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As Delivered
Remarks to
Forbes Annual Executive Women’s
Forum
New York, New York
May 29, 2003
Thank you Kendal [Crolius, VP Marketing, Forbes] for the kind
introduction.
It’s always a pleasure to be with a group of women pioneers and
leaders.
This afternoon, I would like to talk briefly about transparency and
accountability and what these challenges mean for the future of our
country.
Many of the speakers at this conference are focusing on accountability
and transparency in the corporate boardroom. Because of the financial scandals
of the 1990s, it’s clearly an issue that resonates with the public, with
the press, with policy makers and with law enforcement.
As a result, turnover in the executive suite has become a fact of life
in today’s economic environment. For the first time in many years,
shareholders are mounting serious proposals to cut executive pay, to change the
way stock options are reported, and to strengthen other public disclosure
requirements.
But corporations are not the only ones facing the demand for more
accountability and transparency. We are living in an era when many of the major
institutions in our country—public, private and non-profit—are facing
similar scrutiny.
Last year’s revision of the nation’s campaign finance laws,
for example, was done in the name of bringing more accountability and
transparency to politics.
Time magazine’s “Person of the Year” in 2002 was
the “whistleblower,” the person in a company, government agency or
other institution who brings transparency and accountability—sometimes
against the wishes of more senior leaders.
Many of you know that the President persuaded Congress to pass his
“No Child Left Behind” education initiative. The goal of this new law
is to hold schools accountable for how they teach our children—because we
believe that accountability yields better results.
And in an area that we uniquely regulate, the U.S. Department of Labor
has proposed reforms to increase the transparency of union financial activity
for the benefit of union members.
It’s important to step back and see that transparency and
accountability aren’t just issues affecting the corporate world—they
are values that are touching institutions across society.
In many ways, institutional success will depend on the ability to
respond to this new culture of reform.
President Bush’s corporate governance reforms have
already made a major difference. Our Department was part of the team
that crafted the President’s corporate reforms—especially in the
retirement security area.
As a result of these and other changes:
- Corrupt executives and stock analysts are being brought to
justice.
- CEOs must certify their annual earnings statements and reports.
- Lawyers and accountants now understand that they, too, work for
shareholders.
- Institutional investors, who often hold a controlling interest in
company shares, are demanding corporate governance reform.
As U.S. Secretary of Labor, I have a special interest in the integrity
and leadership of our financial and corporate institutions. If a company fails,
it is the Labor Department that must deal with the heart- breaking
aftermath—the mass layoffs of workers and the collapse of worker pension
plans.
When Enron collapsed, the Labor Department sent a team of specialists to
deliver critical short- term assistance and re-employment services to laid-off
Enron employees. In passing Sarbanes-Oxley, we have made real gains in
protecting worker pensions from practices that resulted in significant losses
to company pension plans.
Also, the House of Representatives recently approved a pension bill
intended to give employees the right to drop company stock from their 401 (k)
plans sooner than under current law. In addition, the bill would allow
employees to have access to investment advice provided by the companies
currently administering their pension plans.
This Administration believes that workers should have the freedom to
diversify their savings, and that should have access to professional investment
advice.
As I’ve mentioned, the Labor Department is extending the drive for
accountability and transparency into union financial reporting.
The Department has updated the financial disclosure forms unions are
required to fill out, which haven’t been changed in more than 40 years.
We’ve made the forms more comprehensive and easier to understand. And the
Department is posting these financial reports on the Internet. That’s part
of the Labor Department’s responsibility because we serve as the
Securities and Exchange Commission for labor unions.
These reforms reflect this Administration’s belief that
transparency and accountability are the keys to good governance in every
sector.
But important as laws, regulations and enforcement actions are in
reigning in financial malfeasance and protecting workers, there is an
intangible element to the corporate governance issue that only individuals can
address.
That intangible asset is principled leadership. No law or government
regulation can mandate changes in character.
As head of one of the most far-reaching regulatory departments in
Washington, I know the limits of government regulation. In a democratic
society, all of our institutions—whether public, private or
non-profit—are only as good as the character of the people who run
them.
That means that each one of you here today has an extraordinary
opportunity to help restore trust in our nation’s public, private and
non-profit institutions. You are the emerging public, corporate and non-profit
leaders of our country. You can send a powerful message by becoming role models
for transparency and accountability.
The future of the free enterprise system depends upon how we manage our
most precious asset—which is not revenue—but public trust and
confidence.
That’s why so much of what we do in Washington is focused on
accountability and transparency. That’s why governance reform is an issue
that’s here to stay.
So thank you for inviting me here today. And now, I’ll be happy to
take your questions.
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