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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Sarbanes-Oxley Act Draws Criticism
By: Joseph T. Lonsdale
United Press International. September 20, 2002
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EXCERPT: In the wake of the Enron and WorldCom scandals and the ensuing distrust of corporations, Congress scurried to respond to public outcry, passing the Sarbanes-Oxley Act of 2002. While agreeing with the need to punish obvious wrongdoing and enforce fraud laws, business interests at a U.S. Chamber of Commerce meeting recently lashed out at parts they considered to be misguided legislation. Greg Zerzan, the senior counsel for Rep. Michael Oxley, R-Ohio, said the legislation was the product of an effort that began several months ago. Zerzan noted that the act contains sweeping changes in the areas of corporate governance, financial disclosure, auditor independence and corporate criminal liability. However, referring to provisions thrown in as both sides scrambled to pass the 130-page bill, he facetiously described S-O as a "victim of bipartisanship." "If you quote me, I'll deny being here," said Zerzan at the meeting Wednesday, getting a laugh from the chamber's visiting crowd of CEOs, financiers, accountants and lawyers. James Glassman, a resident fellow at the American Enterprise Institute, told the chamber that S-O will have four chief effects on industry. It will: Raise compliance costs and other expenses, Deter innovation and risk-taking, Increase lawsuits, Distract CEOs and executives from other important tasks "Facing a possibility of 20 years in jail and $5 million fines, executives are going to spend lots of time going over financial statements, and less time creating, innovating and leading," he said. Glassman also noted that S-O may encourage investors to participate in the market. Others at the meeting had similarly negative views on the recent legislation. "I'm an old man, and I've never seen a feeding frenzy like the one we've had on corporate accountability," said Thomas Donohue, president and chief executive officer of the U.S. Chamber of Commerce. Donohue is known for declaring that "business should stop apologizing for being the one institution in America that really works."
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