Bush Delivers Progress Report on Corporate Fraud Task Force

By Paula Cruickshank, CCH Washington News Bureau, contributing author.

Since the presidentially appointed Corporate Fraud Task Force was established in July 2002, the Department of Justice (DOJ) has opened more than 100 investigations into suspected corporate fraud and charges have been filed against more than 150 defendants, according to President Bush. In addition, more than 45 defendants have been convicted of or intend to plead guilty to business fraud, according to Bush. The president provided a progress report on actions taken to date by the task force at a recent conference on corporate fraud in Washington, D.C.

Since formation of the task force, 90 percent of the prosecutions brought by DOJ for corporate fraud offenses were achieved with assistance from Securities and Exchange Commission investigators and analysts, according to details released by the White House. According to President Bush, the new task force was created by executive order to “investigate and prosecute financial crimes; to recover the proceeds of those crimes; and hold corporate criminals to account.” The corporate fraud watchdog group includes members of the DOJ, FBI, SEC, Labor Department, Commodities Futures Trading Commission, Federal Communications Commission, Federal Energy Regulatory Commission and U.S. Attorneys.

“This broad effort is sending a clear warning and a clear message to every dishonest corporate leader: You will be exposed and you will be punished. No boardroom in America is above or beyond the law,” Bush cautioned.

The president also mentioned several actions taken in the past year by the SEC. According to Bush, the SEC has filed “a record 156 actions for financial fraud and disclosure violations, [which is a 51 percent increase over fiscal year 2000]” and it has “sought to throw 107 unfit officers and directors out of corporate boardrooms, almost three times the number the SEC sought to bar in fiscal 2000.”

According to the president, the SEC is “aggressively using its enforcement powers to make corporate wrongdoers financially accountable for their actions.” In fiscal year 2002, the SEC sought to recover compensation, bonuses and stock options from 25 corporate officers, “an almost 40 percent increase over last year,” Bush noted.

“By all these actions, we are making broad and dramatic progress against corporate fraud in America. We’re defending our free enterprise system against corruption and crime. And we’re beginning a new era of corporate integrity. Corporate responsibility is essential to America. It’s essential to shareholders. It is essential to investors,” Bush asserted.