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 no longer slap corporate crooks who cook the books on the wrist," said State Representative Marie Donigan (D-Royal Oak), a lead sponsor of the legislation. "These people are no better than criminals who rob banks. They destroy our workers' financial future and they hurt our economy. This legislation will hold CEOs responsible for their criminal acts and protect our working families, their pension and their 401(k)'s."
For executives who tamper with evidence or obstruct a financial investigation, or who attempt to do either, Donigan's bill would increase their punishment to up to 10 years imprisonment and/or a $250,000 fine.
The Democrats' legislation also 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 Corporate Executive Officers (CEOs) to cook the books and falsify financial statements; 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.
"Our state must not be a place where CEOs can rob people of their future with a stroke of a pen," said Rep. Aldo Vagnozzi (D-Farmington/Farmington Hills). "We must take a stand against criminal CEOs and fight for our working families."
"Tax breaks should not go to corporations that illegally rob workers of their pension," state Rep. Andy Meisner (D-Ferndale) said. "If we are going to provide tax breaks to corporations, it should be to those who provide good jobs, health care and, as good corporate citizens, partner with us to stimulate economic growth."
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.
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.
"Unless we act now, what happened with Enron could happen here in Michigan," Donigan said. "Michigan must be a place where companies, consumers and shareholders can expect transparency and accountability in business. Corporate crime poisons the business environment and it harms Michigan workers."
"Our families work hard to build financial security," State Rep. Paul Condino (D-Southfield) said. "Michigan must take a strong stand against corporate criminals who would save themselves at the expense of the men and women who work hard every day to make ends meet."