Reigning in the Loose Cannons  

How to End Major, Corporate Mismanagement

Que:    And that is . . .   

Rev. Coté:    With a corporation ( as most of them are presently structured)  there is no guiding entity.   There is no outside overseers.   Where the corporate founder or his heirs are still in the picture, there is some oversight, but that oversight  is certainly not independent.

Stockholders are the closest thing to an overseer, but the average stockholder has nothing to do with running the company.   Their relationship is limited to being a money lender.   

Que:    So if you ask a stockholder what his/her interest is in the company, he/she will say "money?" 

Rev. Coté:    Yes.   With rare exceptions, dividends and higher stock prices are their only focus.

Que:    Then the corporate executives are free to do anything they choose to do.   

Rev. Coté:    Your question has both a "yes" and a "no" answer.    On the "no" side, corporate leaders have to focus on money and produce financial returns that shows up in the next quarterly report.   You could say that they are slave to money.   The "bottom line"  rules,    It's produce a profit or get fired.

Que:    And on the "yes" side"    

Rev. Coté:    Corporate executives run the companies for the stockholders.   So other than to conform to the money-interests and to avoid violating the letter of the law,  there are no controls over what corporate leaders can do.   

Human nature is such that very few people are able to handle positions of great power without getting lost in the power they wield.   As a result, all too frequently, corporate executives are engaged in unethical and unscrupulous activities with the sole intent of increasing company profits and/or ripping off as much money as they can before getting fired.   How many times have you heard about employees, customers and/or the environment being sacrificed for the sake of higher profits?  

Que:    Way too many.   Your answer reminds me of the famous quote form Lord Acton, "Power corrupts and absolute power corrupts absolutely."  ***    

Que:    Am I correct is saying that in the Enron Scandal, Kenneth Lay, Jeffery Skilling and several other Enron executives had no one overseeing their activities? 

Rev. Coté:    That's correct.   They only had each other, and in the name of profits, they each went along with the other's deception until it got way out of hand.     

Que:    What about the Arthur Anderson Accounting firm?   Weren't they the overseers?   

Rev. Coté:    That was the public impression being given at the time,  but they were being paid millions of dollars.   They had a huge conflict of interest.   

Que:     So they were in on the scam

Rev. Coté:    Yes.   

Rev. Coté:    The 22,000 employees, the thousands of stockholders and the tax payers.

Que:    And you are telling me that if corporations were answerable of an overseeing foundation that major scandals like the Enron fiasco would be avoided.

Rev. Coté:    Yes!   A well-run overseeing foundation would catch the corruption before in reached a crisis intensity.    

Que:    "Well-run" sounds like a weasel clause in your proposal.    Won't the foundations simply play along with whatever the corporate leaders want?

Rev. Coté:    No.   The Foundations will be set up with some clearly written bylaws that will, among other things, require independent audits of the company's financial records.    

Que:   So What is your  "bottom line?"

Rev. Coté:      Most,  if not all, of the major corporate mismanagement fiascoes that have cost society dearly would not occur if the corporate leaders had to answer to a parent, non-profit foundation.   

Rev. Coté:    Now that you mention it, the parent analogy works well here.   One could think of the relationship as one of guidance but not domination.    To continue your analogy, perhaps as a parent might guide a seventeen year old son or daughter.  

Rev. Coté:    There really aren't any bad guys, '  but for the moment, we'll let your metaphor stand.   Think of it this way:  Under the watchful eye of their overseeing Foundation,  corporate executives would never be allowed to steal the money out of the employees pension funds.  Corporate executives could never get away with paying themselves multi-millions of dollars while the company crashed.   Scandals like the multi-billion dollar Enron fiasco could never happen.

Rev. Coté:    The  corporate executives who choose to follow our suggestions are going to be the leaders in The New Corporate World that rises out of the already in process environmental disasters and out of the major, social, political, economic, religious and environmental transformations that are also in process right now.