June 14, 2005

What is lacking in the Sarbanes-Oxley Act

Sir, Requiring all senior management and board members of companies to disclose publicly what they understand and what they do not understand of the business they are in charge of would do wonders for corporate governance, especially when we start hearing so many cries of ‘I did not know’. For instance, when using sophisticated financial instruments such as derivatives, we could suddenly realize that no one upstairs has a clue of what they, the experts downstairs, are up to, and this could be a quite instructive for the market and the credit-rating agencies when they assess the risks of a corporation.

By having clues I do of course not refer to any specific know-how needed to take apart and put back a carburettor, as very few would be able to do that, and in fact I am not even sure carburettors any longer exist. No, what I refer to is whether they to have a good working knowledge of some basics, like how a car drives, how it brakes, how much petrol it consumes, and what to do if a tyre explodes or an airbag suddenly inflates.

To oblige recognition and acceptance of where the buck really stops both in theory and practice and before mishaps occur could also be useful for shedding light on some systemic risks that, like lava in a volcano, might be building up dangerous pressures underneath the world of finance. It could also provide immediate relief to all those executives living out there, burdened with the constant stress of having to feign that they are in the know.

June 10, 2005

Migration is much more important and transfer fees much less so!

Sir, in today’s editorial, June 10, The Global Workforce when mentioning that it refers to 3 percent of world population you are really underestimating the importance of current migration since, in some countries, more than 40% of their able workforce has migrated. Also you fall into the trap of making a big fuss about financial institutions “creaming” off large commissions on the remittances sent home by migrant workers. Honestly, in the life of a poor migrant these commission are just the smallest of their problems and had many developing agencies not spent fortunes navel-gazing this particular issue, they would have been able to advance much more in solving real problems and in helping to develop know-how about workable temporary legal migration programs. The expensive transfer fees that do not only affect migrants will be taken cared of in time by the time-honored tools of competition and technology.

June 08, 2005

Come on Europe, wave away gloom

Published in FT, June 8, 2005

Sir, For those who believe that the world needs Europe more than ever, the latest events are very disconcerting, not so much because of the No votes themselves but more so because of the ensuing reactions. What a gloom! After the incredible advancements of a Europe over past decades it is unbelievable how this little setback could create so much fuss. The votes on a messy, too voluminous, uninspiring and basically unreadable document, was an as- good-as-it-gets opportunity to grunt a bit about bureaucracy, but now they allow the same bureaucrats to deflect this perfect valid criticism by equating the votes with a rejection of Europe. Europe, pick yourself up! Just wrest whatever Delacroix’s flags are waived from the current bearers, and keep moving on. We will be cheering.