Re:Balance -- Jim Peterson

Still Running on Hot Air – Sepp Blatter Is Smoking His Own Fumes

Richard Kimble: “I didn’t kill my wife!”

Deputy Marshall Samuel Gerard: “I don’t care!”

  -- Harrison Ford and Tommy Lee Jones, “The Fugitive,” 1993

 Is there a living soul, outside the shrinking and isolated circle around Sepp Blatter, so deluded as to believe that he improved his chances of escaping prison in either the United States or his native Switzerland, by imposing on indicted bagman Jack Warner a “lifetime ban” from the inner circles of the pervasively corrupt soccer overseer, the Fédération Internationale de Football Association?  

Or put in terms the long-surviving autocrat plainly does not comprehend, why should a prosecutor -- ready to bag as a trophy the head of one of the world’s great houses of corruption -- give any credence to an illusory act of virtue among this sordid gang of thieves?

This latest study in leadership decisions and behavior under the threat of law enforcement will occupy classrooms in business and law schools for years to come. And as I had predicted in May, it has come back to the fore, as I had the pleasure of discussing this week, with a welcoming audience about the anticipated November release by Emerald Publishing of my book, “Count Down: The Past, Present and Uncertain Future of the Big Four Accounting Firms.”

That’s because – like Blatter – back in the winter of 2002, under a storm of criticism over their proximity to the collapse of Enron Corp., the leaders of Arthur Andersen clung both to their offices and to a futile media campaign of proclaimed rectitude – allowing the US Department of Justice to form and hold the fatal perception that Enron’s auditors were a crew of unrepentant recidivists.

The consequences were fatal for the Andersen firm. Down to date, although no management team every willingly gives up its powers or its privileges, other recent examples support some post-Enron recognition that a prosecutor having life-or-death authority will expect credible action, and will react only with anger to sweet but arid talk or stubborn and self-righteous arrogance:

• In July, Toshiba Corp. promptly cleaned house of its president, vice chairman and senior advisor, on the revelation of multi-year accounting irregularities and earnings corrections upwards of 152 billion yen.

• Announced on September 8, United Airlines sacked CEO Jeffrey Smisek and two senior colleagues under the pressure of prosecutors’ inquiries into special flights arranged for the personal convenience of the chairman of the authority regulating Newark Airport.

• On September 23, Martin Winterkorn was cashiered as Volkswagen’s CEO immediately on disclosure of the global-scale manipulation of emission controls on the company’s diesel vehicles, with other senior executives thrown under the wheels and the company’s reputation and brand value reduced to so much scrap.

There is no single script for the crisis management of these or such earlier cases of executive decapitations as Tesco in the UK, Petrobras in Brazil and Olympus in Japan.

But one theme should be reaching through to the singularly obtuse Blatter: he has nothing with which to trade. The currency he had long used to purchase the fealty of his hierarchy of complaisant minions – handsome positions, lavish perks and abundant funds to lubricate the machinery of local and regional influence – is now debased and valueless in the personal calculations of Warner and his fellow criminal targets.

Pointing to his resignation from FIFA back in 2011, Warner perceptively observed that, “there is no such thing as a coincidence” in the timing of FIFA’s current move against him, the same week that Swiss authorities officially placed Blatter under criminal investigation.

Facing extradition to the US and extended incarceration unless persuaded to bargain with his valuable testimony against Blatter, Warner has much more to worry about than FIFA’s meaningless slap – and every incentive to deal.

The image that overlays Warden’s reaction to Blatter, then, is that of Sharon Stone’s posture in the police interrogation scene in Fatal Instinct (1992):  

“There’s no smoking in this building, Miss Tramell.”

“What are you gonna do? Charge me with smoking?”  

 

Thanks for joining this dialog. Please share with friends and colleagues. Comments are welcome, and subscription sign-up is easy and free, both on the Main page. And “Count Down” is available for pre-publication order, directly at the Emerald Bookstore or through Amazon.

 

 

“Count Down” – Now It’s A Matter of Proof

A stack of 240 freshly typeset pages sits on my desk. This week is fully committed to red-pencil proof-reading, for Emerald Publishing’s intended early-November release of “Count Down: The Past, Present and Uncertain Future of the Big Four Accounting Firms”.

The task provides something to prove, in a second sense -- the first being the book itself: my take on the fundamentally threatened state of the current Big Audit model, and the broad scope of the re-engineering required to evolve a sustainable structure for privately-delivered assurance on the financial information issued by the world’s large companies.

There is resonance in reaching this final stage of a book on Big Audit. The first modern independent auditor’s report – William Welch Deloitte's on the half-yearly accounts of the Great Western Railway as of December 31, 1849 – stated, in its entirety, “Audited and approved” (my emphasis). 

From the Latin, probare, to test or to probe – the root for the English, both nouns and verbs.

Across a full range of human endeavor – proofing and proving extend from the editor’s desk to the geometrician’s theorems to the scientist’s hypotheses to the chef’s puddings. Not to offer a guaranty, or a zero-defects promise, but to test or evaluate or assess, in the quest to advance the quality of information, communication and knowledge. 

So it has been for modern auditors, over the span of 165 years -- sampling and testing and evaluating.

In none of these contexts is the process so hubristic as to presume or conclude perfection – a state of grace beyond the performance limits of auditors and proofreaders and the others alike.

Best efforts devoted, flaws will still lurk undetected in these 80,000 words. And I will not be pleased when, post-publication, they pop out into the open. But it will not be for lack of trying.

“Count Down” is now available for pre-publication ordering, direct from the Emerald Bookstore or through Amazon -- as I would be most pleased to have readers here prove for themselves.

 

 

Thanks for being part of this dialog. Please share with friends and colleagues. Comments are welcome, and subscription sign-up is easy and free – both on the Main page.