As a business anchor for CNN, Ali Velshi’s attitude toward his mainly retail audience reflects not just journalistic drive but also paternal compassion.
In this interview with IR magazine, he reveals his concerns that options backdating could further derail fragile investor trust.
Has corporate America handled well the uproar over options backdating?
Options backdating is not easy to understand, so the story doesn’t have the attraction of Enron or Tyco. And it is not really a retail investor concern, nor is it the PR mess that Enron or Tyco were. The bigger issue is that options backdating speaks directly to corporate governance and management policies.
Sometimes there was manipulation, but sometimes it was just bad decisions. My guess is that most companies investigated for backdating did it inadvertently. But there are a few where it was deliberate and misleading, motivated by greed and involving directors, and there serious action needs to be taken.
What I’ve found is not unexpected: companies that are open generally are generally open to talking about this. Some even came out before they were investigated, saying, ‘Here’s what we found, here’s what we’re doing about it.’
On the other hand, several firms have told me this is going to blow over – it’s not an issue. The underlying suggestion is that it’s not a sexy topic, not worth putting on TV. Thankfully, the beauty of our system is that companies don’t get to decide what’s news. Many stories we break are stories everyone already knew about, but someone had to figure out a way to report them, to give them traction.
Has Sarbanes-Oxley changed the world?
What really gets under my skin is obscenely well-paid CEOs like William Maguire from UnitedHealth, or the NYSE’s old boss, Dick Grasso, claiming ignorance, denying responsibility. Or Home Depot – with a board that has clearly made measurably stupid decisions, and a [now former] CEO with his head in the sand. When you earn that kind of money, you’re not allowed to be ignorant.
The fact is, almost all their problems were pre-Sox. Post- Sox, almost all of it would be clearly illegal. This is the best capital market in the world, with the best access to money, and companies should be doing the right thing.
What hasn’t changed since Sox is that the media haven’t convinced the SEC or the Public Company Accounting Oversight Board (PCAOB) to work with us to out bad companies. As a business reporter, I’m a fan of business, so most of what we do is about business successes. But part of what we do is help weed out the bad apples.We don’t have nearly the same resources as the federal regulators, yet we get far more ‘no comments’ from them than we do from companies.
Can the media help protect investors?
I almost feel guilty that perhaps we let people down in 1999- 2000.We bought the idea that nothing was wrong. The media, the sell side, the SEC, the accountants. Who was watching out for the little investor?
I’ve covered every one of these scandals from start to finish. I’ve seen how they hurt small investors’ faith in the system. I worry that we could go back to a situation where we forget that honesty and integrity in business actually have value.We need to play a role in preventing that from happening. Watch us or read our magazines or read our newspapers. We’re not going to be just cheerleaders.
