WASHINGTON Bill to encourage corporate responsibility
The congressman's bill would close a loophole in a federal anti-fraud act.
THE VIDICATOR, YOUNGSTOWN, OHIO
By DAVID SKOLNICK
VINDICATOR POLITICS WRITER
YOUNGSTOWN -- U.S. Rep. Ted Strickland introduced a bill in the U.S. House to deny federal government contracts to companies whose chief executive officers fail to certify their businesses' financial reports.
"This bill makes sure that the federal government deals with scrupulous companies that have demonstrated that they will be good stewards of not only their shareholders' trust, but public money as well," said Strickland, of Lisbon, D-6th. "If the top official of a company refuses to vouch for its honesty, then that company should not be trusted by the federal government."
Strickland's proposal, called the Responsibility in Federal Contracts Act, will be referred to the House Energy and Commerce Committee, of which the congressman is a member, for hearings. Strickland's proposal has four co-sponsors, all Democrats, including two Energy and Commerce Committee members, and U.S. Rep. Stephanie Tubbs-Jones of Cleveland.
Similar bill died
Strickland introduced a similar bill last year, but it died at the end of the two-year congressional session.
"What prompted the congressman to introduce the legislation was he was dealing with those issues while on the Energy and Commerce Committee last year; they kept coming up," said Chad Tanner, Strickland's spokesman, referring to committee hearings on business scandals at Enron and WorldCom.
Strickland's bill would close a loophole in the Sarbanes-Oxley Act, passed last year, that toughened anti-fraud policies for businesses.
The act requires CEOs to certify their financial reports, quarterly and/or annual, with the Securities and Exchange Commission. While it contains penalties for filing false reports, there are no penalties for failure to file a report. Also, the act does not require the SEC to release the names of the companies who do not certify reports.
Strickland's bill would prohibit the government from granting contracts to companies whose CEOs fail to sign off on their company's financial reports to the SEC, and would require the federal agency to make available to the public a list of companies whose CEOs don't certify their reports.
CEOs of several companies have not certified reports since the act was passed last year, Tanner said.
"Despite congressional efforts last year to solve the problems of corporate malfeasance, we continue to hear stories of families and investors who lost most of their investments because of false corporate earnings reports," Strickland said. "No company willing to lie to and steal from investors and employees should ever be trusted with public money or a government contract."