Chazmo

OK Jeff, fair enough. Of course that's true. Probably the majority of corporate leaders are driven only to make their companies be successful. However, the egregious crimes of these corporate leaders during the latest boom are really hard to swallow. Moreover, if success is simply bringing in $$, then what motivation to these people (and their "overseers") have for dusting off the ten commandments?

When a board of directors does not perform its oversight duty (presumably because it too is gaining from the theft), then a public company ceases to perform its function. It's as simple as that. The top eschelon of these companies became beholden to their leaders and then they got lazy / complacent and looked the other way.

Look, Jeff, I'll agree with you that not everyone is driven by greed. That said, in a multi-billion dollar company, I put it to you that that's what can happen.

---

Rob, I hear you about the problem with starting more federal programs. Ick. I really didn't mean to point the finger at auditors here. Sarbaines-Oxley (sp?) seems to be helping, but it's definitely difficult for everyone to comply with it. I guess I'm trying to make the (perhaps) obvious statement that professional ethics is not sufficient to guarantee that people do their jobs -- particularly when times are fat and the $$ carrot is dangling.

In computer software it's easy. No one has to believe me when I say I've fixed a problem or produced a new feature. I have a QA group and even a marketing group to look at my results and beat the crap out of something I've done if they choose to and see what shakes out. There's an element of trust, of course, that I haven't gone and broken everything else (and -- guess what -- that happens sometimes!), but there's really no conflict of interest. I respect the other groups despite the fact that their mission might be to blow holes in my stuff.

Anyway, just some thoughts. I'll admit that I don't know how to fix the corporate problem because government itself is not the answer. That said, there really need to be checks and balances. Perhaps the big boards can be responsible for paying for audits, I don't know...

ralper

[QUOTE=Chazmo,Jun 20 2005, 07:48 AM] In computer software it's easy.

Chazmo

Quite so, Rob. Most programming errors don't involve fraud and are simply mistakes. Also, no argument... bad programming has cost companies dearly. As for not making headlines, well, occasionally something does get a lot of attention -- remember Y2K?

I guess you guys are getting a little defensive about my vented frustration with this. I have no doubt that most accountants practice with integrity and honesty, Rob. Usually, when faced with an ethical dilemma, they'll do the right thing. I also completely agree that thieves are thieves, white collar or not. As anyone who owned shares in Enron, Tyco, or others will probably agree, when someone violates a public trust -- like one of these executives -- their crime is worse than an individual crime.

My only point is that we need better oversight of corporate leaders because the conflict of interest that's inherent in the current oversight "system" is insufficient.

Done for today.

anarky

with both of Robs points here. I have seen the results of bad coding and poor systems analysis(or business analysis) too many times to be very surprised when I find it. That doesn't mean the programmers or analysts were dishonest or even incompetent. Sometimes requirements are not correctly stated and the results are deemed to be good enough.

and there will always be Kozlowski's in this world and they will figure out how to circumvent any number of laws, rules, codes, programs, audits and systems in order to steal themselves rich(er). The real shame is that the biggest offenders are stealing more to get from being merely ultra-wealthy to qualify as mega-wealthy. I generally have no problems with the amount of compensation a CEO or very senior executive gets. What really p1sses me off is when they feel that they have to pad their multimillion dollar package with pens from the supply room...cheap thieves.

Chaz,

Your points about the boardroom ring very true. A lot of boards are merely
"yes-men" who have been appointed to rubberstanp the decisions of the CEO of the month. A lot of this comes from the fact that most small shareholders have no clue what to do with their proxies when members come up for election and the largest investors (a lot of times fund managers) decide who is going to "protect" their interests and to hell with the small holder (read employee in most cases).

paS2K

Once again, I came late to this *intense* discussion thread.....have no 'expert opinions' to add....but an anecdote of sorts:

One of my college classmates (friend of a vg friend) was Mark Belnick, Cornell Class of 1968. Does the name sound familiar in the Tyco context? Do a Google and you'll find that he was Tyco's head in-house legal counsel.....IIRC his alleged connection was 'closing his eyes' to the fraud and receiving benefit of.....oh, a measly $5-10MM Prior to joining Tyco, he was a rising star and partner at one of the biggest NY law firms....already earning millions/year. Actually, I think he was judged innocent....successful defense that he did not KNOW that he was affirming false statements of the financial condition of Tyco. He apparently convinced a jury....beyond a reasonable doubt....that he felt 'due' that sort of compensation.

Whatever.....it would be interesting to talk to him at a future reunion Btw, he was originally the co-chair of my college reunion in 2003....but mysteriously disappeared from the reunion letterhead in spring 2003. Just about the time that the Tyco bust hit the papers....

ralper

Jerry

Why would an attorney be affirming statements of financial condition? That's the auditor's job.

I suspect Belnick's involvement was something else.

paS2K

You are probably correct....I can't remember the exact way that he got entangled....but it was due to affirming something about the condition of the company. Maybe something related to assuring Wall Street that Tyco's bond rating was safe? Of course, he probably should not have been doing that either....