Friday, January 26, 2007

NBC is wroth about a breach of its rules: What about the shareholders' money?

Victor Jung used to be the treasurer at NBC Universal. According to this morning's Wall Street Journal. He has been charged with stealing some $800,000 over a six month period. Mr. Jung set up a corporation "NBCU Media Productions LLC and wired transferred funds from a GE account" to bank accounts in its name. These accounts financed some fancy flings and a place in the Hamptons.

He was arrested 6:00 A.M. yesterday.

I wonder what he was thinking? "They won't notice $800,000: it's rounding error."

Of course, maybe he is innocent. Perhaps in the wacky world of the media, he was simply facilitating the extravagence of his superiors.

The unsung hero of the piece is the internal auditor who caught him. Internal auditing has been booming after the wakiness of the internet boom went out of fashion. What was ordinary business practice was seen to be just plain silly when that bubble burst. Sarbanes Oxley has super charged the boom. The most recent figures I saw had internal auditors' salaries growing in double digits. The demand outstrips the applicants off into the future.

Most interesting in this news story is NBC Universal's reaction:

Consider its public statement: "NBC Universal is committed to and vigilant about the enforcement of its compliance policies. When we discovered the potential integrity breach, we promptly brought it to the appropriate authorities and are cooperating fully with the investigation. We will continue to monitor the situation to its resolution."

That is a far cry from "That blankety blank stole the shareholders' money and we want every red cent back!" Perhaps the flack under the NBC peacock is singing a song for his grey flannel superiors at GE where the corporate culture is probably a lot less flamboyant.

In general, the return to corporate sanity after the internet bubble burst is salutary. But I also wonder whether in the post Sarbanes-Oxley world, companies are worrying more about following the rules, than growing the value of their businesses?

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