Will `Executive Transparency` Help Curb Future Madoffs?

Anti-Fraud Group ACFECalls for Close Scrutiny of Finances for Top Executives at
Public Companies
AUSTIN, Texas--(Business Wire)--
The eight-member Board of Regents of the Association of Certified Fraud
Examiners (ACFE), the world`s largest anti-fraud organization, has voted
unanimously to call for a law requiring top executives of public companies to
open up their personal finances to scrutiny by auditors and regulators.

The concept was dubbed "executive transparency" by Joseph T. Wells, ACFE`s
founder and chairman, when he first wrote about it in 2003 following the Enron
and WorldCom fraud cases. The state of the economy and the exposure of
high-profile frauds such as the Bernard Madoff scheme and the alleged Stanford
fraud have led to a renewed urgency in calls for the measure.

In a letter to the new Director of Enforcement for the SEC, Robert Khuzami,
Wells wrote: "Had it existed at the time, examination of the personal finances
of insiders would have uncovered the Enron and WorldCom frauds much earlier; it
may have done the same in the Madoff matter and others yet not detected.

"There are but two ways to trace ill-gotten gains of this type: from the
organization to the insider or vice-versa," Wells wrote. "From our members`
collective experience in investigating more than a million cases of criminal and
civil fraud, I can state without reservation that the latter approach works
best."

In a 2003 article published in USA Today, Wells provided additional high-profile
examples of fraud in which the stolen money was spent on "outrageously
ostentatious lifestyles." As chairman of the ACFE, Wells researches, writes and
lectures on white-collar crime issues. He has published fourteen books and
nearly 200 articles on fraud-related topics, and was named to the list of
Accounting Today`s "100 Most Influential Accountants in America" for nine years
in a row.

"The Rigas family used Adelphia funds as their `personal piggy bank,` starting
construction of a championship golf course and buying a condo for their niece,"
Wells wrote. "Dennis Kozlowski of Tyco, along with another executive, looted the
company for a staggering $600 million. Kozlowski`s many excesses included the
infamous $15,000 umbrella stand and the $6,000 shower curtain."

In the case of Madoff, the disgraced financier and convicted fraudster was
reported to own luxuries including multi-million dollar homes in locations from
New York to the Riviera, yachts in Florida and France, and art, jewelry and
furniture worth millions. Altogether, Madoff and his wife claimed to have $823
million in assets, and investigators are working to determine how many of these
assets were acquired through the ill-gotten proceeds of his multi-billion dollar
Ponzi scheme.

Requiring executives to make their personal finances more transparent for
auditors and regulators would expose the type of lavish spending that serves as
a red flag for fraud. ACFE Board of Regents member Jonathan E. Turner, CFE, CII,
said that "the idea is long past due."

"(Executive transparency) is about returning accountability to leadership,"
Turner said. "If we do that, we will reduce the incentives to commit fraud and
thus reduce the impact and incidences of fraud."

About the Association of Certified Fraud Examiners

The ACFE is the world's largest anti-fraud organization and premier provider of
anti-fraud training and education. Together with nearly 50,000 members in 125
nations, the ACFE is reducing business fraud worldwide and inspiring public
confidence in the integrity and objectivity within the profession. The ACFE
proudly celebrates its 20th anniversary as the leader in the global fight
against fraud. For more information about the ACFE, visit www.ACFE.com.

ACFE
Scott Patterson, 512-276-8156
or
Alani Mundie, 512-276-8177

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