There has been a certain smugness of late amongst governance officials. One often finds ethics officers at companies declaring: “I am sick of hearing about Enron.” Well, aren’t we all? Perhaps once we have taken the lessons of Enron to heart, we can stop talking about Enron – but thus far the evidence that those lessons have been absorbed is not convincing.
In the United States, 80 companies are now under investigation for issues surrounding their grants of options to corporate officers. In one of those companies, several of its former officers have been indicted. In others, boards have terminated those officers. BP’s announcement that it would be forced to close a major oil pipeline came along with the news that employees and others have been raising the red flag about the problems with the pipeline for a decade. And Franklin Raines, the former CEO of Fannie Mae who testified post-Enron in favour of the Sarbanes-Oxley reform legislation even as he denounced corporate financial misdeeds, headed a ship described by one auditor as not even being on the page “if that page represented the boundaries of the accounting and financial reporting rules”.
In the words of the great 1960s musical group Buffalo Springfield, “there’s something happening here” – and what is happening is, unlike the song, quite clear. We have not stepped back to see common threads and applied controls for those threads. Instead, we remain poised with reporting systems, ethics officers, ethics codes, ethics training, and a host of other best practices that do not address the real issue (Enron had one heck of a code of ethics and all the other components of a solid ethics program, but these did not seem to provide a barrier for roguish behaviours). We continue to arrive on the scene just a bit too late to prevent the crimes, constantly in mop-up, contrition and PR-nightmare mode.
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