What do Enron, Healthsouth, Adelphia and Tyco have in common? All were found guilty of fraudulent activities. And, each were misled by CEOs and even CFOs. The names Kenneth Lay and Richard Skilling of Enron (accounting and tax fraud), Richard Scrushy of HealthSouth (accounting fraud), John and Tim Rigas of Adelphia (fraud, corruption and theft) and Dennis Kozlowski and Mark Switz of Tyco (massive theft) will not be remembered in a good light. The Enron scandal even brought down one of the largest accounting firms, Arthur Andersen.
Because of their activities, the SEC passed a rule stating that the Board of Directors’ Audit Committee must be given greater authority and independence. In short, the Audit Committee must be independent of the Executive Committee and cannot include the President or Treasurer. It also must:
– Not include anyone employed by the organization or the audit firm
– Have at least one “ financial expert ” who is familiar with the audit process
– Avoid conflicts of interest.
In the federal government, the Inspector General’s office imbedded in each of the departments of the Executive branch serves like an auditor. The equivalent Board oversight is the Congress of the United States, not the president. It is a very important role that keeps America running like a democracy and not an autocracy. When this oversight is compromised, America’s democracy is diminished.
I raise this now as the president of the United States seems to be at war with the Inspector Generals in the Executive branch. Friday night, the president sent a letter that he was firing Michael Atkinson who did his job and reported to Congress the veracity of a whistleblower complaint. To Atkinson’s credit, he publicly defended his role and encouraged whistleblowers to still come forward.
This week, the Glenn Fine, the appointed IG overseeing the $2.2 trillion coronavirus stimulus fund, was removed and will be replaced by a Trump appointee. Fine was well regarded in this role coming out of the Department of Defense. Something seems fishy here.
If that were not enough, the president was critical of a US Department of Health and Human Services IG report led by Christi Grimm. The report was critical of the hospital preparedness for the coronavirus, which is not a surprise, since hospitals and governors are begging for help.
What does all of this mean? Why is the president at war with the Inspector General’s office? Is he hiding something? Are they saying things that run counter to his own storytelling which is well-known to be less than truthful? If this were a publicly traded company, these actions would raise a red flag with the Audit Committee. They should do the same with Congressional oversight.
In short, the US is not a kingdom. It is not an autocracy. The president has never reported to anyone before his swearing in, except for his father. He is highly accustomed to not being questioned. In fact, he does not like being questioned, which is apparent on a daily basis. Yet, he must answer to Congress. I urge Congress to do their job. They must represent Americans, not a political party.