It is incredible that no-one other than now-departed SEC chairman Harvey Pitt knew of William Webster’s role as audit committee chairman of US Technologies.
It is even more incredible that Pitt chose not to inform the other members of the SEC that Webster, who was still head of the new US accounting oversight board as Accountancy Age went to press, was chairman of the audit committee during a period that is now under investigation.
But it is astounding that the other members of the SEC were not able to find this out for themselves.
In the current climate, any appointment had to be not only cleaner than clean, it had to be seen to be so.
Did Webster really leave crucial information off his application form?
Didn’t the SEC ask whether there was anything material it needed to know before making its appointment?
This sorry affair, coming at such a crucial time, will not only have further dented investors’ confidence in the US markets, but will have put the global agenda of corporate governance reform back several paces.
While we wait to see who takes over as the US financial regulator – and let’s face it, not many credible people will be queuing up for the post – there will still be a huge amount of uncertainty surrounding the implementation of the Sarbanes-Oxley Act.
There was a feeling that Pitt was prepared to listen, if only with one ear, to European concerns. But now no-one knows what sort of animal will take over the helm.
Pitt’s reign at the SEC was not a glorious one – there were always concerns that he was too close to the large accountancy firms and that his position was therefore compromised.
His sidekick, SEC chief accountant Robert Herdman, who has himself now resigned, was also very closely allied to one of the firms. But that in itself was no grounds for complaint – look how the IASB’s Sir David Tweedie has ruffled the feathers of the firms despite being an alumni of KPMG.
It will be a fine balancing act to appoint an independent and yet experienced regulator.
One feels that the US authorities have just one more chance left to get it right.
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