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Memo to Warren Buffett from an Ex-Felon on White Collar Crime

Memo to Warren Buffett from an Ex-felon:

I commend your memo to your managers urging them to be ethical and compliant with the law.

Recently, Alan Greenspan a man like you of high moral character whom I am sure you respect as I do said the only thing good about Sarbanes Oxley is that CEO’s and CFO’s should sign certifying documents and rest of it should be swept away.

However, white collar crime and criminality cannot simply be attacked or prevented with well intentioned memos and directives, codes of ethics, and having CEO’s and CFO’s sign certifying documents.

Criminals (like I was) do not respect memos directing them not to commit crime, codes of ethics, and certainly have no problem signing false certifications in furtherance of their crimes.Simply said, we cannot attack white collar crime with paper.

However, an en ex-felon I can say that criminals fear barriers such as a strong internal control structure, well educated, skilled, and trained external public accountants who are truly independent. Criminals fear oversight.White collar criminals think in terms of the successful execution of their crimes (like a project) and are undeterred by strong prison sentences (which we require to exact responsibility and accountability on criminals, but are not a significant preventive measure).

No criminal changes their moral compass and no crimes in progress are stopped as they read about long prison terms imposed on felon like Bernie Ebbers. White collar crime cannot be attacked simply by saying criminals violated memos, codes of ethics, and signed false certification documents. Such measures while important are means to make criminals responsible and accountable (after being caught) and do not prevent crimes from happening in the first place.

I therefore, respectfully urge you to support legislation like Sarbanes Oxley and take greater measures within your company to increase internal controls such as establishing better procedures and oversight to make sure crime does not happen in the first place, including strengthening its internal audit function, increasing oversight by independent board members.

Furthermore, I urge you to send a memo to your external auditors. Please use your credibility and prestige to urge them to push for reforms in the education of their CPA’s including better training in the areas of fraud and white collar crime. Would you believe most accounting students never even take a fraud course in college? Ask them how much of their required continuing professional education credits taken each year are devoted to fraud? Would you believe that the AICPA only recommends (but does not require) them to take only 10% of such credit hours in the area of fraud?

I respect your intentions but your well intended solutions are not respected by the criminals you are trying to stop. You want to stop white collar crime - then prevent it because a model that relies strictly on prosecution and accountability after the fact cannot reverse damage to investors, creditors, employees, and the integrity of our great capitalist free market economic system.

Respectfully,

Sam E. Antar (Former Crazy Eddie CFO and Ex-felon)

Note: I have posted this memo on various blogs that have covered Mr. Buffett's memo.

To view his memo in its entirety see ProfessorBainbridge.com

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