The activities of auditor Arthur Andersen in the Enron debacle provide even more fodder for institutional shareholders and others who use their stock holdings to pressure corporate executives to make decisions in line with stockholder interests.
One of the recent signs that corporate governance initiatives are still at the fore came when the AFL-CIO called for Enron’s directors to be held responsible for their roles in the energy trader’s financial collapse.
The AFL-CIO, a federation of US trade unions, said the Enron directors didn’t properly examine the company’s management and accounts.
Also among the topics under attack by corporate governance proponents are:
- why Enron’s audit committee didn’t sound the alarm about the company’s financial problems. The committee said it was satisfied with Enron’s financial statements, adding that it had reviewed accounting policies, reporting practices and fees paid to the auditor,
- why a member of Enron’s audit committee – long considered the province of independent directors – apparently had improper Enron ties. Lord Wakeham, a former UK secretary of state for energy, sat on the audit committee despite being a paid consultant for Enron.
- why the audit committee included members based in the US, UK, Brazil, and Hong Kong – which may have prevented the recommended more frequent informal sessions.