It Ain't Over Yet

For those who believe the battle against corporate fraud ended with the prosecutions of senior executives at Enron, Tycos and Worldcom, or that discussing the importance of improving business standards of behaviour has been over-shadowed, say, by the "hotter" topic of corporate governance . . . an editorial in today's New York Times suggests otherwise:

"It is sad just how predictable it was that the reconstruction of Iraq would be marred by fraud, dishonesty and profiteering. Last week Robert Stein Jr. was charged in federal court with a slew of crimes allegedly committed while he was financial officer for the American occupation authority in Iraq. The affidavit in the case says that Mr. Stein accepted over $200,000 a month to steer contracts to an American businessman whose companies often did poor work and sometimes did no work at all . . . There must accountability higher up for this clearly bad judgment. Unfortunately, this is only the beginning. Officials at the Office of the Special Inspector General for Iraq Reconstruction say they are pursuing 50 more cases and have already referred at least six more to prosecutors."

In an excellent piece in The McKinsey Quarterly 2005 Number 3, McKinsey & Company worldwide managing director, Ian Davis, makes the following recommendation which speaks directly to those who argue that social and ethical issues are now "peripheral to business management":

"(Business leaders) need to shape the debate on social issues much more consciously by establishing even higher (but appropriate) standards of integrity and transparency within their own companies and by becoming much more actively involved in external debates (such as those in the media) on issues that shape the social context of business."

It will be fascinating to see which business leaders step forward to denounce the "fraud, dishonesty and profiteering" identified by the US Office of the Special Inspector General for Iraq Reconstruction.

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