How is it possible for the chief executive of the company that reported the largest loss in British history to pay himself a £2-million performance bonus? Well, the simple answer to that is .... who's going to stop him?

Big business has become a sort of feudal system with company directors in the role of plundering warlords while shareholder's and employees are relegated to the level of serfs. Corporate melt-downs like Enron and WorldCom have highlighted the fantasy world in which many executives live. If the profits are insufficient to generate the necessary director's bonuses or to trigger the share options then they simply " re-arrange" the balance sheet to reflect non-existent profits. In theory, any dodgy accounting practices should be picked up during the annual audit but this rarely happens. Auditing firms no longer regard themselves as the shareholder's policemen. Instead, they see themselves as an integral part of the company they are auditing. The relationship between company and auditor need not be adversarial, but when it becomes as cosy as many of them seem to have become it's time to worry.

The yearly auditing fees and the tempting possibility of lucrative consultancy fees make it virtually impossible for an accounting firm to maintain impartiality and perform its proper function as an auditor.

As Lady Bracknell might have said ...to screw up one audit may be regarded as a misfortune, to screw up two looks like carelessness. If you had predicted this time last year that the global accounting practice of Arthur Andersen would cease to exist within twelve months somebody would have sent for the men in white coats.

Either the once revered firm of Arthur Andersen has been spectacularly unlucky in its choice of clients or (and this seems more probable) it was too close to the companies concerned to be of any real value as auditor . That some of the audit partners and Andersen employees may have been overworking the paper shredder hardly seems relevant. That, as far as I understand it, was simply to destroy evidence of their earlier incompetence.!! The fact that Enron executives could easily hide so much from their own auditors suggests that Arthur Andersen wasn't asking the right questions and was a pretty useless auditor . However, if it had done its job properly then the company would have almost certainly changed auditing firms. So it's hardly surprising, given the fee-generating capacity of the client, that the company was given a clean bill of health by Andersen.

Impoverished investors, sickened at the current spectacle of executive greed and corporate pillage, suspect that the rot is not confined to the late Arthur Andersen. The reputation of the accounting profession has never been worse and auditors now wallow in the same mud hole as second hand car salesmen, estate agents, lawyers and journalists in the general public's perception of sleazy low lifers.

All auditing firms compete for corporate business and a company is unlikely to choose an auditing firm that will make life difficult for them. So the only way to win back the confidence of the general public would be for the JSE Securities Exchange to appoint a public company's auditors. Better still, the JSE should form its own firm of auditing "untouchables" and send them in to perform a proper examination of the company's accounts, without fear or favour.

Inevitably, the crop of corporate failures and collapsing share prices has brought the subject of executive remuneration into sharp focus. How much a CEO is worth is difficult to say. How much is a columnist worth for that matter? I earn more from an article that takes four hours to write than a municipal worker earns in a month. Do I feel remotely guilty? Not at all. Anybody can empty a dustbin but not everyone can write a newspaper column. The result is that columnists command a marginally higher rate than dustmen.

The same thinking applies to the corporate world. Assuming the company is honestly run, the CEO and directors deserve every cent of their R10-million annual salaries. They work absurdly long hours, carry heavy responsibility and are under constant scrutiny. They are exceptional people and such people need to be rewarded. The fact that they don't actually need the money and don't have the time to enjoy it is one of life's more delicious ironies.

With acknowledgements to David Bullard and the Sunday Times