Reich’s talk, which was delivered in Harvard Hall 104, called for “bold action” by both the federal and state government to combat corporate wrongdoing.
“There’s something going on here, more than a few bad apples,” Reich said.
“There are structural problems.”
Since fall this year, discoveries of misleading accounting and fraud by such prominent corporations as Enron, Xerox and WorldCom have profoundly shaken investors’ confidence, causing stock prices to plummet.
In response, President George W. Bush delivered a speech on Wall Street on Tuesday, proposing reforms such as longer prison sentences for corporate malfeasance and the development of a task force to combat corporate crime.
Some on Capitol Hill have questioned Bush’s own business history, however, including scrutiny of questionable accounting procedures of Harken Energy Corporation, on whose executive board Bush served in the early 1990s.
With corporate scandal at the center of national attention, Reich proposed plans of his own to cope with the recently discovered problem.
“Executives who are responsible for defrauding the public must be prosecuted. Their ill-gotten gains should be confiscated and the worst offenders sentenced to prison,” Reich told the audience.
The gubernatorial hopeful stressed the need to have “independent outside directors” monitor corporate audits and executives’ salaries. He also said that accountants should be held liable for fraud, and that corporate management on all levels must be free from conflicts of interest.
During his talk, Reich also targeted Republican gubernatorial nominee Mitt Romney, who has worked for large businesses in the past.
Romney “represents an approach and attitude towards corporations...” Reich said. “I think that approach is related to the excesses we have seen.”
At one point, Reich looked directly at one of Romney’s aides, who was in attendance videotaping the talk.
“I’d love to debate you in person, but your camera’s almost as good,” Reich said to Romney through his aide’s video.
Reich, who is the former U.S. Secretary of Labor, said he will push for the Commonwealth of Massachusetts to counter corporate misdeeds, including stronger proxy-voting guidelines and more vigilant state-level oversight.
He detailed how the state’s public pension fund has been harmed by investments in companies recently accused of wrongdoing, saying that Massachusetts lost $24 million on deflated Enron stock, and $25.1 from WorldCom bonds.