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Double the prison term for financial fraud: Bush

T V Parasuram in Washington

Apparently having power giant Enron and telecom major Worldcom in mind, United States President George W Bush on Tuesday night proposed a new law doubling prison term for those convicted of financial fraud, announced a task force to target accounting irregularities and unveiled a slew of reforms to restore faith in scandal-hit American capitalism.

Addressing business leaders in their stronghold -- New York's Wall Street -- Bush announced a legislation under which the maximum prison terms for those convicted of financial fraud would be increased from five to 10 years.

He also suggested creation of a new Corporate Fraud Task Force headed by the Deputy Attorney General, which would target major accounting fraud and other criminal activity in corporate finances.

"We will use the full weight of the law to expose and root out corruption. My administration will do everything in our power to end the days of cooking the books, shading the truth and breaking our laws," Bush said.

"The business pages of American newspapers should not read like a scandal sheet," he said. "I am calling for a new ethic of personal responsibilities in the business community - an ethic that will increase investor confidence, make employees proud of their companies and regain the trust of the American people."

"More scandals are hiding in corporate America. We must find and expose them now so we can begin rebuilding the confidence of our people and the momentum of our markets," Bush said, releasing a 10-point plan that requires the approval of the Congress.

Among other things, his reforms would ensure that Boards of Directors are more independent of the company officers, end company loans to officials, strengthen surveillance by the Securities and Exchange Commission, control the huge bonuses company officials secure for themselves when the company itself is going to pieces and introduce other measures to ensure the independence of auditors.

He also asked Congress to temporarily freeze improper payments to corporate executives and strengthen laws to prevent the destruction of records. Bush asked Congress to approve his earlier proposal to have 100 new enforcement personnel in the Securities and Exchange Commission.

In addition, he asked for $100 million in the coming year to give the SEC the officers and the technology it needs to enforce the laws.

Under the Bush proposal, corporate officers who benefit from false accounting statements would forfeit all the money they gained by their fraud.

In future, Chief Executive Officers will have to certify the financial statements not simply on behalf of the company, but personally vouch for their veracity. The SEC, he pointed out, has already ordered leaders of nearly a thousand public companies to certify that the financial information they submitted in the last year was fair and accurate.

He asked financial analysts to give honest advice to investors and not act as salesmen with a hidden agenda. Bush pointed out that 80 million Americans have invested in American companies and assured them that the American system of enterprise has not failed them but some individuals have failed the system.

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