Monday, Nov. 21, 2005
Contact: Dan Farough
Phone: (517) 373-2093
LANSING - In a move to protect workers and their pensions, House Democrats today announced legislation that will take on companies that jeopardize workers' pensions and hold top corporate executives accountable by criminalizing golden parachutes.
"We can't allow corporate executives to cook the books and not hold them accountable," State Representative LaMar Lemmons III (D-Detroit) said. "When they doctor the books, they wreck their workers' lives by destroying their pensions, and that hurts our economy."
The Democrats' legislation will:
* Take away tax breaks and other economic incentives from companies that intentionally jeopardize workers' pensions;
* Make it a crime for top executives of companies in bankruptcy to give themselves lavish compensations - or "golden parachutes'' - while asking their workers to take big pay cuts;
* Make it a crime for CEOs to cook the books to falsify financial statements;
* Increase the punishment for executives who tamper with evidence or obstruct a financial investigation, or who attempt to do either; and
* Increase the punishment for those who retaliate against whistleblowers of corporate malfeasance. The criminal charges can lead to up to 10 years in prison and fines of up to $250,000.
"CEOs who rob our working families of their financial future must be held accountable," said Rep. Gabe Leland (D-Detroit). "This legislation will do that and it will protect our working families, their pensions and their 401(k)s."
"If corporate executives falsify their financial reports and harm our workers, then they don't deserve a tax break from the state," Rep. LaMar Lemmons Jr. (D-Detroit) said. "We have to take a stand and punish those who intentionally steal from our workers."
The legislation comes as several Michigan companies are being linked to questionable financial activities. This summer, Delphi Corp.'s 21 top executives sweetened their compensation even as the company prepared to slash workers' pay by more than 60 percent. The company - Michigan's fourth-largest publicly traded business - has filed for Chapter 11 bankruptcy.
In another high-profile bankruptcy, former Kmart CEO Chuck Conaway and former Chief Financial Officer John McDonald face civil charges of misleading investors about the company's financial condition in the months before Kmart's bankruptcy filing in 2002. Around 60,000 people lost their jobs and Kmart lost $4.5 billion in stocks and equity.
"In this legislation, we protect workers from being taken advantage of by huge corporations," said Sen. Irma Clark-Coleman (D-Detroit). "I join with my Democratic colleagues in their effort to hold corporations accountable for unethical business practices."
When Houston-based Enron folded because of accounting shenanigans, thousands of workers lost their jobs, thousands more lost their pensions and 401(k) plans and investors lost around $60 billion. Enron also gave bonuses ranging from $350,000 to $5 million to its top 20 executives before it declared bankruptcy in December 2001 and laid off workers.
"Our state cannot allow CEOs to give themselves huge salaries while pensions and jobs disappear," said Rep. Morris Hood III (D-Detroit, Dearborn). "They must be held accountable for their actions."
"These CEOs who cook the books are jeopardizing our economy and our workers' future," said Rep. Bill McConico (D-Detroit). "Workers deserve the pensions they worked years to build up. We need to stop these corporate executives from driving companies in bankruptcy, robbing their employees, laying them off work and then leaving the mess unscathed."