By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – While all eyes have justly been on Iraq, more investigations are opening into corporate accounting fraud. The Justice Department is serious and most involved agree this is not window dressing - they mean business. For KERA Marketplace Midday, I'm Maxine Shapiro.
As badly as I want the war to end, it almost equals my desire to see an end to corporate scandals. Is it because I'm just tired of bad news, and unscrupulous executives making the headlines? Yet, would I rather see all the misdeeds swept back under the rug? So we must continue to forge ahead and expose the lies that are costing thousands their jobs, and forcing millions of people to altar their financial futures.
In the not too distant past, the Securities and Exchange Commission took sole responsibility for investigating accounting frauds. But since the first germ known as Enron was detected, it was clear the SEC was understaffed and under funded to take on what was looking like an epidemic.
Today's New York Times illustrates how the FBI and the Justice Department, along with the SEC, are now initiating the search for the facts and figures in cases where fraud may exist. Take HealthSouth, as an example. The nation's largest chain of rehabilitation clinics and hospitals is accused of inflating profits by $2.5 billion. Worse, they might have cheated Medicare out of tens of millions of dollars or more. HealthSouth is now trying to save themselves from bankruptcy by laying off workers and grounding 12 corporate airplanes. And thanks to the Sarbanes-Oxley Bill, those found guilty will serve more time in prison, which is probably why a third Financial Officer of the company - pleaded guilty. In total, nine executives have been charged.
The Times article has defense attorneys warning this federal prosecution of executives might discourage qualified people from taking on these jobs. "Why would someone want to be a director and face all this potential exposure?" asks one baffled lawyer. Hey, I don't care about their personal life. Just give me the correct figures and you can go about your daily lives - stress-free. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.
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