A rchive Date
[ 16-07-2002 ]
Category
[ International Relations ]
sub-Categoy
[ U.S ]
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[http://www.canoe.ca/Columnists/steward.html
Corporate conscience? What's that?
Today's crop of CEOs has been raised to care about nothing but the bottom line
By HARTLEY STEWARD -- Toronto Sun
July 16, 2002
Whatever could President George Bush have meant when he announced, in a phrase that had speech writer stamped all over it, that "there is no capitalism without conscience, and no wealth without character?"
Did he and his writers mean we small investors and minor shareholders will have to throw ourselves on the mercy of the conscience and character of the world's chief executive officers?If he did, Lord help us. We'll all be ruined before the year is out.
In much of the world of big business, it seems, conscience and character are out of fashion. There might have been some of it hanging around the boardrooms a generation ago, but most of it has gone the way of accounting principles.
Somehow, not that long ago, the bottom line in business became everything. Expectation arose that companies would improve on their financial performance every year. It was a notion ushered in, partly, by the dot-com phenomenon, but it infected everyone.
At all costs, if you were a CEO, you had to produce a bigger profit than you did the year before. Nothing else really mattered to those who were keeping score. Other signs of a healthy company lost all meaning.
A stable work force got you no points. A steady and growing bank of orders counted for nothing. A sound pension plan for employees was more likely to draw scorn than praise. Executive compensation tied to performance got you laughed at on Wall and Bay Streets.
Only profit mattered. Only increased revenue and larger profits each year caught the attention of the brokers and bankers. What have you done for me this quarter? What will you do for me next quarter?
There was no time for long-range plans. No chance to get your company on a solid footing. No reward for paying down your debt. No pats on the corporate back for slow and steady as she goes. The next guy was producing the financial goods in a big way. You had better, too.
Many CEOs, in the absence of conscience and character and in the face of mounting pressure to improve the bottom line, apparently took to lying, cheating, stealing, bribery and cooking the books as a way to improve the bottom line. When discovered, they took to shredding. Then they took the fifth.
Forget about conscience and character.
Honesty is not a policy
These people have no conscience or character. Honesty is not a policy with which they are familiar. They are desperate men and women. Unable to succeed within the boundaries of legal and ethical business tactics, they have made up their own rules.
They have been prepared to sacrifice the pension plans of their staffs and the life savings of their loyal investors.
No awkwardly worded plea from the president will get them to straighten up and fly right. No appeal to their better selves will resonate. The arrogance and the greed have taken hold.
Many in this generation of businessmen, working with no moral guidance, are a genuine threat to free enterprise. They are doing more damage to our way of life than all our enemies together.
They seriously threaten the viability of stock exchanges everywhere and undermine the legitimate investment in business of all kinds. Without such investment the world's economies will sputter and stall.
It is a shame that President Bush addresses the issue from a position of compromise. Part of his own fortune is based on a questionable sale of shares back in 1990.
He treads softly, I'm afraid, because he's not on the most solid ground himself.
He is unlikely to initiate the sort of legislation necessary to scare the pants off the current crop of business executives. People have to start going to jail. Make no mistake, nothing less will make the current crop of CEOs change its ways.
Company managers have to be made to face lengthy jail time for hiding losses, faking profits and deceiving shareholders and employees.
Foolproof legislation, compelling recompense, needs to be put in place.
A clear and strong message has to be sent to the executive who would financially misrepresent his company.
Without such legislation, we can only hope for an outburst of successful class action suits against companies and individuals who abuse the system so dramatically. I would be surprised, given the litigious nature of the United States, if several were not under preparation now.
Steward appears Tuesdays and Sundays. E-mail: hartleysteward@canoemail.com
 World Fact Book (CIA)]
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