FRIDAY, JULY 12
Court REJECTS attempt to derail ergonomics rule

FRIDAY, JULY 12
Providence Mother Joseph nurses rally, picket in Olympia

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WEDNESDAY, JULY 10
Sweeney: Bush's get-tough rhetoric an "inadequate response"
AFL-CIO President offers 7-point plan for serious corporate reform

The following statement by AFL-CIO President John Sweeney -- who will be keynote speaker at next month's Washington State Labor Council convention in Spokane -- was released Tuesday in response to President Bush's underwhelming call for corporate evil-doers to develop a conscience:

From the President to members of Congress from both parties, elected leaders are using tough words this week to demand a new spirit of corporate responsibility. But rhetoric and calls for companies to police themselves are an inadequate response to the hundreds of thousands of working families who have lost jobs, pensions and health care because the companies they worked for lied to their employees, their investors and the public.

The measure now must be the actions the President and members of Congress are prepared to take to close the gaping loopholes in our laws that foster the hijacking of American business by insiders bent on self-enrichment. Better enforcement of existing laws and new penalties for "bad apples" are not a sufficient answer. The corporate wrongdoing being exposed daily is not the product of a few bad people. It is the result of markets that were once well regulated, but now allow short-term pressures to combine with conflicts of interest and unchecked greed to destroy companies, industries and lives. Even responsible CEOs can hardly run a company that respects its employees, its investors, its customers and its community when its competitors take the low road. The crisis in corporate governance demands rapid, fundamental legal reform.

Some of the reforms being proposed are good and important; others are shams. In the Senate, the Sarbanes bill on accounting and corporate governance reform, the Leahy-McCain bill on penalties for securities fraud and the Kennedy pension reform bill are important steps that deserve the support of every senator. But the Oxley bill, supported by President Bush and passed by Republicans in the House, does nothing to prevent future Enrons or Worldcoms and will actually weaken the nominal investor protections that exist today to hold boards of directors accountable.

It is positive that President Bush has acknowledged the serious problems that exist and moved to take some key steps toward reform. Unfortunately, the proposals made by the president today only scratch the surface of the widespread problems afflicting corporate America. They fall short of the new rules today's economy so desperately
needs, and in suggesting that the problem is simply one of business "ethics and corporate responsibility," they miss the mark. As important as corporate responsibility is, corporate accountability - not only to shareholders but also to employees, customers and the communities in which they operate - is much more important. And accountability requires new rules.

The challenge of credibility on the issue of corporate accountability for President Bush is steep. From his first days in office, he advanced legal and regulatory changes to loosen controls on big corporations. He repealed a Clinton rule that would have made it harder for chronic corporate lawbreakers to get lucrative federal contracts paid for with taxpayer dollars. He pushed to turn back ergonomics health and safety standards to protect workers from corporate negligence. His administration revoked efforts to shut down offshore tax havens and he appointed the chief lobbyist for the accounting industry head of the SEC to police big accounting firms like Arthur Andersen. In the wake of Enron and Worldcom, he's thrown up barriers to reform.

To exert real leadership, the president will not only have to put the weight of his presidency behind serious reforms that go further, he must also insist on an investigation of the irregularities at Halliburton when Vice President Cheney was CEO and fully disclose details of his own sale of Harken Energy stock.

Serious reform should start in seven areas:

• We need new rules to reform the incentive system for CEOs and require that they take personal responsibility for the information their companies issue to investors. The use of stock options that has driven executive compensation up to an obscene 410 times average workers' pay today provides all the wrong incentives. Stock options should be expensed when they are granted if they are declared a deduction when the corporation files their tax returns. And when CEOs personally profit as a result of abusing their responsibilities, they should be required to return their gains directly to shareholders and employees whose jobs, health care and pension funds have been destroyed by the CEO's conduct.

• We need reforms to make boards of directors real watchdogs, and not lapdogs for CEOs. Shareholders must be given the ability to elect truly independent board candidates. Short of that, a call such as President Bush's for more independent directors will fail.

• We need new rules to ensure strict separation of internal and external auditors. External auditing firms should be prohibited from providing most consulting or other business services for the companies whose accounts they are certifying and should be regularly rotated to ensure the companies they serve do not capture them. A public oversight body for the accounting industry should be established with the powers to establish reliable accounting standards and oversee the accounting industry. And there should be an end to the immunity from civil liability that auditors, lawyers and investment bankers now enjoy when they aid and abet securities fraud.

• Financial services companies offering research services to investors should be prohibited from linking analyst compensation to investment banking performance, to eliminate the conflicts between honest investment advice and fees to investment firms.

• Mutual funds should be required to disclose to investors how they are voting on proxy votes on issues like board and auditor independence so that investors know exactly whose interests the funds are aligned with. And workers should have a voice in the institutions that invest their money --- starting with the boards of trustees of their pension plans.

• We must have new laws that move employees from the bottom of the ladder in bankruptcy proceedings to the top, so individuals whose lives are ruined by their companies' behavior are not left with crumbs after big banks and preferred creditors get their share.

• We must take away the tax incentives that encourage companies to dodge their tax responsibilities by re-incorporating in places like Bermuda.

The challenge of corporate accountability can only be faced when our elected leaders understand that the problem of the crisis of confidence in American business stretches beyond "a few bad apples" to the need to change the rules that are rigged to entrench and enrich CEOs and other insiders at the expense of employees, shareholders, the companies themselves, and the national economy.

If you have news items regarding unions or workplace issues in Washington state that you would like to see posted here, please submit them via e-mail to David Groves or via fax to 206-285-5805.

Copyright © 2002  Washington State Labor Council, AFL-CIO