Canadian CEOs get introspective after WorldCom

TORONTO—A panel of Canadian CEOs called on companies to renew their commitment to corporate governance to help of rebuild the public’s faith in the high-tech market at the Can>Win 2002 summit Tuesday.

An already struggling economy, combined with the WorldCom and Enron scandals, has

turned public and government uncertainty into outright mistrust of the enterprise, said Canadian Council of Chief Executives president and chief executive Thomas d’Aquino.

Moving forward with a new perspective is possible and surviving the current climate of mistrust should provide CEOs with new insights and tools which can only benefit any industry that relies on innovation, added Paul Tsaparis, president and CEO of Hewlett-Packard Canada.

“”There’s an English proverb that said a stumble may prevent a fall,”” he said.

“”It’s an interesting metaphor for what we’re experiencing right now. Certainly we’ve had a lot of tarnished reputations, a lot of corporations have been stumbling over the past number of months.””

It’s been a tough year for the North American economy in general and Deloitte Consulting is no exception, said Terry Stuart, the firm’s principal.

“”Last February was an eye-opener for us,”” he said. “”We had three clients, all fantastic business opportunities. We were working with them on proposals, building business solutions and were in fact notified by them that we had been awarded the work. But before the contracts were signed, the audit committees of all three clients came to us and said, ‘Because you’re also our auditors, we can’t award this business to you.'””

That mistrust is derived directly from the cases in the United States, said d’Aquino. However, industry and government both need to remember that business practices in Canada are very different from those in the U.S. and not overreact, since introducing legislation to address corruption that generally isn’t there may only stifle innovation, he said.

“”The world is largely a corrupt place and within that there are various (honest) islands. Canada, I’m pleased to say, is one of those islands,”” he said. “”That doesn’t mean we should be complacent about it.””

Canadian CEOs need to act now to prevent the same kind of mistrust-motivated investment chill currently seen in the U.S., d’Aquino said. They need to take the principles of corporate governance that they already have in their companies, re-examine them, improve them if they can and work on re-building confidence.

“”Business leaders have to make sure that we belly up to the bar and do what needs to be done to give our shareholders, the people on the street, (and) pensioners a degree of confidence,”” said d’Aquino.

This needn’t be a punitive exercise, said Stuart. Opportunities exist even in a tough market and moving away from what’s safe may actually turn out to be the best thing for a corporation. The execs of Deloitte Consulting, he said, knew that in the current climate the company had no chance of succeeding without re-examining its corporate governance practices, so they decided to move away from Deloitte & Touche and go it alone as Braxton.

“”We’ve taken the governance issue and started to address that, but as part of that we’ve also looked inside and said, let’s reinvent ourselves. Let’s think about how we can innovate. So we’ve created new service lines, we’ve looked at how we deliver our services, we’re going to have joint venture partnerships with outsourcing partners and technology providers,”” said Stuart.

“”We’ll be a separate and private company come the New Year,”” he added.

These types of opportunities exist all over, even in times of uncertainty, said Tsaparis. All it takes to find them is a bit of innovative thinking and a move away from viewing stocks as the only read of how a company is doing.

“”You can focus on the way you serve your customers, control the way you interact within an organization in terms of the transparency and openness that you have. You can certainly control the ethics by which you govern an organization,”” Tsaparis said.

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