Preventing Corporate Fiascos by Thang Nhut Nguyen

Author:Thang Nhut Nguyen
Language: eng
Format: epub
Publisher: Palgrave Macmillan US, New York

MBE Revisited for Prevention: Automated Policy Hierarchy and Processes

As the backbone of the MBE, an institutional policy system has to be in place to account for all policies and regulations. Policy in an institution acts like genes in our body. Most employee tasks are understood for day to day operations. The related policy (regulations, rules, etc.) and processes have been guided by well-thought out and well-defined policies in the institution for years.

A new policy of a strategic nature (or corporate strategy) is more complex. It is hard to detect a flawed policy, especially when the policy or strategy shows some initial success. In fact, they are often unstructured, unclear and the effects are not known until the execution of the policy (or strategy). An example is Jeff Skilling’s mark to market. It was a modified strategy to promote a gas bank business which did generate two successful projects (Cactus 3 and JEDI), but it started to go bad.

Deviations from current policy or strategy, if detected, would be flagged. As in the case of Enron's 360-degree review, which departed from common human resources practices. This is the case for the MTM strategy adapted for gas bank and expanded to other business. This is the case for MTM accounting, which was “mutated” from US GAAP. This is the case for SPEs, where the 3 % condition in SEC regulations was violated. This is the case where a dual role for Andrew Fastow was allowed by the Board of Directors.

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