Global
financial markets have got the jitters. Tens of
billions of dollars of share capital have been
erased in recent days. Corporate bonds are under
siege. The Japanese are indulging in a massive
gold buying spree - a sure sign of desperation
among investors. All of this may seem remote from
the concerns of UN and NGO environmental experts
huddled in conferences today in New York, but it
is not.
The
continuing Enron/Andersen inspired fall-out across
business means, for example, inevitably reduced business
focus on social responsibility issues, less corporate
(and corporate foundation) funding for many NGO and
charities, more attention by politicians to capitalism's
crisis and, theretofore, less attention to other pressing
matters. Moreover, this is not just a U.S. concern the
Enron/Andersen fiasco is spinning out of control on
a global level.
It's urgent that a few saviors come to the
fore. We need them to restore some sanity to
finance, some stability to business sentiment
and some perspective to the wild, sometimes
outrageous, grandstanding of those politicians
now promoting farcical public hearings.
The Congressman
barked at the accountant: "Your
ship is going to go down and you'll be the
last one at the mast unless you start talking
to us." But the wrath of Gary Ackerman,
Democrat from New York, failed to intimidate
Joseph Beradino, chief executive officer of
Arthur Andersen LLP. In the words of the six
column banner headline on the front page of
The Globe and Mail in Toronto today: "Enron
auditor stonewalls." What a surprise!
Andersen faces huge law suits and hasn't a
clue what really went so haywire that every
facet of decent ethics got hurled out of the
company's windows as it fanatically sought
to assist Enron's crooks.
The story is
on the front pages every day from Toronto
to Tokyo, from Hong Kong to Britain
(I got a telephone call in the early hours
of the morning on Sunday to hear a chirpy voice
ask: "Mr. Vogl, this is BBC breakfast
radio in Scotland and we all would like to
know what's happening at Enron why should
we Scots be interested?")
Finding saviors to salvage sanity in this
situation is made all the more difficult by
perceptions of monumental conflicts of interest.
There is hardly a politician around who did
not benefit at some time in the past from Enron's
generosity. Then, the obvious candidate to
save the day, the chairman of the Sercurities
and Exchange Commission is seen to be tainted
as well. Harvey Pitt, who was appointed to
the SEC a few months ago, had spent the last
dozen years as the high paid advisor and lobbyist
of the major accounting firms, including Andersen.
He was the prime opponent of the very auditing
regulations that now even he admits are necessary.
Beradino has at least been smart in convincing
Paul Volcker to take a job as Andersen's would-be
savior. Volcker, 74, would head everyone's
list of the wise, forthright man of integrity
to take a prominent leadership position in
the current debacle. It may take half a dozen
Volckers to calm nerves and return stability
to business, markets and politics right now.
My candidates for those who ought to be persuaded
to play key roles and who have similar credentials
to those of Volcker include former Senate leaders
Howard Baker and George Mitchell, former Secretary
of State Lawrence Eagleberger, former Treasury
Secretary Robert Rubin and former CIA and FBI
chief William Webster.
Volcker has spent most of his life in public
service. After an outstanding stint as Undersecretary
of the Treasury in the early 1970s he could
have taken any high-paying job he liked on
Wall Street. Instead, he taught at Princeton
University and then joined the New York Federal
Reserve Bank. From there he became chairman
of the Federal Reserve Board and after a decade
in that post he finally joined the banking
fraternity. Even then he only did it after
considerable arm twisting by his friend James
Wolfensohn, then running his own investment
firm and now president of the World Bank.
But, Volcker has often been far more focused
on public service issues than on making money.
He headed the commission that forced the Swiss
banks to compensate Holocaust victims. He has
chaired the Group of 30 committee of finance
leaders that has been a formidable advocate
of public policy reforms. Recently, he has
played a growing role in seeking to find ways
to strengthen and reform international auditing
standards.
Volcker may have agreed to assist Andersen
because he believes that how this company emerges
from the current fiasco will be important for
the health of the business system as a whole.
We need more major auditing firms to strengthen
competition, not less. We need to build confidence
in the majors, not demolish them. We need to
find the best ways to reform these companies,
rather than push them into bankruptcy.
We need people
like Volcker entering the public ring now
who have the credibility to convince
the media, the markets and the politicians
that constructive approaches to the Enron-Andersen
fiasco are now needed to secure the soundness
of our business system as a whole. A few more
absurd hearings like the one that pitted Congressman
Ackerman against Beradino and that will soon
see Ken Lay confronted by a pack of overly
zealous Senators, may make it finally crystal
clear that we now need and urgently -
are level-headed saviors of the Volcker caliber.
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