Aside from blockbuster deals and major product/service announcements, big stories in telecom and tech sectors tend to be about rules-the ones made and re-made by regulators, lawmakers and the courts. It’s about who wins, who loses and folks just trying to get a fair advantage over their competitors.
But ever since the late ’90s tech bust and subsequent revelations of corruption throughout the business food chain-from corporate board rooms to Wall Street-it seems no proposed rule or piece of legislation could be as important as the one now seeking to restore investor confidence by keeping business and the financial community honest. That would be the corporate governance bill penned by Sen. Paul Sarbanes (D-Md.) and Rep. Michael Oxley (R-Ohio).
Sarbanes-Oxley doubles as tech policy, the best out there. This is especially true for national mobile-phone carriers with huge capital obligations. In the current environment, how important is a Federal Communications Commission rule or a congressional mandate for a company if investors do not trust its management, its accountants and Wall Street analysts who are supposed to objectively size it up? Forget about competitive; a firm that loses public trust is as good as dead. We’ve entered zero tolerance in Corporate America.
It has been a hard pill to swallow, but Sarbanes-Oxley appears to be changing corporate culture in ways that put a premium on responsibility and accountability. There is simply too much downside not to be on the up-and-up. Things have to add up. Now everyone’s watching, and no one is too big to fail. Not anymore. WorldCom Corp. got lucky.
With the democratization of the investor class, corporate governance is an issue of the masses affecting individuals in every congressional district on the map. Lawmakers, themselves vested in the market, are not afraid to go after the high and mighty. President Bush, whose re-election chances partly turn on whether the bulls return for real, has been forced to carry a big stick.
Bush is criticized for not having a visionary tech policy, as if a silver bullet exists to correct unprecedented speculation, graft and global uncertainty in the 9/11 aftermath. The administration’s lack of an official broadband plan is not the big to-do some suggest. Far worse was Bush’s sticking too long with former Securities and Exchange Commission Chairman Harvey Pitt. The error was not fatal. Pitt’s successor, William Donaldson, seemingly has the SEC headed in the right direction.
The government has saved industry from itself. For now. What happens after New York Attorney General Eliot Spitzer moves into the governor’s mansion in Albany is anybody’s guess.
