*EPF201 07/09/2002
Transcript: White House Daily Briefing, July 9
(President's schedule/phone calls to Mideast leaders, corporate responsibility/fraud, Medal of Freedom Awards, Congress) (2180)

White House Press Secretary Ari Fleischer, Treasury Secretary Paul O'Neill, and Commerce Secretary Donald Evans briefed reporters on Air Force One July 9 as they accompanied President Bush on a day trip to Wall Street to discuss corporate responsibility.

Following is the White House transcript:

(begin transcript)

THE WHITE HOUSE
Office of the Press Secretary
(New York, New York)
July 9, 2002

PRESS GAGGLE BY ARI FLEISCHER, SECRETARY O'NEILL AND SECRETARY EVANS

Aboard Air Force One
En route New York, New York

10:14 A.M. EDT

MR. FLEISCHER: Good morning, I want to give you a report on the President's day, and then have Secretary Evans and Secretary O'Neill be available to discuss with you the President's announcement today, as well as the administration's plans to spread the news about this administration's seriousness in cracking down on corporate malfeasance and restoring confidence in the investor and shareholder community, and to the employees of these companies.

One, the President began his day by calling Crown Prince Abdullah of Saudi Arabia and Prime Minister Sharon of Israel. The President discussed with each of them the importance of pursuing the path to peace in the Middle East. He discussed with each of them the responsibilities of the various parties that do their part to help bring about prospects for peace in the Middle East. And it was a very positive conversation with each of them.

I won't get into anything about the speech in New York; you have the fact sheet in front of you, laying it out, you're aware of that. We will reserve that for your questions.

Upon return to the White House the President will honor 12 recipients of the Presidential Medal of Freedom in a ceremony that will take place in the Residence of the White House. The list of attendees is very notable; we'll have that full list available for you this afternoon, but it includes such people as Hank Aaron, Bill Cosby, Placido Domingo, Katherine Graham post-humously, Nancy Reagan. They will all be honored, so it's quite a list.

I just want to look ahead to tomorrow at a couple of events. Just want to let you know that tomorrow morning the President will have meetings -- or tomorrow during the day, the President is going to have meetings with congressional leaders to discuss the ongoing legislative agenda, particularly trade promotion authority, other issues that are pending on the Hill. These remain vital concerns to the President. Time is running out on this Congress. The House of Representatives is scheduled to leave for its August recess in three weeks, the Senate in about four weeks. Much work remains undone. And the President is going to continue to call on the Congress to put the people's business first. He thinks there is much that can be done, that is very close to being done, and he will do everything in his power to make sure that the Congress finishes with a very positive and powerful legislative agenda, which is what the American people sent everybody to Washington to do.

QUESTION: Democrats and Republicans involved in these meetings?

MR. FLEISCHER: Yes, there are a series of meetings that have Democrats and Republicans; some are Republican only. But you'll see a number of --

Q: Daschle and --

MR. FLEISCHER: I'll have a list for you later. As always, we wait until the meeting is over in case somebody has a scheduling conflict, et cetera. But there will be a number of meetings with congressional people.

With that, we'll be happy to take any questions.

Q: Any background sessions when we get back to White House this afternoon on today's remarks?

MR. FLEISCHER: After the speech in New York, two members of the President's domestic policy staff, two experts, will remain behind in New York at the press filing center to go into the substantive specifics of the President's proposals. That will also be piped back to Washington.

It will give you an opportunity, too, if you have any substantive questions about the President's proposals, we have the two Secretaries here.

Q: On the sentencing guidelines, asking the sentencing commission to beef up criminal prison terms, what's lacking in their ability to do that now? I mean, where are we lacking now in criminal penalties for people who commit corporate fraud?

SECRETARY O'NEILL: Well, under the existing sentencing guidelines, judgments have been made about what the appropriate length of incarceration for different kinds of violations of law or fraudulent activities -- and the President is saying to the people who make these judgments for certain kinds of business abuses, the terms ought to be doubled, from five years to 10 years. And it's in the hands of the sentencing commission to decide what the appropriate length of time for incarceration is.

Q: According to our summary, the doubling to 10 years is only for wire and mail fraud. Are you thinking about double for all sorts of corporate fraud?

SECRETARY O'NEILL: Basically, these provisions of law for postal and wire fraud have been the basis for pursuing violations of the law for business people because it's almost impossible to do any kind of business activity without using the mail or using communication channels, if you will. And so it's a convenient way to use an existing statute which has been useful to pursue business criminals and just add the doubling there instead of changing the basis for pursuit.

Q: Does it include the type of thing about certifying, you know, misleading financial statements? That would be covered under mail and postal fraud?

SECRETARY O'NEILL: Right, yes, I think so. Because the annual reports and the proxy statements have to be mailed.

Q: Leahy has called for a new crime that would deal with federal securities crime. Why aren't you going as far as creating a new category, a new type of crime that you would prosecute?

SECRETARY O'NEILL: Well, you know, it seems that we've got plenty of authority and it's a question of what the terms should be, rather than defining a whole new category where then you have to develop years of case law and all the rest of that. But, in truth, we should leave this question to experts in security law. If you want to pursue this, we can get you someone to talk to who is an expert in security law, to give you the nuances so that you've got --

Q: Now, it was in March when you asked for the legislation requiring corporate executives to sign off on financial statements. You have to have that --

SECRETARY O'NEILL: The department has already moved to do that.

Q: But that is not in effect now, you still have to have the legislation, right?

SECRETARY O'NEILL: Actually, Harvey has already moved under the existing statute to require everyone with the next filing -- I think it's after August 14th -- to certify as an individual, not as a corporate --

Q: -- require any additional legislation for that?

SECRETARY O'NEILL: We think this will do it.

Q: What you're requiring is stiffer penalties. And you think that will be covered under mail?

SECRETARY O'NEILL: We think the sentencing commission can establish a higher penalty level for business crimes. We do need legislation ideally to give the SEC power to freeze assets and take punitive actions without going to court, so that they could do it on their own bottom, without having to pursue penalties through a secondary process. We need legislation to accomplish that.

SECRETARY EVANS: And Harvey has also called for the top 947 companies to retroactively verify their previous fiscal year numbers. And I think that's by mid-August, or August 14th.

Q: And you need a DOJ task force, as opposed to what the SEC is doing, because the SEC simply can't do it alone because it doesn't have the manpower?

SECRETARY O'NEILL: Well, you know, this is a way of having a full assault with our -- basically with our highest level law enforcement activity to go get people who have abused their trust and to do it on a speedy basis. It's kind of -- you know, in my mind, it's the equivalent of the Elliot Ness attack on organized crime. This is the President saying, we're going to organize ourselves to get people who've abused their trust and we're going to do it on an accelerated basis and this is a way to do it.

Q: As you know, some people have criticized the FBI for cracking down a house of prostitution -- where was that, out in Arizona -- people are saying they're busy fighting the war on terror. Do you still feel the FBI has the resources to divert to this, to business fraud, as well?

SECRETARY EVANS: They cracked down on Arthur Andersen. I mean, they've already gone after them and had a guilty verdict against Arthur Andersen.

Q: You don't think this will dilute the war on terrorism in any way?

SECRETARY O'NEILL: I don't think so. You know, this is a criminal division, and other parts of the Justice Department, headed by the Deputy Attorney General. It gives us a paramount visibility and designation as an agency that's going to go get these issues and get this issue off the table by aggressively prosecuting people who've abused the trust of the shareholders and employees.

Q: The FBI will be doing the investigation -- it will be FBI agents doing the grunt work, primarily?

SECRETARY O'NEILL: I think it depends what the circumstances of the case are. The criminal division has agents and an investigative capability, and it would depend on the judgment of the Deputy --

Q: You've got a lot of people under you. Would some of your people be working on this?

SECRETARY O'NEILL: Could very well be. We have people in Customs and the IRS and in Alcohol, Tobacco and Fire Arms that have investigative capability. And certainly if there was a request to extend the manpower in order to go after these cases, we'd make them available.

SECRETARY EVANS: I think that's the thrust. I mean, this is a corporate task force that is being located in the Department of Justice. But it's inner-agency, it's going to bring all the agencies together. One place to focus the attention so you know who's responsible for this. But it's an agency-wide, administration-wide task force.

Q: Mr. Secretary, at this point, President Bush has a stock market that's at the lowest point since -- of any President since President Nixon, at this stage in his term.

MR. FLEISCHER: Say again?

Q: At this point in his term, 18 months into his term. The stock market is lower under President Bush than it's been percentage-wise drop under any President since Richard Nixon -- 18 months into his term. I can confirm it. Is this enough to restore, you know, investor confidence?

SECRETARY O'NEILL: I think, in my view, the market is a function of a lot of complicated things. And as the President has said, this uncertainty that's been created by Enron and the other companies that have been caught up in this accounting, in some cases fraud and abuse of law, is a contributor to the condition of the stock market.

There are other contributing factors. And, you know, from a technical point of view -- you ought to go get this from an expert in technical analysis of the market -- but technical people would tell you what we're now going through is testing the lows that we hit after September the 11th, and that's a basis for creating a foundation for another leap forward, above the highs that we've ever achieved.

There's no doubt that these fraud and abuse cases have had some effect. But I think to assign a majority of the movement in the market in the last six months to this cause is wrong.

Q: It would be unrealistic to expect --

MR. FLEISCHER: John, just a minute. In the President's remarks today you're going to hear him focus very strongly on his faith in our economy, his faith in America's workers, his faith in our system. The speech is aimed at restoring confidence throughout as a result of ethics in corporations. But the President remains very optimistic about the strength of the economy and the productivity of America's workers.

MR. FLEISCHER: We're going to land in a second, so make this the last one, John.

Q: Would it be unrealistic to expect a sustainable bounce from today, after the President's speech?

SECRETARY O'NEILL: I don't know, markets -- we don't anticipate daily movements in the markets --

Q: I don't understand this task force and how it works, you know, what it's going to do different than what the SEC can already --

MR. FLEISCHER: We're about to land. The background briefers will stay after the speech -- you'll get a transcript of that.

END 10:28 P.M. EDT

(end White House transcript)

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

Return to Public File Main Page

Return to Public Table of Contents