Statement by Theresa Amato President of Citizen Works

July 5, 2002

We are here today because despite massive daily media coverage of the growing corporate crime wave, Congress has yet to send a single reform bill to the President’s desk in the seven months since the Enron collapse. Some members of Congress have talked tough on corporate reform, many have grabbed the spotlight in dozens of aggressive hearings on the Enron/Andersen scandal, but, as the Citizen Works study released today shows, when it comes to actually taking action, almost half of the members of Congress have yet to sponsor or even co-sponsor a single piece of post-Enron corporate reform legislation.

This underachievement is matched by the lack of securities law enforcement by an overburdened and understaffed securities and exchange commission, and it is matched by the overachievement of CEOs and their acquiescing boards cooking the books, amassing huge fortunes, and leaving their lied to workers jobless, and the pension funds of millions threatened.

In the years between 1992 and 2001, the SEC has referred to U.S. Attorneys for criminal charges only 609 cases. Of these, U.S. attorneys have prosecuted only 187, of these, 142 were found guilty and only 87 went to jail. The SEC’s enforcement staff consists of 950 people; the whole budget in 2001 was less than $423 million.

The Citizen Works Corporate Crime Wave Index in your press packet helps put these numbers in perspective.

For example, in 2001, there were at least 21 U.S. corporate law firms (many who represent defendants against the SEC) that each have grossed more than $423 million, and there are an estimated 12,113 corporate lobbyists in Washington, D.C.

Meanwhile, publicly-traded companies are restating their earnings in record numbers. Most Americans today do not trust corporate executives to give them honest information and they are right. Of the 50 large brokerage firms covering companies that went bankrupt in the first four months of 2002, 47 of them were continuing to recommend to investors to buy or hold shares in the companies even as these companies were filing for bankruptcy.

Meanwhile, CEOs are getting paid tens of million of dollars while laid off workers find their severance packages capped at a few thousand dollars. In May of 2002, 80 CEOs retired. In June, World Com announced the layoff of 17,000 workers. CEOs are making 531 times as much money as the average worker. CEO pay went up 571% in the last decade. Twenty-five percent of the U.S. population is earning poverty-level hourly wages.

Meanwhile, Enron pays no taxes in 4 of 5 years, has more than 800 subsidiaries in offshore tax havens, and gets hundreds of millions of dollars back from the U.S. government. Companies are fleeing to offshore tax havens like the Cayman Islands and Bermuda to cheat the U.S. government out of hundreds of millions of dollars, leaving the rest of us taxpayers to pay the bills. Companies are spending millions of dollars on lobbyists and politicians. WorldCom – which estimates it disguised 3.8 billion of expenses as profits in 2001 and 2002 -- alone spent 7.5 million between 1989 and 2002 in soft money, PAC and individual contributions to federal candidates and another $11 million just on lobbying expenses since 1987.

And from Congress? Not one piece of corporate reform legislation has been sent to George W. Bush. And from the President? Has his 18 month-old administration prosecuted and convicted any of the high-profiled corporate bosses caught deceiving with their hands in the cookie jar, while their company’s head south?

We have a corporate crime wave and here to talk about it and the need for corporate reform are:

Professor Cynthia Williams, who is an associate professor of law at the University of Illinois College of Law, where she teaches courses on corporate and securities law and corporate social responsibility. She has written about the securities and exchange commission and corporate social transparency for the Harvard Law Review and she will speak about securities law disclosure and enforcement.

Professor Williams will be followed by Travis Plunkett, who is the legislative director of the Consumer Federation of America, a membership organization of more than 285 organizations from throughout the nation with a combined membership exceeding 50 million people. For more than three decades, CFA has advocated policies and programs that help ensure a marketplace with vigorous competition, products that are useful and safe, marketing that is truthful and informative, and adequate consumer redress.

Mr. Plunkett will be followed by Tom Devine who is a lawyer, a former adjunct professor, and the legal director of the Government Accountability Project for more than twenty years. In his work to protect whistleblowers, he has testified more than 50 times in Congress and led successful campaigns to pass the Whistleblower Protection Act of 1989 and amendments to it in 1994.

Mr. Devine will be followed by Charlie Cray who is the director of the Campaign for Corporate Reform at Citizen Works. He campaigned for Greenpeace for ten years. Between 1999 and 2002, he served as associate editor of Multinational Monitor. He will speak about corporate tax escapees.

Mr. Cray will be followed by Ralph Nader who is the founder of Citizen Works and a consumer advocate.

We will begin with Professor Williams.