Corporate accountability bill mired in politics

Debate over measures takes a partisan tone

July 18, 2002|By Julie Hirschfeld Davis | Julie Hirschfeld Davis,SUN NATIONAL STAFF

WASHINGTON - With a corporate accountability bill seemingly destined to become law within weeks, lawmakers sparred yesterday over which party should receive credit for a tough response to business scandals.

The competition to claim ownership of the politically explosive issue has slowed progress on the measure, which is entering the final stages of negotiations. Lawmakers hope to hammer out the differences between a tough Democratic-written Senate bill, approved 97-0 on Monday, and a weaker Republican measure that the House passed in April.

The legislators spent yesterday - a day many had hoped would be the first of swift negotiations - engaging in bickering. House Republicans threatened to derail the Senate measure on constitutional grounds, using arcane procedural rules. Meanwhile, Democrats accused the other party of purposefully stalling the bill.

"We think they're doing it to try to distract or try to sideswipe this legislation," said Sen. Paul S. Sarbanes, the Maryland Democrat who was the chief architect of the Senate measure.

At a news conference called to respond to threats by Rep. Bill Thomas, a California Republican who is chairman of the House Ways and Means Committee, to block the bill on procedural grounds, Sarbanes called such tactics "an outrage."

Corporate responsibility, Sarbanes said, "is not an issue with which you can or should be playing political games."

Leaders of both parties and President Bush say they want to enact a law that would increase criminal penalties for deceitful corporate executives, before lawmakers leave town for their month-long August recess. House and Senate leaders appointed negotiators yesterday for a conference committee to reconcile the differences between the House and Senate versions. Those talks could begin as early as today.

But the consensus behind enacting a law has not translated so far into broad agreement on key elements of the measure.

As the bill has acquired an air of inevitability, lawmakers have scrambled to put their imprimatur on it. On Tuesday, the House passed hastily drafted legislation to create a new class of felony for corporate fraud, carrying criminal penalties of up to 25 years. The bill the Senate passed included a similar provision with a penalty of 10 years.

House Republicans denied that they were trying to hold up the bill. They said they were instead trying to protect their constitutional rights and to make sure that the legislation was as strong and effective as possible.

"It is our goal and it is our responsibility to get this bill to the President by the end of next week," said Rep. Michael G. Oxley, the Ohio Republican who chairs the House Financial Services Committee. "We're firmly committed to doing so."

But the Sarbanes bill, Oxley said, "needs improvement."

`Let us win'

After the Senate approved the Sarbanes bill Monday, Democrats began calling on Bush to endorse it and said House Republicans should pass the new bill. That would eliminate the need for a conference and clear the bill for Bush's signature.

"Sooner or later, we're going to win," Sen. Charles E. Schumer, a New York Democrat, said at yesterday's news conference. "Why don't you guys just let us win now?"

Republicans have expressed serious concerns about the Sarbanes bill. But they are also wary of letting Senate Democrats to enjoy the bulk of the credit for cracking down on unscrupulous executives.

"There are maybe some who always like to defend turf and make sure anything that comes out is Republican, but most of us have some legitimate concerns," said Rep. Mark Foley, a Florida Republican who wrote to House Speaker Dennis Hastert of Illinois this week, urging him to accept the Sarbanes bill and avoid a conference.

Constitutional issue

Thomas' procedural objection was designed primarily to insist upon the House's role in writing the bill. Under the Constitution, the House has exclusive power to raise revenue. Because Sarbanes' bill imposes mandatory fees to pay for a new independent board to police the accounting profession, Thomas threatened to block the measure.

In the end, Thomas did not object. But he made clear that he expects the constitutional issue to be resolved and that he could block the bill at any time if it is not addressed.

The Senate and House positions on the legislation are similar in many respects, especially with House passage Tuesday of the new criminal penalties.

Both bills would create an oversight board to monitor the accounting profession. Both would authorize new resources for the Securities and Exchange Commission. And both contain disclosure rules for complex off-balance-sheet transactions and loans to executives.

But Republicans say they object to the structure of the oversight board in the Sarbanes bill. They have also criticized a provision of that bill that bars major accounting firms from providing auditing and consulting services to the same client.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.