- The Washington Times - Saturday, July 13, 2002

President Bush yesterday presided over the inaugural meeting of his new task force on corporate fraud, and its chairman pledged to go after business criminals "with vigor and an aggressive manner."

As the "SWAT team" Mr. Bush's term for the task force met at the White House, the Senate passed a ban on personal loans from companies to their top officials and directors, setting up a vote early next week on legislation creating stiff penalties for business fraud.

Deputy Attorney General Larry Thompson, chairman of the task force, said the group, composed of prosecutors, investigators and regulators, will be tough but fair.

"We are going to pursue these matters with vigor and an aggressive manner, as they should be. But I also want to assure everyone that in doing our work, we're going to be professional, we're going to be fair, and we're going to be just," Mr. Thompson said outside the White House after the closed-door meeting with Mr. Bush.

Mr. Thompson said there are already "a number of investigations" under way across the country, adding, "We have hundreds of career prosecutors involved in these investigations."

Mr. Thompson offered no specific information of which companies are under investigation, but said he will be looking at the big picture in coming up with recommendations for the president.

"One of the things we're going to do is look beyond the investigations and see what we can do to recommend to the attorney general and to the president appropriate corrective and remedial actions that may be needed in this area, for example, changes in rules and regulations, or legislative changes," he said.

Securities and Exchange Commission Chairman Harvey L. Pitt, also at the White House meeting, said Mr. Bush plans to increase the number of SEC enforcement officers from 1,000 to 1,200 as part of a new crackdown on corporate fraud.

Mr. Bush also announced that the SEC will receive more money to tackle the growing problem of corporations running fast and loose in their accounting practices.

"We are going to use those resources as effectively as we can and to work with the task force to make sure that we deal with all of these instances of corporate wrongdoing," Mr. Pitt said.

"I think the combination of the SEC's financial-accounting expertise and the wonderful prosecution resources arrayed make it clear that this is going to be a very, very successful task force," he said.

He said the SEC has sought to have banned from corporations 71 corporate officers and directors since last Oct. 1, compared to 38 in all of fiscal 2000, the year before Mr. Bush took office.

The SEC chairman, given a vote of confidence by Mr. Bush despite calls from Democratic lawmakers that he resign, said the commission has ordered the 1,000 largest companies to "certify the validity of their financial statements, both filed and to be filed, or otherwise explain why they cannot."

"That will happen in the next few weeks, and when that does, I think that will give us a very clear picture of what's around. And that's one of the reasons why we took this action, at the president's request," Mr. Pitt said.

Mr. Bush on Tuesday created the task force, which also includes as members Attorney General John Ashcroft, Treasury Secretary Paul O'Neill, FBI Director Robert S. Mueller III and the heads of the Federal Energy Regulatory Commission, the Federal Communications Commission and the Commodity Futures Trading Commission.

Meanwhile, the Senate, on a voice vote, agreed to prohibit personal loans to chief executive officers and chief financial officers of the sort made by companies such as WorldCom Inc. The company's former chairman, Bernard Ebbers, received $408 million in personal loans from the telecommunications giant.

Sen. Charles E. Schumer, New York Democrat, said such loans had "created havoc" in his state, when telecommunications giant Adelphia Communications filed for bankruptcy in June after disclosing in March that it had guaranteed $2.3 billion in loans to partnerships controlled by its founders.

"This is wrong. It must be stopped. Why can't these corporate executives go to the bank like everybody else when they need loans?" he said.

Mr. Bush, in his Tuesday speech on Wall Street, called for such loans to be banned. Since then, newspapers have published stories that Mr. Bush received low-interest loans of $180,000 a decade ago as a director at Harken Energy Corp.

Also on a voice vote, the Senate adopted a proposal by Sen. Byron L. Dorgan, North Dakota Democrat, to ensure that officers of U.S. companies that reincorporate offshore have to comply with new requirements in the bill that they certify company financial statements.

A vote on a sweeping bill that will address many questionable accounting practices may come as early as Monday evening. Bush spokesman Ari Fleischer said, "The House bill is a tough bill, the Senate bill is a tough bill, and [Mr. Bush is] looking forward to signing a tough bill into law."


This article is based in part on wire service reports.


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