"Promote a culture of openness, competency and candor"

As the chairman of the Permanent Subcommittee on Investigations, U.S. Sen. Carl Levin, D-Mich., headed an in-depth investigation of the Enron scandal. Many of his accounting-reform proposals were included in the corporate-governance and accounting-oversight bill, which was passed by Congress and signed by President George W. Bush in late July. Levin unveiled his Shareholders' Bill of Rights in an address last April before the Economic Club of Detroit. His excerpted remarks follow:

The collapse of the Enron Corp. has raised troubling questions about our sense of economic security and about the engine of our economic stability and prosperity-American corporations.

People want to know how so many Enron executives could walk away from the disaster they created with tens of millions of dollars in their pockets.

They want to know how - with all the systems in place to protect employees and consumers, i.e., the auditors, the board of directors, the Securities and Exchange Commission - the sudden bankruptcy of a company this large could happen. And with more than 50 percent of American households now owning stock, directly or indirectly, these questions are being asked on Main Street, not just on Wall Street.

Enron was the largest energy trader in the world, worth $80 billion, with 20,000 employees. It reached that point by the tangled and deceptive use of a reported 3,000 affiliates, approximately 800 of which were in offshore tax havens.

When you pare down the hundreds of incredibly complex financial transactions, which were the hallmark of Enron, you realize many were nothing more than bookkeeping tricks designed to artificially inflate earnings rather than achieve economic objectives, to hide losses rather than disclose business failures to the market, and to deceive more than inform.

The decisions to engage in these complex transactions were fueled by interlocking conflicts of interest, a shocking disregard of investors and arrogance.

Over the last 25 years, with both Democratic and Republican administrations in the White House, we have moved steadily toward a less regulated economy, and few would argue that we should suddenly reverse direction. But the challenge for us today, made clear by the Enron fiasco, is to find the legitimate role for government to play in this new largely deregulated economy.

Increasingly, Americans are both workers and shareholders, and they are vulnerable to the kind of manipulations and deceptions that left hundreds of thousands of Enron employees and shareholders with nothing but broken dreams for all their years of hard work. We need to think boldly about what economic security means in this new economy.

What happened at Enron wasn’t just a failure of regulations and law-it was a failure of corporate culture, a failure of values, a failure of heart. And even the best government policy can’t change that.

That change will come from the actions of leaders in the business community who, by their example, promote a culture of openness, competency and candor.

Corporate boards and officers have a fiduciary duty to their stockholders. When business leaders ignore that duty, the results are corrosive to our society as a whole. They undermine the basic sense of fairness and honesty that binds us together as a people. The pursuit of personal profit at any cost cheapens the core values that make America great.

We know what a difference the right kind of business leadership can mean for a community because for decades our region has been blessed with business leaders who have exemplified corporate citizenship at its best. To realize our great potential as a nation, we must always strive to find the right balance between the bottom line and the common good.

For additional comments by Senator Levin, visit levin.senate.gov.