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1. The type of accounting misrepresentation that WorldCom stands accused of is, at least in the eyes of WorldCom ex-CFO Scott Sullivan, perfectly legal. The feds, of course, disagree and are attempting to put Mr. Sullivan's ass in the slammer for a very long time. Time will tell who is right.

Anywho.

CEOs can certify financial statements until their fingers bleed from repeated signing of their names, but if their companies merely comply with the letter of the law rather than the spirit of the law, there will be more scandal.

2. CEOs and CFO's already sign off on their financial statements. What this second round of sign-offs are supposed to prove? That they really, really mean it this time? Honest to goodness, cross my heart, no crossing fingers or take backs? What does it say about their integrity that we're forcing these guys to say, a second time, that they aren't breaking the law? If we don't trust them at their word the first time through, why should we trust them the second time?

3. If a CEO or CFO knew that their company was doing something illegal with their financial statements and misrepresenting earnings, do you think they will take this opportunity to come clean? I certainly don't. If they haven't been caught up until this point, why would it benefit them to admit they're cooking the books? What makes August 14th, 2002 a special day to admit wrong-doing? The pundits would say, "Oh, will come forward today because of the 'Stiffer Criminal Penalties (tm)' that they will face if they are caught in fiduciary hanky panky." Yawn. Whatever.

It is precisely cheap publicity stunts like this that will cause further public distrust of corporate integrity when the next scandal comes down. And there will be more. Human nature guarantees that.

"Well," you say. "You what ever can we do to ensure corporate financial integrity?"

I have a few ideas.

First, when it comes to their financial stability, always assume that companies are lying to you. Always assume earnings are inflated, backlogs are bloated and projections will not bet met. If you expect that they're lying to you, it won't be such a shock when you find out they are.

Second, John Ashcroft needs to start prosecuting these lying bastards to the fullest extend of the law. The very foundations of our economic system is being shaken and Ashcroft is sitting around with his thumb in his ass. Sure, Scott Sullivan was arrested. So were two member of the Regas clan for their mismanagement of Adelphia Communications. But what have we heard of their cases? What about the other huge cases out there? Global Crossing? Tyco? IMClone? What about Martha Stewart? When are we going to see her prissy ass in handcuffs?

Finally, I wish the media would stop with the incessant stories about how horrible the market is. We're actually talking ourselves into a deeper hole than we should be in. Why? Every time I turn on the TV or pick up a newspaper or read a web site, I'm blasted with three different takes on why our economy is doing so horribly. Get over it.

Things may be bad now, but they will get better. When will they get better? Who knows. Perhaps not for quite a long time.

We're in the midst of three down years and could be at the beginning of a secular bear market. If that's the case then it's time to realize that no number of August-14th-like magical-days-of-reckoning will make things better.

Copyright © 2002 Christopher Ford
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