fraud Accountability Act of 2002, which is an important part 
     of this effort and deserves your support.
       The measures embodied in S. 2010 will help protect working 
     families and their retirement funds from future Enrons by 
     strengthening the penalties for securities and accounting 
     fraud, and destruction of audit papers. The bill provides 
     strong civil and criminal penalties for conduct such as 
     document shredding by auditors and conspiracies to defraud 
     investors; and bars those who commit securities fraud from 
     using the bankruptcy system to avoid compensating the victims 
     of such fraud. It also lengthens the statute of limitations 
     for civil lawsuits by the victims of securities fraud, making 
     it more difficult for those who commit these crimes to escape 
     having to compensate their victims.
       S. 2010 is an important part of the comprehensive reforms 
     Congress needs to enact in response to the conflicts in the 
     capital markets exposed by the collapse of Enron. The AFL-CIO 
     urges you to support S. 2010 at this week's Judiciary 
     Committee markup.
           Sincerely,
     William Samuel
       Director, Department of Legislation.
                                  ____



                                              Consumers Union,

                                                   Washington, DC.
     Re Support for S. 2010, the Corporate and Criminal Fraud 
         Accountability Act of 2002

                               Consumer Federation of America,

                                   Washington, DC, April 16, 2002.
       Dear Senator: Consumers Union and the Consumer Federation 
     of America urge your support for S. 2010, the Corporate and 
     Criminal Fraud Accountability Act of 2002, sponsored by 
     Senator Patrick Leahy, when it comes before the Judiciary 
     Committee for markup on Thursday. This proposal adds 
     important provisions to the civil and criminal laws, which 
     will both, deter and when necessary, punish securities fraud.


        Enhancing Enforcement and Sanctions for Securities Fraud

       S. 2010 takes the following important steps to strengthen 
     enforcement and penalties for securities fraud:
       It creates a new felony for the act of defrauding 
     shareholders of publicly traded companies.
       It creates a new felony for destruction of evidence or 
     creation of evidence with intent to obstruct a federal agency 
     or criminal investigation.
       It provides whistleblower protection to employees of 
     publicly traded companies when they act lawfully to disclose 
     information about fraudulent activities within their company.
       It enhances the ability of state attorneys general and the 
     SEC to use civil RICO to enforce existing law; currently only 
     the US attorney general has such authority currently under 
     RICO.


              Adopting a Realistic Statute of Limitations

       S. 2010 also increases the ability of defrauded investors 
     to recover their losses by lengthening the statute of 
     limitations. The bill would set the statute of limitations to 
     the earlier of 5 years after the date of the fraud or three 
     years after the fraud was discovered.
       The current statute of limitations, the result of a 5-4 
     vote in a 1991 Supreme Court decision, sets up an 
     unrealistically short timetable for bringing private suits 
     and needs to be corrected. Former President Bush's SEC 
     Chairman Richard Breeden, former President Clinton's SEC 
     Chairman Arthur Levitt, and state securities regulators have 
     all supported an extension of the statute of limitations.
       Suits by defrauded investors have long been recognized by 
     securities regulators, including former SEC Chairman Levitt, 
     as an important deterrent against fraud. Moreover, securities 
     fraud is often well-concealed and not readily apparent to 
     investors until, in some cases, years after the fraud has 
     been committed. As Chairman Levitt testified in 1995 before 
     the Senate Banking Committee, ``Extending the statute of 
     limitations is warranted because many securities frauds are 
     inherently complex, and the law should not reward the 
     perpetrator of a fraud who successfully conceals its 
     existence for more than 3 years.''
       Justices O'Connor and Kennedy, in their vigorous dissent in 
     the 1991 Supreme Court case, also supported a longer statute 
     of limitations. Justice Kennedy wrote, ``The most extensive 
     and corrupt schemes may not be discovered within the time 
     allowed for bringing an express cause of action under the 
     1934 Act. Ponzi schemes, for example, can maintain the 
     illusion of a profit-making enterprise for years, and 
     sophisticated investors may not be able to discover the fraud 
     until long after its perpetration . . . By adoption of a 
     three year period of response, the Court makes a 10(b) action 
     all but a dead letter for many injured investors who by no 
     conceivable standard of fairness or practicality can be 
     expected to file suit within three years after the violation 
     occurred. In so doing, the Court also turns its back on the 
     almost uniform rule rejecting short periods of response for 
     fraud-based actions.''
       Indeed, some states' pension funds may have to forego 
     claims against Enron for securities fraud that occurred in 
     the late 1990s because of this short statute of limitations. 
     Washington State's Attorney General discussed this problem 
     when she testified before your Committee in February of this 
     year. ``In fact, for Washington State, our claim in the 
     [Enron] case is for approximately $50 million, when in fact 
     our losses are in excess of $100 million. But because of the 
     statute of limitations, we're not able to make that claim.'' 
     (underlining added).
       The current statute of limitations rewards those who are 
     able to conceal their fraud for a relatively short time with 
     immunity from private liability. It also includes a limit of 
     one-year from the time of discovery, which encourages a rush 
     to the courthouse.
       The criminal conduct surrounding the collapse of Enron, and 
     the fact that many claims for fraud will be time-barred by 
     the current short statute of limitations, have drawn 
     attention to the need for reform. S. 2010 includes important 
     investor protection measures. We urge your support for this 
     bill in the Judiciary Committee April 18.
           Sincerely,
                                                  Sally Greenberg,
                                                   Senior Counsel.
                                                  Travis Plunkett,
     Legislative Director.
                                  ____

                                              U.S. Public Interest


                                               Research Group;

                                   Washington, DC, April 17, 2002.
     No More Enrons--Support S. 2010, the Corporate and Criminal 
         Fraud Accountability Act of 2002
       Dear Member of the Senate Judiciary Committee: We are 
     writing on behalf of the members of state Public Interest 
     Research Groups to urge your strong support for S. 2010, the 
     Corporate and Criminal Fraud Accountability Act of 2002, 
     sponsored by Senator Patrick Leahy, when it comes before the 
     Judiciary Committee for markup on Tuesday. This proposal adds 
     important provisions to the civil and criminal law to both 
     deter and, when necessary, punish securities fraud. Please 
     oppose weakening amendments.
       S. 2010 takes the following important steps to strengthen 
     enforcement and penalties for securities fraud:
       It creates a new felony for the act of defrauding 
     shareholders of publicly traded companies.
       It creates a new felony for destruction of evidence or 
     creation of evidence with intent to obstruct a federal agency 
     or criminal investigation.
       It provides whistleblower protection to employees of 
     publicly traded companies when they act lawfully to disclose 
     information about fraudulent activities within their company.
       It enhances the ability of state attorneys general and the 
     SEC to use civil RICO to enforce existing law; currently only 
     the U.S. attorney general has such authority currently under 
     RICO.
       Importantly, S. 2010 also increases the ability of 
     defrauded investors to recover their losses by lengthening 
     the statute of limitations. The bill would reasonably and 
     sensibly set the statute of limitations to the earlier of 5 
     years after the date the fraud occurred or three years after 
     the fraud was discovered. A securities law violation is often 
     a complex, multi-year enterprise. Indeed, Enron's recent 
     accounting restatements went back five years. Under the 
     fraudster-friendly current law, some state pension fund 
     claims against Enron may be time-barred.
       S. 2010 includes numerous important investor protection 
     measures to assist whistleblowers, fraud victims, and law 
     enforcement agencies. We urge your strong support for this 
     bill to help restore investor confidence in the Judiciary 
     Committee April 18. Please

[[Page 12321]]

     oppose weakening amendments. For more information about the 
     full state PIRG platform to protect employees, investors and 
     taxpayers from future Enron/Andersen debacles, please visit 
     http://www.enronwatchdog.org. Please contact me with 
     questions at either 202-546-9707x314 or [email protected].
           Sincerely,
                                               Edmund Mierzwinski,
     Consumer Program Director.
                                  ____



                                National Whistleblower Center,

                                   Washington, DC, April 17, 2002.
     Hon. Maria Cantwell,
     Senate Judiciary Committee, Washington, DC.
       Dear Senator Cantwell: The National Whistleblower Center 
     strongly supports S. 2010, the Corporate and Criminal Fraud 
     Accountability Act of 2002. This law would protect employees 
     who disclose Enron-related fraud to the appropriate 
     authorities.
       One of the most notorious loopholes in current 
     whistleblower protection law exists under the securities 
     laws, in which employees who report fraud against 
     stockholders have no protection under federal law. It is 
     truly tragic that employees who are wrongfully discharged 
     merely for reporting violations of law, which may threaten 
     the integrity of pension funds or education-based savings 
     accounts, have no federal protection.
       This point was made abundantly clear by the recently 
     released internal memorandum from attorneys for Enron. 
     According to Enron's own counsel, employees who were blowing 
     the whistle on Enron's misconduct were not protected under 
     federal law, and could be subject to termination. 
     Unfortunately, the Enron attorney was correct.
       It is imperative that the next time a company like Enron 
     seeks advice from counsel as to whether they can fire an 
     employee, like Sharon Watkins (who merely disclosed potential 
     fraud on shareholders), the answer must be a resounding 
     ``no.'' That can only happen if the Corporate and Criminal 
     Fraud Accountability Act is enacted into law.
           Respectfully submitted,
                                                 Kris J. Kolesnik,
     Executive Director.
                                  ____

                                              National Association


                                         of Attorneys General,

                                     Washington, DC, July 3, 2002.
       Dear Senator: It has come to my attention that the 
     substance of S. 2010, the Corporation and Criminal Fraud 
     Accountability Act of 2002, will be offered as an amendment 
     to S. 2673, the Public Company Accounting Reform and Investor 
     Protection Act of 2002, as early as next week.
       I have attached a letter to Senator Leahy from seven 
     Attorneys General written last April in support of the 
     substance of S. 2010, in order to make these views known as 
     you consider this legislation.
       If you have any questions or concerns, please feel free to 
     call Blair Tinkle, NAAG's Legislative Director at 202-326-
     6258.
           Sincerely,
                                                       Lynne Ross,
     Executive Director.
                                  ____

                                           National Association of


                                            Attorneys General,

                                   Washington, DC, April 17, 2002.
     Hon. Patrick Leahy,
     Chairman, Senate Judiciary Committee, U.S. Senate, 
         Washington, DC.
       Dear Chairman Leahy: We would like to take this opportunity 
     to express our support for your bill, S. 2010, the Corporate 
     and Criminal Fraud Accountability Act of 2002, which is 
     pending before the Senate.
       As you know, the proposal would allow state Attorneys 
     General to seek to enjoin racketeering activities under the 
     federal RICO statute. Such added authority would enhance the 
     ability of Attorneys General to protect their citizens from 
     unlawful activities by organizations both within and outside 
     the borders of our individual states.
       In addition, to restore accountability, S. 2010 provides 
     prosecutors new and better tools to effectively prosecute and 
     punish criminals who defraud investors by:
       Creating a new, 10-year felony specifically aimed at 
     securities fraud.
       Enhancing fraud and obstruction of justice statutes where 
     evidence is destroyed and in fraud cases, where there are 
     many victims or where any victim is financially devastated.
       Creating two new document destruction felonies establishing 
     a new felony shredding crime and requiring the preservation 
     of audit documents for 5 years.
       Creating new protections for corporate whistleblowers.
       Finally, the bill protects victims' rights by:
       Protecting securities fraud victims from discharge of their 
     debts in bankruptcy.
       Extending the statute of limitations in securities fraud 
     cases.
       We appreciate your efforts to enact this important 
     legislation. Please feel free to contact us if we can provide 
     further assistance in this effort.
           Sincerely,
         Carla J. Stovall, Attorney General of Kansas, President 
           of NAAG; Hardyress, Attorney General of Oregon, 
           Chairman, Enron Bankruptcy Working Group; Christine 
           Gregsire, Attorney General of Washington; William H. 
           Sorrell, Attorney General of Vermont; Ms. Edmonds, 
           Attorney General of Oklahoma, President-Elect of NAAG; 
           Thurbert E. Baker, Attorney General of Georgia; Betty 
           D. Montgomery, Attorney General of Ohio.

  Mr. LEAHY. I appreciate the distinguished majority leader introducing 
this amendment and yielding to me.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. MILLER. I was going to send an amendment to the desk but I 
understand there is one pending. I ask unanimous consent I have up to 8 
minutes to discuss this amendment now, which I will send later.
  Mr. McCONNELL. Reserving the right to object, and I probably will 
not, I hoped for an opportunity to briefly explain the second-degree 
amendment that is pending at the desk. If the Senator thinks it might 
be helpful just to determine the order of discussion, perhaps it is 
more appropriate to discuss the amendment that is pending over one that 
might have been pending.
  Mr. MILLER. The Senator from Kentucky is correct. I would like to get 
in the queue somewhere along the line.
  Mr. REID. I ask the question of the Senator from Kentucky, How long 
does the Senator from Kentucky wish to speak?
  Mr. McCONNELL. I will be happy to wrap up in 5 or 6 minutes. I want 
to summarize what the amendment is about.
  Mr. SARBANES. Madam President, I ask unanimous consent the Senator 
from Kentucky be recognized for 5 minutes to speak to the second-degree 
amendment that has been offered, that is pending, and that be followed 
by the Senator from Georgia to speak for 8 minutes.
  Mr. MURKOWSKI. Madam President, I wonder if I may be recognized after 
the sequence that has been discussed for about 1 minute.
  Mr. REID. I object.
  The PRESIDING OFFICER. Is there an objection to the original request 
of the Senator from Maryland?
  Mr. REID. I do not object to the original 13 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Kentucky will proceed.
  Mr. McCONNELL. I thank my friend from Georgia. I will briefly discuss 
the second-degree amendment. I expect to vote for the underlying bill, 
but we ought to, in the name of equity, apply the same principles in 
the underlying bill we are seeking to apply to corporations to labor 
unions.
  The amendment I sent to the desk requires union financial statements 
to be audited by an independent accountant using procedures that mirror 
those of public companies under Federal securities laws. It imposes 
civil penalties for violations of these new auditing requirements that 
mirror those imposed on the Security Exchange Act of 1934. Third, it 
requires that the Union President and Secretary-Treasurer certify the 
accuracy of financial reports, mirroring a similar requirement for CEOs 
and CFOs in the Sarbanes bill.
  We are debating how to better oversee and enforce the audit 
requirements for large corporations that were first established under 
the Securities Act of 1933. It may shock many to learn that labor 
unions are not even required to have independent audits of the 
financial statements they file with the Department of Labor--or should 
I say that they are required to file. Many unions apparently thumb 
their nose at the requirement. A study by the Office of Labor 
Management Standards found that 34 percent of all unions filed late 
financial reports or no reports at all.
  If we are serious about protecting the investing public from the 
financial fraud of corporations and accountants, we should be equally 
serious about protecting the day-to-day American worker--the plumbers, 
the machinists, the longshoremen, and the steelworkers--from the 
financial fraud of union officials.
  One prominent union official recently said that:

       Over the coming months you will no doubt hear more about 
     the Enron scandal and the many thousands of people who have 
     lost their pensions because of corporate greed.

  I agree with that. What we do not hear enough of are the stories of 
union

[[Page 12322]]

greed. It is only fair to share some of them today. I have a rather 
long list I will discuss later in the debate, but let me cover a few of 
them in my allotted time. We have heard of Arthur Andersen, but has 
anyone heard of Thomas Havey? That is the accounting firm where a 
partner confessed to helping a bookkeeper conceal the embezzlement of 
hundreds of thousands of dollars from a worker training fund of the 
International Association of Ironworkers. And in an eerie parallel to 
the Enron scandal, the Havey accountants revealed startling 
information--10 years ago, the then General Counsel for the Ironworkers 
Union said that if the accounting firm refused to assist in the union 
scheme to conceal financial mismanagement, the accounting firm should 
be fired. Sadly, the accounting firm complied.
  We have all heard of Global Crossing, but has anyone heard of ULLICO? 
That is the multibillion-dollar insurance company owned primarily by 
unions and their members' pension funds that invested $7.6 million in 
Global Crossing. Apparently, ULLICO directors received a sweetheart 
investment deal that allowed them to make millions on the sale of 
stock. The union pension funds, however, dried up with Global 
Crossing's demise.
  There is much more. An accountant within the National Association of 
Letter Carriers embezzled more than $3.2 million from union funds over 
an 8-year period to buy 8 cars, 2 boats, 3 jet skis, a riding mower, 
and 105 collectable dolls. A former official of the Laborers' Union 
District Council in Oregon, Idaho, and Wyoming is in jail for accepting 
hundreds of thousands of dollars in kickbacks for directing money into 
a ponzi-like investment scheme that defrauded Oregon labor unions of 
$355 million.
  I have a number of additional examples that I wish to get to later, 
but I do want to say in summary, again, what my amendment is about, 
just so everyone will understand as we move subsequently to a vote. It 
first requires union financial statements to be audited by an 
independent accountant using procedures that mirror those of public 
companies under the Federal securities laws; second, it imposes civil 
penalties for violations of these new auditing requirements that mirror 
those imposed under the Securities Exchange Act of 1934; and, third and 
finally, it requires that the Union President and Secretary-Treasurer 
certify the accuracy of their financial reports, which mirrors a 
similar requirement for CEOs and CFOs in the Sarbanes bill.
  I yield the floor.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. McCONNELL. Yes.
  Mr. SARBANES. Of course, there is a special statutory arrangement 
that governs labor organizations. I take it this proposal--has this 
come to us from the Department of Labor?
  Mr. McCONNELL. I say to the Senator from Maryland, it did not come 
from the Department of Labor. It came from my office. This is something 
we have been looking at over the last week or 10 days, thinking that, 
since the very worthwhile requirements of corporations and accounting 
firms, under the bill of the Senator from Maryland, make sense if we 
are looking to protect investors, we should also protect union members 
from similar kinds of casual exploitation.
  Mr. SARBANES. But under the Labor Management Reporting and Disclosure 
Act, the Department has certain authorities it can invoke in dealing 
with the kind of problems the Senator has outlined. At least that is my 
understanding under the current state of the law. Is that correct?
  Mr. McCONNELL. I don't know what the position of the Department of 
Labor is on the amendment I am offering. But it is my belief that if 
the amendment were not necessary, we would not be offering it here 
today. This is something I am sure we are going to discuss further as 
we move along.
  Mr. SARBANES. I am sure the Senator would be able to find out from 
the Secretary.
  Mr. McCONNELL. I expect I could find out from the Secretary of Labor, 
but I chose not to do that.
  Mr. GRAMM. I don't know whether you could or not.
  Mr. McCONNELL. She has her job and I have mine.


                           Amendment No. 4176

  The PRESIDING OFFICER. The Senator from Georgia is recognized under 
the previous order.
  Mr. MILLER. Madam President, I ask unanimous consent the pending 
amendment be temporarily set aside so I be allowed to offer an 
amendment.
  The PRESIDING OFFICER. Is there objection to the request? Without 
objection, it is so ordered.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from Georgia [Mr. Miller] proposes an amendment 
     numbered 4176.

  Mr. MILLER. Madam President, I ask unanimous consent the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To amend the Internal Revenue Code of 1986 to require the 
signing of corporate tax returns by the chief executive officer of the 
                              corporation)

       At the end add the following new title:

                   TITLE VIII--CORPORATE TAX RETURNS

     SEC. 801. SIGNING OF CORPORATE TAX RETURNS BY CHIEF EXECUTIVE 
                   OFFICER.

       (a) In General.--Section 6062 of the Internal Revenue Code 
     of 1986 (relating to signing of corporation returns) is 
     amended by striking the first sentence and inserting the 
     following new sentence: ``The return of a corporation with 
     respect to income shall be signed by the chief executive 
     officer of such corporation.''.
       (b) Executive Date.--The amendment made by this section 
     shall apply to returns filed after the date of the enactment 
     of this Act.

  Mr. GRAMM. Will the Senator yield?
  There is a little bit of confusion. I want to be sure he is setting 
aside the entire amendment, the Leahy and the McConnell amendment, and 
he is offering a first-degree amendment? That is what I understood when 
I talked to the Senator and to what I had agreed.
  The PRESIDING OFFICER. That is the Chair's understanding.
  Mr. SARBANES. No. What was the request? I thought the unanimous 
consent request was to set aside the McConnell amendment and offer the 
Miller amendment to the Leahy amendment.
  Mr. GRAMM. It was the pending amendment.
  Madam President, I wanted to be sure that we set aside both Leahy and 
McConnell. This is a new issue, a first-degree amendment. That was the 
basis that I understood it on and on the basis of that I had no 
objection to it.
  The PRESIDING OFFICER. The Chair understands the Senator from Georgia 
was going to offer an amendment that would be considered at a different 
time, an independent first-degree amendment, to be spoken about now and 
considered at a later time. Is that the understanding of the Senator 
from Vermont?
  Mr. LEAHY. Reserving the right to object, I want to make sure I fully 
understand. What is the request?
  The PRESIDING OFFICER. There is no request pending.
  Mr. LEAHY. I am sorry. I thought there was a request to lay aside my 
amendment.
  The PRESIDING OFFICER. That request has been granted.
  Mr. LEAHY. But then my--what is the parliamentary situation with my 
amendment? Maybe that is the best way to ask it.
  The PRESIDING OFFICER. The Senator from Georgia obtained the consent 
to set aside the pending amendment in order to offer a first-degree 
amendment.
  Mr. LEAHY. I understand.
  Mr. SARBANES. Would the call for the regular order at the completion 
of the statement of the Senator from Georgia, or disposition of his 
amendment, bring back before the body the Leahy amendment?
  The PRESIDING OFFICER. Yes, it would.
  Mr. LEAHY. The Senator from Georgia spoke to me earlier. I do not 
want in any way to interfere with that. I do want to accommodate him. I 
just wanted to make sure, also for my own schedule, where we stood.

[[Page 12323]]

  I thank the distinguished Presiding Officer and I thank the 
distinguished chairman of the committee and of course I thank the 
distinguished Senator from Georgia.
  Mr. MILLER. I thank the Senator from Vermont and the Senator from 
Texas.
  Madam President, there is a good old boy from down in Georgia named 
Jerry Reed, who went to Nashville several years ago and made it big as 
a tremendous guitar picker, singer, and songwriter. He had a big hit a 
while back. Maybe some of you remember it. It was called ``She Got the 
Gold Mine and I Got the Shaft.''
  I thought about that song of Jerry Reed's as I watched what has 
happened lately on the corporate scene. The big shots of Enron and 
WorldCom and others, they got the gold mine while the poor employees 
and the innocent stockholders got the shaft.
  If a picture is worth a thousand words, take a look at this gold 
mine. It was built partly on the backs of those Georgia schoolteachers 
who, each month, put their hard-earned money into the Georgia teachers' 
retirement fund. The fund in Georgia lost $78 million from Enron and 
another $6 million from WorldCom. Think how many monthly contributions 
by how many struggling teachers that represents. And think about those 
other thousands of employees who have lost their life savings, not even 
to mention the thousands of employees who have lost their jobs--at 
least 450 jobs were wiped out in Georgia alone so far.
  Yes, a few big shots got the gold mine and a lot of little folks got 
the shaft.
  I am as probusiness as anyone in this body. I yield to no 
officeholder when it comes to supporting business issues. As Governor 
and Senator, I have worked to give tax cuts and tax incentives and pay 
for the training of their employees--all to provide a probusiness 
environment in which the entrepreneurial spirit can thrive and prosper 
and create jobs. But, folks, there comes a time when so much greed and 
so many lies become so bad--even if it is only by a few--that something 
meaningful has to be done. We must act quickly to protect the investor, 
provide some security for the worker, and restore confidence in the 
marketplace because, make no mistake about it, today we have a crisis 
in the integrity of corporate America.
  That is why I have worked with Senator Sarbanes in perfecting his 
bill, and I strongly support it. I am pleased that it is before us this 
week. I also commend President Bush for making the strong 
recommendations he is going to be making in New York.
  But I think we need to do at least one other thing, so I have a 
simple amendment. It is only two short paragraphs in length, but it 
goes to the very essence of fairness. It simply says that, when the 
taxman cometh, we all--workers and high-dollar bosses alike--must face 
him just alike, without any go-betweens or liability firewalls or 
corporate veils.
  This is how it would work. There is a standard tax form called 1040. 
I know there are more sophisticated ones for big business, but the 
principle I am getting at is the same. This is what it says:

       Under penalties of perjury, I declare that I have examined 
     this return and accompanying schedules and statements, and to 
     the best of my knowledge and belief they are true, correct 
     and complete.

  And then it is signed here by Joe Sixpack. Joe Sixpack of America 
signs those kinds of forms. There were more than 14 million of those 
forms filed in April. If Joe Sixpack is required to sign this oath for 
his family, why shouldn't Josepheus Chardonnay be required to sign that 
same oath for his corporation?
  So my little amendment simply requires that henceforth the chief 
executive officer of all publicly owned and publicly traded 
corporations must sign the corporation's annual Federal tax return.
  Currently, there is an IRS rule that corporations can designate any 
corporate officer to sign their tax return. That will not get it. Let's 
be specific. Let's put it into law: The CEO is the one who is to sign 
the tax return and must be accountable for it.
  Where I come from it is expected that those being paid ``to mind the 
store'' should at least know whether the store is losing or making 
money.
  Harry Truman had a sign on his desk in the Oval Office that said, 
``The Buck Stops Here.'' For Truman, it meant that he was accountable.
  He took the blame. He suffered the consequences when things went bad.
  For some of today's CEOs, it is just the opposite. They want no 
accountability. They shift the blame to others. They hide behind that 
corporate veil. And, it seems, they rarely if ever pay the 
consequences.
  Their former workers cancel plans for their children to go to college 
while they sip from champagne flutes in their mansions in Boca and 
Aspen.
  For these CEOs, Truman's famous sign has changed from ``The Buck 
Stops Here'' to ``The Bucks Go Here.''
  Our system of collecting taxes is based upon the premise that 
individual taxpayers will take all steps necessary to ensure that the 
financial information in the tax return is accurate.
  If Joe Sixpack fudges the numbers, he doesn't get a pass from paying 
penalties or going to jail. I find it outrageous that the same is not a 
part of the mind set for those in the corporate culture.
  If any CEO is not willing to sign the company tax return--if they are 
not willing to take steps to satisfy themselves that their corporation 
is accurately reporting financial information--then those CEOs have no 
right to the prestige and respect that goes with the position they 
hold.
  What is good for the goose is good for the gander. So I urge my 
colleagues to simply hold our CEOs to the same standard that we now 
impose upon our average wage earners.
  Treat them the same, ``Treat 'em'' the same. That is the American 
way. That is what the voters out there want us to do and that is what 
they expect us to do. ``Treat 'em'' the same.
  And you can take that back home this summer and explain it. Some of 
these other reforms, I fear, will be more difficult to explain.
  Treat 'em the same.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.

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