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| | | /diary0013 Tuesday
15 January 2002 Also today
Don't forget the buses Taming the Corporations
The collapse of Enron, the star US energy corporation, was an awful event. But the real lessons of the disaster will not be learnt. The global green movement will fulminate. Political leaders will wring their hands, expressing deep regret. The CBI will come up with some self-serving excuse. The Left will crow I told you so , without knowing what to do next.
The Observer summarises the gruesome facts Enron Corporation > The media will focus on side-issues – the personal liability of the Directors, the sins of the company auditors, the wrongs committed against the shareholders and employees, the personal consequences for George
Dubya.
Yet these will all miss the point. The real issue is too big for most people to comprehend. The problem is that very legal structure of the corporate sector is wholly inadequate for the regulation of modern trade, with its international complexities. Within the last fifty years, the proliferation of “companies”, or artificial personality, has given the business community virtual immunity from political intervention. The formation of millions upon millions of “companies” has allowed business leaders to retreat into a virtual world, avoiding personal liability, avoiding taxes at will, avoiding union pressures, avoiding onerous regulation.
In the UK alone, new companies are currently being formed at the rate of over 500 every week. Company formation is virtually “on demand”: no probing questions have to be asked by Companies
House. The process is also absurdly cheap – less than £50 per company, £150 if you need a company agent to do the work for you. And the UK is only one of over 200 separate jurisdictions around the world that are in the company-formation business. The system resembles a a game of abstract multi-dimensional chess, in which Governments and corporations confront each other, right across the globe.
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While many formations represent bona fide commercial or social requirements, other companies are destined for money-laundering, tax-evasion, creditor fraud, funding terrorist and criminal initiatives, and drug-trafficking. Taken together, they represent an awesome jungle of legal complexities, an impenetrable thicket of artificial persons. It is managed by a veritable priesthood of highly-paid lawyers and accountants. It is inaccessible to ordinary
people, and to ordinary politicians. Yet within the interstices of this awesome system, great powers are located, great abuses perpetrated. Enron is merely this week’s example, the tip of an impenetrable iceberg.
The challenge to the Left is to engage with the reform of company law, nationally and internationally. The recipes of the old Left, with its rejection of the very institution of private ownership in the corporate sector, have no continuing application. Yet the manifold abuses of corporate power must be confronted, with the same seriousness as political tyranny. The corporate sector must be tamed. This represents a huge political challenge, which no country has yet taken up.
This is, without compare, the greatest contemporary challenge to the Left. In the UK, Labour has yet to address the problem. Nor have independent thinkers
like Will Hutton (writing perceptively in Sunday's Observer) come up with any practical reform measures. True, the Government is planning a new Companies Act next year, but that project is expressly designed to make things easier for business , not to deliver any political challenge. Creative political thinking will have to come from elsewhere.
If you want to join me, in developing new radical strategies to tame the corporate sector, let me know. The need is for discussants who have some professional or personal understanding of how the corporate sector operates at the highest level – main Board members, corporate accountants or lawyers. There would be no whistle-blowing, no loss of confidentiality. But the need is for radical, practicable measures, capable of confronting the abuse of corporate power. I have set up a Yahoo Chatroom, to bring us together.
What do you think? Drop me a line. And remember to give me your E-address, so that I can reply |
You are in the company of Roger Warren Evans
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