We are told by the OWS crowd that the nation’s current economic problems are mostly due to the sinister machinations of the “1 percenters,” greedy corporate business leaders and Wall Street plutocrats who rig the system to their advantage and force students to take loans for their college education that they are unable to pay back. As with any caricature there are shadows that outline some truths. Certainly the meltdown of MF Global Holdings Ltd. is a glaring example of how politically connected finance firms regardless of their ideology, give new meaning to the term crony capitalism. Now under Congressional subpoena, former CEO Jon Corzine has to explain not just the collapse of MF Global, thanks to his series of risky bets on European bonds, but also how some $1.2 billion in MF Global’s customer accounts, which are supposed to be kept separate from the firm’s own capital, seem to have disappeared. He and others responsible could face the same fate as Bernie Madoff and former Enron’s Jeff Skilling in sporting the latest fashion; jumpsuit orange (It’s the new black).
As a former Goldman Sachs CEO, Corzine is an insider’s insider. Just a few months earlier, the Obama administration was considering him as a possible successor to Treasury Secretary Timothy Geithner. Investors in the bonds of his firm demanded the right to an extra percentage point of interest if he left as its CEO and chairman. This is the same big government Corzine who as governor of New Jersey, promised to bring fiscal stability to state finances and reduce the crushing property-tax burden on homeowners. Needless to say, his failure to do so opened the door to Chris Christie being elected the Garden State’s governor on a platform to de-Corzine the State.
Contrast this with Michael Woodford, the ousted CEO of the Japanese camera and electronics maker, Olympus. He raised uncomfortable questions about the company’s fraudulent financial payments for acquisitions and was summarily fired by the company’s chairman and board of directors for exposing the cover-up. Woodford could have taken his golden parachute and flown back to his native Britain a wealthy man. Instead, he decided to confront the board and the management that desperately wanted to hide $1 billion in investment losses, some dating back to the 1990s. Sobered by the company’s 44 percent share drop since it fired Woodford, some Olympus shareholders and employees are campaigning for his restoration.
Reading more like a John Grisham novel than a HBS case study, the Woodford saga continues to unfold. But it is clear that there are CEOs who stand for their ethical principles even when it means risking standing athwart the closed ranks of an entire nation. An old Buddhist proverb holds that one individual can change the destiny of a nation. If so, then certainly he or she can do the same for an enterprise.