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Richard ThornburghThornburgh Headlines Woodstock
Discussion of Corporate ScandalsRichard Thornburgh
The topic of the evening was "A Crisis of Corporate Governance," and the title itself was a point of discussion at an October 12 event held in the Woodstock Theological Center's library at Georgetown University.
Richard Thornburgh, formerly U.S. attorney general and Pennsylvania governor, suggested that the title should be followed by a question mark.
"And I think that question is yet to be resolved. There's certainly a lot of troublesome things out there, but I don't think I'm quite ready to label what we have in our country today a crisis," said Thornburgh, who was the court-appointed examiner in the WorldCom bankruptcy proceedings. Basically, his role as examiner was to give an account of what went wrong with WorldCom.
"Well, I don't know if it's a crisis," said Thomas Saporito, a psychologist and consultant to corporate boards of directors. But he said the recent ethical failures of corporate America reveal "a whole chapter of weak oversight," and added, "There is, I think, some kind of crisis of leadership."
Another way of posing the subject would be to call it "a crisis in corporate or organization ethics," said William J. Byron, S.J., a business professor at Loyola College of Maryland and former president of The Catholic University of America.
Thornburgh, Saporito, and Byron were featured speakers at the "evening of conversation" sponsored by Woodstock together with Georgetown University Law School. About 40 people, including business people, academics, reporters, and other friends of Woodstock, crowded into the library.
The discussion followed the pattern of a meeting of the Woodstock Business Conference (WBC), a national network of business people who meet together in small groups. The event began with a reading of WBC's mission statement followed by prayer and biblical reflection.
The reading, aptly enough, was from the Gospel of Luke, about the man who stored up treasures for himself. Saporito's remarks would suggest that the Luke was offering a painfully accurate picture of many CEO's.
These days, corporate chiefs seem preoccupied with amassing personal wealth, apart from the good of their organizations, and they speak openly of their "personal exit strategies" for when things go wrong, said Saporito, who is senior vice president of RHR International, a management consulting firm.
He contrasted this attitude with those corporate leaders who arrived on the scene after World War II. "They came into their roles with a much greater sense of a sacred trust, a mantle of responsibility in which they were to build something that was to endure over time," Saporito said.
In the immediate background of the discussion were the accounting scandals associated with now-infamous corporate names like Enron, WorldCom, and Tyco. The speakers said these ethical lapses have presented an opportunity for ethical renewal in the corporate world.
"I think that in the final analysis what we're looking at is the challenge of changing a culture in corporate America. And the opportunity for that change has never been greater, in my view, because I think that what this crisis - question mark - has done is offer the opportunity to empower what I call the good guys in corporate America," said Thornburgh, who is counsel at Kirkpatrick and Lockhart LLP.
The "good guys" include managers who are more committed to financial transparency and willing to get feedback from truly independent boards, as well as outside auditors who are more skeptical of aggressive accounting schemes, among other corporate actors. They are empowered because they can now point to examples of how bad corporate behavior has ended in catastrophe, according to Thornburgh.
For their part, added Saporito, boards of directors will be less likely to rubber-stamp decisions by chief executives, because "they don't want to get caught with the kind of egg on the face that they have been caught with."
However, it became implicit in the discussion that real change is unlikely to happen without some appreciation of core values, some modeling of basic virtues.
Thornburgh said a corporate leader must act as a "steward for the shareholders." Saporito went further to say these leaders must be stewards not just for shareholders but also for other constituencies including employees
And there's got to be courage, said Father Byron, because "you're going to have to ask questions, and you know the acoustics are going to be unpleasant sometimes, for those questions. You've got to do it, and if you do, you're going to be serving the long-term interest, the viability of the firm, and the interest of the shareholders."
Former WBC director Jim L. Nolan moderated the evening of conversation, which was organized by Woodstock senior fellow and business programs director Terry Armstrong. The Woodstock Business Conference is made up of 18 local groups nationwide and is also coordinated by Armstrong.
