Originally Published MX July/August
2002
EDITOR'S PAGE
Quis Custodiet Ipsos Custodes?
The
dilemma of governance observed by the second-century Roman satirist Juvenal
was certainly not new even in his time, but his formulation of it has rung throughout
the ages: who will watch the watchmen?
It is perhaps arguable that much of the evolution of governmental institutions has been, in effect, a response to this dilemma. Repeatedly over the centuries, the societal response to crises of trust and responsibility has been to establish new organizational structures and governmental institutions designed especially to prevent fraud and eliminate corruption.
So today the U.S. economy—and with it the world’s economy—is being battered by yet another crisis of trust and responsibility. Triggered by revelations of accounting misdeeds at energy-giant Enron and communications heavyweight WorldCom, the effects of the scandal have also rippled their way into the medtech sector. While defending its accounting practices, Merck & Co. reclassified $12.4 billion in revenues, and the Securities and Exchange Commission announced that it was investigating wholesaler incentives offered by Bristol-Myers Squibb. And, after firing the auditing firm of Arthur Andersen, AbioMed Inc. said that it expected to adjust the time frames for revenues it originally recorded in 2001.
In response to the growing crisis, Congress is considering legislation calling for stiff prison sentences for corporate fraud and—predictably—creation of a private body with disciplinary authority over auditors.
But the flat fact is that such watchdog agencies, no matter how fierce they are intended to be, can only do so much. At some point, responsibility for policing the behavior of corporations must fall to the executive leaders of those corporations.
If such a body is created, however, don’t be surprised if—as Juvenal cautioned—the watchers and the watched eventually wind up in bed together.
Copyright ©2002 MX
