Quote:
Originally Posted by chezlaw
Well firstly we dont know how often someone smuggling drugs puts them in a 'friends' case.
but the rest rest addresess the precise point and no, that's not my response at all. I dont agree that there's anywhere enough due dilligence and that often some do know what's is going on but it can't be proved. Make key people responsible and a) the level of due dilligence will rise significantly and b) the amount of fraud will go down significantly.
Maybe the difference betwen us is whether you think there's a problem to be addressed in the first place. Maybe you think there is enough due dilligence/honesty. I dont.
I'm sure that I have a lot more experience dealing with allegations of wrongdoing against corporate executives and board members than most people in this thread. I am under no illusions about whether accounting fraud and the like exists.
You can make whatever rules you want for board members. You can impose whatever penalties you want. But it won't change the fundamental facts. Outside board members are not close to full time employees. (In fact, outside directors are not employees at all.) They are not paid like full-time employees. In many cases, they are overseeing the operations and reviewing the financial statements for very complex companies. To a considerable extent, they must rely on management. If management is determined to hide impropriety from the board, it is exceedingly likely that it will succeed.
I'll put it this way. If you, chezlaw, had been an outside director of Enron back in the day, there is no better than a 1 in 1000 chance that you would have detected the major problems that ultimately brought down the company.
This is a long way of saying that management is in a much better position to prevent impropriety than outside board members are. Hanging board members from yardarms is likely to an ineffective tool for preventing fraud. You would do better to focus on penalties for management.