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Wednesday, 10 July, 2002, 02:50 GMT 03:50 UK
Bush talks tough on business
George W Bush in New York
George Bush: Will "vigorously pursue" lawbreakers
US President George W Bush's call for a new era of integrity in corporate America in an attempt to restore confidence in business has met with a mixed reaction.

"America's greatest economic need is higher ethical standards," Mr Bush said in a speech to more than a thousand business leaders on Wall Street.


I thought the President spoke loudly but he offered a very, very small stick

Democrat Tom Daschle

The President urged longer prison sentences for corporate fraudsters and announced the creation of a new taskforce - headed by deputy attorney general Larry Thompson - to pursue and prosecute corporate criminals.

Opposition Democrats said the speech was long on words but short on action. However, some business leaders welcomed the president's call for higher ethical standards.

'Heady profits'

The BBC's Stephen Evans in New York says the speech was about politics as much as economics.

Investor confidence and public trust has been shaken by recent accounting scandals involving companies including Enron, WorldCom and Merck.

What the President wants
Longer sentences for corporate fraudsters
New corporate fraud taskforce
More money for SEC watchdog
Pay packages for bosses explained in plain English
More independent directors for firms
Stock option plans need shareholder approval
Special payments to bosses under investigation to be frozen
Compensation committee to stop 'improper loans' to CEOs
Tougher laws against document shredding

Many of these companies soared to prominence during the telecoms and internet boom of recent years.

"The lure of heady profits of the late 1990s [led to] abuses and excesses. We must usher in a new era of integrity of corporate America," the President said.

Mr Bush stressed the strong performance of the American economy, but said that "while nearly every week brings economic news", it also "brings a discovery of fraud and scandal".

He said: "The business pages of American newspapers should not read like a scandal sheet."

The President stressed the need for greater transparency of accounts as well as greater vigilance.

Democrats said Mr Bush's words must be matched by action.

The majority leader in the Senate, Democrat Tom Daschle, praised the president's tone but felt the proposals fell short of what was needed.

"I thought the President spoke loudly but he offered a very, very small stick," he said.

"Not only do we need to lecture on corporate irresponsibility, but we've got to send those responsible to jail."

A political battle is now under way, with Democrats, and increasingly Republicans, backing tougher measures than those proposed by Mr Bush.

Reform call

Mr Bush called for an extra $100m (64.7m) to strengthen the SEC, helping it to hire enforcement officers and bolster its technology.


If we actually saw these guys go to prison...that would do something

Bev Hendry
Phoenix Aberdeen
He also said executives should be jailed if they deliberately falsified accounts - at the moment they face only civil penalties. Prison sentences should be doubled to ten years.

With the exception of the taskforce, Mr Bush's other calls for reform require co-operation from lawmakers, regulators, stock markets as well as business itself.

"So far the administration's approach has been a familiar strategy. Use harsh rhetoric to condemn wrongdoers while delaying and watering down whatever reforms might come out of Congress," said House of Representatives Democratic leader Richard Gephardt of Missouri.

"If we actually saw some guys go to prison for these scandals that would do something," said Bev Hendry, portfolio manager at Phoenix-Aberdeen.

"We need more action, less talk. These things would take a long time to be enacted."

 WATCH/LISTEN
 ON THIS STORY
The BBC's Ian Pannell
"So called wrong-doers beware"
US President George W Bush
"The American economy, our economy, is based on confidence"
Hudson Institute's Irwin Steltzer
"I think you are going to get more structural reform before all this is over"
WorldCom

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See also:

09 Jul 02 | Business
09 Jul 02 | Americas
09 Jul 02 | Business
03 Jul 02 | Business
08 Jul 02 | Business
30 Jun 02 | Business
28 Jun 02 | Business
09 Jul 02 | Business
09 Jul 02 | Business
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