Last Wednesday I commented on the unfolding Livedoor scandal in Tokyo and the hidden costs associated with poor legal literacy and casual compliance.  In the few days that have elapsed since that posting the world has sadly watched the human toll continued to grow:

1. On Thursday, January 19, a former executive of Livedoor involved in setting up one of the investment partnerships Livedoor employeed and a central figure to the investigation of Livedoor’s alleged market manipulation was found dead.  The victim of a suspected suicide.  (Perhaps the loss of face associated with even the appearance of impropriety was too much to bear?)
2. Trading of Livedoor stock was suspended again on the Tokyo exchange on Thursday after a new allegations surfaced regarding financial irregularities, and
3. Today Livedoor chief executive, Takafumi Horie, the irreverent young upstart whose brash ways challenged the starched status quo, was arrested along with three other executives for allegedly spreading false information about Livedoor’s affilate companies to cover up losses at a subsidiary and inflate stock prices. 
4. In keeping with his anti-establishment image, Horie wrote in his blog over the weekend before his arrest “I have no recollection of any of the allegations. And I don’t even know how to comment because I have no idea what kind of investigation the media reports are coming from.”

     There is an eerie similarity between the Livedoor case and Enron case scheduled to go to trial next week — the suicide, the investment partnerships, and the dumb CEO defense. It’s easy to dismiss these cases as isolated examples of greed.

Sure, dazzling riches can easily blind leaders to their responsibility of establishing decision making safeguards to protect the organization and its shareholders. But by dismissing these cases as isolated incidents we forget that poor decision making processes can result from negligence as easily as willful blindness. All negligence requires is that we know or should have known about something and did nothing about it. It means that all those casual, “good enough,” business practices could be accidents waiting to happen.

This entry was posted on Monday, January 23rd, 2006 at 9:32 pm and is filed under Business Blind Spots, Compliance, Costs, Decision Making, Leadership. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.