July 31, 2002	Wednesday	Jamadi-ul-Awwal 20,1423

WASHINGTON, July 30: Hoping to restore investor confidence after a wave of boardroom scandals, US President George W. Bush on Tuesday vowed “hard time” instead of “easy money” for corporate crooks as he signed a law that quadruples penalties for accounting fraud.

The legislation, largely written by Maryland Democratic Sen. Paul Sarbanes and designed to make it harder for company executives to deceive investors, was spurred by weak stock markets, voter anger and approaching congressional elections.

The legislation was far tougher than measures proposed by Bush, who himself has been questioned over stock sales and a low-interest loan he accepted while he was an outside director at Harken Energy Corp.

Facing a challenge in shaking off an image that his administration is too close to big business, Bush was under pressure to swiftly sign the tougher law amid public outrage at recent staggering stock market losses and fear of the political fallout against his fellow Republicans at the ballot box on Nov. 5.

“No more easy money for corporate criminals. Just hard time,” Bush promised as he signed the measure in an elaborate White House East Room ceremony attended by about two dozen key Democrats and Republicans, but few corporate CEOs.

The legislation creates a new oversight board for the accounting industry, until now a largely self-regulated profession implicated in a series of corporate meltdowns ranging from Enron Corp. to WorldCom Inc.

Maximum jail time for executives who commit mail or wire fraud is quadrupled to 20 years. The bill establishes a new crime of securities fraud with a maximum sentence of 25 years and increases funding for the Securities and Exchange Commission, the government’s corporate watchdog.

“In the aftermath of September 11 we refused to allow fear to undermine our economy and we will not allow fraud to undermine it either,” Bush said. “Tricking an investor into taking a risk is theft by another name.”

Bush said corporate corruption had struck at investor confidence — a massive sell-off in stock markets has fulled fears of another economic downturn — and offended “the conscience of our nation.”

Even as the President signed the law, the Senate was holding hearings into the role investment banks played in encouraging creative financing at Enron and whether accounting shenanigans in the communications sector might threaten telephone and Internet service.

“This law says to corporate accountants the high standards of your profession will be enforced without exception,” Bush said. “The auditors will be audited. The accountants will be held to account.”

It takes effect a day after a new CNN/USA Today/Gallup poll showed Bush’s economic approval rating slipping — although his overall job approval rating remained strong — amid a growing impression that the president values big corporations over ordinary Americans.

The poll also showed Democrats gaining an edge over Republicans in handling of the economy and in voter preference for congressional seats — key gauges ahead of November elections to determine control of both houses of Congress.

“My administration pressed for greater corporate integrity,” Bush said. “A united Congress has written it into law. And today, I sign the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.”

“There will not be a different ethical standard for corporate America than the standards that applies to everyone else ... No boardroom in America is above or beyond the law.”—Reuters