Forbes attacks "onerous" SOX

IT futurist predicts SOX will have positive impact for humanity

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.

But Forbes insisted such improvements would have happened anyway without the need for costly legislation. "What you'll see in the next 20 years is that companies are going to have internally very elaborate software to do what Sarbanes Oxley is attempting to do with a [regulatory] sledgehammer - simply because it will pay to learn more about the innards of your business," he said.

However, fellow keynote speaker and IT futurist Thornton May insisted SOX was delivering massive benefits to the economy by forcing firms to digitise and analyse corporate data.

"In the lens of history you are going to see Sarbanes and Oxley as basically an accelerator pedal for humanity's path towards being digital," May said. "The age of little information was from 1995 to 2005 when we developed the web and were digitising all this information [in order to have] access to information. But now we are moving into the age of big information...when you are expected to do something with that information. You are seeing that happen with legislation like SOX."