Board responsibility

While the weekly “perp walks” of telecom executives have become comedic fodder for late-night talk show hosts and provide a certain amount of mental satisfaction for their employees who have been laid off, perhaps the industry would be better served if we took some time to step back and assess who is ultimately responsible for the current accounting mess.

In the case of WorldCom, for instance, do the arrests of Scott Sullivan and David Myers really get to the bottom of the alleged fraud? Is it possible that two executives could have pulled this off with not one person in the chain of command knowing about it? More important, is it possible that the board of directors, which nodded their collective heads in agreement when the numbers were presented, would skate around the whole issue with impunity?

Sweeping out “the bad guys” is certainly one way to reinstall trust in the investing public. It makes for great TV, too. But ultimately, those putting their dollars at risk must expect representation from boards of directors that aren’t afraid to challenge the collegial atmosphere that led to the current scandals. Ultimately, the responsibility is theirs.