VIEW FROM THE GROUND FLOOR: It's just over a year since the Enron debacle shocked investors and was the catalyst for further punishment in world equity markets. Six months later WorldCom's bankruptcy followed, with a wave of anger at the regulators which has yet to abate.
Whereas there's plenty of ire directed at the board members of both companies (and the many others where corporate governance was found to be lax if not non-existent), more people are asking why nobody blew the whistle before the problems took hold.
The auditors are taking a good deal of flak with Andersen's being the most high-profile casualty; more recently, the regulators are coming under more scrutiny and not everyone is happy with what they see.
As I mentioned a few weeks ago, the US Securities and Exchange Commission (SEC), set up in 1934 to monitor the market and ensure its efficiency and fairness, has had internal problems culminating in the resignation of its chairman, Mr Harvey Pitt, as well as other top officials.
The general feeling is that pressure is brought to bear on the SEC by powerful Wall Street interests (Pitt had worked on the Street as has his successor, Mr William Donaldson, nominated this week by President George W Bush) while the Commission has continuous budgetary problems making it difficult to implement some strategies.
The reason the SEC is less effective than it should be is that no Wall Street firm - or indeed any global corporation - wants to be regulated at all. We hear it all the time from professional bodies - "self-regulation works best". Which is complete nonsense.
There is now a belief that the SEC is too corporate and accountancy-friendly while also lacking the resources to begin investigations into suspect activities.
Around 15,000 filings by corporations are made annually but the finance division did not bother to check any for years and even now only has the manpower to look in any detail at major firms.
Meanwhile, Wall Street firms will spend millions in lobbying SEC members on a range of issues to make their lives easier but will not spend a dime on regulation if they can help it.
Doing things by the book can be expensive and spending money on doing things the right way rather than on generating more profit isn't on most minds.
The SEC isn't the only body drawing criticism - in fact the regulator is examining the area of the ratings agencies and how they didn't spot problems sooner in firms to whom they allocated investment grade ratings, including Enron and WorldCom. Of course the difficulty for the ratings agencies, just like the difficulty for the auditors, is that the companies pay to obtain a rating.
Complaints about the agencies are almost the opposite of what they were at the time of Enron and WorldCom. Investors are protesting that the agencies are reacting too quickly in cutting the ratings that they've given to corporate paper thus causing them to decline in value.
The companies themselves are angry because a lower rating means borrowing money the next time is more difficult and more expensive and, if they've been downgraded because the agencies have concerns about their businesses, then it's just as likely that a cut in the rating will lead to additional debt problems too.
The agencies issue is difficult; if the firms looking to raise debt don't pay the agencies to rate it, then who will? And if you don't have faith in the agencies to give an unbiased rating, then what's the point in getting debt-rated at all?
Scepticism is rampant, even in Europe where Mr Detlef Eckert, of the European Commission, has left to take up a position with Microsoft. Mr Eckert worked in the information society directorate in the Commission where his role covered competition rulings. In fact he was supposed to be giving the Commission his opinion on the European antitrust lawsuit against Microsoft around now but instead he'll be sitting in front of his desk looking at a Windows screensaver.
A Microsoft spokesperson said he'd be working in Paris and would have nothing to do with the antitrust case. Of course not. That's why they hired him. The word in the industry is that he wasn't a fan of the company and believed its stance was problematical. So he's going to work for them!
In a clever piece of career management, though, he's simply taking three years unpaid leave from the Commission. Which means that after the dust has settled, he can go back and take up his position of protecting Europe from anti-competitive practices. How sweet.
If investors and the general public are sceptical about their regulators and authorities it's because we've good reason to be. Part of the money that poured into WorldCom helped mediocre people to finance lavish lifestyles, though former chief financial officer, Mr Scott Sullivan, is trying to sell his unfinished 24,000 sq ft home in Boca Raton. It's worth around $15 million and its partly-built state is said to be driving the residents of the exclusive development crazy.
Mr Sullivan isn't the only one in the property market. The WorldCom real estate bankruptcy sale takes place shortly, featuring land and properties from Denver to Houston. If you fancy buying a piece, you can check out the details at www.worldcomre.com.
But if the land, buildings and other sites are beyond your reach why not buy some Enron memorabilia from eBay?
The variety of pens, mugs, T-shirts would undoubtedly make a thoughtful gift. Not to mention reminding you that not only can you get your hands very dirty as you climb the greasy pole, but the fall back to earth can be surprisingly quick.
