January 22, 2002
Who Can You Trust? ...
Now, let's see. The stockholders trusted their investment advisors. The employees trusted their employers. And some members of the Board of Directors trusted the big-ticket third-party auditors. Frankly, most of the critical players were just plain untrustworthy.
It sounds like a formulaic suspense thriller, but unfortunately, I'm talking about Enron.
What's become clear in recent days is that Enron's auditors, the accounting firm of Arthur Andersen, were willing and active participants in some very irresponsible actions prior to Enron's sudden public collapse and the largest business bankruptcy in American history. Besides not blowing any whistles, the accounting firm has even admitted to destroying corporate documents.
So while more keeps being revealed every day about the Enron situation, I was amazed to learn that Arthur Andersen has already begun a campaign to regain everyone's trust.
First out of the chute -- they're running ads in major newspapers.
Ads?
Someone needs to tell these fellows this isn't about "selling" trustworthiness. It's about being trustworthy.
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Now, no business can operate without trust, but what's particularly difficult here is that Andersen is supposed to be in the business of trust.
With 85,000 employees worldwide, Arthur Andersen is one of the Big Five accounting firms, and from a corporate client standpoint, just being able to retain such a firm connotes that you're reaching a certain level of success. While their services are expensive, this association creates value in its own right.
And for corporations of every size, earning a "favorable opinion" regarding their accounting practices serves as a bellwether that all is in order. Management might be tempted to skew the financial picture to the Board of Directors, but an esteemed and trustworthy third-party accounting firm won't.
At least, that's how it's supposed to work.
And it has, up until now.
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You know, there's a whole specialty in Public Relations called "crisis containment," and you can bet that piles of money is being spent by Arthur Andersen at this very moment in just this area. There's no doubt that these newspaper ads are a part of a larger and calculated strategy to shore up Andersen's rapidly fraying reputation.
But why are they spending money on ads when people have lost their jobs and much of the value in their retirement accounts?
Any organization can have rogue employees, and an accounting firm can even have irresponsible partners. What's important is what Arthur Andersen does now. How will they attempt to make up for the damage they have caused? How will they put new controls in to ensure such behavior will never happen again.
And why not just give the media a press release like they always have in the past?
I have to say that there's still another reason to stop running these self-serving open letters in expensive advertising space. Forgive me, but for you fans of "Leave It To Beaver," they have the unmistakable ring of Eddie Haskell saying "Good morning, Mrs. Cleaver."
I'm Moira Gunn. This is Five Minutes.
