SOX Center

Steve Forbes, chief executive of media giant Forbes, has predicted that US lawmakers will implement major changes to the controversial Sarbanes-Oxley (SOX) Act, in the wake of the sentencing earlier this week of disgraced Enron executive Jeffrey Skilling.

Speaking after his keynote speech at SAS’ BetterManagement Live conference in Las Vegas yesterday, Forbes argued that the SOX corporate reporting legislation had been rushed through in the wake of the collapse of Enron and Worldcom. As a result, he said the rules were ineffective, onerous and unnecessary.

“A person intent on committing fraud will not be deterred by paper walls,” Forbes said. “The best [defence against] corporate crime is stiff jail sentences.”

Forbes insisted the legislation was damaging the US economy, resulting in IPOs that would have been undertaken in New York being lost to London and Hong Kong.

“The brain power and time that goes into [complying] should be spent on productive pursuits rather than on this activity that does very little in either improving internal procedures or preventing crime,” Forbes argued. “I think there is going to be, and should be, a relook at Sarbanes Oxley in a more calm atmosphere now that Jeffrey Skilling is going to be out of circulation for a while.”

Advocates of SOX have argued that while costly in the short term, forcing firms to develop systems and processes that provide better visibility over their operations helps them optimise performance and improve governance.

Here the link to the story of IT Week.