Corporate Integrity –
Who Should You Really Trust?
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KEITH: Yes, but let’s call a spade a spade. These consultants are accounting company consultants. Does this mean they are accountants and then also have management training? Who knows, but we certainly have seen of late that the numbers guys can really cook the golden goose. If left unattended they’ll burn the house down.

It has always been odd to me that numbers guys move up in companies and are entrusted to run the whole show. What do they really know about? Numbers. Unfortunately companies do not run on numbers alone, otherwise we’d have a bunch of machines running everything and that doesn’t quite work.

Business Consultants, to be worth anything, must have a full understanding of the subject they are consulting in and if they have experience along the same line they are worth more. Don’t fret too much — there is now workable management know-how and technology that newly exists to help make businesses and the executives that run them more competent and ethical. Over 120,000 firms and hundreds of consultants worldwide have taken advantage of this new technology and they are trained to detect and deal with these kinds of ethical challenges. In the long term, as more businesses take advantage of this new technology, things will straighten out.

DAVID: In addition to needing management know-how and expertise, a top-level executive must also know and use some factors, which underlie administration. The executive must know how people tick and how to deal with people well. Plus, they must be ethical and keep their firm on the straight road.

KEITH: True, but knowing how people tick and dealing with people well doesn’t go over that well with the tyrant-type boss. These kinds of individuals rarely make it to the top or if they do they don’t last that long. Most of the ones that really make it to the top are excellent administrators, deal with people well and remain ethical.

How do you know when you’ve met one of these competent, ethical individuals? Maybe they are running the company you’ve invested in or work for.

Well, look at what the company is doing and how they are doing. It’s not just the stock market index.

Do you like the company’s products?

Are the people that work there happy to be there?

Do the public like the product and buy it?

These are all areas to consider when looking at a company and deciding if you want to be a part of it as an investor or an employee.

DAVID: Those are some good questions to ask. If I may, I’d like to give a personal example that illustrates the mind-set and actions of criminal executives and how one can detect and handle them. I think it will show some principles we can use to improve our businesses and protect ourselves from these criminal types.

I was once defrauded of my home in what turned out to be the largest real estate fraud in the history of California. One of the things that I noticed about the firm that pulled this scam, Suma Properties Ltd., was that they had constant turnover in their accounting department. As people found out that they were defrauding us (the public), they left.

Another key indication that all was not well was that when I started checking out what these business people said they were doing (something any competent executive should do), I found out that they were in fact lying to me.

For example, they claimed that when they purchased my home in Silverlake they were going to pour money into it to doing major upgrades on it. When I drove by to check on this I found it was false. They said they were aggressively showing the property to new buyers for our mutual profit. So I took a friend of mine by to look at the property figuring that the renters would not mind one more potential buyer. However, the people who were renting the property (for half its market value) had been given an entirely different story by these criminal executives and the mystery of what was going on started to unravel rapidly.

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