Since the Enron debacle,corporate ethics has been under scrutiny. Calls have beem made for more stringent accounting standards and trasparency but the issue is whether one should focus on the methods or the motives.

There have been several articles on corporate fraud which has put the American firms on the defensive. The head of investment bank Morgan Stanley denied concerns raised about his firm’s business. These remarks brought a rebuke by another CEO indicating a lack of contrition. American Airlines ousted its Chief Executive in April after an employee rebellion over his failure to disclose a multimillion dollar pay package for senior executives approved while the troubled Airlines fought off bankruptcy. Another chief executive was similarly implicated.

After Enron and Worldcorp last year, a lot of companies in the US are under scrutiny for corporate fraud. Considering the fact that America has very stringent accounting standards, it was surprising that the frauds of such magnitude took place in the first place. The focus has been more and more on improving the accounting and disclosure norms and trying to further detect companies who could be suspected of fraud. Reams of written material are available on how Enron perpetrated the fraud over a period of several years. This is a never ending post mortem which is essential but the main focus should be on prevention following the maxim “ Prevention is better than cure”

One of the most important things stated in management circles is about “ Going back to the basics’ In the case of Enron kind of frauds, the fundamental issue is vested interest. How could the auditors even of the reputation of Arther Anderson afford to displease the powers that be at Enron considering that it was also a major client for their corporate consultancy services. Protecting jobs and careers is understandably a natural phenomenon for most people and considering this expected proclivity, special laws should be formed to prevent conflict of interest.

Spiritual leaders often talk of tackling a problem at the cause level rather than at the effect level. This aspect has been completely ignored. In a management book, well known consultant Pramod Batra had stated that while the difference between the highest and the lowest paid executives in Japan was 6 to 7.5 times, in India it was 60 times. An American writer lamented that it should not be more than five times but the reality was drastically different. Greed is a fundamental human trait and unless business leaders voluntarily curb themselves, all other steps are superficial. The chairman of Infosys, Narayan Murthy can easily be the role model and many people attribute Dhirubhai Ambani’s success of establishing equity cult in India to his willingness to share his wealth and reward the small investor handsomely with capital appreciation rather than dividends.

Actually to really address the issue fundamentally, the issue needs profounder probing. The story goes that at the end of his life, Albert Einstein was asked what he would like to become in another life and Einstein jocularly replied that he would like to become a plumber as even he made more money than Einstein did. The story questions whether or not money should be a criteria for judging success at all. If one takes that into account, our world champions in Billiards and Badminton would be deemed unsuccessful vis-à-vis cricketers although merit wise their achievements are equal. A famous American CEO
said that only if the business profile, personal profile and market profile match, that alone could ensure material success and market profile was the hand of god over which no one had control. Therefore there needs to be a fundamental change in perception about money being the right barometer for success. Only when fundamental thinking changes can changes in the external environment be brought about in society.

To conclude, whether the fraud be corporate or political or any other, the fundamental issue is greed and money as a criteria for success. More focus is required on motives, not methods.