ETRE: Firms need to clean up fraud and restore trust

Eric Benhamou, chairman of 3Com and Palm, said that the technology industry has more than just poor sales to cope with - it also...

Eric Benhamou, chairman of 3Com and Palm, said that the technology industry has more than just poor sales to cope with - it also has to improve a very bad reputation.

Speaking at the European Technology Roundtable Exhibition (ETRE 2002) in Seville, Benhamou said: "When the bubble burst, it wasn't just the stock market that was hit. It distorted the value of businesses, and some greedy people tried to take advantage of that."

However, legislation passed in an attempt to prevent further financial scandals "has gone to extremes it didn't have to. These new rules will affect the way business is run", Benhamou said.

Chief executive officers and chief financial officers now have to certify their results are accurate. "The idea of going to prison tends to stiffens backs and so you take that signature very seriously," he said. That was not a bad thing, he added, but it put chief executive officers under enormous pressure.

"I wouldn't be the chief executive officer of a large public company again. It's going to be a hard, unrewarding job for the next few years and I don't think the risk-reward ratio is balanced for me now," Benhamou said.

If the industry can go six months without another big fraud case, it can start to get on with business, Benhamou said. "This gives the entire industry a bad name. You can't do business if people don't trust you. So the first step to recovery is cleaning up the fraud."

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