A Failure of Trust

I use this blog as an outlet for addressing fraud, fraud prevention, the value of controls in mitigating all types of business risk, and the critical nature of ethical managment behavior in all aspects of business life.

Today, however, a series of articles, courtesy of nakedcapitalism.com have moved my focus a bit. I don't think they are directly connected, any more than the fact that I'm addressing the local Chapter of the Association of Fraud Examiners this evening is connected...........

But, for me, it all fit together too perfectly.

The articles below, in the order they appear, are worthy of your time and thought.

Americans and Government (Joe Costello)
http://www.archein21.com/2010/04/americans-and-government.html

The T Word (Robert Cringely)
http://www.assetinternational.com/ASMW/PostDetail.aspx?id=876&blogid=226

and
GOP Seeks SEC Records on Goldman (Mike Allen)
http://www.assetinternational.com/ASMW/PostDetail.aspx?id=876&blogid=226

Joe Costello's item summarizes a recent Pew survey that looks at Americans' distrust of Government...and how it has grown over time....regardless of the political parties in power........as he says "The issue of disenfranchisement is essential to understanding America today."

After reading his, I stumbled onto Robert Cringely's brilliant article on the nature of Trust....empiricism and transparency. "Trust is present or it is absent. Grab a nerd and he’ll tell you that even the absence of trust is a measure of trust and that particular measure is zero. When trust is non-zero (which is better, believe me) it is based on one of two methodologies -- empiricism or transparency (the other T-word)."

His parallels between technology and current behaviors in the banking industry are frighteningly astute. For someone who addresses business ethics and fraud, I find his insights (depressingly) dead on.

The coup de grace of course was concluding my little sojourn into thoughts about political and leadership distrust with an article about Senators politicizing the regulators that are questioning Goldman's actions. Regardless of how you think you feel about the merits of the SEC's accusations (we all might want to question what we think at this point since so few facts of the case are yet known) the fact that a legal action is either seen as political, or has been turned into something political, only reinforces the first two articles.

So I'll talk about this to the fraud examiners tonight. I'll mention this to my peers and clients. I'll state again that regulating behavior is a failed hand....particularly without heavy investment in those who are supposed to regulate (something we have been consistently reluctant to do), though serious punishment can slow the perpetrators down. I'll hope that the 'facts' are uncovered without interference, in Goldman's case and others, and that we will judge the actions on their merits, not political agendas.

Tomorrow I will arise with the resigned cynicism of those who responded to the Pew survey...and go about trying to make my own small difference in the world....one deserving client at a time.

and wondering if we, as a people and a government, can ever learn that trust betrayed, is trust lost.

In closing I defer to a much smarter man than I, Peter Drucker:•

"Management is doing things right; leadership is doing the right things."