MutualFundWire.com: Citizens Speaks Out
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Wednesday, July 10, 2002

Citizens Speaks Out


Too much emphasis on punishment, not enough on prevention -- that is the verdict on President George W. Bush's speech yesterday on Wall Street, at least according to Citizens Funds. The firm is also looking for more specifics from the President, Val Dingle, vice president of marketing at the firm, told the MutualFundWire.com.

The firm believes that there need to be specific policies established concerning the independence of boards of directors and auditors.

"Corporate boards are not as independent as they appear. While we think President Bush's remarks are a good first step, we believe the Administration will need to get much more specific -- and focus as much on prevention as on punishment -- for it to be effective in really raising the bar on corporate responsibility," stated Dingle.

The firm is also supporting certain aspects of the bill proposed by Senator Paul Sarbanes (D-MD) concerning corporate responsibility issues including:
  • the creation of a strong, independent board to oversee the conduct of auditors of public companies;
  • regulations to ensure that auditors of public companies do not engage in activities that could undermine the integrity of the audit;
  • a change in criteria for financial statements;
  • and increased disclosures concerning conflicts of interest;
The firm also wants the SEC to develop rules to better disclose conflicts of interest. Citizens Funds also supports the President's proposal to have CEOs swear to the veracity of financial statements.

"We take seriously our role as a major investor and our ability to shape corporate behavior. We avoid and divest from companies that we believe do not demonstrate solid corporate citizenship; we sponsor shareholder resolutions aimed at remedying issues like auditor conflict; and our proxy voting guidelines are aggressive," contended Dingle.

Dingle further reported that Citizens Funds was preparing communications pieces for its clients. "We are going out of our way to assure our investors that we are doing everything we can to safeguard their investments," she explained.

"We are campaigning for independent boards. Everything that has occured recently can be traced back to the gatekeepers in the corporations and how they have failed. We are revisiting our guidelines on proxy voting and making them more stringent. If a company's financial statements are opaque, we are staying away. And we've been advocating greater diversity on boards as well," the executive concluded.


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