With the election date announced the political parties will likely be holding out their begging bowls to corporate New
Zealand to help fund their election campaigns. But global business has recently been told to either clean up their act
or everybody is in serious trouble. Maree Howard writes.
Last week Henry J. Paulson, the chief executive of investment bank Goldman Sachs, made a compelling and unusual speech
to the National Press Club when he called for corporate governance reforms.
Goldman Sachs has long been recognised as the epitome of discretion in investment banking circles.
"In my lifetime, business has never been under such scrutiny. To be blunt, much of it is deserved," Paulson said.
Corporate scandals, along with the extravagant payoffs to chief executives, have triggered a sense of alarm across the
world triggered by such spectacular falls as Enron and Tyco.
These, and many others just coming under the spotlight, have rattled global investors to the point where the integrity
of financial markets and public confidence in them, has been shattered.
Paulson said; "If the outcome of all that we are going through, all the soul-searching and debate is business as usual,
then we will have missed an enormous opportunity."
Clearly, Henry Paulson has delivered a stern warning to major global companies who are under such a cloud that they
threaten global financial markets.
It was a warning so compelling and unusual that it simply must be heeded.
Even in New Zealand the waning of public trust in corporate New Zealand has been matched by the waxing of declamations
of high ethical standards from quarters used to issuing strident calls for such things as welfare reforms.
I recall a New Zealand Herald review of the corporate world in July 1996 by Dr Greg Newbold of Canterbury University.
In part, Dr Newbold wrote:
" Instead of greater policing, which they urge for common crimes such as burglary and robbery, they want less policing
of the business elite. And while they advocate heavy penalties for crimes in the streets, they want much lighter ones
for crimes in the suites."
"Their rationale is less than compelling. Business crime is extremely dangerous and it has never been effectively
regulated by the business community."
"Such crime causes people to lose their homes, their livelihoods, their children's education, often their marriages and
even their sanity. It sometimes drives people to suicide."
"Financial ruin destroys not just individuals by whole communities as well. So why should the criminal in the suit be
treated any differently from the one in the leather jacket?"
"Of all offenders, it is the white-collar criminal who is the most likely to be logical in his actions. As a rationale
man it is he who will weigh the possible profits against the possible losses before he acts. It is he who is most likely
to be deterred from crime when the probable penalties outweigh the expected profits."
One of the major issues of this election is likely to be about law and order in the streets but, as Dr Newbold wrote,
why not also about law and order in the suites?
So as all you aspiring politicians and political parties hold out your begging bowls for donations from the corporate
world, remember, a good politician is never one who has been bought.