|
|
 |
Paul Sarbanes
At the beginning of the 21st century, corporate scandals involving Enron, Worldcom, Tyco, and many other firms, rocked
the American business landscape, ruined the lives of many workers and stockholders, and caused the world to lose confidence
in American business. In order to regain investor confidence, and monitor corporations and their activities, Paul Sarbanes,
Maryland’s senior senator, led the charge to reform the business world. His work in creating the Sarbanes-Oxley Act has
transformed the business world, and restored public confidence in Wall Street by holding companies liable for unethical actions.
The principles of fairness and opportunity instilled in Sarbanes by his parents from a very early age led to his life of public
service. In 1966, Sarbanes ran for the Maryland House of Delegates in Baltimore City and won. During his four years as a state
legislator in Annapolis he served on the Judiciary and the Ways and Means Committees. He was then elected to the US House of
Representatives, followed by his five terms in the US Senate.
In response to the failure of Enron Corporation in 2001, which, at the time, was the 7th largest corporation in the United
States, he held a series of comprehensive hearings resulting in the passage of Sarbanes-Oxley. The act was designed to reform
the accounting industry and restore the investor confidence that had been eroded following the collapse of Enron and subsequent
corporate scandals.
“The Public Company Accounting Reform and Investor Protection Act” was signed into law on July 30, 2002, and has been referred
to as “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” The law is
now known as the “Sarbanes-Oxley Act,” named for Senator Sarbanes and his House co-sponsor Michael Oxley. It creates a strong
independent oversight board to oversee the auditors of public companies and enables the board to set accounting standards, and
investigate and discipline accountants. It addresses conflicts of interest, ensures auditor independence, strengthens corporate
governance, by requiring corporate leaders to be personally responsible for the accuracy of their company’s financial reports,
and establishes safeguards to protect against investment analysts’ conflicts.
As a result of his work in shepherding this historic legislation through the Congress and into law, Sarbanes was honored in
June 2003 with the prestigious Paul H. Douglas Ethics in Government Award from the University of Illinois. The award was
designed to honor individuals who have made a substantial contribution to promoting ethics.
Sarbanes work has created a lasting impact on the world of business. Through his actions and legislation, ethical behavior must
now be standard practice for all companies, creating a positive business environment for employees and the public.
|
