Bush Vows to Crack Down on American Corporate Frauds

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Last updated at: (Beijing Time) Thursday, June 27, 2002

Bush Vows to Crack Down on American Corporate Frauds

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United States President George W. Bush said Wednesday the U.S. government will fully investigate the WorldCom Frauds. In doing so he sent a strong message that a cleansing campaign against the Corporate America has started from the highest level of the country.

On the opening day of the G-8 Summit held in Canada, Bush denounced those involved in the accounting frauds as "outrageous" and he said those people should "be held accountable."

"We've had too many cases of people abusing their responsibilities and people just need to know that the SEC (Securities and Exchange Commission) is on it, our government is onit, and Arthur Andersen has been prosecuted. We will pursue, within our laws, those who are irresponsible," said Bush.

WorldCom Inc., which is the country's second biggest long-distance service provider, appeared as the latest in a series of accounting frauds sweeping through the U.S. corporate world, dealing a heavy blow to public faith in the business world.

An investigation by the group's new leadership discovered that more than 3 billion U.S. dollars of expenses in 2001 and 797 million dollars for the first quarter of 2002 were wrongly listedon company books as capital expenditures, thus not reflected in its earnings results.

With similar financial scandals revealed to the public one after another, a crisis of confidence is said to overwhelm the country. People are reeling from the massive "white-collar crimes," and some have begun to ask: "Who can you trust?"

When the crisis emerged, some other people began to look back to the one-decade financial boom of the country. Jeremy Siegel, Professor of Finance at the University of Pennsylvania, said in aninterview with CNBC, a U.S. business channel, that in the corporate world, people are only concerned about making money, andthat as long as stocks are going up, everything will be all right.

An absence of responsibility in the market has become a source of widespread concern. The U.S. Securities and Exchange Commission(SEC) has stepped up its efforts to tighten financial regulations.It said a comprehensive reform is needed to regulate the market.

On June 20, the SEC proposed rules to establish the framework for a Public Accountability Board in the private sector to remedy the SEC's oversight and enforce its efforts. In this proposal, theSEC has stressed the importance of enforcing ethical and competency standards in the accounting profession.

All these efforts, however, are believed to be just the beginning of a long process, for the primary concern at the momentseems how big the scandal can be, rather than finding a solution. As the WorldCom is unlikely to be the last one in the chain, people are still waiting to see which is the next.

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