    [Public Papers of the Presidents of the United States: George W. Bush (2002, Book I)]
    [March 7, 2002]
    [Pages 356-359]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks at the Presentation of the Malcolm Baldrige National Quality
    Awards
    March 7, 2002

        Thank you, Secretary Evans, and thank
    you all very much. It's an honor to be back here. It's a pleasure to see
    so many students here today. I understand some of you took a tour of the
    White House. You must have behaved well, because I didn't hear the dogs
    barking. [Laughter] I hope you enjoyed being there as much as Laura and
    I enjoy being there. It's a fabulous place, the White House is. I'm so
    glad you were able to see it.
        I'm also pleased to be back to congratulate the award winners of the
    Malcolm Baldrige National Quality Award. I'm really pleased that school
    districts have been added. I want to commend the Baldrige Committee for
    including education. Secretary Rod Paige
    is here. Both of us believe so strongly that no child should be left
    behind. Both of us know the potential of the public school systems in
    America, and we want to thank and congratulate the school districts here
    that have set the highest of high standards not only at the secondary
    level but also at the high level of education.
        I was privileged to know Malcolm Baldrige. He was one of America's
    most distinguished Secretaries of Commerce, and what a fine and
    honorable man he was. The award that bears his name reflects the virtues
    that he brought to public service and how he lived in his private life,
    a commitment to excellence, shrewd judgment and sound judgment,
    principled leadership, integrity, and a sense of responsibility.
        Today's honorees have met a rigorous test--and such a worthy example
    for others. And I know Malcolm would have approved of the winners.
        It's a great honor to be with Midge Baldrige again--you're looking pretty darn good these days--
    [laughter]--and Letitia Baldrige as well. I
    know we've got some Members of the United States Congress here. I think
    Bill Jenkins from Tennessee is here. I
    know Connie Morella is here. Thank you
    for coming, Connie. I also appreciate Nancy Murkowski, the wife of Frank Murkowski. Nancy is committed to quality education in the State of
    Alaska, and I know you're as proud as I am for the winners who are here.
    And I always want to thank the U.S. Army Band for providing such
    wonderful music.
        I appreciate the fact that prior winners of the Baldrige Award are
    here. I think it's important for you to stay involved in the process. As
    you heard, some of the recipients also appreciate of you being here. And
    I want to welcome five more organizations to your ranks, the school
    districts, the University of Wisconsin-Stout, as well as the fine
    symbols of entrepreneurial spirit in America, Pal's Sudden Service of
    Tennessee, and of course, Clarke American Checks, represented by some
    rowdy Texans.
        This is a high, high honor. I know you all understand what a big
    deal this is, having gone through the process. It is an important award,
    and I congratulate you all so very much. The award goes to organizations
    rather than any single individual, and that's important to note. As
    we've seen today, success happens in an atmosphere of teamwork, common
    values, and trust.
        An organization needs a good idea and a good product or a good
    service. It certainly needs a good strategic plan. But more than
    anything, it needs good people, men and women of integrity who
    understand their duties to each other and to the public interest.
        And this is true throughout our entire economy. The free enterprise
    system draws upon the best in people, creativity, ingenuity, energy, a
    desire to make life better

    [[Page 357]]

    for ourselves and for others. The whole design of free market capitalism
    depends upon free people acting responsibly. Business people must answer
    not just to the demands of the market or self-interest but to the
    demands of conscience.
        The bottom line of the balance sheet defines a business' goal but
    not the sum of responsibilities of its leaders. Management should
    respect workers. A firm should be loyal to the community, mindful of the
    environment.
        In America, by far--by far--most businesses fulfill their
    responsibilities. They do not cut ethical corners or neglect workers or
    disregard community standards. A good business finds opportunities and
    makes the most of them, and a good business always respects the
    boundaries of right and wrong.
        In our country, the law defines many of these responsibilities, from
    workplace safety to environmental protection. For publicly held
    corporations the law goes further, defining standards of disclosure with
    independent certification by auditing firms.
        We have seen lately just how important these standards are and the
    harm that can follow when they are ignored. Exactly where the blame lies
    may take a long time to determine, and legal judgments are for
    regulators and for courts. But this much is clear: To properly inform
    shareholders and the investing public, we must adopt better standards of
    disclosure and accounting practices for all of corporate America.
        The reason that a single bankruptcy can cause so much concern in
    America is that more Americans than ever have invested their money in
    public corporations. Today, about 80 million Americans own stock, either
    individually or through their pension plans. This is one of the causes
    for the expansion in personal wealth over the past 20 years. This has
    been an incredibly positive development for America. Stock ownership
    allows citizens from all walks of life to own a part of the economy and
    to share in its growth. The people who run public companies owe a
    special obligation to these investors, many of whom have put their
    savings and future security on the line.
        Corporate officers must perform their duty in good faith to the best
    of their abilities. They must disclose relevant facts to the investing
    public, and they must focus on the interests of shareholders, who are
    the real owners of any publicly held enterprise.
        I recognize that the basic rules of corporate law are made by the
    States, and that's as it should be. But Washington has responsibilities
    as well. The buying and selling of publicly held shares is regulated by
    the Federal Government. And today I call upon the Securities and
    Exchange Commission to take action. Existing regulations should be
    clearer. Penalties for wrongdoing should be tougher. Reform should
    improve investor confidence and help our economy to flourish and grow.
        It is important to provide sound regulation and remedies where
    needed, without inviting a rush of new lawsuits that exploit problems
    instead of solving them. Our goal is better rules so that conflict,
    suspicion, and broken faith can be avoided in the first place.
        Reform should begin with accountability, and reform should start at
    the top. The chief executive officer has a daily duty to oversee the
    entire enterprise, the entire firm, and therefore, bears a unique
    responsibility for serving shareholder interests. Currently, a CEO signs
    a nominal certification of annual financial statements and does so
    merely in his capacity on behalf of the company. In the future, the
    CEO's signature should also be his personal certification, vouching for
    the veracity and fairness of the financial disclosures. When he signs a
    statement, he's giving his word and should stand behind it.
        Oftentimes businesses base executive bonuses on financial
    statements. If, however, a financial statement turns out to be grossly
    inaccurate or the result of serious misconduct, those bonuses should be
    returned

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    to the company's treasury on behalf of it's shareholders.
        Corporate officers should not be allowed to secretly trade their
    company's stock. Every time they buy or sell, they should be required to
    tell the public within 2 days. The Securities and Exchange Commission
    should be able to punish corporate leaders who clearly abuse their
    powers, by banning them from ever serving again as officers or directors
    of publicly held corporations.
        We must also do more to safeguard the rights of investors. America
    has the best system of corporate disclosure. Yet, the interests of the
    average investor are sometimes overlooked, especially the need for
    thorough and timely information about firm performance. And some
    corporations have used artful and intricate financial arrangements to
    hide the true risks of the investment.
        We need to get back to basic capitalism. In a system based on the
    willingness to take risks, investors need to know the true nature of the
    risks. The investor has the right to a true and fair picture of assets,
    liabilities, and income. Management has a good-faith obligation to
    provide that information, attracting investment by building on
    strengths, not by clever concealment of weaknesses.
        And to further ensure that information is reliable, we will need
    reforms within the accounting profession. Auditors are a critical
    external check on management, and we must ensure that the integrity of
    their work is never compromised. Accounting is one of the most basic and
    one of the most respected professions in our country, and it can help
    protect its own integrity by developing and enforcing clearer standards
    of conduct.
        The profession also needs an independent regulatory board to hold
    accounting firms to the highest ethical standards. And the SEC should
    exercise more effective and broad oversight of accounting standards. The
    SEC should also do more to guard against conflicts of interest,
    requiring, for example, that an external auditor not be permitted to
    provide internal audits to the same client.
        And finally, auditors should do more than evaluate a company by
    minimum standards. Instead, the auditors should compare the company's
    financial controls to the best industry practices and give those
    findings to the audit committee.
        You know, we're passing through extraordinary times here in America.
    We fight a war--a real war--to protect our homeland by bringing
    terrorists to justice. We stand strong against evil abroad--I mean, we
    are standing strong and determined and united against evil. We're
    finding strength at home through the gathering momentum of millions of
    acts of kindness and generosity and goodness, neighbors helping
    neighbors, Americans adhering to the age-old call to love someone just
    like you'd like to be loved yourself.
        America is ushering in a responsibility era, a culture regaining a
    sense of personal responsibility, where each of us understands we're
    responsible for the decisions we make in life. And this new culture must
    include a renewed sense of corporate responsibility. If you lead a
    corporation, you have a responsibility to serve your shareholders, to be
    honest with your employees. You have a responsibility to obey the law
    and to tell the truth.
        Business relationships, like all human relationships, are built on a
    foundation of integrity and trust. When those values are practiced and
    expected, our economy and our country are stronger.
        We're seeing some challenges and some changes in American business
    and American enterprise. Yet this annual presentation is a reminder of
    things that must never change, the passion for excellence, the drive to
    innovate, the hard work that goes with any successful enterprise, the
    need to be open, the call for integrity. This year's Baldrige Award
    winners have shown these qualities and have taken their place in a
    distinguished line of leaders.

    [[Page 359]]

        Once again, my congratulations to you all. May God bless your
    enterprises, and may God bless America.

     Note: The President spoke at 11:05 a.m. in the International Ballroom
    Center at the Washington Hilton Hotel. In his remarks, he referred to
    Margaret ``Midge'' Baldrige, widow of former Secretary of Commerce
    Malcolm Baldrige; and Letitia Baldrige, his sister.