Wednesday, July 13, 2005


Man, is the corporate America taking a beating in the image department.

Today, Canadian telecom businessman and former Worldcom CEO Bernard "Bernie" Ebbers was convicted of fraud and sentenced to 25 years in prison.

I'm sure he was relieved to find out that he would have gotten 30 years, but his sentence was reduced due to his charitable work and health condition. He's 64.

The new corporate image? Posted by Picasa

Unfortunately, this is another conviction from a long list of corporate fraud and malfeasence scandals in the U.S. From Worldcom, to Enron, to Imclone to Tyco, to Arthur Andersen, a seemingly endless series of charges, allegations, trials, (and in some cases) convictions have rocked the corporate world in the last 5 years.

So what, you ask? What does that matter to Canada? Why do we care?

Well, firstly, I think that any pro-business group or individual is painted with the same brush in the eyes of the public when word of these kind of scandals comes out. Have conservatives (small and big "C") not seem eyes roll when they express the same shock and outrage as anyone else?

I recently went and saw "The Smartest Guys In the Room", a documentary on the Enron scandal that has yet to fully play out in the courts, but started the investigation into WorldCom accounting practices. While I recognize that part of a documentary like this--especially in the post-Fahrenheit 9/11 world--is to tell an interesting and sexy story, many of the allegations have been investigated by congressional committees and the courts. Some of the players have been already been convicted of fraud and sentenced.

I can tell you I was disgusted by the criminal activities of Enron executives and equally put off by the fraud perpetrated by Mr. Ebbers. The unfortunate spin off to all this is that the image of businesses and those who run them gets tarnished, whether they've done anything or not.

Corporations are greeted with general suspicion. Motives and ethics of successful businesspeople are questioned. Governments move to impose more and more regulation. Politicians see innovation and free enterprise as a risk that needs to be managed, rather than a driver of the economy.

Here in Ontario, the MFP computer leasing scandal has essentially brought partnerships between IT firms and the City of Toronto to a halt. The City's IT department rarely speaks to potential vendors or those with new, efficient technology that could save the City money or bring added value to citizens.

On the political side, those who welcome corporate Canada (or even worse corporate America) as potential partners in economic growth and development are questioned in the same cynical way: what kind of kickbacks are they getting? Is this another Haliburton? Who's relative is on which board? How many donations did they receive for their support?

This is not a healthy situation--the fallout from Worldcom, Enron, et al. affects far more than Wall Street. When scandal breaks in the corporate world, it sends shockwaves everywhere. Those shockwaves breed cynicism, distrust of the same people we look to to create jobs, pay taxes and drive the economy.

Those who support and encourage business should be (and usually are) the first people to condemn the actions of greedy, power hungry individuals who don't care who's lives they ruin. Conservatives in Canada should ask the same from Canadian businesses that they offer in their platform--strong ethics and principled management. And this operational standard should apply to everyone, from those who donate money to a campaign to people who sell to and operate within government.

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