WorldCom Inc. is the latest Fortune 500 company to implode with the discovery that its executives had committed fraud.
And guess who was doing their books over the past few years? You got it right: Arthur Andersen. I'm told that they resigned the account recently and take no responsibility for this latest debacle.
But if your accounting firm doesn't discover the fraud, then who's supposed to realize that something is very wrong with the books?
I always thought that an audit is supposed to uncover inappropriate accounting or criminal wrongdoing. When is enough enough?
We've been inundated with a number of high-profile companies that either have been cooking their books or have high-placed executive folks who seem quite content to steal shareholders' money from the corporate coffers.
And then we've got some icons, like Martha Stewart, who are embroiled in some sort of wrongdoing but make it worse by denials and actions that dig a deeper hole for themselves. Only time will tell for Ms. Stewart, but she sure looks as if she's up to her neck in big trouble. And that's a very bad thing.
It's ironic that it was not that long ago that Kmart Corp. was worried that Martha Stewart would bolt because of its financial problems. Now in just a couple of months, the roles have been reversed, with Kmart wondering what to do with good old Martha.
For a while, I figured that the pressure from Wall Street is so huge to perform that executives were doing all sorts of shady bookkeeping to keep their jobs and keep their stocks at unrealistic levels. Because of the pressure on their accounting firms, their law firms and even the analysts at the big brokerages on Wall Street, everybody sort of looked the other way and figured that the chickens never would come home to roost. Everybody's discovered that they were wrong.
Now it looks as if the disease is much greater. It's not just the conduct of the executives in the way they run their companies, but the conduct of those executives in their personal lives as well. They must figure that it's OK as long as they don't get caught.
Business is in a sad state these days. Let's hope they catch all the crooks and try mightily to get back in the realm of running business in an honest and truthful manner.
Mr. Crain is chairman of Crain Communications Inc., which publishes Tire Business.