Magazine article Workforce Management

5 Questions: ACCOUNTING FOR INTEGRITY

Magazine article Workforce Management

5 Questions: ACCOUNTING FOR INTEGRITY

Article excerpt

BEN HEINEMAN JR., former general counsel, General Electric

Workforce Mtnigtmint: How do you see the downfall of Bear Stearns and major losses at other Wall Street firms as an integrity issue?

Ben Heineman: We haven't had detailed public postmortems yet at Bear Stearns and other major financial service firms. We do know that it is not massive fraud led at the top, like Enron or Worldcom. It appears that the discipline of risk management was overridden by greed and bad judgment. Risk management and financial discipline are a form of integrity. They are a critical check on the forces of greed. These recent problems are, in some sense, worse than Enron and Worldcom, because all the systems failed-finance, risk, accounting, legal, operational management, senior management, the board.

WM: Why is integrity vital?

Heineman: The pressure for people to make the financial numbers in the short term can lead to corruption. What we see in all these scandals is the failure to fuse performance and integrity. These two principals should be the twin aims of contemporary corporations and, indeed, global capitalism.

WMs Didn't the Sarbanes-Oxley Act tackle ethics?

Heiman: The governance focus over the last five or six years has really been about boards of directors, because the CEOs in some companies were corrupt. But to establish high integrity throughout a company, the boards can't do it. It has to be driven by the CEO and top business leadership.

WM: How do you make this happen? …

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