You've got to love the romance of "transparency"

By Alex Manchester, Editor, The Internal Comms Hub (Australia), Melcrum

In searching for an article for a customer yesterday, I came across an editor's column from my colleague, Mandy Thatcher. It's from 2002, when stocks and shares were down, the world was reeling from the effects of 9/11, and organizations were also reeling from financial disasters such as Enron.

In her column (SCM Oct/Nov 2002), Mandy said:

"Business is not booming. Far from it. According to The Economist, some US$7 trillion has been wiped off the value of American shares since March 2000. While optimistic economists predict that US and European markets are set for a bounce back, the present reality in many organizations is that share prices are falling and jobs are being cut. At the same time, the level of scrutiny on financial dealings has risen dramatically after much- publicized “cooking of the books” in corporate America. As a result, improving the transparency of financial information is now high on the communicator’s agenda.

Now, how profits are made matter as much as how big those profits are. Government intervention has meant that there’s a much greater emphasis on accountability, with US Treasury secretary, Paul O’Neill announcing that, 'The US is vigorously putting measures in place to improve corporate disclosure, enhance corporate accountability and strengthen the independence of auditing.'"
_____

Eerie isn't it, considering that for many a month now the main business headlines have been about global financial meltdown, looming recession, job cuts and all the other demoralizing events that occur when the economy starts to take a dive.

In the column extract above you don't need to adjust anything for today's situation - save maybe the "light at the end of the tunnel" sentiments from economists. Since the upturn and boom that followed the 2000-2002 dip, the benefits of a growing global economy have been felt by most.

Now, however, it's frustrating to read about the chain of events and errant dealings that spurred that growth and have led to the current crisis. Banks lending too much money to people who really couldn't afford it, then losing track of the value of their shady (but profitable) investments and promptly finding themselves in a rather deep vat of very hot water. And they're dragging everyone else in too. Of course, for the US sub-prime market especially, there were plenty of warnings that went unheeded.

If it's not cooking the books, it's chucking out all sense of "good business" in the truest interpretation of the phrase, and drilling for profits with no concern for the damage to the surrounding environment.

Look at Bear Sterns. And Northern Rock. Crushed by the weight of their business dealings until governments bail them out with money they themselves have borrowed. This in itself can't go on forever and in the US, as the money the Fed borrows and pumps into the market evaporates along with your house equity, somewhere, somehow, someone is getting very rich, while thousands go home with a pink slip.

Where's all this money going, exactly? It makes you think that something is deeply, deeply wrong.

Another story came up today about an internal JP Morgan document that explains how its richest investors can "circumvent" insider trading regulations. Yes, you did just read that correctly.

Ethics? Transparency? It might be technically legal but sadly (and inevitably), the idea of making money morally, as was pitched to us in 2002 and sold on the promise of vigorous measures to improve disclosure, has vanished.

In times like these it seems that the problem with corporate transparency - and corporate responsibility for that matter – is that it's exposed as a baseless, romantic load of waffle.

It's profits. All about profits. Get them no matter what you have to do. Change the rules (or circumvent them), just find us profit. My new penthouse apartment demands it.

Comments

[Naz]

it is amazing how things remain the same,the more we 'change'.Meaningful change in the area of Corporate Governance will always fall short, if we tackle it from a legal standpoint only.Far more impactful is the Leadership as well as Values concerns.Let's get to the PROBLEM....it's the penthouse!