[Weekly Compilation of Presidential Documents Volume 38, Number 27 (Monday, July 8, 2002)]
[Pages 1112-1113]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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

[[Page 1113]]

again. 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.
    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.