Consulting Summit,2004
C o n s u l t i n g
N ove m b e r / D e c e m b e r2 0 0 4
4 9
Summit Attendees Query Levitt
If you were to advise the next President of the United States, what would you choose to say?Levitt:
I would advise him to stay clear of the weeds. Now, what I mean by that is that it’s ve ry easy to allow some of these issuesto fall into a political arena, which would be tragic. Without get t in g
political, President Bush became the first President in historytoc o n c e rn himself with an accounting sta n d a rd. Wi thin the fi rst six m o n ths of his incumbency, he came out aga i n st expensing sto ckoptions. Fo rt u n a te ly, he has stayed away from that issue eve r since then. There are two issues — at least two issues — in America that defythe political process. One is closing military bases and the other isestablishing accounting standards. And it’s simply inappropriate for that to be morphed into the political arena, certainly by thePresident of the United States.I would urge the President to stand back from the kinds of issuesthat really should be decided by the public sector. And most impor-tantly, I would urge the President to keep uppermost in his mind theimportance of speaking about these issues, about the importanceof independence, about the importance of disclosure, about theimportance of preserving a system that has stood this country insuch good stead, and not neglecting it, and, certainly, making appointments to key regulatory agencies that respect the indepen-dence of those agencies.For years, the SEC has been a nonpolitical body. And I think it’scritical that it continue to be that. And I think that the FCC is anoth-er such agency that should be nonpolitical.But I think that like anyone else the President must be a rolemodel, and this must be an important issue because the landscapefor corporate America is built upon the fundamental conviction that the system is not rigged for one part of the population vs. the other,so that we don’t have shareholders battling against stakeholdersand against management. The next President must, th rough his actions and his speeches,
t ry to bring to ge ther the inte re st of the va rious elements th a t m a ke up our markets. He can do that by speechmaking. He cando that by a special convening of those groups. He can do th a t by personal behav i o r. There is a lot that can be done by the newP resident or the continuing President to bring us to ge ther ra th e r than pull us apart .
Can you share some pers p e c t i veon the recent insurance scandals?Levitt:
I do believe that the insurance scandals, which took me bytotal surprise, really are far more pernicious than almost any other scandal of this decade. While the mutual fund industry [scandal]hurt very few individual investors, the implications of this to our markets and their trustworthiness and the backlash in terms of theappearance of commercial bribery is very, very serious for U.S. mar-kets and U.S. companies. And I think that this is an issue that hasto be dealt with directly rather than hysterically. The best cure is from the companies themselves and the boards
of directors themselves. This is terribly important for all of us, and
the boards are going to be held more accountable than they ever have been before. And what’s playing out in Wilming ton is singularly
critical because it’s not just the plaintiff’s lawyers who are going to
create heartache for direc tors and make it more difficult to recruit
competent directors. I believe that you’ll see reg ulators paying much
closer attention to other directors who are doing their jobs.
And the whole area of corporate responsibility has come intoquestion. I think that consultants and accountants and journalistshave got to think hard and long about how we deal with this issueresponsibly, because independent directors really are the bedrockof our system. And whether they have been good or bad, in gener-al they’ve been terrific and better than any other system in the
No one person has arg uably had greater impact on the consulting profession over the last ten yearsthan Arthur
Levitt. Whether it was his battle to divorce consulting from the Big Five accounting houses or the generousc o n s u l t i n go p p o rtunities his re g u l a to ry legacy has brought fo rth, Arthur Levitt has exposed to the wo rl dc o n s u l t i n g ’ svast reach as well as its limitations.
For the first time ever, the fo rmer chai rman of the Securities and Exch a n ge Commission came befo re the
co nsulting profession to peer into the future and reveal the complex challenges that will confront consultants as
they advise clients in an economically integrated world.
“ I do believe that the insurancescandals, w h i ch took me by to tal surp ri s e ,
really are far morepernicious than a l m o sta ny other scandal of this decade.”
Leave a Comment