Corporate Greed- A review of recent events and the need for Corporate Ethics (Part III of III)

Corporate Greed- A review of recent events and the need for Corporate Ethics (Part III of III)

At Fannie Mae, the career of well-respected CEO Franklin Raines came to an abrupt end when the Office of Federal Housing Enterprise Oversight forced a very resistant Fannie Mae Board of Directors to oust Raines. Raines, Fannie Mae's Board, and his supporters insisted that he wasn't culpable for the misuse of obscure accounting standards. But his friend thoughts were rejected and his testimony was not accepted as the full truth by the SEC, the U. S. Congress, or the public.

Raines rose from being a poor kid from Seattle to graduate from Harvard, earned a Rhodes Scholarship, and becoming White House Budget Director, before being tapped to be the CEO of Fannie Mae. Now Raines' lucrative severance package ("early retirement") has become a new issue of contention. There have been well documented cases of massive fraud, mismanagement, and accounting mistakes at Fannie Mae during Raines' tenure as CEO.

While Raines has never been convicted of perpetrating or approving the fraudulent accounting, there was a major uproar over his severance package when the news broke that he had apparently been negligent in overseeing accounting functions at Fannie Mae. Yet somehow amazingly, the then fallen and sacked Franklin Raines (after the US Government took over and bailed out Fannie Mae) became a "financial advisor" to then US Presidential Candidate, US Senator Barrack H. Obama, now US President Obama.

In this post-Enron, post-WorldCom, and post-Tyco world, the rules are being enforced on the playing fields of corporate America. Even one of the largest and most profitable insurance companies in the world, American International Group Inc. (AIG), has had a serious bout with both the Securities & Exchange Commission and the U. S. Justice Department, starting back several years ago.

The financial problems and fraud at AIG really began in 2001 (or maybe even earlier), but took three years for SEC securities regulators to catch it. In 2004, the SEC informed AIG that it was exploring filing securities fraud charges against it for their non arms length relationship with PNC Financial Services Group Inc. and what the SEC call a pattern of helping PNC hide their underperforming loans, starting clear back in at least 2001.

The full impact of the seeds of greed sown earlier this decade and subsequent misdeeds have resulted in the major disaster at AIG, which has now been unveiled in 2008 and 2009. Now, the failing of AIG has resulted in the Federal Government Bailout is costing American's Billions and Billions of Taxpayer Dollars.
The list of the indicted and fallen corporate leaders is long and growing. In August of 2003 it was reported that story of the misdeeds of Adlephia's John Rigas, and two of his sons failed came to light. They were indicted and convicted of defrauding Adlephia Communications Corp. of $2.5 billion.

One of the lessons that these leaders should have learned and lived was basic ethics or morals. The Sarbanes-Oxley Act of 2002 [H. R. 3763], passed by the United States Congress on January 23, 2003 and immediately signed into law by President George W. Bush.

From a basic moral, maybe even a religious perspective, the Sarbanes-Oxley Act would not have been necessary if corporate executives had just lived the "Ten Commandments," or at least just three of them: "Thou shalt not steal," "Thou shalt not covet," and "Thou shalt not bear false witness."
See Part I and Part II of this three part article on Corporate Greed.

Copyright 2006-2010 ©Howard Edward Haller, Ph.D.

Howard Edward Haller, Ph.D.
Chief Enlightenment Officer
The Leadership Success Institute
www.TheLeadershipSuccessInstitute.com
www.LeadershipandAdversity.com
email: HowardEdwardHallerPhD@gmail.com