MADISON, Wis.—Paul Sarbanes, the former Democratic senator from Maryland and co-author of The Public Company Accounting Reform and Investor Protection Act, better known as Sarbanes-Oxley, will keynote the World Council of Credit Unions' (WOCCU's) 2008 World Credit Union Conference. The annual event this year takes place in Hong Kong from July 13-16.
The legislation, authored by Sarbanes and then Rep. Michael Oxley (R-Ohio) and signed into law on July 30, 2002, created a strong independent oversight board to monitor the auditors of public companies and enable 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 of interest.
In addition to making the names of Sarbanes, a long-time credit union supporter, and Oxley household words, the legislation created in the wake of the Enron and Worldcom failures also is credited for transforming the business world and restoring worldwide public confidence in Wall Street by holding companies liable for unethical actions.
Sarbanes, reached at his Maryland home, took time to answer WOCCU's questions about the legislation, financial transparency, credit unions and what attendees at the 2008 World Credit Union Conference can expect from his session.
WOCCU: Throughout your career you've supported credit unions and their service to members. Did the development of Sarbanes-Oxley change that point of view?
Sarbanes: No, credit unions remain very important players in the financial services field. I like the fact that they are member-owned and member-focused. You've also promoted financial literacy, which puts you squarely on the side of your members' best interests. A lot of complex situations and institutions have evolved in financial services over the years, but credit unions have stayed focused on member service.
WOCCU: You're referencing many of the elements that make up the credit union "difference," yet the banking industry still contends that we occupy an uneven playing field. Based on your experiences, do you think that attitude will ever abate?
Sarbanes: Some of that tension will continue because, in some respects, you're competitors. But each of you has a role to play in the financial system and you should be able to exist together. We've tried to help credit unions on the membership issue in the past, but credit unions need to be careful not to try and play the same game as their competitors. Credit unions must remain faithful to their mission and stay close to their members. Those are the same concepts WOCCU strongly supports with its development efforts in other countries.
WOCCU: Your Congressional legacy, of course, was the passage of what is universally referred to as the Sarbanes-Oxley legislation. Even though credit unions are not publically held companies, how do they fit in with your parameters?
Sarbanes: Transparency of financial records and activity is the legislation's cornerstone, and for credit unions such things always have been at the forefront. There has been increasing demand for greater transparency since passage of the legislation, and credit unions have been very high up when it comes to financial accountability.
WOCCU: What do you plan to talk about at the World Credit Union Conference in Hong Kong in July?
Sarbanes: I'm going to review what happened that led up the passage of the legislation and what its implications are for businesses worldwide. The bottom-line message is that everyone should be interested in honesty and accountability, not only consumers but businesses as well. The small percentage of business people who operate dishonestly can have a profound impact. They tarnish everyone and their actions can have widespread economic consequences.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.