For reasons that I hope will become apparent in the coming days, Transparency International is of interest to me. It was therefore good to read Richard Murphy's analysis around a recent piece that appeared in the FT. It now seems TI is extending its definition of corruption to embrace at least some of the activities of the banking community:
Cobus de Swardt told the Financial Times in his first full interview since becoming TI managing director in June that corruption "facilitated by bankers and financial centres" had received too little attention by the global pressure group, but that this was changing.
Founded in 1993, TI was now entering a "second wave" of corruption campaigning focused more on the responsibility of western governments and companies for "perpetuating corruption in poorer parts of the world", he said.
I have long held the view that corruption doesn't exist in isolation and is most certainly not restricted to the activities of errant governments and their officials. For corruption to survive, it needs the active participation of business and those who finance business operations. I have also argued that senior professional leaders bear a burden of responsibility to ensure that standards are not just words but capable of action.
In recent meetings and conversations, I get the impression that professional bodies hold to the view that self regulation remains a viable route to ethical standards maintenance. I don't see how that can remain viable when I continue to read about the shenanigans of the Big Four. But even then the appointment of Sir Mike Rake to oversee PE compliance is little short of incredulous. Again from Richard:
How can a man who watched his own firm nearly go to the wall and pay fines of $456 million because it failed to comply with so many legal and ethical requirements made of it possibly be suited to this role?
Now I don't for one minute think that what I think would make an iota of difference but I have to ask the question: what was the appointment board thinking? Perhaps the citation for his recent AccountancyAge award had something to do with it:
More recently, he led KPMG through the US tax shelter scandal. He described the episode as his own 'personal nightmare' after the US authorities threatened to launch a criminal prosecution that could, potentially, have caused a similar loss in confidence in the firm as that suffered by Andersen.
But Rake was instrumental in making the case that prosecution should be averted and the firm was fined £250m instead. With this, KPMG's reputation was saved, along with thousands of jobs across the world.
Additionally, this act pulled back from an action that could have removed another Big Firm from the audit market, a outcome that could have caused regulatory chaos in financial markets as corporates struggled to find audit services and avoid conflicts of interest.
That makes everything all right then, doesn't it?
In the meantime, I hope that TI will deliver on its promise. There is much to be done.
Technorati Tags: big four, KPMG
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