World business leaders look to restoring public trust

DAVOS, Switzerland -- In earnest panel discussions and just-between-us sideline chats, the titans of international business spent six days chewing over how to restore public faith in corporations.

As the World Economic Forum wound up, a rough consensus was evident: Tougher laws may help, but they won't stop executives willing to lie or steal. A renewed dedication to basic business ethics is more important, many said.

"Doing the right thing: It's simple to say, but that sums it up," said William Parrett, managing partner for Deloitte Touche Tohmatsu USA and one of the many auditing firm executives taking part.

Or, as Peter Brabeck-Letmathe, chief executive of Swiss-based Nestle put it, "we need less lawyers and less detail, and we need rock-solid principles."

Boeing chairman and CEO Phil Condit, summing up at a Tuesday session, noted that on paper now-bankrupt Enron Corp. had a fine values statement it didn't live up to. "You need a deep commitment to the value set that integrates it into the culture," Condit said.

The crisis in trust created by fraud scandals at Enron Corp., WorldCom Inc. and a host of other companies was the official theme of the conference, though it was sometimes overshadowed by the potential war in Iraq and fears about terrorism.

Looming over all the business discussions was the Sarbanes-Oxley Act, the get-tough U.S. legislation passed in response to the scandals.

Getting tougher on CEOs

The law forces chief executives to personally certify their company's books and quadruples jail terms for accounting fraud. The U.S. Securities and Exchange Commission is busy writing the thousands of pages of regulations to implement the new law.

U.S. Rep. Michael Oxley, an Ohio Republican and one of the law's sponsors, said concerns from European executives that the law imposed burdensome requirements on them were easing.

The SEC rules now permit foreign companies to argue that their home countries' laws are solid enough for them to list their shares in the United States, he said.

Still, Sarbanes-Oxley exposed a divide between Europeans and Americans, with the U.S. side more willing to agree to new regulation and revamped management structures.

Samuel A. DiPiazza Jr., global head of auditor PricewaterhouseCoopers, had to disappoint Brabeck-Letmathe by warning him that 3,000 pages was only the first installment of Sarbanes-Oxley rules.

"Let's face it, the U.S. model is one of deep regulation and specificity, and you're not going to get away from that," DiPiazza said.

While the "tough medicine" from legislators was appropriate, he agreed that managers' integrity, not rules, was most important, he said. "You can have rules against people robbing banks and people still rob banks."

Charles O. Holliday Jr., head of chemical firm DuPont USA, said corporations needed to consider three other groups along with shareholders: customers, employees, and the community. Strong efforts on job safety and the environment, he said, builds the trust corporations need to have.

"It's not really a tradeoff," he said. "If you do a good job on the first three, you'll do a good job for your shareholders."