The International Economic Crisis and the Failure of Internal Corporate Controls: Has the Time Arrived for New Corporate Concepts & Private Regulatory Bounty Hunters

Mankind and states are generally change-adverse.  Yet when financial and other crises occur, there is a widespread response that action has to be taken.  The course of conduct selected may be impulsive and not properly address the underlying problems, but passivity or inaction under such circumstances can have huge political as well as concrete costs.

A great deal has been written about the causes of the global financial crisis.  Its magnitude is evidence that there are plenty of individuals, governmental regulators, and political officials to whom blame can be assigned.  Fortunately, it appears that a global economic meltdown has been averted – but many of the underlying problems inflicting mankind – crime, disease, greed, immorality, intolerance and violence (taking a multitude of forms) remain.

Most people will give more thought to their sustaining minor injuries after falling down a flight of stairs, than they will about the problems of the abuse of governmental power, extreme poverty, seemingly mindless violence and other human induced problems that one can read about and ignore.

Nonetheless, a great many people will find satisfaction in learning that two former Vivendi executives will be standing trial in Paris for stock manipulation dating back 8 years, that McKinsey partner Raj Rajaratnam was arrested and charged (granted not convicted) for securities fraud, and that the regulatory and prosecutorial authorities are proceeding with their investigation of the Galleon inside trading matter, even though those who may have lost their life savings or jobs as a result are seldom made whole.

It is too ambitious to seek to solve the world’s problems.  Many foundations are engaged in commendable efforts, which people would not be willing to fund their governments to accomplish.  There are some things politicians can change and presently there is considerable interest in creating mechanisms that will prevent the financial crisis that occurred last year.  I will focus on the commercial and regulatory situation in the U.S. since it is a topic with which I have some degree of familiarity.

Making the Fight Against Financial Crime More Proactive

Should (Some) Banks & Insurance Companies Be Transformed into Public Utilities?

Bank of England Governor Mervyn Kings should be applauded for raising the proposition that those bank and presumably insurance companies that are “too big to fail” should be converted into public utilities.  His thinking reflects the belief that it is fanciful to expect that new institutions, new laws, new regulations combined with enhanced regulatory enforcement […]

Should G-20 Members Join the Fight Against International Commercial Bribery?

A critically important Briefing Paper “The links between tax evasion and corruption: how the G20 should tackle illicit financial flows” (September 2009) by Global Witness, Tax Justice Network, Christian Aid, and Global Financial Integrity, warns that capital flight through money laundering represents the principal mechanisms by which transnational corporations engage in tax avoidance and facilitate […]

Crimes [May Have Been] Committed

The late President Richard Nixon popularized the sentence “Mistakes were made,” when he referred to the Watergate Affair.  Most English teachers attempt to encourage their students to avoid the use of the passive voice since it often hides more than it illuminates.  Citizens are entitled to know who, what, when, how, and why, when their […]

Goldman Sachs’ Code and the Elephant in the Room

The recent allegations of trade secret theft and trafficking against former Goldman Sachs programmer Sergey Aleynikov raise important questions of corporate security and policy to handle a new generation of attempted economic disruption. According to a deposition given by FBI Agent Michael McSwain, Aleynikov, a former programmer at Goldman Sachs, is purported to have uploaded […]

How the FCC Can Make Itself Popular

In the not too distant future, the land-line telephone will go the way of the rotary dial telephone as well as the manual typewriter.  There is no doubt, cell phones have changed the way we live, but not always for the better. 10+ years ago, if someone walking down the street were talking to themselves, […]

Russian Machinations and the WTO

Russian Prime Minister Putin has apparently conditioned Russia’s entry into the World Trade Organization on the approval of its participation in a trading bloc with Belarus and Kazakhstan.  Frankly, I have never fully understood why Russia would ever want to join the WTO.  The Russian economy is largely dependent on the export of raw materials, […]

Can Consumers Realistically Expect Their Governments to Protect their Interests?

Some news organizations are reporting that the Obama administration is studying the creation of a new governmental body that would be empowered to protect consumers of various financial products as well as have authority in other areas.[1]  The White House is planning to increase the Consumer Product Safety Commission’s budget by 71% (see generally the […]

A Question of Identity

Nobel Laureate Amartya Sen, in his insightful book “Identity and Violence: The Illusion of Destiny,” grapples with the complexity of how individuals define themselves (although Professor Sen seems overly eager at undercutting the generalizations used by the late Samuel Huntington in his “Clash of Civilizations,” which as a conceptual framework can be helpful).  Indeed, Prag […]