Frauds, Fakes and Sycophants. Protect Your Company From These Now. By Andrew J. Birol, President, Birol Growth Consulting, Inc.
In the last few weeks, we have been sent reeling from the following local and national newspaper headlines and media broadcasts.
- ENRON and Arthur Andersen apparently cooperate in hiding the nation’s largest business bankruptcy duping investors and employees alike. Accountants, consultants and executives fail to blow the whistle while racking up millions of fees and stock gains. Meanwhile their stockholders lose everything.
- LTV Steel squanders hundreds of millions of dollars in government bailouts on peripheral business investments while the City of Cleveland pours more millions into paving miles of streets around the company’s factories. Executives, financiers and advisors spend or earn millions while the core business hemorrhages cash.
- Lehman Brothers’ Cleveland executive bilks his decade-old client base by exploiting weak management controls and mailing client statements to P.O. boxes rather than traceable home addresses. This financial planner, his firm and their third-party administrators apparently did not have or enforce everyday controls designed to prevent such rogue actions.
What do these events all have in common? In each situation, the same people who stood to gain wealth were charged with safeguarding it. Their breach caused millions of dollars to be squandered and thousands of people to be hurt. While this happens all the time, a recession seems to be particularly effective at exposing frauds, fakes and sycophants. As margins shrink and mistakes are more costly, temptation can be too great. In fact, the old saying, "Temptation is a bigger threat than theft" is truer than ever.
These days it seems that many professionals are discovering how hard it can really be to provide real value to their customers and markets and are resorting to financial shenanigans, short cuts and empty promises to maintain their formerly secure business status.
What can you do as a business owner to avoid being hoodwinked or otherwise cheated? One easy answer is to assure that those professional service providers you are counting on for objectivity stay independent, unbiased and within their best and highest use. While most professional service providers are honest, ethical and moral, why risk your firm’s future on the few who are not. Here is how to reduce your risk.
For example, do not turn to attorneys for financial advice, consultants for financial controls or accountants for consulting advice or financial services. The very concept of best and highest use lends itself to integrity and financial autonomy. So when turning to outside advisors, don’t follow in the footsteps of ENRON employees, LTVs creditors or Lehman Brothers’ customers. Assure your advisors are staying within their distinctive best and highest uses and are not responsible for policing their own activities. To walk my own talk, click here to read an article I wrote on what to expect from your consultant.
Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:
© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080 , by email at email@example.com, or on the web at www.andybirol.com.