With the collapse of reputable big companies like the Enron and WorldCom, the way companies are bieng run has started to get microscopic scrutiny. Both Enron and WorldCom, giants in their respective industries of energy and telecommunications have declared bankrupcy.
The CEO of WorldCom has been given 25 years imprisonment for his role in the largest corporate bankrupcy in US history. The investors have lost millions of dollars and the ground has shaken under their feet. Several officers held responsible for this debacle have been sent to prison. Once more tax payers and the public will have to pay to keep them there.
How did this happen in the most business-friendly and free society? These questions have already been raised, laws and regluations put into place to protect investors and plug loopholes in company management. Everyone talks of good governance these days.
Investors have a responsibility to find out about the companies they invest in and not become complacent in their scrutiny of how the companies are run. From time to time smart crooks will appear to manipulate the system and take advantage of unsuspecting employees and investors. If employees and investors remain vigilant, this challenge can be met.
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