James Sensenbrenner, July 11, 2002

Since Enron declared bankruptcy in December, news of other major corporations’ financial problems have surfaced. After the Enron fiasco, the House, sensitive to the plight of employees in America, acted on legislation to enact new safeguards and options to help workers preserve and enhance their retirement security, by passing the Pension Security Act on April 11. Moreover, on April 24, the House also passed the Corporate and Auditing Accountability, Responsibility, and Transparency Act, which reforms accounting oversight and increases corporate responsibility to restore investor confidence. Until now, the Senate has not yet passed any similar bills.

More recently, corporations like WorldCom, Xerox, and Merck Pharmaceuticals have admitted - to varying degrees - to playing around with their financial numbers so as to present the American public with a more positive picture of their company. When CEOs lie about their companies’ finances, they commit a crime. These kinds of criminal corporate behaviors don’t just undermine people’s faith in American businesses, they also affect employees’ lives in a very real and serious way. When corporations go bankrupt, people lose their jobs, and in many cases, their pension and retirement funds. Yet, it seems that CEOs and other high ranking officials at Enron and WorldCom seem to have been financially well taken care of, and some have even qualified for bonuses.

This isn’t right. Corporate officers hold positions of high trust and they should face stiffer penalties when they break the law. Corporate leaders who violate the public trust should not be given that trust again. In a speech on Wall Street delivered on Tuesday July 9, the President made this point, and called for a new ethic of responsibility in America’s corporate community. He outlined a plan on corporate responsibility that includes the creation of a corporate fraud task force, increases SEC resources for greater enforcement, provides investors with better advice and information, and doubles jail time for those convicted of financial fraud from five to ten years.

As Chairman of the House Judiciary Committee, I look forward to reading the details of the Administration’s proposal, and considering those provisions that fall within the jurisdiction of my committee. For example, the Judiciary Committee will be able to weigh in on the jail time for people convicted of financial fraud. I can tell you right now that ten years is not a long time for people who have jeopardized the futures of thousands of employees by robbing them of their livelihood.

Congress needs to revisit the issues of corporate accountability and investor confidence now that it appears that we have a problem that’s even bigger than the Enron disaster. People are losing faith in American businesses. We don’t know who to trust and when to believe in a business that says it’s doing well, when perhaps it really isn’t.

In a welcomed departure from its frustrating "do-nothing" approach, on July 10, the Senate took action by actually passing several amendments to an accounting oversight bill that addresses some of these problems. However, neither this accounting oversight bill, the Pension Security Act, nor the Corporate and Auditing Accountability, Responsibility, and Transparency Act, have passed the Senate.

We must restore trust in our businesses and the American free market. The illegal and unethical business practices of the 1990’s cannot be allowed to continue, and I look forward to passing a bill that’s tough on corporate crime.

James Sensenbrenner is a Republican member of the U.S. House of Representatives from Wisconsin.