House, Senate negotiators promise swift action on compromise anti-fraud legislation

Friday, July 19th 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ House and Senate negotiators on Friday began crafting compromise legislation aimed at fighting business fraud and promised swift action to stem the erosion of investor confidence.

Twenty lawmakers on a House-Senate conference committee convened for the first time, stressing areas of agreement and the need for decisive action before reporters and television cameras. The gritty business of negotiating to reconcile differences between bills passed by the House and Senate, which create new criminal penalties for business fraud and tighten oversight of the accounting industry, was coming later in meetings behind closed doors.

Lawmakers are trying to get President Bush a final bill before they adjourn for their August recess, as he has urged them to do.

Sen. Phil Gramm, R-Texas, said that going in, members of the panel had ``unanimous agreement on about 90 percent of the issues.''

With congressional elections coming up in November, lawmakers are trying to restore confidence in business and stock markets battered by a wave of corporate accounting scandals.

``It's become increasingly clear that something has gone wrong,'' said Sen. Paul Sarbanes, D-Md., chairman of the Senate Banking Committee and a leader of the conference panel. ``We confront a very serious challenge here.''

``I believe that we can move expeditiously. ... We can't do less than that.''

Key lawmakers meeting privately Thursday agreed to use far-reaching legislation unanimously approved by the Democratic-controlled Senate as the underlying text for crafting the new compromise measure _ a sign that Republicans may be willing to adopt a tougher bill than they previously had supported.

As Congress acted, the Justice Department and Bush nominees to the Securities and Exchange Commission promised Thursday to punish corporate wrongdoers.

The package adopted by the Senate on Monday would create new criminal penalties and jail terms for business fraud and tighten oversight of the accounting industry. The GOP-led House followed up Tuesday with a 391-28 vote on a criminal penalties bill that is more stringent in some aspects than the Senate measure but considered weaker in others.

The House in April had passed an accounting oversight bill that is widely viewed as weaker than the Senate version.

In negotiations, Republicans will focus on powers of a new independent body to oversee the accounting industry. Lawmakers of both parties agree broadly on new criminal penalties for corporate fraud and executives who shred documents.

The congressional action was taking place as the Justice Department and the SEC continued to investigate accounting irregularities at Enron Corp., WorldCom Inc. and other big companies.

``The Department of Justice ... will continue to investigate fully the reports of corporate fraud and hold the guilty parties accountable for misleading shareholders and employees,'' Attorney General John Ashcroft said in a statement Thursday.

At a Senate hearing, one of two Bush nominees as SEC commissioner, Harvey Goldschmid, said that if confirmed, he would do all he could ``to punish corporate wrongdoers and to rebuild faith in the fairness and integrity of our markets.''

The other nominee, Paul S. Atkins, said the SEC ``is at the center of a crisis of trust.''

``I will dedicate my energy, experience, integrity and independent judgment to achieving'' the goal of rebuilding investor trust, he said.

Atkins, a Republican, is a partner at big accounting firm PricewaterhouseCoopers and previously worked at the SEC. Goldschmid, a Democrat, was SEC general counsel under former chairman Arthur Levitt. The nominees were warmly received and were expected to be confirmed by the Senate to fill long-standing vacancies on the five-member commission.

The SEC, which has been thrust into the spotlight by the string of accounting failures, has been stretched thin by the multiple investigations.

SEC Chairman Harvey Pitt, already under fire because of his past ties to the accounting industry and business, said he does not intend to automatically remove himself from cases involving former law clients when a one-year period requiring such a step expires in two weeks.

An SEC spokesman said Pitt will decide on a case-by-case basis whether to participate.

White House spokesman Ari Fleischer said the president saw no problem with Pitt's decision. ``The president has strong confidence in Harvey Pitt's judgment and discretion,'' Fleischer said.