In the August 12, 2002 issue of Forbes, Mr. Forbes makes some grandiose comments in a column called "Fact and Comment". Personally, I disagree with most of the scare tactics he has chosen to use.
Today, "W" signed into Law a bill that enacts tougher penalties for corporate fraud. The maximum sentence for executives who commit corporate fraud quadruples from 5 years to 20 years.
Massively powerful Business Person Steve Forbes has a few comments:
His comments are based from a statement: "As Forbes Silicon Valley bureau chief, Quentin Hardy, put it on Forbes on Fox, "Washington should not confuse corruption with risk-taking"
I'd like to take a quick examination of the buzz-companies that are the fuel on this fire of what Forbes defines as "sheer hysteria" in the public:
Enron: Mis-stated $24 Billion in revenue to hide state of company debt. Paid execs heavily before issues came out. (Lost Jobs 4500)
Arthur Andersen: Auditor pleads guilty to "Obstruction of Justice"
Worldcom $3.8 billion in expenses that had improperly been classified as capital expenditures Secondary link...(Lost Jobs 17,000)
Qwest: 1.16 billion in improperly recorded revenue.
Xerox: Improperly booked $2 billion, restates 1.4 billion less in pre-tax profits. Then restates the amount is actually 6.4 billion.
Adelphia: founders found charged for looting, fraud, embezzlement, and racketeering
Hmmn. So, what in these cases separates 'fraud' from risk taking?
Forbes then likens the new rush of laws to creating a "...modern version of the debtors' prison concept" He pushes this concept with a rather horrific looking piece of artwork showing the squalor of the 18th century debtors' prison.
"It's one thing to punish those who willfully commit fraud and other well-defined crimes, quite another to jail or ruin people for bad judgment, mistakes, or for taking risks that go wrong."
I'll get to 'well-defined' in a moment as later in this same issue of Forbes I had to laugh at the irony. The basic problem I have here is that Forbes seems to be defending a lot of what we've seen as 'cavalier, risk-taking, heroes.' And yet, we've seen nearly 50,000 jobs slashed this year because the guy getting paid to watch the books 'misplaced' $2 Billion dollars. And I put this to any of you who've not realized that you've capped out your credit cards, written a check hoping that the deposit will clear before your check does, not paid a bill on time, or any other list of 100 little things that as individuals we get pinned for.
Yes, in the real world, if you ignore a bill for $0.05... that's right... 5 cents, it can go on your credit record. But.. in the corporate world, this is "risk taking"
"As for having CEOs sign off on their companies' financial statements--how would members of Congress like to be personally liable for every appropriations bill they pass?
You mean they aren't? I realize this is a might be of a naive statement that I've made. But I figure in this I agree with what Forbes is suggesting. Yes, if someone votes for legislation, I believe they are fully liable.
Members haven't a clue as to the details in most of those spending bills.
This of course is an entirely different rant on the downfall of our legislative system best kept to another post. I think a bill should state clearly what it covers and not have 1000 other little issues tacked into it. I firmly believe that the legislators should know what they are voting for as much as a CEO is responsible to know what the upper management does in hir company.
Would they be willing to personally sign off on the income tax code they've been creating over the years? Mandate that and they'd all end up in the hoosegow.
Does the phrase, "Kill all the lawyers" come to mind?
Forbes goes on to redeem "W" for commenting that "many accounting issues 'aren't black and white.'"
I get the impression that the stance Forbes has is that in an industry that has grown so big in a 'relatively' short time, we have to not overly ab-react to the 'mavericks' who do what we 'simple lay people' who are merely succumbing to the "dangers of public passion" mis-comprehend as illegal. We must not take notice of the tens of thousands of workers who've found themselves jobless and often without severance because a couple of people who make 1-3 orders of magnitude of salary over them, can't do the jobs that they earn that salary for.
Finally, I'd like to agree that we who should not overly ab-react to the 'mavericks' who do what we 'simple lay people' who are merely succumbing to the "dangers of public passion" mis-comprehend as illegal should look at a story in the later pages of this same issue of Forbes.
Title: Next Step: Seize His Typewriter
Kevin Mitnick, who spent five years in prison for hacking corporate computers, is now fighting a bit by the FCC to strip him of the ham radio license he's held since his teens. Mitnick, 38 is already barred from using computers and cell phones. The FCC order scheduling a hearing lists no specific Mitnik act involving the relatively low-tech ham medium but only "his propensity to engage in criminal activities involving fraud"
That's right folks. The government has decided that even if you've served a jail term, been released, and served parole time... The government can still take away your rights based on, "Well, we think you might do it again." Translation, 0 strikes and you're out. No wonder there's going to be another baseball strike. For more on this issue, please see this article which discusses what he was 'actually charged for'