Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 4186

Mr. SARBANES. Will the Senator yield for a question?

Mr. SARBANES. Mr. President, in just a few minutes, at 4:45, we will move to the first of two votes. The first vote will be on the Daschle amendment, and the second vote on the Lott amendment. I urge my colleagues to support both amendments. At the conclusion of those votes, we will go to Senator Edwards, who has been waiting patiently, to call up an amendment. Then we have sequenced behind Senator Edwards, for purposes of calling up amendments, Senator Gramm, and Senator Levin has an amendment involving the powers of the SEC, and then back to Senator Gramm. That is the procedure we have managed to put into place so far while continuing to work to try to compile a list of amendments and to do some sequencing. We urge our colleagues to inform us--I am not urging to add amendments, but just informing colleagues of the process so they can be on the alert. Very shortly we will begin the first of two rollcall votes. Both of these are amendments which strengthen the penalties. Many are related to the Leahy amendment which we adopted earlier today, and in a sense deal primarily with the subject matter that was in the Leahy amendment. I urge my colleagues to be supportive of both amendments.

Mr. SARBANES. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. SARBANES. Madam President, I suggest the absence of a quorum.

Mr. SARBANES. Madam President, let me say, first of all, the Senator is obviously within his rights to divide the amendment. The Senator could have offered an amendment striking section 804, which is the section to which he objects. As I understand it, he approves of the remainder of the bill. By dividing it, he gains a one-vote advantage because if he moved to strike and we had a tie vote, he would lose. By dividing the bill, if there is a tie vote on section 804 the proponents of that provision lose. So by the division the Senator from Texas has gained a one-vote step up. I recognize that. That is permitted under the rules. I am not complaining about it. I think it is inaccurate to use an example of the whole bill and say I either have to vote for all of the amendment or none of it because certainly he hasn't been in that position. He could have offered an amendment to strike the section--am I right; 804 is the section on which the Senator is focused? I make the following suggestion in order to try to move matters forward, if I could have the attention of my colleague. Why don't we proceed and adopt the two divisions other than 804 right now and get those taken care of. Then we can address 804, which is the division to which the Senator objects. We can have an appropriate debate with respect to that division.

Mr. SARBANES. Madam President, given that the Senator has indicated he is supportive of the Leahy amendment--I think he said that on more than one occasion--except for section 804, what is it that would have to transpire?

Mr. SARBANES. Did the Senator consider dividing it only for section 804?

Mr. SARBANES. Madam President, I want to resume my discussion with the Senator from Texas. I am not going to engage in a substantive debate with respect to section 804 of the Leahy amendment, which is division 1 of the divisions the Senator has made. I want to go back to the prospects of getting division 1 and division 3 accepted, to which the Senator has repeatedly indicated he has no objection. In fact, as I understand it, he is supportive of it. I renew my inquiry as to whether we could move ahead and accomplish that, since in our previous discussions the Senator has indicated concurrence with the notion that we need to move this legislation along. I don't understand what the objection would be to doing that. The Senator has divided the amendments. He has improved his holding position by doing so with respect to section 804. He has accomplished that objective under the rules. But as I understood it, he does not object to all of the matters in division 1 and division 3. I think it would help move the work along if we could adopt those two divisions, and then we could address division 2.

Mr. SARBANES. Madam President, I would like to put forward a couple of inquiries. Could the Senator outline what his division of the amendment does?

Mr. SARBANES. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. SARBANES. What does division 3 provide for?

Mr. SARBANES. I move to reconsider the vote.

Mr. SARBANES. Mr. President, I ask for the regular order.

Mr. SARBANES. I would anticipate a vote in relation to the McConnell amendment--well, we have 30 minutes.

Mr. SARBANES. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. SARBANES. I certainly think that could be done. I intend to speak to it for a few minutes.

Mr. SARBANES. Mr. President, I rise to commend the distinguished Senator from Vermont for the excellent work that he and the Committee on the Judiciary did with respect to the amendment that is now pending at the desk. This amendment will create tough new penalties to punish corporate fraud. It has very important provisions to protect corporate whistleblowers. Previously, they have been acting under wire and mail fraud provisions. And those are not adequate to deal with securities fraud. The committee recognized that and dealt directly with that question. The President is talking about doubling the penalties for wire and mail fraud, as I understand it, but did not have a proposal to actually have a securities fraud offense. And that is very important because it would have been very difficult under those other statutes because they are not directly focused on securities fraud. I think the committee has stepped into what was clearly a vacuum and has filled it in an exceedingly effective and craftsmanlike way. There are also important provisions in this amendment to prohibit individuals from destroying documents or falsifying records with the intent to obstruct or influence a Federal investigation or a matter in bankruptcy. That is also very important. We have some provisions of that sort but, once again, they are not fully developed or fully focused. The committee, again, has applied itself in order to do that and obviously made a very substantial contribution in that regard. I also want to touch, very briefly, on the provisions for whistleblower protection for employees of public companies. The legislation, as reported out of the Banking Committee, requires audit committees to have in place procedures to receive and address complaints regarding accounting and internal control or auditing issues and to establish procedures for employees' anonymous submissions of concerns regarding accounting or auditing matters. That was a provision championed by Senator Stabenow. We were very pleased to adopt it. But Senator Leahy and his colleagues on the Judiciary Committee have moved ahead to provide additional protections and remedies for corporate whistleblowers that I think will help to ensure that employees will not be punished for taking steps to prevent corporate malfeasance. There are a number of other very important provisions in this legislation of which I am very strongly supportive, but I, in deference to the limitation on time, will withhold with respect to those. But, again, I thank the able chairman of the Judiciary Committee and his colleagues for this very important contribution to the legislation we are trying to develop. Let me simply say it is a pleasure, once again, as we did back in the fall when we did money laundering, to be able to work closely with the committee in furthering the public interest. I yield the remainder of my time to the Senator from Vermont.

Mr. SARBANES. Does the Senator yield the floor?

Mr. SARBANES. Mr. President, I ask unanimous consent that following Senator McCain, who will speak later, Senator Corzine be recognized to speak for up to 15 minutes.

Mr. SARBANES. If the Senator will yield, I thank him for that observation because he is absolutely on point. The bad apples ought to be punished. There is no question about it. They ought to be punished severely. But it is very clear, as this issue has unfolded, that we need to make structural changes. We need to change the system so that the so-called gatekeepers are doing the job they are supposed to be doing. That has not been happening. That is why we need to remove these conflicts of interest on the part of auditors who are also consultants for the same company, collecting huge fees. And they are supposed to come in as outside auditors and be very tough on the company, which at the same time is giving them large fees for consultancy. The Senator is absolutely on point. We have to put in place a framework, a system which tightens up and begins to screen out these things. Furthermore, if you go after the bad apples, fine; but the damage has already been done, as the Senator just observed, for instance, WorldCom and the collapse of the whole pension program and pension provisions. Punishing a bad apple may have something of a deterrent effect, but there is nothing like putting a system into place that gives a heightened assurance that you are going to be accountable. That is what investors are looking for.

Mr. SARBANES. Mr. President, I ask unanimous consent to speak for 30 seconds.

Mr. SARBANES. I urge the adoption of the amendment.

Mr. SARBANES

Mr. SARBANES. Mr. President, I say to my good friend, the distinguished Senator from Indiana, that he said I should read his gracious comments. I actually saw them on one of the monitors. That is one of the reasons I came to the floor. I wanted to express my personal appreciation to the Senator for his very kind remarks. But even more, I wanted to underscore the constructive contributions which the Senator made to this legislation in the course of its consideration by the committee. I know how closely he followed what we were trying to do. He came forward with a number of ideas that were most helpful to us in shaping this legislation. I think the statement he just made reflects his own deep appreciation of the seriousness of the issue with which we are trying to deal, the import it has for the functioning of the American economy, and how he understands that they are very important issues. If we don't move to restore confidence in the U.S. capital markets, there will be a negative impact on our economy. We are seeing some of that now. We have already seen this tremendous loss in the value of the retirement plans. People have just been wiped out. Tens of thousands of people are being laid off. The impact on the economy is beginning to spread. We need to move in order to counter that and start ascending in a different direction. I particularly want to thank the Senator for his consistent help in the committee as we marked up this legislation.

Mr. SARBANES. I thank the Senator from Minnesota.