PUBLIC COMPANY ACCOUNTING REFORM AND INVESTOR PROTECTION ACT OF 2002-- Continued
(Senate - July 09, 2002)

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[Pages S6491-S6496]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 PUBLIC COMPANY ACCOUNTING REFORM AND INVESTOR PROTECTION ACT OF 2002--
                               Continued

  The PRESIDING OFFICER. The clerk will report the pending business.
  The assistant legislative clerk read as follows:

       A bill (S. 2673) to improve quality and transparency in 
     financial reporting and independent audits and accounting 
     services for public companies, to create a Public Company 
     Accounting Oversight Board, to enhance the standard setting 
     process for accounting practices, to strengthen the 
     independence of firms that audit public companies, to 
     increase corporate responsibility and the usefulness of 
     corporate financial disclosure, to protect the objectivity 
     and independence of securities analysts, to improve 
     Securities and Exchange Commission resources and oversight, 
     and for other purposes.

  Mr. SARBANES. What is now pending before the Senate?
  The PRESIDING OFFICER. The Miller amendment, No. 4176.
  Mr. SARBANES. I ask for the regular order.
  Mr. GRAMM. May we have order, Madam President.
  The PRESIDING OFFICER. Members will take their conversations off the 
floor of the Senate.
  Mr. SARBANES. There is a procedural question following the Miller 
amendment. We have been discussing that. We may be able to resolve it, 
but we need to do that overnight.
  I call for the regular order which, as I understand it, would take us 
back to the Leahy amendment, with the McConnell amendment pending to 
Leahy?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. SARBANES. I call for the regular order.


                           Amendment No. 4175

  The PRESIDING OFFICER. The amendment is now pending. The Senator from 
Massachusetts.
  Mr. LEAHY. Will the Senator yield for a question? We are on, am I 
correct, the Leahy amendment which was pending to it the McConnell 
amendment?
  The PRESIDING OFFICER. That is correct.
  Mr. LEAHY. I thank the Senator from Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. As I understand it, the matter before the Senate now is 
the McConnell amendment; am I correct?
  The PRESIDING OFFICER. That is correct.
  Mr. KENNEDY. Madam President, this amendment of the Senator from 
Kentucky is what we call around here and everywhere a poison pill 
amendment intended to prevent serious action on corporate 
accountability. Just as a few Republicans sought to stop campaign 
finance reform with similar amendments, now they are trying to block 
action to make executives accountable. The lack of corporate 
responsibility in the United States has undermined the credibility of 
our markets and devastated the retirement savings of millions of 
Americans.
  This widespread abuse of corporate power has jeopardized our Nation's 
economic recovery and hurt the legitimacy of our fundamental 
institutions. We must not call for the obstructionism of Senate 
Republicans. Instead, we must heed the call of the American people and 
insist on bold action this week to ensure that corporations are made 
accountable and that workers and investors are protected against these 
abuses.
  The Leahy amendment, which my Republican colleagues seek to block, 
was unanimously approved by the Judiciary Committee in April. It 
includes critical measures to strengthen the ability of Federal 
prosecutors to detect, prevent, and prosecute corporate fraud. It makes 
acts of document shredding and corporate fraud punishable by 10 years 
in prison. It lengthens the statute of limitations for victims of 
security fraud.
  Finally, the bill directs the U.S. Sentencing Commission to review 
criminal penalties for obstruction of justice and corporate fraud.
  Today, Americans are outraged by the endless corporate scandals, and 
Congress must act to hold corporate crooks fully accountable and to 
restore confidence in our markets.
  Defeating the ``poison pill'' amendment offered by Senator McConnell 
is the first step toward that goal. Senator McConnell's amendment would 
put America's workers in double jeopardy. The amendment puts new 
requirements on workers' representatives, despite the fact that these 
officials currently face disclosure and reporting requirements which 
surpass those of public companies.
  This amendment would subject small local unions with annual receipts 
of only $200,000, which are already subject to labor reporting 
requirements, to the same SEC reporting requirements as large public 
companies which typically have resources in the millions.
  The reality is that union finances are already more heavily regulated 
than those of most public companies. The Department of Labor under 
current law can investigate and audit union financial records at any 
time, including conducting random audits. There is no comparable 
requirement for public companies today.
  There are many other examples of current labor laws requiring much 
stricter disclosure by unions than the SEC requires of publicly traded 
companies. Unions have to list every employee who receives more than 
$10,000. But the SEC does not require this of companies. Unions have to 
provide more detailed information regarding their loans than do public 
companies under SEC requirements. Unions have to provide more detailed 
lists of their investment today than do public companies under the SEC 
requirements.
  The list goes on and on and on.
  For over 40 years under labor laws, union officials have been 
required to certify the annual financial reporting of their unions 
under penalty of perjury.
  The McConnell amendment certification requirement ignores the 
safeguards that already exist under our labor laws. Union officials are 
already subject to criminal penalties, which include jail time for 
willfully failing to

[[Page S6492]]

file reports, or knowingly making false statements, or willfully 
concealing documents. Union officials who violate these provisions are 
subject to jail time as well as substantial fines.
  It is misguided to apply SEC requirements and penalties which were 
designed for publicly traded companies to not-for-profit groups such as 
unions. Even the Department of Labor recognizes this.
  Don Todd, Deputy Assistant Secretary in charge of the Department's 
Union Reporting Office, wrote last August regarding SEC requirements 
that the Department of Labor does not have the expertise to provide 
more than a very general overview of this complex area of law. Why in 
the world would we want to force the labor unions to comply with SEC 
filing requirements when the relevant oversight agency doesn't 
understand this area of the law?
  The bottom line here is that the Republicans fear corporate 
responsibility. They know the American people are outraged by the 
endless series of corporate scandals that are hurting workers, 
retirees, and our economic recovery. Rather than admit the scope of 
corporate corruption and the urgency of criminal penalties for corrupt 
executives proposed by Senator Leahy, the Republicans are seeking to 
poison the well. If we allow this, the American people will never 
forgive us for passing up this unique opportunity to bring 
accountability to corporate executives. Corporate criminals must be 
made to pay for their misdeeds.
  I urge my colleagues to vote against the McConnell amendment.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Madam President, first of all, let me point out something. 
Senator McConnell's amendment changes nothing in the Leahy amendment. 
The adoption of Senator McConnell's amendment does nothing to change 
the Leahy amendment. I understand that Senator McConnell tomorrow is 
going to come over and speak at great length on his amendment. But I 
don't want anyone to be deceived as to what the amendment is about.
  The amendment has nothing to do with the Leahy amendment in terms of 
its adoption in any way delaying or changing the Leahy amendment.
  The Senator from Kentucky has proposed a simple proposition that I 
believe is unassailable logically. That proposition is we are going to 
put penalties on filing false reports by corporations, and we are going 
to in the process send people to prison for it. I support that 
provision. I think there are probably 100 Members of the Senate who 
support that part of Senator Leahy's amendment.
  The Senator from Kentucky simply asks the question: Why don't we 
require that labor unions, when they submit financial statements once a 
year, have them audited by CPAs? Second, why don't we have them sign 
those reports and be accountable for their accuracy?
  I am sure that people who do not want unions subjected to 
transparency and to accountability are going to say: Well, this is an 
effort to circumvent requirements on corporate America. Nothing could 
be further from the truth. This amendment does not strike the Leahy 
amendment. It simply adds a simple provision to it that applies 
parallel standards to unions.
  Senator Kennedy says this neglects existing law. The point is that 
the existing law is not very strong. Many unions don't even submit 
these reports. You could argue on the corporate side that we already 
have a body of law; why are we writing new laws? We are writing new 
laws because we need stronger and better laws. We have a bipartisan 
consensus that we do it.

  Also, Senator Kennedy says the veracity of these reports should 
follow under another jurisdiction. We are talking about accounting. We 
are talking about accuracy in reporting. We are talking about 
transparency. We are talking about accountability. Surely union 
members, in reading a report, should have the same confidence that it 
is valid, that a certified public accountant who is subject to high 
ethical standards wrote the report, and that the president of the 
unions certifies it, and that the president is going to be held 
accountable if it doesn't meet the standards we are setting.
  Let me just summarize, since we are going to debate this amendment 
tomorrow, by saying:
  No. 1, this amendment does not change the Leahy amendment. If you are 
for the Leahy amendment, that is fine.
  The question the Senator from Kentucky poses is, should similar 
parallel requirements be imposed on unions that issue a financial 
statement annually, and should they have to be certified by a certified 
public accountant? And should the president of the union have to sign 
the report as the president of a corporation does? Should they be held 
liable if the report is not accurate and if they knowingly file an 
inaccurate report?
  That is the question.
  No. 2, it seems to me it is perfectly reasonable. You might be for 
it, and you might be against it, but you can't say it has anything to 
do with trying to undo the Leahy amendment.
  It seems to me that if you are against it, you have to explain why 
unions should not be required to meet high standards in filing reports.
  I haven't spoken on the Leahy amendment. It is my understanding we 
are going to be debating it tomorrow. I would like to simply outline 
what is in the amendment that I am for and what is in the amendment 
that I am against. I can do it very briefly.
  If people knowingly and willfully violate the law, I support putting 
them in prison. The President has proposed doubling the sentence. I am 
for that. I hope at some point the administration will give us 
legislative language to implement the changes the President proposed 
today. I am hopeful that on a bipartisan basis we can adopt it on the 
floor of the Senate as part of this bill.
  If we do not have time to do it, I have every reason to believe there 
will be bipartisan support to make those changes and those additions, 
those strengthening amendments in conference.
  There is only one part of the Leahy amendment to which I object. 
Unfortunately, it is a very important part of the amendment that no one 
is focusing on when they are talking about the Leahy amendment. In 
fact, I would move that we simply accept the Leahy amendment except for 
this small but important provision.
  I remind my colleagues that in 1995, on a bipartisan basis, we 
adopted the Private Securities Litigation Reform Act, legislation that 
basically amended securities laws to deal with the whole issue of 
predatory strike suits where one law firm was filing 80 percent of the 
lawsuits against corporate America and we had a reform of corporate 
liability. That bill was adopted on a bipartisan vote. It is the only 
bill that we overrode President Clinton's veto on in 8 years in office.
  One of the reforms was to set statute of limitations requirements 
that basically paralleled the securities acts from the 1930s. What we 
said is, if you want to file a lawsuit, you have to do it within a year 
of when you know there was a violation or within 3 years of when the 
violation occurred.
  The whole point of statute of limitations is, that beyond some point 
it is very difficult to maintain records. You do not know what 
happened. People's memories fade. People die. This was part of this 
important reform.
  The Leahy amendment effectively throws out the 1 year and the 3-year 
statute of limitations and adopts a 5-year limitation. Now, he claims 
it is a 2-year and 5-year, but the 2 year applies only if you can prove 
that the person who filed the lawsuit knew that the violation occurred 
outside of the 2 years. I would assert that is virtually impossible to 
prove.
  It is interesting, in statute of limitations, where you are saying 
you have to act on a timely basis because people do not have knowledge 
after periods of time expire, under this, you have to have enough 
knowledge to prove that they knew, which I think is a standard that 
could not possibly work. No one really believes it could work.
  So the reality is, we are striking the 1-year and the 3-year statute 
of limitations in the securities litigation reform bill, and we are 
substituting a 5-year statute of limitations for it. That is a 
provision that I oppose. Every other part of the Leahy amendment I 
support. I personally would be willing to see it accepted by unanimous 
consent save that one provision in the bill. I think it is an important 
provision.
  But I want people to know, as we go into the debate, that my support 
for

[[Page S6493]]

the McConnell amendment has nothing to do with the Leahy amendment; it 
simply has to do with having been convinced that there is logic to the 
McConnell position.
  If we are trying to get transparency in financial reporting, if we 
are trying to hold people accountable, if we want honest numbers, it 
seems to me the logical place would be to start with Government, which 
we have not done. But the second point, it seems to me, is to apply the 
same standard to business and to labor. That is what McConnell has 
done.
  Tomorrow we will have the debate on it, but I wanted to outline what 
the amendment did and did not do and my position on the Leahy 
amendment.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. Madam President, I am prompted to enter this debate by 
the comments of my colleague from Texas. You cannot evaluate the 
parallelism of the McConnell amendment without evaluating the 
requirements that are now imposed upon labor unions under the Labor-
Management Reporting and Disclosure Act of 1959. The argument that this 
is logical is only if you drop out of the picture or the context the 
fact that the unions are now under extensive reporting requirements in 
the law, requirements that significantly exceed, in many respects, 
anything that is required of corporations.
  Now, the Department of Labor has the authority to conduct audits of 
labor unions.
  Mr. KENNEDY. Will the Senator yield on that point?
  Mr. SARBANES. Yes.
  Mr. KENNEDY. According to the statute, it can conduct those audits 
randomly, as I understand. Does the Senator agree with me that these 
audits can be done randomly? According to the statute, it says right 
here, in section 601(a):

       The Secretary shall have power when he believes it 
     necessary in order to determine whether any person has 
     violated . . . any provision of [the legislation] . . . to 
     make an investigation and in connection therewith. . . .

  And they may enter such places to inspect such records and accounts 
in question.
  Does the current underlying legislation permit the SEC to conduct 
random auditing of public entities?
  Mr. SARBANES. The auditing is done by the independent public 
accountants.
  Mr. KENNEDY. The point I am making is, at the current time, the 
Department of Labor can conduct an independent audit at any particular 
time on any occasion, according to the Labor-Management Reporting Act.
  Beyond that, it has the provision:

       Every labor organization shall file annually with the 
     Secretary a financial report signed by its president and 
     treasurer or corresponding principal officers containing the 
     following information. . . .

  And it lists all of that information. It already exists.
  Mr. SARBANES. Will the Senator yield on that point?
  Mr. KENNEDY. Yes.
  Mr. SARBANES. The Senator from Kentucky says they are not filing 
these reports. What are the Secretary of Labor and the Department of 
Labor doing, because they have the power to make them file their 
reports. In fact, they can impose penalties, as I understand it, 
including not only fines but also imprisonment for the failure of union 
officials to meet the requirements under the statute.
  My dear colleague from Texas says, well, look, this thing is on all 
fours. This is what we are doing to the corporations. And all the 
McConnell amendment does is it does it to the unions. Now, who could be 
against that?
  But let's look at what is already being done to the unions. Let's 
look at the requirements under which they already have to function. 
Let's look at the powers that the Department of Labor and the Secretary 
of Labor have with respect to this matter.
  Mr. GRAMM. Will the Senator yield?
  Mr. SARBANES. Certainly.
  Mr. GRAMM. You can make the same argument the SEC has the power to 
audit any company in America today. Any exchange they are a member of 
has the power to audit them today. We are saying we need better, 
stronger, more powerful laws. We need better reporting. People need 
better information.

  All the Senator from Kentucky is saying is, why don't we apply the 
same thing to the reports that are filed by labor unions.
  Mr. SARBANES. Will the Senator yield?
  Mr. GRAMM. Yes. You have the floor.
  Mr. SARBANES. Has the Senator examined, with any care, the reporting 
requirements and the other matters that govern labor union reporting 
under the Labor-Management Reporting and Disclosure Act?
  Mr. GRAMM. Only to the degree that I can say that all the arguments 
that are being made, saying we do not need to improve reporting, are 
arguments that someone could make with regard to corporate America. 
They are already subject to random audits by the SEC. They are already 
subject to random audits by exchanges. I am not making that argument 
because I do not believe it.
  Mr. SARBANES. What about the requirement on unions that they list the 
employees whose total of salaries and other disbursements exceed 
$10,000, including position, gross salary, allowances, and 
disbursements? What about that requirement that is imposed on the 
unions to make that kind of disclosure? Where is a comparable 
disclosure in that regard with respect to corporations?
  Mr. GRAMM. Will the Senator yield?
  Mr. SARBANES. Certainly.
  Mr. GRAMM. I say, if the Senator wanted to offer an amendment to 
impose that, he certainly could. And I will stop asking him to yield, 
but let me make this point.
  Mr. SARBANES. To impose it on corporations, you support that?
  Mr. GRAMM. If you offer that amendment, I would have to read it. I 
probably wouldn't.
  Mr. SARBANES. All right.
  Mr. GRAMM. But the point I am making is, we are talking about two 
things. One thing that you have to have is a CPA do the audit, and, 
two, the president of the union and the president of the company has to 
sign the report. They are liable if they knowingly are misleading 
people. Those are the only two things the McConnell amendment does.

  I just can't see what is wrong with it and why it doesn't make sense. 
Not that there is anything wrong with that part of the Leahy amendment; 
I support that part of the Leahy amendment. I just don't understand why 
this does violence to organized labor. It seems to me it makes 
perfectly good sense.
  Mr. SARBANES. I simply say that a statutory structure has been worked 
out for labor which is quite extensive and exceeds in many respects 
anything that applies to corporations. You can't make a judgment about 
whether you should do anything additional to the unions until you 
examine carefully what is already required from them under the existing 
statutory scheme. That is not happening here.
  Mr. DODD. Will my colleague yield for a question?
  Mr. SARBANES. I yield.
  Mr. DODD. It occurs to me as well, in this bill, we are not requiring 
for all businesses these requirements. These are for businesses that 
have to file with the SEC.
  Mr. SARBANES. That is right, which is a limited universe.
  Mr. DODD. It is a limited universe. My point is, we are not talking 
about every entity that conducts business for profit. We excluded the 
overwhelming majority of businesses that are private entities, that 
have no filing requirements with the SEC. Our colleague from Wyoming 
felt very strongly about this point, that we only deal with public 
companies, the 16,000 public companies.
  Let me ask my colleague this question: Is a labor union a for-profit 
business or are they a different kind of an entity? I have always 
understood a labor union was not a business and therefore to require of 
the labor union that which we require of a for-profit company that is 
required to file with the SEC seems to be mixing apples and oranges. 
There is no parallelism here at all.
  Mr. SARBANES. The Senator is absolutely correct. The unions ought to 
have reporting requirements and they ought to file.
  Mr. DODD. Correct.
  Mr. SARBANES. Those have been put into law. There are extensive 
authorities in the Secretary of Labor and the

[[Page S6494]]

Department with respect to the unions--quite extensive authorities, I 
might add.
  We have established one statutory framework to control the reporting 
requirements and disclosure on the part of unions, which is a 
completely separate universe from what we are trying to address in this 
legislation.
  The Senator is absolutely right. It is in a sense apples and oranges. 
You are dealing with two different universes, and you have established 
two different statutory frameworks within which to address that.
  Mr. DODD. If the Senator from Texas were interested in creating a 
sense of uniformity, I could see him offering an amendment--I wouldn't 
agree with it--which would require that all businesses that are 
conducting their operations for profit be subjected to an accounting 
standard that was equal. Again, my friend from Wyoming would 
strenuously object to such an amendment. I would as well because of the 
reasons that smaller companies just could not possibly afford the costs 
associated with that. But to suggest somehow that a nonprofit 
organization ought to be subjected to the same rules as a for-profit 
public company where shareholders and so forth are involved is 
stretching logic.
  I appreciate my colleague yielding.
  Mr. SARBANES. It is obvious that one of the distinctions we sought to 
make in the underlying bill that is before us is that when a company 
becomes public, you then have an investor interest that has to be 
protected. Otherwise, manipulation destroys investor confidence and 
affects the confidence in our capital markets. That is the issue we are 
confronting now and the impact it is having on the economy.
  That was the universe we tried to deal with in this legislation. We 
were very careful that the legislation does not apply to most 
businesses in America and doesn't apply to most accountants in America, 
since most of them don't audit public companies.
  Mr. GRAMM. Will the Senator yield?
  The PRESIDING OFFICER (Mr. Dayton). The Senator from Texas.
  Mr. GRAMM. I remind my colleagues that in some 40 States in the 
Union, you can't work unless you are a member of a union. If unions are 
not public organizations, when you have mandatory requirements, I can't 
work in Maryland in an area that is unionized without either joining 
the union or paying union dues. To suggest that unions are somehow 
private when you have mandatory membership I think won't hold water.
  Mr. SARBANES. If the Senator would yield, you don't have mandatory 
membership. You may have a requirement that you pay a union fee, but 
the union then has an obligation, if you are in a union shop, to 
represent you in the collective bargaining efforts and with grievances, 
and so forth and so on. So the union has to, in effect, provide you a 
service for the fact that you get charged that fee.
  Mr. GRAMM. I am not saying you are not getting anything for it. I am 
just saying that it is mandatory, and I don't see how you cannot say 
that unions are public institutions.
  Secondly, why do we require CPAs to do audits of companies? We can't 
audit every company in America. We don't have enough resources. So you 
try to get a system where the auditor has some degree of responsibility 
for helping to enforce the standards. I don't see why you wouldn't have 
CPAs required to do the audits of unions.
  I was handed this by Senator McConnell's staff. I am sorry he had an 
appointment tonight, but the OLMS, which does the compliance audits, 
did a high of 1,583 audits in 1984. Last year, that was only 238. So I 
don't know why you wouldn't want a union that has mandatory membership 
to have its reports done by CPAs who we are holding to a high standard 
in this bill. That is all I am saying.
  Mr. SARBANES. What is the explanation by the Department of Labor for 
this rather stunning drop in the number of audits? Was it from 1,500 to 
200 in 1 year's time or 2 years' time?
  Mr. GRAMM. It is from 1984 to 2001.
  I would say on that issue, if the Senator will yield, that the 
President's 2003 budget asked for an additional $3.4 million for 40 
full-time positions. It will be very interesting to see if we provide 
the money for them to have it.
  Mr. SARBANES. That is the way to go at this problem; otherwise, it 
seems to me that the Department of Labor needs to do the job that it 
has been charged to do. I think that is what those figures amply 
demonstrate.
  I am gratified that the administration's budget is seeking more money 
in order to meet these responsibilities, but that is where it ought to 
be done.
  Mr. GRAMM. My final point--and I appreciate the generosity of the 
chairman--it seems to me the most fundamental requirement is if you are 
going to make a public report and you have mandatory membership so you 
are a public institution, you ought to have a certified public 
accountant do that report and sign that they have done it.
  We have decided--I think it is one of the best things in our bill; 
whatever bill is adopted will have it--to require the heads of 
companies to sign these reports. I don't know why you wouldn't want the 
head of the union to sign these reports.
  Mr. SARBANES. Would the Senator support a provision that required all 
companies with annual receipts of $200,000 or more to meet all of these 
auditing requirements?
  Mr. GRAMM. I would if the companies were companies that people had to 
do business with. If we had anything equivalent in the marketplace to a 
provision that said you have to buy things from this company or you 
can't buy them, which in essence we do in States that don't have right-
to-work laws; we say that you have to pay the union dues in order to 
work--you don't have to join, but you have to pay the dues--I think 
when you have that mandatory element, having to report publicly is 
logical.
  Mr. SARBANES. They do have to report publicly. They are now required 
to report publicly under the legislation that governs reporting and 
disclosure. The Senator is speaking as though there are no such 
requirements.
  The fact of it is that there is an elaborately developed framework. 
Now, the Department of Labor may not be carrying it out fully, as the 
statute would require. They may be falling short in that regard, but if 
that is the case, the way to remedy the situation is to provide the 
resources to the Department of Labor and call upon them to do their 
job.
  Mr. GRAMM. Mr. President, this is Mr. McConnell's amendment, and I 
will let him debate it. But the whole purpose of having CPAs, the whole 
purpose of having licensing and the taking of oaths is we cannot audit 
every company by the Government. I am pleased to say that nobody has 
proposed to have the Government take over the auditing function. We 
have proposed to strengthen the CPA process and impose higher standards 
because that is really our fundamental line of defense.
  I just don't understand. It seems to me this would be a logical 
amendment to take. It only says two things: When unions file a report, 
it has to be done by a CPA. You have a mandatory membership of unions 
in some 40 States, and they are public institutions. Secondly, the 
president of the union, as the president of the company, ought to have 
to verify the veracity of the statement and be liable if he knowingly 
is certifying it when he knows it is not valid. I mean you are not 
holding him accountable if somebody has not told him the truth.
  Senator McConnell is going to present case and verse of all of the 
problems. I don't know the problems, but it seems to me that when we 
are trying to improve reporting and improve transparency and improve 
accountability, the simple proposal that when unions file their annual 
report, as corporations do, a CPA should prepare the report--I just 
cannot imagine not requiring that.
  Secondly, the president of the union ought to have to sign the report 
and be accountable if he knowingly is saying something that is not 
true.
  Finally, the argument that there are other requirements--well, there 
are more requirements on corporate America. We just concluded there 
were not enough. So Senator McConnell is simply saying while you are 
improving one, improve both. If I were a member of a union, I would 
like having certified by a CPA a report showing how my money was spent. 
I think it would give me more confidence. I would think if the rank-
and-file union members in my State would vote on this, there would

[[Page S6495]]

be an overwhelming vote for it. I don't even know why we are debating 
this. This is sort of a no-brainer, in my opinion. But my opinion may 
not be the majority opinion.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois is recognized.
  Mr. DURBIN. Mr. President, I agree with the Senator from Texas, this 
is a no-brainer amendment because I cannot quite understand why we 
would be establishing a standard here for labor unions. It reminds me 
of when I was raising my kids and my wife and I had to give one of our 
children medicine that they didn't want. My daughter would say: I would 
feel a lot better if my brother had to take it, too. That is what we 
are having here--businesses faced with corporate corruption. Frankly, 
we have people on the Senate floor saying, as painful as it is for us 
to make more disclosures, we would feel better if you could also hurt 
the labor unions while you are at it. Is that what this is about--to 
try to find a parity of pain between business and labor? I didn't think 
so.
  The point made by the Senator from Maryland is that labor unions 
already face extraordinary reporting requirements in a law that has 
been in place for 43 years--requirements not made of many businesses. 
In the McConnell-Gramm amendment, it suggests that if your labor union 
has receipts of $200,000 a year, they are going to add a new burden to 
the labor unions--even beyond this 43-year-old law.
  I listened closely as the Senator from Maryland explained the bill 
before us. He has worked closely with the Senator from Wyoming to make 
sure it just applies to public corporations, where there is public 
investment in stockholders and where there is an item of public trust 
involved. That is understandable.
  So if I would stand before the Members here and say, if you really 
believe in transparency and disclosure, you ought to apply these 
requirements to every business in America, many people would say that 
is an onerous and unnecessary burden; it goes beyond the issue of 
public trust; now you are going after every business, large and small. 
That is what the McConnell-Gramm amendment does when it comes to labor 
unions. They say if a labor union has receipts of $200,000, they have a 
brandnew set of requirements. The Senator from Texas says these unions 
are public institutions, they should not be treated as if they are 
private. Well, they are not. They are subject to the 1959 Labor-
Management Reporting and Disclosure Act.
  The thing that also concerns me is that many requirements of the 
labor unions under current law are far stricter than what is required 
under the SEC for public corporations. I cannot understand why we would 
want to increase the burden on labor unions when the issue appears to 
be, at Enron, not a union problem but a business problem. The issue at 
Enron had to do with members of the board of directors being paid--
according to the Governmental Affairs recent report--$350,000 a year to 
serve on the board and, frankly, missing it completely, or didn't 
report it when things were being done that defrauded stockholders, 
pensioners, and ultimately cost employees their jobs.
  That, I thought, was what this debate was about. Instead, we are 
talking about right-to-work and labor unions. I am sorry, but I don't 
think people across America believe the problems of Enron and WorldCom 
and Global Crossing had anything to do with labor unions. They didn't. 
They had to do with corporate greed and corruption.
  I commend Senators Sarbanes and Enzi for bringing to the floor a bill 
that addresses this in a straightforward manner. The McConnell-Gramm 
amendment wants to get us on another track to discuss other things. I 
find this interesting. There is no proposal that this new requirement 
be applied to any other organization than labor unions. I don't hear 
anybody coming before us and suggesting that the Boy Scouts of America 
should be subject to SEC filing. That is a large organization. They 
certainly have receipts beyond $200,000. I don't hear the suggestion 
that associations and organizations like the Boy Scouts of America, or 
the American Legion--I don't want to go too far with this--or the 
Federalist Society should have more transparency and disclosure and, 
therefore, should be subject to SEC filings. Nobody brought that up. Is 
that part of the problem in America, the lack of confidence in our 
economy? Not at all.

  The problem relates to corporations and businesses that have gone too 
far and lied to the stockholders and the American people. If we get off 
the track here and decide we are going to go after other battles to be 
fought, whether labor unions or other organizations, we have missed the 
point. I think this amendment misses the point.
  Let me also say that the McConnell amendment holds labor unions to 
standards to which not even businesses are being held. In 1995, I 
happened to be a Member of the House when the so-called Newt Gingrich 
``Contract on America'' came through. One of the things we did there, I 
am afraid, turned out to be a precursor to what we are going through 
today in what was known then as securities litigation reform. We 
basically said we think some of these plaintiff lawyers, class action 
lawyers, have gone too far and therefore we are going to protect many 
corporations from liability when it comes to securities transactions. I 
was 1 of 99 in the House of Representatives who voted against that bill 
and wanted to sustain President Clinton's veto. We did not prevail. We 
lost in the House and in the Senate.
  It really, sadly, set the stage for where we are today. Another 
watchdog was gone. Corporations such as Enron and WorldCom didn't have 
to worry about somebody bringing an action against them for securities 
misdeeds.
  One of the things that was included in the 1995 law was to take away 
liability for aiding and abetting, in terms of rights of action, causes 
of action involving corporate fraud. We exempted a whole category of 
people who, up until that time, had been liable for aiding and abetting 
fraud. We said in the name of securities litigation reform, we would 
exempt this category of individuals.
  Senator McConnell comes up with this amendment and says: We want to 
reinstate that aiding and abetting liability, not for businesses, but 
we want to put it on labor unions. What is wrong with this picture? We 
are not imposing it on corporations despite all the scandals we have 
read about; instead, we are going to impose this new obligation on 
labor unions.
  I am afraid, frankly, that is not a matter of public policy, it is a 
matter of retribution. I also think we should take a look at how many 
labor unions could be liable for this audit that is required. There are 
70 national and international unions, but the McConnell-Gramm amendment 
would apply to 5,000 different unions, large and small, across America. 
It goes way too far.
  The amendment certification requirements are also redundant. For more 
than 40 years, union officers have been required to sign annual 
financial reports, under penalty of perjury, attesting that the 
report's information accurately describes the union's financial 
condition and operations. That is a pretty reasonable standard for 
labor unions under current law.
  We are trying to impose similar standards on corporations so when 
they file their accounting audit statements, someone puts their name on 
it and accepts responsibility for the truth and accuracy of the 
statement.
  Frankly, I think Senator McConnell and Senator Gramm have this 
totally upside down. The problems we face--the corporate corruption, 
the lack of confidence in the economy, which even the President spoke 
about today--have nothing to do with labor unions. They really have to 
do with corporations that have an obligation to the public.
  I believe the vast majority of businesses and corporations in America 
are run by honest people, working hard to make a profit to provide 
goods, services, and jobs to make America a better place. I do believe 
that. But there are some who have violated the public trust. The 
underlying bill addresses that. To bring in an argument now about 
imposing new obligations on labor unions not only misses the point 
completely as to why we are here this evening but misses the point 
about why we are facing this crisis in America.
  I stand in opposition to the McConnell-Gramm amendment, and I hope 
all

[[Page S6496]]

of my colleagues will join me in remembering why this debate got 
started.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. CORZINE. Mr. President, I, too, wish to verbalize my opposition 
to this amendment that tries to draw in a completely extraneous item 
which has not been debated in the context of this bill in the 10 
committee hearings we had with regard to putting together the Corporate 
Corruption and Investor Protection Act.
  It has not been involved in any of the President's discussions about 
corporate abuse or fraud that we have heard discussed. It is not in any 
way related to the group of organizations with which we are attempting 
to deal, which are large, publicly traded corporations, and really 
ignores the fact that there is already a body of law that deals with 
union organizations and union officers with regard to their 
responsibility to their memberships and for their reporting 
requirements.
  For a whole host of reasons, I do not understand how this even 
relates to the issue that is the fundamental part of the underlying 
bill, and there certainly is not any evidence in the marketplace of 
ideas and activities across America that would justify pulling labor 
unions by their actions into the fish net about which we are talking. 
This is about corporate corruption. It is about investor protection. It 
is about making sure corporate fraud is properly dealt with in the 
legal system, one that puts everyone on notice that they have serious 
responsibilities to certify that what is reported is real, and if it is 
not real, then people are held accountable.
  We are off on the wrong track, and if we end up having too many of 
these diversionary tactics away from the underlying principles of what 
we are trying to accomplish, which is to have measured, reasonable, and 
thoughtful progress with regard to corporate responsibility, corporate 
accountability, accounting reform, and investor protection, public 
protection, then I think we are going to miss the opportunity to secure 
our economy, to secure the steps that are necessary for most people to 
restart this engine of investment that drives our economy. This is 
completely off point.
  I hope my colleagues in the Senate will recognize it for what it is 
and move on, turn this down, and get on with the underlying amendment 
that Senator Leahy has so appropriately brought to bear in this case.
  I yield the floor.
  Mr. SARBANES. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SARBANES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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