Rebel shareholders at Eurotunnel clinched enough support to oust those who they hold responsible for taking the Channel Tunnel operator to the edge of collapse. The revolt was significant for a number of reasons, not least that it marked the first time that small shareholders have succeeded in toppling management at a French company. But chiefly it demonstrated that the intense spotlight that has shone lately on corporate executives – and financial managers in particular – shows no signs of dimming.
As the Eurotunnel crisis unfolded, across the Atlantic the fallout from the corporate excesses of the late 1990s continued. Andy Fastow and Scott Sullivan, the CFOs of Enron and WorldCom respectively, are spending more time with prosecutors than profit and loss accounts these days. Fastow is currently talking to investigators about what went on at the energy trader, and has already plea-bargained his way to a shorter jail sentence in return for spilling the beans. This could be in jeopardy, however, following his wife’s withdrawal of her own guilty plea. Sullivan, meanwhile, has agreed to testify against his former chief executive Bernie Ebbers as part of a plea bargain of his own. What price a rerun of the Scott & Bernie show now?
Then there’s Tyco. The mistrial, declared last Friday in the case of the company’s former chief executive Dennis Kozlowski and former chief financial officer Mark Swartz, won them few friends and did nothing for the image of US regulators and prosecutors. It was an extremely unsatisfactory outcome to a trial of executives accused of cheating $600m out of the corporation.
Domestically, and more prosaically, Shell CFO Judy Boynton is feeling the heat in the wake of the erroneous booking that resulted in the company cutting 3.9 billion barrels, or 20%, from the reserves it claimed.
It all makes for uncomfortable reading – though that is nothing compared to the discomfort these and other executives are feeling.
But there must be no let-up in policing corporate behaviour. The cases above are all very different. Some involve genuine error, others deliberate fraud. And while the Tyco mistrial served no one’s interests, it must not deter prosecution of white-collar crime elsewhere. Eurotunnel executives may well feel aggrieved at their ousting, but again, this should not detract from the need to be accountable to shareholders – whatever their size.
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