Now FDs sit in firing line

Deservedly, the spotlight has been shone on boardrooms across the world in the wake of the slew of corporate scandals that has cost so many their hard-earned reputations.

First it was the auditors that were moved into the firing line. Now the snipers have retrained their sights. And this time they are pointing them directly at the finance director.

Some, on the face of it, appear more deserving of inquiries than others.

Enron’s former CFO Andrew Fastow handed himself over to the FBI last week to be charged with fraud, money-laundering and conspiracy following the energy company’s multi-billion dollar collapse. The move surprised no one.

Then within a matter of hours Kenneth Lonchar CFO of US software group Veritas had resigned after it was revealed he had lied on his CV, claiming a non-existent MBA from Stanford University. Again, hard to argue.

But the real FD story of the week – and the most troubling – was the non-appointment of Ric Piper at Trinity Mirror.

Piper’s tale was very different – the withdrawal of his job offer followed a profit warning at his former employer, PFI specialist WS Atkins. As a result the two parties agreed to go their separate ways less than 24 hours before he was due to join.

It was very hard not to sympathise with Piper. But the affair highlights the extent of the current credibility crisis: no company wants to inherit a problem – whether, thanks to the profit warning in this case, it’s real or perceived.

And that’s the crux of this problem. When does an industry issue become a company issue? And when does a company issue become an individual problem?

Unless Trinity Mirror knows something that the rest of us don’t, Piper lost his job because his employer issued a profit warning. His employer issued a profit warning because of market conditions – primarily in its US business and its non-public sector business in the UK.

Now arguably the company’s management could have handled the environment better (certainly a doubling of forecast debt to £120m should not be underestimated) but don’t forget its peers are among the hundreds of companies that have also suffered in recent months.

At times like these FDs should expect to be asked tough questions. But scapegoating them for wider problems will help no one.

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