Pitt said he believes the accounting problems are the work of a "few rotten apples." But he also pledged that the SEC "is going to go after these people, and people who do hard crime will do hard time."
But Sen. Paul S. Sarbanes (D-Md.), who drafted the Senate accounting bill, said: "It's not just a few bad apples who need to be severely punished.... The system is not working right." He called on the president to get behind the legislation in "a very strong way."
Sarbanes' bill would establish an independent accounting oversight board to replace the accounting industry's self-policing approach to discipline. It would also establish new penalties for corporate fraud and new financial disclosure requirements for public companies.
While agreeing with many of the goals of Sarbanes' bill, the White House has expressed concern that it could create a turf war between the new board and the SEC.
A bipartisan group of senators plans today to try to strengthen the bill further.
McCain and Sen. Carl Levin (D-Mich.) have pushed to require companies to deduct from earnings the value of stock options awarded to executives. They hope to get a vote on an amendment that would refer the politically hot issue to the Financial Accounting Standards Board, which writes rules for the accounting profession.
But they face stiff opposition from business groups, which fear such a move could slash bottom-line earnings across the corporate landscape as well as jeopardize one of corporate America's most popular forms of compensation.
"The problem, in my opinion, is not stock options, but the way in which a small group of greedy and unethical corporate executives used stock options," Lieberman said.
Sarbanes' legislation also calls for increasing the SEC budget.
Pitt praised Bush's call for the SEC to receive $100 million more, but he was more cautious in endorsing bipartisan legislation that would give the agency $300 million more. "I support more money, but I also support responsibility," he said. "Somebody has to do a study first."
In the WorldCom case, five boxes of documents provided to Tauzin's committee on Thursday--the deadline for receipt of records from the Clinton, Miss.-based company--showed that on several occasions, employees raised issues about the fraudulent accounting with senior WorldCom executives, who dismissed their concerns. The company has acknowledged improper accounting of nearly $4 billion.
In 2000, for example, finance employee Troy Normand was so distressed by the company's accounting practices that he considered leaving the company. He went to chief financial officer Scott Sullivan and comptroller David Myers with his fears, but "they all assured him, 'Oh, everything's fine,' " Tauzin said.
Normand asked for a severance package but was refused, Tauzin said. "He knows his corporation is going downhill and he, unfortunately, is watching as they're cooking the books in front of him."
Tauzin noted, "There's quite an insight in these documents as to how corporate greed took over."
In another document described by Tauzin, WorldCom employee Stephen Brabbs, who managed the company's European and Asian accounts, says he told people at Arthur Andersen about an improper $33-million reduction of expenses in the international division in the spring of 2000--made by his U.S. bosses after he had closed the books.
When Brabbs told his WorldCom superiors that he had informed people at Andersen, his bosses got upset and Sullivan exerted pressure, Tauzin said.
"This Week" anchor George Stephanopoulos quoted from a Brabbs' letter: "Pressure was exerted, and we were instructed to make the entry. This pressure, we understood, was from Scott's office specifically."
Associated Press contributed to this report.
