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House votes to boost corporate crime penalties

'Real time' vowed for corporate criminals

House members voted Tuesday to toughen penalties for corporate chicanery.
House members voted Tuesday to toughen penalties for corporate chicanery.  

From Ted Barrett
CNN Washington Bureau

WASHINGTON (CNN) -- The Republican-controlled House of Representatives, bowing to overwhelming support for tough corporate reform, rushed a bill to the floor Tuesday that calls for stiff new criminal penalties for corporate wrongdoers.

It passed with overwhelming bipartisan support 391-28 and followed the Senate's approval Monday of a corporate reform bill.

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The bill would add criminal penalties to corporate reform legislation passed the House passed in April. That legislation contained no changes to existing criminal laws.

House Republicans noted Tuesday's bill mandates even longer jail sentences for some corporate crimes than the measure passed by the Democratic-controlled Senate.

"Corporate criminals will do real time. Real long time," said House Judiciary Committee Chairman James Sensenbrenner, R-Wisconsin, during floor debate. "It goes a long way to protect the life savings of many Americans by making the price of theft too high."

But a key Democrat criticized the bill as "a diversionary tactic for the media," designed to turn attention away from other parts of the House corporate reform bill that Democrats argue is too weak.

"They're playing catch-up football. They are embarrassed," said Rep. John LaFalce, D-New York, the ranking Democrat on the House Financial Services Committee. "They had their head in the sand. President Bush had his head in the sand."

The House bill would increase penalties for wire and mail fraud -- "statutes that are often used in criminal cases involving corporate wrongdoing," according to a GOP summary of the bill. Maximum prison terms would rise from five to 20 years. The Senate bill would increase the maximum to 10 years.

The bill would also create a new "securities fraud" section of the mail and wire fraud statute designed to "provide a more general and less technical provision than the current patchwork of existing technical securities law violations." There would be prison sentences up to 25 years for violators.

In response to the shredding of documents by Arthur Andersen employees involved in the Enron Corp. case, the bill "strengthens the laws that criminalize document shredding and other forms of obstruction of justice" and increases the maximum prison term to 20 years. The Senate bill put the maximum at 10 years.

Congressional aides said the bill would bring most of the other criminal penalties in the House and Senate corporate reform bills in line with each other. Among them are provisions to:

  • -- require top corporate executives to certify company financial statements and impose fines and jail time if they knowingly certify a false statement;
  • -- allow the Securities and Exchange Commission to freeze extraordinary payments to corporate executives when their corporations are under SEC investigation;
  • --amend the federal sentencing guidelines to strengthen penalties against corporate leaders who defraud investors or destroy evidence;
  • -- give additional protection to corporate whistleblowers by providing for jail time for officials who retaliate against them.
  • But other key differences remain between the bills, including the structure and authority of an independent accounting oversight board.

    Congressional leaders said they want to meet a deadline set by President Bush and complete action on the legislation before the August recess.

    To speed the process, House Minority Leader Dick Gephardt, D-Missouri, and Senate Banking Committee Chairman Paul Sarbanes, D-Maryland, called on House Republican leaders to take the Senate bill, which was authored by Sarbanes, and move it in the House this week.

    They argued that a conference committee to resolve differences in the bills could take weeks or months and that key reforms in the Senate bill would be "watered down" by Republicans influenced by business groups who oppose the bill.

    Republicans said no.

    "We passed a good bill in April. We look forward to going to conference to make that bill even better for the American people," said Pete Jeffries, spokesman for House Speaker Dennis Hastert's spokesman.




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