The U.S. Office of Federal Housing Enterprise Oversight (OFHEO) and the Securities and Exchange Commission (SEC) announced on Tuesday a 400-million- dollar civil penalty against Fannie Mae -- the government- sponsored mortgage company -- in a settlement over alleged accounting manipulation.

A report released by the OFHEO said that senior executives at Fannie Mae manipulated accounting to collect millions in "maximum, undeserved bonuses" and deceive investors.

The report also faulted Fannie Mae's board of directors for failing to exercise its oversight responsibilities and failing to discover "a wide variety of unsafe and unsound practices" at the largest buyer and guarantor of home mortgages in the country.

The OFHEO report detailed what the agency calls an arrogant and unethical corporate culture. From 1998 to mid-2004, the smooth growth in profits and precisely-hit earnings targets each quarter reported by Fannie Mae were "illusions" deliberately created by senior management using faulty accounting, the report said.

Meanwhile, Washington-based Fannie Mae neither admitted nor denied wrongdoing under the settlement but agreed to refrain from future violations of securities laws.

The company also agreed to limit the growth of its multibillion- dollar mortgage holdings and to make "top to bottom" changes in its corporate culture, accounting procedures and ways of managing risk.

The Fannie Mae has been under investigation in the past years for accounting misconducts. In December 2004, the SEC ordered Fannie Mae to restate its earnings back to 2001 -- a correction expected to reach an estimated 11 billion dollars. The U.S. Justice Department has also been pursuing a criminal investigation against the company.

Source: Xinhua