    [Public Papers of the Presidents of the United States: George W. Bush (2002, Book I)]
    [June 29, 2002]
    [Pages 1082-1083]
    [From the U.S. Government Publishing Office www.gpo.gov]

    The President's Radio Address
    June 29, 2002

        Good morning. This week we learned of another deeply troubling
    accounting scandal at a major American corporation. Reports allege that
    the company hid nearly $4 billion in expenses and reported profits when
    it may have actually lost more than a billion dollars. The Securities
    and Exchange Commission immediately filed suit against the company to
    preserve documents so that a complete and thorough investigation can
    take place and to ensure that the company cannot give massive payments
    to executives during the investigation.
        Despite recent abuses of the public's trust, our economy remains
    fundamentally sound and strong, and the vast majority of businesspeople
    are living by the rules. Yet, confidence is the cornerstone of our
    economic system, so a few bad actors can tarnish our entire free
    enterprise system. We must have rules and laws that restore faith in the
    integrity of American business. The Government will fully investigate
    reports of corporate fraud and hold the guilty parties accountable for
    misleading shareholders and employees. Executives who commit fraud will
    face financial penalties, and when they are guilty of criminal
    wrongdoing, they will face jail time.
        In March, I unveiled a 10-point plan designed to enhance the
    economic security of Americans by providing better information to
    investors, making corporate officers more accountable, and delivering a
    stronger, more independent auditing system. Among other measures, the
    plan would give the Securities and Exchange Commission two critical
    tools to hold corporate officers accountable.
        First, corporate officers who personally benefit from false
    accounting statements should lose all the money gained by their fraud.
    An executive whose salary or bonus is tied to his company's performance
    makes more money when the company has done well. That is fair when all
    of the accounting is done aboveboard. Yet, when bad accounting practices
    make the company appear to be more successful than it actually is,
    corporate executives should lose their phony profits gained at the
    expense of employees and stockholders.
        Second, corporate leaders who violate the public's trust should
    never be given that trust again. The Securities and Exchange Commission
    should be able to punish corporate leaders who clearly abuse their
    powers by banning them from ever serving

    [[Page 1083]]

    again as officers or directors of publicly held corporations.
        Since my call for action, the Securities and Exchange Commission has
    sought to take away the profits of senior executives from four different
    companies. And in this fiscal year, the SEC has sought to bar 54
    officers and directors. On Thursday, the SEC ordered the CEOs and CFOs
    of the 1,000 largest public companies to certify that the financial
    information they submitted in the last year was fair and accurate.
        In addition to bringing a new measure of accountability to American
    businesses, my administration is committed to protecting the retirement
    savings of American workers. The plan I unveiled in February would give
    workers greater freedom to diversify and manage their own retirement
    funds. It would ensure that corporate executives are held to the same
    restrictions as workers during blackout periods, when employees are
    prohibited from trading in their accounts. It would give workers
    quarterly information about their investments, and it would expand
    workers' access to investment advice. These measures should give
    American workers confidence that their investments will not fall prey to
    unethical executives.
        America is ushering in a new era of responsibility, and that ethic
    of responsibility must extend to America's boardrooms. I want every
    American to know that the vast majority of businesspeople are honest
    individuals who do right by the employees and their shareholders. The
    unethical actions of a few should not be allowed to call into question
    our whole free enterprise system.
        No violation of the public's trust will be tolerated. The Federal
    Government will be vigilant in prosecuting wrongdoers to ensure that
    investors and workers maintain the highest confidence in American
    business.
        Thank you for listening.

    Note: The address was recorded at 10:50 a.m. on June 28 in the Cabinet
    Room at the White House for broadcast at 10:06 a.m. on June 29. The
    transcript was made available by the Office of the Press Secretary on
    June 28 but was embargoed for release until the broadcast. The Office of
    the Press Secretary also released a Spanish language transcript of this
    address.